bloggingbuyouts

While this is backward looking, private equity generated fees for Wall Street are plummeting. That will continue as long as the situation remains here and as long as the de-leveraging trends continue. Try to find someone who thinks this won't continue for at least a while longer.

Revenue generation on Wall Street from private equity fees has significantly slowed this year. Blame the credit crunch and decline in deal volume, but either way the de-leveraging on Wall Street is taking its toll. CNN Money has a summary describing this from LBO Wire.

The top fee-generating firms on Wall Street are Credit Suisse Group (NYSE: CS), Citigroup Inc. (NYSE: C), J.P. Morgan Chase & Co. (NYSE: JPM), Goldman Sachs Group (NYSE: GS) and Lehman Brothers Holdings Inc. (NYSE: LEH).

According to Dealogic, fees are down 75% from last year, from roughly $3.7 billion in first quarter 2007 to about $895 million in 2008. The share of fees to investment banks currently sits at about 10% of revenues, down from about 23% of total revenues this time last year. While leveraged buyouts in the U.S. have slowed, the two most active buyout shops this year, Apollo Advisors and TPG Capital, have paid over $200 million in total fees to banks this year. Ranking behind them are Warburg Pincus, Alfa Capital Partners, and the Carlyle Group.

Goldman Sachs Group Inc. (NYSE:GS) is planning to raise $19 billion to $20 billion for the largest corporate buyout fund ever.

This isn't a total shock. As Reuters points out, rival bankers have argued that Goldman was excluded from the Blackstone Group IPO because it's viewed as too much of a competitor. Goldman Chief Executive Lloyd Blankfein disputes this characterization.

Last month, Goldman joined forces with Kohlberg Kravis Roberts & Co. and Texas Pacific Group for the $45 billion TXU buyout, the largest ever.

Buyout funds are surging in popularity because of the growing demand by large investors for alternatives to stocks and bonds

But this is far from a sure thing.

``They have been leaders in identifying new trends and clearly this is where they feel their profit margins have the most growth opportunity,'' said Financial Advisory Service portfolio manager Douglas Ciocca told Bloomberg News. ``But this is risky if it decreases their liquidity.''

It will be interesting to watch to see how private equity firms and rivals on Wall Street react to Goldman's move.

Meanwhile, I bet hotel rooms are booking up fast near Goldman's headquarters in New York from companies both large and small eager to be acquired.