Monday, June 29, 2020

Carlyle Makes 13x Investment in ZoomInfo, CHK Bankrupt

The Carlyle Group and other ZoomInfo sponsors hold nearly 66% of the company's shares after an early June IPO which offered a mere 12% of ZoomInfo's common stock.  On June 4th ZoomInfo's IPO price was $21 per share.  It closed over $30 higher on Friday.  ZoomInfo is not the video conferencing Zoom, but a subscription provider of B2B sales and marketing intelligence.

It's not clear why the company has a $20 billion value when its S-1 showed the total addressable market for its services as $24 billion.  The $20 billion valuation is 66 times 2019 revenues.

The S-1 had a risk for not using non-GAAP financial measures.  A highly overvalued PEU affiliate using non-standard financial reporting, that's the greed and leverage boys.

It makes for big write ups, sometimes followed by big write downs. What will happen to Carlyle's huge holdings in Chesapeake Energy now that CHK filed for bankruptcy?   Was The Carlyle Group able to convince Robinhood gamblers to invest in CHK?

Market Realist reported:

In the first quarter of 2020, Carlyle Group exited most of its stake in Chesapeake Energy. The hedge fund sold around 864,000 Chesapeake Energy stocks. Notably, Carlyle Group was the largest institutional seller. In the fourth quarter of 2019, Chesapeake Energy accounted for 9.78% of Carlyle Group’s total portfolio of publicly traded securities.  The figure has fallen to 1.3% in the last quarter.
How many Robinhood buyers are behind ZoomInfo's nonsensical $20 billion valuation?  RH's website shows 11,426 Zoominfor shareholders.

The real Robin Hood stole from the rich and gave to the poor.  RobinHood may have enriched The Carlyle Group at the expense of the small investor.  It's a PEU world.