Adventures in private equity: Remember how the Blackstone bid for EOP — at the time, the biggest private-equity bid ever — was quickly topped by another bid, from Vornado? Well, the same thing might happen to KKR’s bid for TXU. Credit Suisse, TXU’s bankers, have promised any potential rival bidder that they’ll be able to rustle up the same $40.2 billion in debt that KKR and Texas Pacific have already lined up elsewhere. Alphaville provides some color:
Credit Suisse would probably lend only about $13bn to $15bn of that sum, syndicating the rest to other banks, people familiar with the matter said.
“Only” $13bn to $15bn, indeed. That’s a hell of a lot of balance sheet to tie up in one client’s debt, no matter who the client is.
So might Blackstone or Carlyle get into a private equity vs private equity bidding war? Such things are very rare — there seems to be an unspoken rule that when private equity shops start bidding against each other, they all lose out in the long run.
On the other hand, maybe such a bidding war would help prevent such funds turning into the “unacceptable and unaccountable face of capitalism”, in the words of Guy Hands, who knows a thing or two about private equity. Interestingly, at the same conference, Carlyle’s David Rubenstein said that “We are so large and therefore need to operate like a public company.” Could the distinctions between public equity and private equity be disappearing as quickly as they appeared?
Could the distinctions between public equity and private equity be disappearing as quickly as they appeared?
Seems to me that Rubenstein was making a call for a voluntary sort of transparency, whereas what your typical big public company has to go through is anything but. I wouldn’t go calling the actual death of that particular distinction just yet. :^)