Thursday, February 20, 2020

Carlyle Invests in Blood Management Software Firm


Doctors are using plasma to treat COVID-19, the pandemic corona-virus sweeping parts of Asia.  The Carlyle Group stands to profit from widespread misery.  Market Screener reported:

Global investment firm The Carlyle Group (NASDAQ: CG) today announced it has made a significant investment in MAK-SYSTEM (MAK), a family-owned company providing software for blood management solutions, which will be used to accelerate the company's growth.

The investment will provide MAK with additional capital to support the company's global growth strategy and to continue innovating and delivering standards of excellence for the blood service, plasma collector and hospital markets.

Carlyle co-founder David Rubenstein speaks of his firm's ability to sense the pulse of the global economy.  China's economic pulse dropped precipitously due to the pandemic.  If plasma becomes the go to treatment for COVID-19 Carlyle will profit handsomely from worldwide suffering.  It won't be the first time. 

Carlyle has been mostly in sales mode with PA Consulting the latest affiliate targeted for monetization. 

Wednesday, February 19, 2020

Michael Milken's Criminal Record Scrubbed by Trump


President Donald Trump pardoned Junk Bond King Michael Milken, who pleaded guilty to six charges, reduced from an original 98 count indictment. 

the firm’s rock star, Milken, pioneered the use of these (junk bond) securities to finance the huge ambitions of corporate raiders, like Carl Icahn and T. Boone Pickens, and of private equity firms, such as Kohlberg Kravis Roberts & Co. and Texas Pacific Group.
Many came out in support of Milken's pardon.  Private equity underwriters on the list include The Carlyle Group's David Rubenstein and Yuciapa's Ron Burkle.

Business Insider reported on Milken's sentencing:
“You were willing to commit only crimes that were unlikely to be detected,” U.S. District Judge Kimba Wood told him in November 1990 at his sentencing hearing. “When a man of your power in the financial world . . . repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself . . . a significant prison term is required.”
Milken spent 22 months of his 10 year sentence in a minimum security prison and was allowed to keep most of his vast fortune in his plea deal.  Bloomberg wrote:

"A former Morgan Stanley managing director and wealth management executive who wrote Trump in 2017 urging him to pardon Milken, calling the junk-bond king’s prosecution a result of “a period of class envy run amok.”
So that's why employees have made no wage progress since the early 1990's.  Revenge from the Michael Milken class.  If class envy was bad in the 90's it is orders of magnitude higher today.

Business Insider gave a glimpse of Milken, the man:
Someone who met Milken later in his life and spent hours with him describes his “burning eyes” and says he was “manipulative to the core” and only seemed truly happy when he believed he had won her over to his way of thinking about things. “Mike Milken was kind of like Jim Jones [of Jonestown massacre infamy] with a billion dollars, a PR man, and a fancy office,” she says.
Milken long ago rehabilited his name in the financial world.  His Milken Institute Global meeting is California Davos.  PEU Founders are regular speakers on how greed and leverage will solve the world's ills.

WSJ opened the door that Milken could return to the securities industry, the recipient of trillions in government and central bank support.  Burning Platform characterized this group accurately with.

The irrational exuberance exhibited by the big swinging dicks on Wall Street during the dot.com bubble, the subprime mortgage induced bubble, and the current everything bubble has been encouraged and inspired by the reckless actions of the Federal Reserve and their fellow feckless central bank heroine dealers around the world. Their arrogance is only exceeded by their greed and myopia. Their grasp of history reaches to last Wednesday. No one is heeding the wisdom of great men. 
Nine years ago a major financial reporter wrote PEUReport:

I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as greed has hollowed out the economy. These are people took pride in their jobs and held themselves to this invisible standard that we all just took for granted, but is being wiped out.

The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to exist to corrupt politicians and it's hard to know who they even represent.

I watched a video interview of (David) Rubenstein and his arrogance is really beyond tolerance. He was going on about the debt ceiling problem and how there would need to be cuts in services and higher taxes. When the reporter asked him about tax on carried interest he turned really disdainful and said that this "only" amounted to $22 billion over some number of years and this was not serious money. Boy, nothing like everybody doing their small part to save the country from oblivion!
Milken's record is clean, thanks to a fellow financial miscreant.  Milken's return to the securities world would indicate anything goes for the monied, ruling class.

Greed, power and image are everything.  Milk'em leverage lives in our PEU world.

Monday, February 17, 2020

Carlyle Flips Golden Goose


The Carlyle Group sold Golden Goose Deluxe Brand to Permira, a fellow private equity underwriter (PEU).  As a result music artist Taylor Swift will lose leverage in her fight with Carlyle affiliate Ithaca Holdings which purchased Big Machine, the holder of Swift's past music rights.  Swift could have burned her GG sneakers in protest, but did not.

Carlyle bought Golden Goose in 2017 for roughly €400 million.  It sold Golden Goose for €1.3 billion.  Under Carlyle ownership Golden Goose revenue rose from €140 million to €260 million.  The deal priced at 14 times 2019 earnings.

Those numbers don't warrant a 225% valuation increase.  As Taylor Swift helped make Golden Goose sneakers cool, surely Carlyle will give her a cut.

Also for sale is Carlyle affiliate Twinset

Saturday, February 8, 2020

Carlyle Stuck PPD Numerous Times Prior to IPO


The Carlyle Group recently took two healthcare affiliates public, OneMedical and PPD.   PPD's S1 described their PEU owners:

Carlyle is one of the leading private equity investors in the healthcare sector, having completed 65 total healthcare transactions representing approximately $12.3 billion in equity invested since inception. Recent transactions include Sedgwick Inc., One Medical (a technology-enabled primary care organization), Millicent Pharma Limited (a pharmaceutical company), MedRisk Holdco, LLC (a physical therapy-focused workers’ compensation solutions company), Albany Molecular Research, Inc. (a contract research and drug manufacturing organization), WellDyneRx, LLC (an independent pharmacy benefit manager), Rede D’Or São Luiz S.A. (a hospital provider in Brazil), Ortho-Clinical Diagnostics (a global provider of in vitro diagnostic solutions for screening, diagnosing, monitoring and confirming diseases), Healthscope Limited (a hospital in Australia) and PPD. 
Carlyle and company bought PPD in December 2011 with equity financing up to $1.76 billion.   PPD had no long term debt prior to the 2011 buyout.  PPD had $1.2 billion in stockholders equity.  At the time PEUReport asked:

How long before Carlyle conducts a debt offering for dividends, adding to an exploding health care pie?
Not long.  PPD's PEU owners used the company as an ATM, pulling out billions.  The first debt for dividend play came in October 2012.  Moody's reported PPD's holding company issues new $500 million of unsecured notes to fund a dividend to the equity sponsors, The Carlyle Group and Hellman & Friedman.  Standard and Poor's referred to the move as a "drive-by."

In August 2016 Standard and Poor's indicated PPD paid more than $1.0 billion to shareholders over the last year.

They sampled PPD for more in November 2016 and then stuck the firm twice in 2019.


For an initial $1.76 billion equity investment PEU shareholders took over $4.2 billion in debt funded dividends. 

PPD issued 60 million new shares in its IPO.  Carlyle owns 66,454,994 shares of PPD which closed at nearly $31 per share.  Carlyle's current PPD shares are worth over $2 billion.

Carlyle and company added over $5.6 billion in debt to the company, which had zero long term debt before PEU sponsorship. This PEU debt burden cost PPD over $1.5 billion in net interest expenses through the third quarter of 2019.

PPD also paid over $20 million in Sponsor fees since 2014.  PEUs take a cut of deal/transaction fees and PPD was active in this arena, paying over $50 million since 2014.

PPD joins KKR's HCA in not bringing down healthcare costs under PEU ownership. Carlyle's ownership of ManorCare came with quality concerns and an eventual bankruptcy.  Is that the future for healthcare users as PEUs roll the dice for grand returns?

Update 2-9-20:  Ohio retirees will have their healthcare benefits cut as there is no money for healthcare   OPERS.  OPERS invested $150 million in Carlyle Partners V in 2007.   Carlyle Partners V is currently harvesting its investments, which include healthcare.  Did OPERS not make enough money in healthcare to maintain healthcare benefits for retirees?   Carlyle claims it doubled investor money through CP V.  Also, Carlyle's CEO said he expects a pickup in realizations in 2020.  It's cash in time for the PEU boys.

Tuesday, February 4, 2020

ACRONYM Issues Carlyle Worthy Response to Shadow Failure


ACRONYM issued a Carlyle worthy response to the failure of Shadow's smartphone app at the Iowa Democratic Causus.  The Carlyle Group distanced itself from the spectacular collapse of Carlyle Capital Corporation, the March 2008 canary in the coalmine of the Fall financial crisis.  Both Carlyle and ACRONYM downplayed their roles as "merely investors."

Just as Carlyle launched Carlyle Capital Corporation, ACRONYM said it would launch Shadow.


Both ran away from the stinking piles created by CCC's implosion and Shadow's collapse.  Image is everything for the greed and leverage boys whose desire for money and power are insatiable.

Sunday, February 2, 2020

Carlyle Delays Atotech IPO due to Coronavirus


NYT reported:

Buyout firm Carlyle Group Inc has delayed the U.S. initial public offering (IPO) of its German specialty chemicals group Atotech, concerned that the coronavirus outbreak would negatively impact the valuation it could achieve with investors, people familiar with the matter said on Friday.
Why would a German chemical company need to postpone its public offering due to a Chinese coronavirus outbreak?
Atotech, which makes specialty chemicals and equipment for printed circuit boards and semiconductors, had planned to kick off its IPO process this week by publishing an indicated price range. 

However, Carlyle became concerned that Atotech's production and business exposure in China, as well as the broader market volatility caused by the outbreak, would hurt investor demand in the IPO.
NASDAQ reported:

Atotech operates several manufacturing facilities in China, accounting for 38% of the revenue in its chemistry segment, which in turn makes up about 90% of its business.  The sources requested anonymity because the decision is confidential.
Carlyle leaks what it wants to leak and its leaders won't give interviews to reporters who ask pesky questions about the private equity underwriter's (PEU) biggest failures, ManorCare, Philadelphia Energy Solutions and Carlyle Capital Corporation.  Recent bankruptcies include Acosta and Addison Lee.

Carlyle is in the midst of selling affiliates or handing them back to lenders.  What's on the PEU horizon?

Friday, January 31, 2020

Carlyle Jettisons Addison Lee


The Carlyle Group's Addison Lee effectively declared bankruptcy and will be taken over by debt holders.   Bloomberg reported:

A group of lenders to British cab operator Addison Lee agreed to a rescue package that will hand them control of the troubled firm, according to a person familiar with the situation.

Creditors will provide 45 million pounds ($59 million) of fresh funds and refinance 100 million pounds of loans, extending the maturity on the debt by seven years, according to the person who asked not to be named because it’s private.

The deal was agreed after private equity owner Carlyle Group LP, which bought Addison Lee in 2013 for about 300 million pounds, failed to find a buyer. Bloomberg News reported in August that it was considering a U.S. listing.

Portions of the company’s debt were trading at distressed levels below 30% of face value earlier in January.
The report did not say how much cash Carlyle extracted from Addison Lee via special dividends/distributions, management and deal fees prior to surrendering the company to lenders.  

Nearly a year ago Carlyle announced its desire to sell the company for £390 million.  The private equity underwriter (PEU) found no takers and had to give the firm over.