Wall Street Folly

• U.A.E. Leaders Try to Ease Concerns Over Dubai
• Dubai World in Talks on $26 Billion of Debt, Rest Is ‘Stable’
• AIG closes debt for equity deal with NY Fed
• Madoff Investor Rosenman Loses Bid to Recover Assets
• GE, Vivendi Agree on $5.8 Billion Value for NBC Stake
• Cramer reverses his stance on stock-trade levy
• SEC Watchdog Eyes Insider Trading Probe
• Carlyle Group sued over collapsed fund
• CBOE to demutualise ‘within days’ Read the rest of this entry »

Tags: AIG, Bernie Madoff, Carlyle, CBOE, Credit Crunch, Dubai, Jim Cramer, retailers, SEC, Sovereign wealth funds

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Tags: Bernie Madoff, Bonuses, Carlyle, Compensation, David Rubenstein, Lehman Brothers, prison inmates

• Goldman Sachs to Repay U.S. Tomorrow, Blankfein Tells Lawmakers
• More auto industry bankruptcies loom
• Carlyle, TPG Said to Weigh Buying First Republic Bank
• Verizon and AT&T deny collusion on texting prices
• Adobe Profit Falls 41% on Slumping Software Demand
• Best Buy Pres: Customers’ Careful Spending To Continue Read the rest of this entry »

Tags: Autos, Carlyle, Goldman Sachs, Lloyd Blankfein, Private equity, retail, TPG

SEC Proposes Money-Manager Rules After Madoff Fraud
- Bloomberg

The U.S. Securities and Exchange Commission moved to impose new rules on money managers to safeguard client holdings after Bernard Madoff’s Ponzi scheme cost investors $65 billion. 

SEC commissioners voted 5-0 today on a proposal to subject about 9,600 investment advisers to annual surprise inspections by independent auditors. About 370 money managers with direct custody of client holdings would also face yearly compliance exams to ensure they have adequate procedures to protect assets. 

“We are taking this action in response to major investment scams such as Madoff,” SEC Chairman Mary Schapiro said at a public meeting in Washington. “Our proposals would greatly enhance the independent checks on client assets.”…

Carlyle to Pay $20 Million to Resolve Cuomo Probe
- Bloomberg

Carlyle Group agreed to end “play for pay” tactics in its investment business and pay $20 million to resolve a pension fund probe by New York Attorney General Andrew Cuomo. 

Under the agreement, Carlyle will adopt Cuomo’s code of conduct, which bans investment firms from using placement agents or other third parties to negotiate with public pension funds to obtain investments. To avoid pay-for-play schemes, investment firms will be prohibited under the code from doing business with a public pension fund for two years after the firm makes a campaign contribution to a public official who can influence the fund’s investment decisions….

Morgan Stanley fined over trader’s mispricing
- Financial Times

Morgan Stanley has been fined £1.4m ($2.1m) by the UK’s financial regulator after weak control of its credit derivatives desk allowed a rogue trader significantly to overprice his position for six months.

The Financial Services Authority on Wednesday penalised the bank for its failure to prevent the mispricing by Matthew Piper, then a trader in complex credit derivative products.

The problem came to light in May last year and Mr Piper was fired in September following an internal investigation. On Wednesday the regulator said it had banned him from the industry and fined him £105,000…..

Tags: Andrew Cuomo, Carlyle, Derivatives, Hedge funds, Morgan Stanley, Rogue Traders, SEC

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Tags: Activist Investing, Bankruptcy, Blackstone, Carlyle, Cerberus, Hedge funds, KKR, Private equity

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Tags: Avenue Investments, Carlyle, Credit Crunch, Hedge funds, Private equity, Ramius

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Tags: Carlyle, Credit Crunch, Distressed, Hedge funds, high yield bonds, LBO / MBO, Ramius

The chase for distressed debt is getting more and more crowded as Apollo is
the latest to raise money.  It’s looking for over $2 billion for new
fund that will buy troubled loans from European banks. 

Other players involved in the distressed debt market include Blackstone, which raised a separate $1.3bn (£697m) fund to invest in the area, and Carlyle, which raised $1.35bn.
 
  According to recent figures from Private Equity Intelligence, distressed debt funds raised 38pc more capital in the first six months of the year globally, bringing in a total of $33bn.

Apollo seeks £1.1bn for distressed debt
- Daily Telegraph

Tags: Apollo, Blackstone, Carlyle, Distressed, Hedge funds, Private equity

Another Carlyle Group fund has run aground and is liquidating.  It’s multi-strategy Blue Wave fund, which has seen assets drop from $900 million when the fund opened its doors in 1997 to around $600 is going the orderly liquidation route:

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Tags: Carlyle, Credit Crunch, Hedge funds, Liquidations / implosions

It’s finally over for Carlyle Capital, Carlyle Group’s mortgage bond fund…..

Talks on a so-called standstill agreement
with lenders failed, Amsterdam-listed Carlyle Capital Corp. said in a statement
last night. Through March 12, the company has defaulted on about $16.6 billion
of debt, and any remaining debt is expected “soon” to go into default,
according to the statement.

Carlyle Capital sought refinancing on its residential mortgage-backed
securities. Those negotiations failed late yesterday after a pricing service
used by some lenders reported a decrease in the value of its mortgage-back
assets, the firm said. Carlyle expects additional margin calls today of $97.5
million.

“The basis on which lenders are willing to provide financing against the
company’s collateral has changed so substantially that a successful refinancing
is not possible,” Carlyle said in the statement.

Carlyle Capital Fails to Reach Accord; Lenders to Seize Assets - Bloomberg

Tags: Carlyle, Credit Crunch, Liquidations / implosions, Toe Tags

UBS’ revolving door saw another top banker heading through the exit: Oliver Sarkozy, French president Nicolas Sarkozy’s younger half-brother, will be joining the Carlyle Group:

Olivier Sarkozy, 38 years old, is giving up
his job as UBS’s global co-head of financial institutions to co-head a Carlyle
Group unit investing in the financial-services industry. Mr. Sarkozy was seen as
one of the most prominent remaining bankers at UBS after a string of
high-profile defections and resignations.

"I leave UBS with great sadness," said Mr. Sarkozy, who is the
half-brother of 53-year-old French president Nicolas Sarkozy. The relationship
raises the question of whether Carlyle, which has in the past employed former
top government officials, may be hiring Mr. Sarkozy for his political
connections. Through a Carlyle spokesman, the younger Mr. Sarkozy says he has
never and will never use his personal relationship with his brother for any
professional gain.

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Tags: Carlyle, Revolving Door

Not only is Blackstone lookiing for other than traditional bank financing, but so too are Carlyle’s David Rubenstein and Terra Firma’s Guy Hands. And unsurprisingly, sovereign wealth funds are among the deep pocketed firms being approached.

Private equity firms are now approaching
sovereign wealth funds for loans for big leveraged acquisitions, filling the gap
left by investment banks struggling with the credit squeeze, leading buy-out
bosses said on Wednesday.

Guy Hands, head of Terra Firma, and David
Rubenstein, head of the Carlyle Group, told the Super Return conference in
Munich that private-equity firms were already talking to wealthy state-backed
funds in the Middle East and Asia about raising debt

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Tags: Carlyle, Private equity

Carlyle Group’s David Rubenstein made optimistic comments on the leveraged buyout market at the Super Return Conference in Germany.  The "golden age" will return and come back even stronger.   But he noted that owing to the $200 million debt overhang on their balance sheets that banks won’t be lending again in a major way for maybe three years.  But while they’re waiting for business to pick up, they’ll still be busy — with all of the bankruptcies and restructurings that are on the way.  So it’s all good…..

Of the banks and their debt overhang he said:

"It’s now on their books at 95 cents
on the dollar and if they had to sell it they would get even less. So they don’t
want to sell it and it stays on their balance sheets.

"But this will change – eventually the
banks will conclude they are better using their balance sheets for other things.
When it begins to happen you will see leverage coming back into the
industry."

In the meantime, he predicted there would
be some bankruptcies of private equity run companies, but he countered the
pessimism of Alchemy boss Jon Moulton by claiming default ratios would be small.

"I don’t think defaults will be as
large as they were during previous periods of distress. Banks are much more
flexible and there is much more expertise in buyout firms than there as
before."

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Tags: Carlyle, Private equity

The fund, overseen by former Deutsche Bank
AG executives Rick Goldsmith and Ralph Reynolds, fell 9.5 percent in October
after beginning the month with $690 million in assets, according to an investor
who declined to be named because returns are private. The managers were hurt by
bets on structured credit, which can include securities backed by repackaged
home loans.

Blue Wave’s decline since March compared
with the 10 percent average gain by hedge funds globally and the 6.7 percent
return by multistrategy funds that bet on price differences between stocks,
bonds and other securities, according to Chicago-based Hedge Fund Research Inc.
The fund’s losses made it vulnerable to client redemptions.

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Tags: Carlyle, Credit Crunch, Hedge funds

• Private Equity: Greed Is Good and Ugly
• Allan Sloan: More sugar for Schwarzman
• Black-$toned – IPO Investors See Red Over 30% Losses
• Carlyle brings in IPO veteran

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Tags: Blackstone, Carlyle, Private equity

• KKR Extends Deadline on Alliance Boots LBO Loans
• "Golden age" of private equity is behind: Carlyle
• A Private-Equity Peak?
• Citi gets boost from investment banking

 

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Tags: bonds, Carlyle, Citigroup, KKR, Law firms, LBO / MBO, Private equity

Not really a surprise, given how the Democrats have jumped on the taxation bandwagon, but private equity is throwing more cash at Republican candidates these days according to the Wall Street Journal:

Newly released campaign-finance reports show former New York City Mayor Rudy Giuliani, former Massachusetts Gov. Mitt Romney and Arizona Sen. John McCain received a total of $262,000 in contributions from employees of private-equity companies since January. The top Democrats in the 2008 race,
Sens. Hillary Clinton of New York, Barack Obama of Illinois and former North Carolina Sen. John Edwards received a total of $231,000, the reports show.

The numbers could be the first indication that private-equity managers are reversing their trend of giving most of their donations to Democrats. Since the 2000 election, the same private-equity firms were the source of an increasing share of their donations to Democrats, according to historical data provided by the nonpartisan Center for Responsive Politics.

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Tags: Blackstone, Carlyle, KKR, Political Contributions, Politics, Private equity

• The ABCs of CDOs. Can you spell RISKY?
• CDO market near halt amid deeper subprime worries
• Axed deals reflect subprime chill
• Carlyle Postpones $415 Million IPO of Mortgage Fund
• Hedge funds’ mortgage woes could spread

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Tags: Carlyle, Hedge funds

Not to be left out of the fun, Carlyle Group intends to launch its own $1 billion multi-strategy hedge fund:

Private-equity titan Carlyle Group plans to launch a $1 billion multistrategy hedge fund next month, people familiar with the matter said, in what will be the company’s first foray into hedge funds.

The move into hedge funds — lightly regulated investments targeted at institutional investors and the wealthy — highlights a broader trend of private-equity firms diversifying their businesses.

Carlyle’s first offering from its Carlyle-Blue Wave hedge-fund unit, called Carlyle Multi-Strategy, will use a range of strategies.

Carlyle Group Plans to Launch Its First Hedge Fund – Wall Street Journal

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Tags: Carlyle, Hedge funds, Private equity

Thirteen private equity firms were sued on Wednesday alleging that they violated antitrust laws, conspiring together to fix deal prices.  The plaintiffs are holders of Univision Communications, HCA Inc., and Harrah’s Inc.:

The lawsuit names big private equity firms, including the Carlyle Group, Texas Pacific Group Ventures Inc., the Blackstone Group, and Kohlberg Kravis Roberts & Co.. It claims that the plaintiffs "were paid less for their equity shares that they sold to the private equity defendants and their co-conspirators than they would have been paid under conditions of free and open competition."

The other buyout firms named in the lawsuit are Clayton, Dubilier & Rice, Silver Lake Partners, Thomas H. Lee Partners, Madison Dearborn Partners, Warburg Pincus and Providence Equity Partners. [Bain and Merrill Lynch are also named in the suit].

The lawsuit, which seeks class-action status, cites news reports of an investigation by the U.S. Department of Justice "into potential collusion by large buyout firms."

On Tuesday, Blackstone President Tony James told the Reuters Investment Banking Summit that he had never seen collusion between private equity firms.

Holders sue private equity firms over deals – Reuters

Tags: Bain Capital, Blackstone, Carlyle, KKR, Lawsuit, LBO / MBO, Merrill Lynch, Private equity

Carlyle is the latest private equity group to venture into hedge funds.   The firm has hired Ralph Reynolds away from Deutsche Bank where he was global head of proprietary trading….

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Tags: Carlyle, Deutsche Bank, Hedge funds, Revolving Door

Carlyle Group is hiring a global head of lobbying to help it navigate regulatory challenges, particularly in China.  The firm also is creating a trade association with other private equity firms to help "educate" about what they do;  last year a German politician unflatteringly compared the firms to "swarms of locusts"….

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Tags: Carlyle, D.C., Lobbying

Buy-out group nobility, including Steven Schwarzman of Blackstone, Henry Kravis of Kohlberg Kravis,  David Rubenstein of Carlyle, David Bonderman of Texas Pacific and Leon Black of Apollo Management are in Frankfurt for the Super Return conference (Feb 20-23) where they’re scheduled speakers…

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Tags: Apollo, Blackstone, Carlyle, Henry Kravis, KKR, Leon Black, Private equity