PEU Legend Interviews PEU Supernova

Berlin's SuperReturn conference saw Carlyle Group co-founder David Rubenstein interview spanking new private equity underwriter (PEU) Kim Kardashian.  Kardashian formed SKKY Partners with former Carlyle executive Jay Sammons. 

Kim hopes to help SKKY's affiliates win.  Kim K may be able to do what Sam Bankman-Fried could not, bringing greed and leverage to the masses.  Rubenstein interviewed Bankman-Fried several months before FTX and Alameda imploded.  

Who wants be an LP for SKKY Partners, a "next generation consumer and media PEU?"  Jay will be happy to take your money.

Carlyle's Acentra Health to Help Government Healthcare

A press release revealed two Carlyle Group healthcare companies, CNSI and Kepro, have merged and have a new name, Acentra Health: 

Our team of technology and business experts, skilled clinicians, and highly talented healthcare professionals work as one to help state and federal partners lead the way in accelerating better health outcomes for priority populations."

When Carlyle bought Kepro from Apax Partners PE Hub reported:

Apax Partners got Kepro from Nancy Ann DeParle's Consonance Capital.  DeParle was President Obama's White House health reformer.  DeParle was a PEU before her "public service" and afterwards.

Bain and Co gave a PEU healthcare update in April.  It stated:

Medicaid services: Medicaid enrollment tends to increase in downturns due to a rise in unemployment; outsourced service providers are also positioned to help state agencies effectively manage their costs and spending. For example, Carlyle expanded on this theme by merging Kepro with CNSI. Investors considering plays in Medicaid services should take note of the impact of potential enrollment redetermination in 2023. 

Carlyle cut its teeth on milking the federal wallet.  That should continue with Acentra Health.  The greed and leverage boys will not make healthcare better or cheaper(ManorCare).  They will get their cut.

PGA Tour Sells Out to Saudis

Yahoo Sports reported:

...the PGA Tour, the DP World Tour and LIV Golf, the upstart breakaway tour funded by Saudi Arabia's Public Investment Fund, have agreed to merge and create a new entity to unify the tours.

The details are still sparse and incomplete, but the fact that the PGA Tour and LIV Golf have agreed to create a new entity after more than a year of acrimony and litigation is significant. The deal was negotiated in such a secretive fashion that not even the PGA Tour's players knew. LIV Golf CEO Greg Norman apparently found out in a phone call just before the announcement was made public.

The sole and exclusive financial investor in the new entity will be Saudi Arabia's Public Investment Fund.  Saudi Arabia's Public Investment Fund also retains the right of first refusal for any additional investment in the new entity. That, in effect, gives Saudi Arabia's PIF enormous power in dictating the scope, goals and direction of the new entity.

Golf is the now the shiniest sportswash gem in Prince Mohammed bin Salman's crown.  No pariah here, just a giant pair of gold truck nuts dangling from bin Salman's throne.

Like all good PEU and SWF deals the tax implications are minimized:

The PGA tour will continue to retain its status as a 501(c)(6) tax-exempt organization, and will retain so-called "inside-the-ropes responsibilities" of its events.

The greed and leverage boys want both money and image.  State sponsored industries now include professional golfers.  Are they ready to pay homage to their new owner?

The average citizen gets to pay more for gas to fund this deal.  Who's ready to cheer on higher oil prices?  

Golf, but LOUDER.  Gas, but HIGHER!

Update 6-7-23:  Many PGA players expressed concerns about the deal and called the PGA Commissioner a hypocrite.  It's amazing how tons of money can change one's principles.  Maybe the opposition will decrease when all the players get their set of gold MBS truck nuts.  Can they spare a few sets for the 9-11 families, who are legitimately disgusted by the PGA's grotesque sellout?

PGA players experienced the kind of duplicitous, selfish behavior of the people in charge.  You can't call it leadership because executives sold out their core beliefs and principles.  Lesson here is greed wins.  That's a sick and sad distortion, not close to any substantive transformation.

PEU Carlyle wants to exploit sports as well as Saudi Arabia's evil Crown Prince:

Carlyle's Arctic Glacier Avoids Debt Thin Ice

The Carlyle Group's Arctic Ice repaid over $400 million under a term loan due 2024.  Carlyle engaged PJT Partners to assist with the refinancing.  

Carlyle bought Arctic Ice from HIG Capital in March 2017.  PJT Partners was spun off from Blackstone, another politically connected private equity underwriter (PEU).  Blackstone founder Stephen Schwarzman owns roughly 5% of PJT Partners.

 

It's not clear where Arctic Ice received funds for the refinancing.  Did Carlyle's private credit step forward to fund their company?  Or did another PEU provide financing?  A new debt rating may reveal the answer.  

Update 6-5-23:  "In the first quarter, according to Carlyle Group, Inc., private credit funded 94% of buyouts by number and 70% on a dollar-volume basis."(Grant's Pub)

I'll fund your junk if you'll fund mine... 

CFOs Are New Used Car Salesmen

Used car salesman have been portrayed as unethical for rolling back odometers to make their product more appealing.  WSJ reported similar manipulating with corporate earnings.

"...nontraditional earnings metrics are beating reported earnings by a lot more than last year, and a measure of the likelihood of earnings manipulation is at its highest level in about 40 years."

Both result in more money for the manipulators, higher commission for the used care salesman and increased executive compensation for the CFO.  

The accounting profession gave up its policeman role decades ago.  Now nontraditional measures dominate earnings reports.

The pressure to fudge is even greater if a corporation is private equity owned.  McKinsey said:

"borrowed capital means the risks are larger, the time to show results is shorter, and the scrutiny from investors is more intense."

The SEC and Justice Department avoided prosecuting widespread fraud after the 2008 financial crisis.  Corporate executives got the message, wink wink.  

The pressure for corporate executives to lie, cheat and steal is greater and the consequences are virtually nil.   That is the system our leaders created over the last few decades.  Politicians Red and Blue love PEU and increasingly, more are one.

FT on China Love for PEUs

FT reported:

An IVC Evidensia veterinary practice in Sweden may not appear to have much in common with a Vena Energy solar project in Taiwan, or GardaWorld security personnel at a Canadian ice-hockey game. 

But some of the capital that helps sustain all three companies comes from the same place: the People’s Republic of China. 

Private equity firms EQT, Global Infrastructure Partners and BC Partners — the immediate owners, respectively, of the three businesses — are just three among dozens of western buyout groups that Chinese state-backed investors such as the State Administration of Foreign Assets and China Investment Corporation have poured money into.

Private equity underwriters (PEU) sent countless U.S. manufacturing jobs to China over the last few decades.  Virginia Governor Glenn Youngkin did just that with The Carlyle Group (United Components and Nature's Bounty) and as recently as 2020 was monitoring rush hour traffic in Beijing.  Youngkin went from corrupting politicians to being a corrupted one, possibly one with presidential ambitions.

Rabobank's Michael Every said "The kind of mess you've got in America between Blue and Red, no country wants that (kind of polarization)."  

Every added China "never wants to repeat what happened to the U.S.  They are fully cognizant how the U.S. was de-industrialized, hollowed out.  They were the primary beneficiary of that."  Youngkin and The Carlyle Group had a role in hollowing out local U.S. economies.  

A major business reporter wrote in 2011:

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.

That same year a Carlyle's Francis Finelli warned about the dangers from our biggest enemy, China.  

Politicians Red and Blue love PEU and increasingly more one.  How will the greed and leverage boys benefit from the Debt Ceiling deal?   It will be found in the white space between the words.

Update 6-1-23:  Blackstone co-founder Stephen Schwarzman showed his China love with a scholarship program at Tshinghua University in Beijing.  Is that near where Glenn Youngkin monitored rush hour traffic at Carlyle?

Heartless PEUs Go for Peopleless AI

Over the Memorial Day weekend I ran across two stories on private equity and artificial intelligence.  

How fitting for the heartless greed and leverage boys to embrace artificial intelligence, the tool for reducing jobs on a widespread basis.  Many AI firms are directly marketing to PEUs. Altiva's website states:

Three major areas have emerged as ideal for AI assistance:

1. Back-office processes. Firms are ditching manual processes and adopting AI to complete repetitive tasks faster, more accurately, and cost-effectively. And as a result, they’re freeing back-office staff to work on more important projects.
   
2. Portfolio monitoring. Keeping an eye on portfolio companies used to be a labor-intensive activity. However, AI can do in seconds what used to take hours.
   
3. Target identification. While target selection must be performed by humans and their understanding of the nuanced interplay of several factors, firms can leverage AI to quantify and narrow down the field. This saves team members a significant amount of time.

The Carlyle Group tried AI for its investment processes and liked it so much they invested in the company.

AI firm Gemedy sued Carlyle and affiliate TwoSix Technologies for IP infringement earlier this year.

Spooool added more PEU AI pieces.  Every piece read as if they were written by AI.  News from the AI's neutron bomb future for employment highlighting the most greedy, heartless corporate owners.  

The greed and leverage boys want all the spoils and elected officials are just fine with that.