Wall Street Folly

That's according to a report in the Mercury News.

Grim outlook for IPOs, study finds – Mercury News

Tags: IPO

My, how time flies.  A year ago, actually a year ago yesterday (6/22), Blackstone went public at $31/ share, popped on day one then it was pretty much all downhill from there.  So for strong stomached investors who bought on day one and still hold it, today might be more of an Unhappy Anniversary….

Tags: Blackstone, Charts, IPO

There’s been speculation for months and months — now Leon Black’s Apollo Management is going the IPO route issuing 29.8 million class A shares.  Black, and his co-founders, Josh Harris and Mark Rowan, Drexel alums who founded the firm after Drexel imploded,  naturally stand to bank large. (But probably not as large as Steve Schwarzman et al banked when Blackstone took their firm public at nearly the top of the market.  The shares currently trade privately at around $14 / share on Goldman’s private over the counter exchange (GSTrue).  Apollo sold shares in a private transaction to Goldman, JP Morgan and Credit Suisse in a private offering in August at $24/share, so they’re under water.  Oops.  It’s not clear exactly whose shares will be sold into the offering since the table of "Selling Shareholders" isn’t yet filled in.

In its 406-page securities filing, Apollo
shrugged off worries about an economic downturn and its inability to do
traditional limited buyouts, instead embracing the period as a time of
opportunity. "Investors should understand that we may significantly
increase the pace of investment when the ‘prevailing wisdom’ is to sell and may
decrease the pace of investment or sell large portions of our funds’ portfolios
when the ‘prevailing wisdom’ is to buy," the filing states.

The partners at Apollo make a base cash salary of $100,000 a year, but have a
windfall as part of the reorganization of the firm in July in preparation for
capital-raising. Although individual compensation is not yet broken out,
Apollo’s partners will get stock and restricted stock units valued at a total of
$986 million. The firm’s restricted-stock units have long vesting periods of six
years, which is about twice the normal length of such units on Wall Street.

IPO for Apollo Management - Wall Street Journal

Here are some excerpts from the S-1 filing, including shareholdings of the principals:

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Tags: Apollo, Blackstone, IPO, Leon Black, Private equity

Citadel is making a move to separate its options market making operations from its hedge fund.  And that’s leading to even more speculation that Ken Griffin’s Chicago based fund is setting itself up for an IPO….

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Tags: Citadel, IPO

It’s become something of a joke that now that Blackstone’s stock is trading so far under its $31 IPO price that they’d be taking themselves private soon.  Well that may not be so far fetched with this morning’s announcement that they’re buying back up to $500 million of their own stock.  Oh, and they’re also spending as much as $920 million to buy hedge fund GSO..

Blackstone will pay $620 million up front
in cash and stock, and up to an additional $310 million over the next five years
based on meeting certain earnings targets.

GSO is an alternative asset manager, specializing in leveraged finance. It
currently has about $10 billion under management. With the acquisition,
Blackstone’s alternative asset management business will have more than $21
billion under management.

Blackstone is repurchasing stock, in part to offset the issuance of new stock
for the GSO acquisition. 

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Tags: Blackstone, Hedge funds, IPO, LBO / MBO

Charles Tyrwhitt, a Wall Street staple clothing retailer (we have a closet full) — and one of our ad sponsors — is set to go public on the AIM later this year.

Founder Nick Wheeler is seeking fresh
capital to expand the company’s stores from nine to a chain of 50 across the UK
alone, having already opened two in Manhattan below the offices of Lehman
Brothers and Bear Stearns.

After previous managing director Ashley
Potter, who joined from Ralph Lauren in January 2005, left the business Wheeler
took operational control a year ago. He has refocused the business on clothing
for work after attempts to diversify into womenswear and children’s clothing
left the company with unsold stock which had to be written off at a cost of
about £3m. Wheeler, who owns 95 per cent of the shares in Charles Tyrwhitt, is
expecting the business to turn over £50m this year and make a profit of £5m.

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Tags: Banking Culture, Fashion, IPO

Citadel had a great year in 2007 with returns over 30%.  And according to a tease from the firm’s CFO to BusinessWeek, they’d consider an IPO…..

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Tags: Citadel, Hedge funds, IPO

Not every private equity firm is itching to go public.  David Bonderman’s TPG is one of them:

"Being public is not my favourite
thing, Bonderman said.

Asked whether he was interested in a
sovereign wealth fund taking a stake in his firm’s general partnership, as
Blackstone Group and Carlyle Group have done, Bonderman said:

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Tags: IPO, Private equity

Has Ouch-Ziff laid an egg or what?  The stock was down for the fifth day in a row since its $32 IPO, closing today at $24.35.

Tags: Charts, IPO, Och Ziff

The oogliness continues:  Ouch-Ziff had another bad day after this weekend’s very negative Barron’s article.  It was the fourth down day in a row.   And that’s four days out of four since it IPOd at $32.   It closed at $25.73, off another $2.27 (Day high: $27.18; Day low: $23.57).

Tags: Charts, Hedge funds, IPO, Och Ziff

Peeee-ewwwww!: Given its horrendous performance over since its IPO three trading days ago, Och-Ziff (OZM) has managed to lose 12.5% from its $32 IPO price.  Sure, Friday’s loss was an itty bitty $0.05, but the new Barron’s could help extend the slide with an unflattering piece on why at these levels it still overvalued and buyers are paying for mediocrity:

OCH-ZIFF CAPITAL MANAGEMENT group, the
hedge-fund operator, had a rocky debut in the stock market last week. And the
going could get rockier. Its shares may move even lower, because the company
still commands a lofty valuation relative to Fortress Investment Group (ticker:
FIG), another manager of so-called alternative investments, as well as to
traditional asset managers like Legg Mason (LM) and newly public Pzena
Investment Management (PZN)

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Tags: Charts, Hedge funds, IPO, Och Ziff

Oogly:  Day one of hedge fund Och-Ziff’s IPO was a downer, with the stock closing $1.45 below its $32 IPO price.  Day two fared even worse with an even bigger loss.  The stock closed down $2.60, at $28.05, at the low of the day.  That’s nearly $4 off the $32.00 IPO price.

Tags: Charts, Hedge funds, IPO, Och Ziff

Not a very auspicious debut for hedge fund Och-Ziff’s IPO. Priced at $32, it traded higher(up to $32.80) ever so briefly but it was downhill from there.  All day. It closed at $30.65, up from its day low of $30.

Tags: Charts, Hedge funds, IPO, Och Ziff

While many hedge funds had a pretty profitable October, according to the NY Post, one notable fund didn’t.  Cliff Asness’ AQR is said to have put his funds’ IPO plans on ice as a result:

AQR Capital Management, the giant
Greenwich-based hedge fund, has been forced to shelve its planned initial public
offering after a dismal performance caused several large investors to pull their
cash from the firm’s $38 billion fund, The Post has learned.

AQR Capital Management, run by former
Goldman Sachs trader Cliff Asness, saw its flagship fund drop 3 percent in
October, according to the fund’s investors.

The performance leaves the AQR Absolute
Return fund down roughly 6 percent for the year, compared with a 4 percent
return for the Standard & Poor’s 500 index.

Clipped Hedge Fund AQR Pulls Offering – New York Post

Tags: AQR, Hedge funds, IPO

Och-Ziff has a new investor.  Dubai International Capital is buying 9.9% of the hedge fund for around $1.25 billion when it goes public.
   

The deal, by which DIC will take 31.8m
shares in Och-Ziff, came after the hedge fund run by Daniel Och, a former
Goldman Sachs executive, slashed its proposed valuation by about 40 per cent as
the credit squeeze diminished investor appetite for the listing.

At Och-Ziff’s implied valuation of $12.5bn, the hedge fund would be trading at
about 13 times expected earnings. Och-Ziff said it expects to price its offering
at between $30 and $33 a share.

According to a report on sovereign wealth funds published this month by Standard
Chartered, the global bank, DIC invests between $3bn and $4bn a year in
buy-outs, stakes in public companies and private equity funds.

Och-Ziff to sell 9.9% stake to Dubai fund – Financial Times

Tags: Hedge funds, IPO, Och Ziff

Even in the face of Blackstone’s abysmally performing IPO, the recent turbulent markets, and the likelihood that continuing credit market problems will lead to compressed profits, KKR is apparently still planning to go forward with their IPO according to an updated SEC filing.  In the same filing, they disclosed that the SEC has asked them for documents in a probe announced last October in an investigation of so-called "club deals", where private equity firms have been alleged to team up, to drive deal prices down.

Kohlberg Kravis Roberts, the private equity
group, yesterday indicated that it was continuing with plans to float, despite
severe losses last week in equity and debt markets and a warning that the credit
crunch may lead to reduced returns for its own investments.

KKR, one of the world’s biggest buyout
firms, also admitted yesterday, as part of amended regulatory filings ahead of
its flotation, that it had received a demand for documents from the antitrust
division of America’s Department of Justice. The firm, which had said in June
that it planned to raise $1.25 billion (£620 million), has still not committed
to a date for a float.

The documents requested form part of the
Department’s inquiry into whether private equity firms colluded over price in
buyouts in the US.

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Tags: Henry Kravis, IPO, KKR, Private equity

If you want invest in Carl Icahn’s hedge funds, you’ll soon have a chance.  But rather than doing an IPO,  he’s using his 90% owned public company, American Real Estate Partners LP, to buy his funds in an exchange of stock; the combined company will then be renamed Icahn Enterprises.

The activist investor sold his hedge-fund
business to American Real Estate Partners LP, in a move that will bring his
three-year-old asset-management firm to the public markets.

The move merges two of Mr. Icahn’s most
important holdings and will result in AREP, of which Mr. Icahn is 90% owner,
changing its name to Icahn Enterprises LP. The remaining 10% is publicly traded
and will remain so.

"I believe it’s a very interesting
time to build a money-management company with expertise in purchasing distressed
securities and in activism," Mr. Icahn said in an interview.

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Tags: Carl Icahn, Hedge funds, IPO

Revised bonus expectation time? Was last year the high water mark?:
With the turmoil in the markets and the expectation of slowing of LBO’s and other fee generating transactions, Wall Streeters might be making less than they did last year come bonus time ending the record annual escalation we’ve all grown to expect.

A new report out of Standard and Poors today talks about how banking fees might be affected and which firms could be affected most:

Group revenue at Switzerland’s
second-largest bank could fall by 3.8 percent were leveraged buyout fees to fall
by half, S&P said. Earnings at Credit Suisse and UBS AG could plunge up to
19 percent as buyouts slow, Deutsche Bank AG analyst Matt Spick said on July 26.

The risk of owning corporate bonds soared
to the highest level on record in the U.S. and Europe last week as banks
struggled to find investors for loans to pay for buyouts of Alliance Boots Plc
and Chrysler. Buyout firms will need to pay more to borrow and put more of their
own money into deals, the rating company said.

“It seems certain that the LBO market’s glory days are over and the future
environment will be more challenging for sponsors and banks alike,” S&P
said.

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Tags: Bonuses, Compensation, Hedge funds, IPO, LBO / MBO

In spite of the market turmoil, Cliff Asness’ AQR Capital Management is considering an IPO.  They’re contemplating selling a 10% stake, raising as much as $500 million.  They’ll have lots of investment banking muscle behind them with Goldman Sachs, Credit Suisse and Lehman Brothers underwriting the deal with Merrill Lynch and Morgan Stanley also included in the syndicate.

AQR’s decision to press ahead with an IPO
has highlighted how hedge fund listings are considered less vulnerable to recent
deterioration in market conditions than the largest private equity groups.

This is because hedge funds often find ways to perform strongly in a variety of
environments, while buy-out groups are more reliant on healthy bond markets for
acquisitions and strong equity markets for exits.

Based in Greenwich, Connecticut, AQR was founded in 1998 by Clifford Asness and
other members of the Goldman quantitative research group and now has about $35bn
under management.

AQR poised to sell 10% stake in $500m IPO – Financial Times

Tags: AQR, Hedge funds, IPO

Given the dismal performance of Blackstone’s IPO and the state of turmoil in the debt and equity  markets, it’s sounding more likely that KKR may have a problem with its own planned IPO….

Jeff Arricale, who runs a financial-stock
mutual fund for T. Rowe Price Group Inc., said he doubts KKR will be able to
find enough investors to pull off an IPO if current market conditions continue.
"Sure, at some price it is possible to do it, but I’d be shocked if they
end up doing this IPO."

Five blocks south of KKR’s New York headquarters overlooking Central Park, rival
firm Blackstone Group LP is learning just how tough this market has become.
Shares of its own initial public offering — priced just over a month ago — are
now 17% below their $31 debut, and closed yesterday in 4 p.m. New York Stock
Exchange composite trading at $25.70, up 19 cents, or 0.7%.

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Tags: Blackstone, IPO, KKR, LBO / MBO

Where’s a good plumber when you need one?:  Blackstone continues to leak — it hit a low of $25.63 on Friday, closing at $25.95, which is also where very light after hours trading ended.

Tags: Blackstone, IPO

Blackstone can’t seem to get out of its own way, making yet another new low.  After hitting $27 it managed not to close on the low, finishing at $27.33.  In light after hours trading it hit $27 again, ending at $27.10.

Tags: Blackstone, Charts, IPO

Get the party started!:  Dan Loeb (aka Mr.Pink for those of you who don’t know) isn’t exactly getting the reception he might have hoped for his new London stock listing.  With the checkered performance of publicly traded alternative investment vehicles, it’s not a total surprise that shares of  his Third Point hedge fund’s new IPO aren’t exactly flying out the door.  So it’s London IPO is being delayed for 24 hours so that maybe more people can show up to the party.

Trading in Third Point Offshore Investors’ shares was supposed to start today on the London Stock Exchange, but the issue has been postponed by 24 hours to allow more time for investors to buy stock. The fund had said it aimed to raise about €500 million ($688.9 million). Yet orders for shares continue to come in, so the fund may hit its target, one of the people familiar with the matter said.

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Tags: Dan Loeb, Hedge funds, IPO

Blackstone finally managed to close at $31.50, over its $31 IPO price.  Now the question is, will it stay there?

Tags: Blackstone, IPO

The Barbarians are through the gate KKR Files For IPO of $1.25 Billion Buyout firm KKR files to go public Simpson Thacher and Davis Polk steer KKR towards IPO KKR could be valued at more than $15.5bn KKR and Blackstone Jeremy Warner’s Outlook: As KKR floats, are we at the market top?

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Tags: Blackstone, Henry Kravis, IPO, Private equity