Many are familiar with the story of Bear Stearns’ monumental stock collapse and the sale of the investment bank to JP Morgan in 2008 at $2 per share – almost 1% of the original value of the year before. The notion of purchasing a competitor at such a discount is borderline unfathomable. Unfortunately, the takeover created such a substantial regulatory and legal liability over time that led Jamie Dimon to declare his regret of the acquisition. But is there a way to acquire a failing company cheaply and make a profit: can we buy extremely low and still sell high?
Colateralized Loan Obligations are becoming increasingly popular in the post-crisis era by enabling high yield investing at reduced risk levels. The beauty of the CLO is its malleability: like a bespoke suit, risk/return can be tailored for the squeamish or the aggressive investor. In this article, we explore the characteristics of this peculiar form of structured credit to discover the reasons for its surge and how these CLOs are used in the PE industry.
On Wednesday the 27th of February, Bain & Company published its annual Global Private Equity Report 2019, presenting the main events and trends of the industry in 2018 and giving insights into its future developments. The industry continued its strong growth in 2018, displayed by a high number of deals and a high total amount of invested capital invested in buyouts.
The NPL market is more than ever in the spotlight. Going from the definition to what is changing in the regulatory framework, this article tries to understand the potentiality of this market in terms of risk/return, what is changing and why some of the most important PE funds around the world are raising capital to be invested in this asset class.
No period in history better demonstrates the need for portfolio diversification than the late 90s Tech Bubble and the March 2000 crash. In the public markets and at the height of the bubble, speculators were in such a frenzy to get a hold of technology stocks that any newly listed stock with the word “tech” or “.com” in their name could shoot up over 100% in one day. Many of these companies had yet to properly develop their products and their financial health was often very uncertain, yet they commanded prices at very high price to earnings multiples. In private markets there was also a strong appetite among VC firms to invest in the technology sector and bring the burgeoning amount of tech startups to public markets in IPO exits.
In July 2017, Private Equity companies CDH and Hillhouse completed the leveraged buyout of China's largest shoe retailer, Belle International for HK$53.1bn (US$6.8bn). It became the largest privatization deal on Hong Kong stock exchange.
KKR, a leading global investment firm acquired a 12.64% stake in Indosari, an Indonesian based consumer goods company, in October 2017. This deal marks the third such deal KKR has made in Indonesia in the preceding 18 months. KKR makes this investment in the wake of major macroeconomic positives for the Indonesian economy including a young and growing middle class, accelerated urbanization trends, and increasing consumption as a percentage of GDP.
On October 17th, 2017 it was announced that $104 millions were raised from a group of private equity firm by Vacasa LLC, an online vacation rental company set to expand internationally and challenge the biggest player of the sector, Airbnb.
The Harvard MBA indicator was started and maintained by Roy Soifer, consultant and former HBS student. It represents a long-term stock market indicator that evaluates the percentage of Harvard Business School graduates that accept "market sensitive" jobs in fields such as investment banking, securities sales & trading, private equity and venture capital. If more than 30% of a year's graduating class take jobs in these areas, the Harvard MBA Indicator creates a sell signal for stocks. Conversely, if less than 10% of graduates take jobs in this sector, it represents a long-term buy signal for stocks. In addition, it is also useful to analyse the attractiveness of jobs in finance. Indeed, during the last decade, the indicator has been heavily skewed towards jobs in sectors such as Venture Capital and Private Equity and, in particular after the crisis, Harvard MBA alumni have even further shunned IB and IM.
he aim of this article is to briefly describe a principal transaction document for a Private Equity deal: the Sale and Purchase Contract. This is an extremely complex topic to which many articles would be needed to give a full understanding to the reader so rather the intention is to provide a brief introduction to an aspect which is irregularly discussed.
At the beginning of this academic year we had the pleasure to interview Edoardo Lanzavecchia. Since 2007, he has been a senior partner at Alpha, a pan-European mid-cap private equity firm with €2 billions under management. He is considered one of the veterans of the Italian Private Equity industry. In 1998 he founded and was head of The Carlyle Group in Italy, and then also founded Magenta SGR.
The European bond market is still under the effect of ECB’s quantitative easing lowering yields to sub-zero levels and, on the stock market side of things, valuations are at all times high making the quest for an index-beating return even harder. This translates many investors to allot their funds towards junk bonds.