Wednesday, October 14, 2009

PEU Update: Still Smells Bad

Carlyle Group co-founder David Rubenstein spoke from Dubai's SuperReturn conference. He envisions a rebranding of the PEU (private equity underwriter) label:

"Private equity will probably come up with a new name. It went from bootstrap deals in the early days to leveraged buyouts to management buyouts to private equity," he said. "Maybe it will go to change capital or value-added equity," he said.
Here's my suggestion, call it Corporafornication Capital, which of course requires a partner. Carlyle struck a deal with a Chinese infant formula maker.

Carlyle said it has acquired a 17.3% stake in Guangdong Yashili Group, through its investment fund Carlyle Asia Partners for an undisclosed sum.
Recall how hundreds of thousands were sickened with six infants dying? They were poisoned by tainted Chinese infant formula. Cheaper ingredients were substituted to increase profits. Carlyle knows very well how to play the substitution game. They also know how to get Uncle Sam to provide subsidies. Guess what made the amended Baucus health deform bill? It's a $1 billion credit/loan fund to encourage new medical therapies. The criteria include:

1. Qualifying investments would include those made during 2009 and 2010.
2. Total of $1 billion would be allotted for the program over the 2-year period.
3. Eligible companies who are unable to utilize the credits would have the option to receive such credits in the form of Treasury loans.
How many Carlyle subs will line up for this latest form of government financing? The Carlyle Group has a strong health care portfolio. Did David Rubenstein and Rahm Emanuel discuss this at their Blue Duck Tavern dinner? Did Nancy Ann DeParle deliver for her former PEU employer? How many CCMP Capital Adviser affiliates will end up with Treasury loans?