With surging energy prices, investors have been pouring huge sums into alternative energy and cleantech deals. For example, according to a recent survey from Ernst & Young/Dow Jones VentureSource, venture capital investments in the category have surged 83% to $961.7 million in Q2.
Well, private equity shops also want some of the action, especially since buyouts continue to remain fairly quiet. That is, the Blackstone Group LP (NYSE: BX) has established its Cleantech Energy Group.
The chief of this division will be James D. Kiggen, who certainly brings some nice credentials. He was the senior vice president at AllianceBernstein L.P, where he analyzed emerging technologies. He also structured investments in a variety of cleantech companies, like A123Systems and Powerspan.
It looks like Kiggen will have a wide mandate. Some of the investment themes include wind power, solar, ethanol, renewables and so on.
In fact, Blackstone has already made some cleantech investments. One example is an investment with Windland Energieerzeugungs GmbH to complete Meerwind, a massive wind farm project in the North Sea. There was also an $870 million deal for a Bujagali hydroelectric power station late last year.
According to the Blackstone Group LP (NYSE: BX) conference call, it appears that the buyout market is getting somewhat better. For example, in Q2 the firm struck deals like the purchase of the The Weather Channel.
Despite all this, things are still far from good. In fact, Blackstone predicts that the slowdown will continue into 2009 and perhaps 2010. Actually, it looks like the problems are slipping over into Europe and even Asia.
So it should be no surprise that Blackstone's recent financial results are fairly lackluster. The firm posted a net loss of $156.5 million, or $0.60 per share, which compares to a profit of $774.4 million or $0.20 per share in the same period a year ago. Revenues plunged 63% to $353.7 million. Of course, the main reason is that Blackstone hasn't had opportunities to exit investments from its portfolio.
However, Blackstone believes there are juicy investment opportunities. For example, the firm's credit-focused hedge fund, GSO Capital, is investing in distressed debt and even providing financing for Blackstone buyouts. Interestingly enough, the alternative asset management segment saw a 34% spike in revenues to $225.2 for Q2.
Some other good news: Blackstone is still collecting large amounts of assets. So far, the amount is about $113 billion, providing the firm with lots of power to capitalize on things.
The Blackstone Group (NYSE: BX) has entered into its second large-scale alternative energy project. The private equity giant has announced that it will form a partnership with Windland Energieerzeugungs GmbH to complete the development and construction of Meerwind.
This is being billed as one of the North Sea's largest wind farm projects. The wind farm will comprise 80 wind turbines with a combined generation capacity of 400MW. The project will be located some 80 kilometers (approximately 49 miles) off of the northern coast of Germany in the North Sea and is expected to cost in excess of €1 billion (almost US$1.6 Billion) to build.
The area management plan for the future wind farms in the North and East Sea was introduced by the German government in July, 2008 and supports local government objectives in fighting global warming by reduction of its greenhouse gas emissions by 40% by the year 2020.
The wind farm will generate approximately 1.6 billion KWh annually and will provide enough energy to supply electricity to some 500,000 households.
This will be Blackstone's second significant investment in renewable energy after the financial closing of the $870 million Bujagali hydroelectric power station project in December 2007 by Blackstone's 80% owned portfolio company called Sithe Global.
I received an interesting email alert this morning from The Blackstone Group (NYSE: BX) regarding the addition of a new Board of Directors member. The addition is Richard H. Jenrette.
Board member additions are usually not stock events or at least not actionable events, but Mr. Jenrette is founder of DLJ, or Donaldson Lufkin & Jenrette ("DLJ"). That firm was founded in 1959.
DLJ wasn't exactly an institution that went without problems through the years, but it was built essentially from scratch to a multi-billion dollar behemoth in the financial sector with operations in trading, brokerage, investment banking, advisory, clearing, and more. Ultimately it was acquired by Credit Suisse Group (NYSE: CS), and its discount brokerage operations were acquired by E*TRADE Financial Corp. (NASDAQ: ETFC).
Mr. Jenrette is also also a former Chairman of the Securities Industry Association and has served as a director or trustee of The McGraw-Hill Companies, Advanced Micro Devices Inc., the American Stock Exchange, The Rockefeller Foundation, The Duke Endowment, the University of North Carolina, New York University and the National Trust for Historic Preservation.
It has been a while since we have seen a lot of news on the front of Special Purpose Acquisition Companies, or SPACs. Apparently they aren't dead. In fact, a huge deal just came in for a SPAC to become operational.
Hicks Acquisition Company I, Inc. (AMEX: TOH) has reached an agreement in principle to go from SPAC to operational in a tentative deal that is expected to be finalized in the next few days. Hicks Acquisition will merge with Graham Packaging Holdings Co. through a transaction with Hicks Acquisition.
Interestingly enough, this will be in partnership with The Blackstone Group L.P. (NYSE: BX) and the Graham Group. Blackstone has also agreed that it will maintain the largest ownership stake for at least two years as it continues to play an important role in guiding the company strategically and operationally.
After the transaction, the combined enterprise will be renamed Graham Packaging Company and will list on the New York Stock Exchange.
Continue reading core background data as to what the company will look like at 247WallSt.com.
For deals of $2 billion or less, private equity firms are showing interest. However, the problem is cheap valuations.
This is what the board at Chemtura (NYSE: CEM) found out the hard way. Late last year, the company retained Merrill Lynch (NYSE: MER) to explore "strategic alternatives." While some private equity firms showed interest – like Blackstone Group LP (NYSE: BX) and Apollo Management LP -- there wasn't much appetite to pay a premium. So, Chemtura has ended the process. Instead, the company will focus on restructuring, such as divestitures.
Chemtura has an interesting mix of businesses, such as plastic additives, pool and spa products and the lubricant components. For 2007, the company generated $3.7 billion in revenues.
However, with the energy crisis, the environment has been particularly tough for Chemtura. Just look at rival Dow Chemical (NYSE: DOW), which has increased prices two times during the past month.
It's been tough for private equity firms to exit investments. Basically, the valuations are much lower – and the IPO market is particularly weak. And, with the credit crunch, it's really impossible to recap portfolio companies (such as with dividend payouts).
Despite all this, the Blackstone Group LP (NYSE: BX) may buck the trend. According to a report in Bloomberg.com, it looks like the firm may be able to sell one of its portfolio holdings, Groupe Vitalia, a hospital operator based in France.
In fact, it appears that Groupe Vitalia has attracted four serious bidders – and that the deal may come to $2.2 billion. Some of the bidders include CVC Capital Partners, LBO France, Gruppo Ospedaliero San Donato and Batipart SA. In other words, it's a mix of private equity players and strategic buyers.
Interestingly, Blackstone has been able to bulk up Groupe Vitalia with a variety of bolt-on acquisitions. All in all, it 's a smart strategy that may see a rare pay off.
For some reason, private equity has refrained from aggressively investing into energy and oil & gas plays. Perhaps it was that energy prices spiked too fast or perhaps it was because the fears would be that the projects only merited investing if prices were assured to stay high in oil and gas. That may be changing.
The Blackstone Group (NYSE:BX) will invest $500 million in a new pipeline company, Crestwood Midstream Partners LLC. A Blackstone-owned hedge fund called GSO Capital Partners is participating in today's deal.
Crestwood was formed in December 2007 with an initial investment of $150 million from the Kayne Anderson, which has several public entities in the space:
Crestwood is headed by industry veteran Robert G. Phillips, who is former chief executive of Enterprise Products Partners, who joined Enterprise following its merger with GulfTerra in 2006.
Apria Healthcare (NYSE: AHG), a home healthcare services firm, agreed to be acquired by an affiliate of Blackstone Group (NYSE: BX) for approximately $1.6 billion. AHG share holders will receive $21 in cash for each share they own.
AHG closed at $15.82. AHG July option implied volatility of 46 is near its 26-week average according to Track Data, suggesting non-directional risk.
Buyout Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
The Blackstone Group L.P. (NYSE: BX) has just announced that Laurence Tosi will become the new Chief Financial Officer for the private equity giant. He comes to the company from Merrill Lynch & Co. (NYSE: MER) where he served as Chief Operating Officer for the Global Markets and Investment Banking Group. He will also serve on the executive committee and is expected to take up this position "after the summer."
Blackstone also noted that Michael Puglisi, the current CFO, will remain on board as a senior managing director and will remain a member of senior management while he will take leadership of other firm matters and special projects for Stephen Schwarzman.
In a report (subscription required) out of the Dow Jones LBO Wire, Carlyle Group L.P. has delayed its deadline for the fund-raising efforts for its new Carlyle Partners V LP. The delay is said to have been moved to the end of the year for it to close on its fund raising efforts. Carlyle V's original closing date was May 30, and it received investor consent to extend the final closing date to Dec. 31 at the very latest.
Fund V efforts started in 2007 and was said to have quickly held an $8 billion first closing with a target of $15 billion and a hard cap of $17 billion.
The company's market cap is almost $1.9 billion, so it would seem within the realm of deal sizes even in an environment where private equity types have not been able to do many deals. Whether or not the deal is made, that is yet to be seen.
Chemtura products are used in flame retardants, polymer additives, PVC additives, agriculture, plastics, and more.
Even on a deal this size, do we need club deals in a private equity environment in need of simplification? Either way, until we have an announcement. this should be treated as just a rumor.
Yesterday was a tough day in the markets, with the Dow falling 199 points. But if you follow some of the legends of finance – such as Carl Icahn, T. Boone Pickens and The Blackstone Group's (NYSE: BX) Steven Schwarzman – you will notice that they are getting aggressive.
Keep in mind that these guys have been through multiple market cycles. And if history is any worthy benchmark, it's during times of instability where the big money is made.
Pickens is focusing on the energy industry. He sees major demand/supply imbalances and is buying various stocks. He is also interested in natural gas and alternative fuels.
As for Icahn, he's doing what he does best – shareholder activism. He senses when companies are vulnerable and seems to relish an attack on corporate managements and boards. Of course, he's gearing up for a fight with Yahoo! (NASDAQ: YHOO). Interestingly enough, he persuaded Pickens to buy 10 million shares.
And with Schwarzman, he's buying up the bank debt of companies that went private. Because Blackstone sees many deals, it has an extensive database of opportunities.
In other words, the legends of finance are confident in the long-term. They are making some big bets -- based on lots of experience and due diligence -- and not listening to the short-term noise. All in all, these are some valuable lessons for investors.
About a year ago, the rage in private equity was the so-called megabuyout. It seemed like no company was immune. There was even talk of $100 billion dollar deals.
Of course, the credit crunch ended the megabuyout. In fact, it ended most of the activity for private equity folks.
Yet, according to the co-founder of the Carlyle Group, David Rubenstein, things are perking up [subscription required]. His firm – like other veterans, such as The Blackstone Group (NYSE: BX) – understands market cycles. After all, these players have dealt with variety of credit crunches, such as in 1991-1992, 1998 and 2001-2002.
Rubenstein predicts we'll see a pick-up in deals over the next few months. Although, the deals are likely to range from $2 billion to $4 billion, with less debt. And expect more foreign deals.
Funny enough, Rubenstein seems to be leading the charge with its recently announced a $2.54 billion deal for a majority stake in Booz Allen Hamilton.
The struggles of the big boys in private equity have been well chronicled: Blackstone Group's (NYSE: BX) declining stock price, the Linens n' Things bankruptcy, and so on.
But NexCen Brands (NASDAQ: NEXC), a smaller, less diversified buyout shop, is also in trouble, according to The New York Times. The firm's portfolio companies include Bill Blass, Athlete's Foot and ice cream chain MaggieMoo's. With other brands including Pretzel Time and Great American Cookies, the fast-growing company had planned to make millions in the franchising business. But in recent months NexCen has fired its CFO, delayed the filing of its 10-Q, disclosed that there is "substantial doubt" about its ability to continue as a going concern, and announced that investors should no longer rely upon its 2007 financials.
Basically, NexCen is looking like yet another failed conglomerate, at least for now. Rather than buying, improving, and selling businesses like many private equity firms, NexCen had hoped to acquire various franchise brands and run them under a larger umbrella, taking advantage of synergies and opportunities for integration. Yes, that's the dreaded S-word. I wonder how many billions of dollars in shareholder value have been destroyed by promises of synergy.
With the company badly in need of cash, it's currently looking to sell some or all of its brands. But in this market, that might not be so easy. Athlete's Foot and Pretzel Time sure didn't create a lot of value for NexCen shareholders.
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With surging energy prices, investors have been pouring huge sums into alternative energy and cleantech deals. For example, according to a recent survey from Ernst & Young/Dow Jones VentureSource, venture capital investments in the category have surged 83% to $961.7 million in Q2.
For deals of $2 billion or less, private equity firms are showing interest. However, the problem is cheap valuations.
It's been tough for 
Yesterday was a tough day in the markets, with the Dow falling 199 points. But if you follow some of the legends of finance – such as Carl Icahn, T. Boone Pickens and 
About a year ago, the rage in private equity was the so-called megabuyout. It seemed like no company was immune. There was even talk of $100 billion dollar deals.
The struggles of the big boys in private equity have been well chronicled: 
