Tuesday, March 31, 2020

Biden's New Deal Has Corporate Sponsors

Democratic Presidential hopeful Joe Biden’s campaign launched a new podcast called “Here’s the Deal.” The first episode features Ron Klain, the former White House Ebola Response coordinator who is advising the campaign on the coronavirus outbreak, to discuss Trump’s handling of the pandemic.

Klain is Executive Vice President for Revolution LLC, a D.C. based venture capital firm.  Right now affiliate Ready Responders is looking for EMT/Paramedics and other healthcare staff for New York City, Washington D.C., Los Angeles, San Francisco, Miami, New Orleans, Shreveport, Baton Rouge and Reno, Nevada.

It remains to be seen which venture capital/private equity firms receive money from the Fed and Treasuries cash firehose.  Rest assured the politically connected are lobbying for their share.  Politicians Red and Blue love PEU (private equity underwriters).

Sunday, March 29, 2020

Rent Due? Rubenstein's Declaration Partners Owns Apartments

“Crisis doesn't change people; it reveals them.”--Eric Walters

Carlyle Group co-founder David Rubenstein has a family office.  Declaration Partners is one vehicle for his personal investments.  Last year Declaration invested in two apartment complexes in the Washington, D.C. area.  In addition it made a minority equity investment in Peaceable Street Capital in October 2019.

Peaceable Street Capital, a specialty finance company that provides preferred equity capital for small and mid-sized income-producing real estate in North America.  Peaceable Street has provided financing for more than $775 million in real estate across various income-producing property types including multi-family, self-storage, retail, and RV park sectors in the United States and Canada.
Rubenstein's Carlyle Group has a history of evicting the poor.  The Duke Chronicle published an editorial in April 2019.  Its title and final sentence are below.

David Rubenstein’s private equity firm is pushing poor people out of their homes
I want this archived—to contribute to a paper trail cataloguing the shameful and irredeemable evil of David Rubenstein’s financial investments.
How will Declaration Partners treat those suddenly unable to pay their rent?

Update 3-30-20:  Carlyle operating executive Admiral James Stavridus spoke about character and leadership to The Diplomat.

Update 4-11-20:   The Kennedy Center, under David Rubenstein and Deborah Rutter, has made its worst publicity mistake ever. After receiving $25 million in the stimulus package to keep the place going, this pair dismissed the National Symphony Orchestra with one week’s notice.

Update 7-24-20:  The eviction moratorium expires today leaving millions of renters at risk for eviction. Andy Serwer asked David Rubenstein if he would use any of his giving to help the down and out.  Serwer avoided a more direct question as to how Rubenstein's family office will treat its struggling renters.

Update 8-16-20:  So far there is no public data on evictions at Montgomery White Oak Apartments or Vista at White Oak Apartments.  Both are in Silver Spring, Maryland.

Carlyle May Drop Pioneer Credit Deal, NY Plasma Study Approved

As the novel coronavirus shreds credit markets one private equity underwriter is rethinking an arranged deal. Pitchbook reported:

The Carlyle Group is considering pulling its proposed takeover of Australian financial services and debt management company Pioneer Credit, according to The Australian. The firm originally agreed to acquire the business in December for a reported A$120 million (about $71.5 million at today's conversion rate). Carlyle is believed to be asking for more data on the company's operations and performance.

Pioneer Credit Ltd provides financial services in Australia. The company's primary business involves in the acquisition and servicing of unsecured retail debt portfolios comprised of personal loans and credit card accounts. It is also involved in brokering, introducing, and issuing retail credit products.
The deal may be  doable at a lower price or it may die altogether.  Conversely, the global pandemic encouraged Carlyle to invest in blood products software firm MAK Systems.  New York approved a clinical study for blood plasma from recovered patients as treatment for seriously ill COVID-19 patients.

The Carlyle Group has an office in New York City and founder David Rubenstein's Declaration Partners also has a Madison Avenue address.  One is 510 and the other 520 Madison Avenue.

Update 4-7-20:  Chinese medical studies show the benefit of convalescent plasma on seriously ill coronavirus patients.

Update 4-13-20:  Pioneer Credit accused Carlyle of putting the screws to the company causing Pioneer's stock to drop over 50%.

Update 4-16-20:  Pioneer Credit talked with former suitors as its deal with Carlyle continues to sour.

Update 4-20-20:  Pioneer terminated its deal with Carlyle after The Carlyle Group called its $141 million loan.   Pioneer refused to become Mrs. Fields or Brintons'. 

Thursday, March 26, 2020

CFR Says PEU Junk Bonds Need Rescue

The Council on Foreign Relations  recommended:

For many cash-strapped companies, however, the Fed’s interventions will be of little or no help. The central bank’s corporate-debt buying will focus on companies with high credit ratings. But it is riskier-company borrowing that has skyrocketed of late. As the right-hand chart above shows, large shares of nonfinancial commercial paper issued since 2017 have come from lower-rated companies—much like in the run-up to 2008. This mirrors the pattern in corporate-bond markets, where junk-bond issuance has soared. All this suggests that Fed buying will not stem the rising tide in corporate defaults.

Distressed companies are not completely out of lifelines. On March 26, the Senate approved $867 billion to support industries, small businesses, states and cities. Still, unless the Fed expands its lending to cover low-rated borrowers, relief from the pandemic’s economic fallout for thousands of companies, and millions of workers, appears a long way off.
Note that Carlyle Group co-founder David Rubenstein is Chairman of CFR's Board of Directors.  Carlyle and its PEU brethren acquire companies using riskier debt, i.e. junk bonds.  Fed Chief Jerome Jay Powell is former Carlyle Group Managing Director as is Fed Vice Chair Randall Quarles.

CFR's Vice Chairs are Blair Effron of Centerview Partners and Jami Miscik, head of Sovereign Risk for Lehman Brothers when it imploded in 2008.  Miscik sits on the boards of GM, Morgan Stanley and EMC.

The Fed backed Carlyle affiliate Boston Private with TARP funds in 2008.  FDIC Chief Sheila Bair gifted Carlyle and Wilbur Ross, current Commerce Secretary, with BankUnited in the aftermath of the September 2008 meltdown.  Ross and Rubenstein made huge profits from flipping a publicly subsidized BankUnited.

Financing long term assets with short term money becomes problematic when the big money boys no longer trust one another to make good on their debts.  It happened in Fall 2008 and it's returned in force.  

Billionaire handouts loom.  File this post under:  The Way Washington D.C. works.  It's why a private equity firm named after a New York hotel is located in our nation's capital.  Power, influence, Uncle Sam's wallet = massive PEU profits.  Politicians Red and Blue love PEU  Nobody does it better than Carlyle.

Update 3-30-20:  WolfStreet reported on the many ways the Fed and Uncle Sam will firehose trillions to the PEU boys so they can own even more U.S. assets. 

Tuesday, March 24, 2020

Plasma Treatment PEU Style: New York and The Carlyle Group

Bloomberg reported cash rich private equity firms are waiting for blood to deepen in the streets before putting cash to work.  In reality they are likely scrambling to hold leveraged affiliates together as business evaporates.  Maxed out balance sheets provide little flexibility when markets turn upside down.  "Sponsors" hate putting good money after bad when capital calls become the order of the day.  Yet just prior to the ongoing carnage one private equity underwriter (PEU) announced a deal.

The Carlyle Group's press release on 2-20-2020 stated:

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.

MAK is a leading provider of state-of-the-art software solutions supporting the entire blood chain management process, from donation through to transfusion. MAK currently operates on all continents and is considered a preeminent blood management software expert. The company has a strong track record of business success and has built long-term relationships with an established group of blue-chip clients and partners.
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.
 NBC News reported:

Hoping to stem the toll of the state’s surging coronavirus outbreak, New York health officials plan to begin collecting plasma from people who have recovered and injecting the antibody-rich fluid into patients still fighting the virus.
New York State plans to conduct a clinical trial using plasma to fight the virus.  PEUReport first noted Carlyle's investment in MAK Systems on 3-5-20.  The U.S. has changed dramatically since that date.   Carlyle's ability to read the tea leaves remains intact.  MAK Systems should provide the PEU grand returns.  

Update 3-25-20:  Leon Black's Apollo Global found enough blood to put money to work.  The PEU is buying discounted debt of its own affiliates.  The credit team is getting coaching from the private equity team.  This is OK as there are no rules or referees left.  Seeking Alpha reported on the many strategies the PEU boys are undertaking now that enough blood is in the streets.

Update 3-26-20:  Reuters suggested salivating PEUs will go on a buying spree in Q2.  NBC reported plasma treatment for coronavirus received FDA approval on Tuesday.  The FDA specified criteria for plasma donors and recipients.  MAK Systems could be a Beats in the making.  Short hold, massive PEU profits.

Update 3-29-20:  President Trump spoke of clinical studies to treat the coronavirus in today's press conference.  He spoke of blood plasma and its potential to save lives.  He did not share its potential give The Carlyle Group another huge payday.

Update 4-7-20:  Chinese medical studies show the benefit of convalescent plasma on seriously ill coronavirus patients. 

Update 4-8-20:  The FDA approved Johns Hopkins' use of convalescent plasma therapy for COVID-19 patients.

Monday, March 9, 2020

Carlyle Extracts Millions from Exocad, Slips on Dr. Martens

On a day the stock market lost 2,000 points and entered bear territory PE News reported:

The Carlyle Group has sold exocad, a German dental software maker, to Align Technology, a US-based designer and manufacturer of orthodontist products, for €376m in cash.

The firm generated four times gross return multiple on the exit, a person familiar with the matter said. The transaction is expected to close in the second quarter of the year, Align said.
Carlyle extracted huge profits from exocad, likely at a relatively full valuation.  Align had partnered with exocad and the companies intergrated their software.

Also today, Carlyle announced the purchase of retailer Dr. Martens at a deep discount to prior possible valuations.  Retail Gazette reported:

Dr Martens is reportedly set to be acquired by US private equity firm Carlyle Group LP for £300 million.

Carlyle is currently the interested party in talks with Dr Martens to acquire it after rival firm KKR dropped out of a potential deal, the Mail on Sunday reported.

The British footwear and clothing retailer is currently owned by UK-based investment firm Permira, which bought it in 2014 for around £300 million.

Dr Martens has been in talks with Carlyle since November, when it emerged that a deal could potentially value the retailer at £1 billion.

Carlyle will sell whatever isn't nailed down as credit markets implode.  It will put its dry powder to work by buying stressed companies.  The deal can occur via a buyout or through steeply discounted debt.  The greed and leverage boys don't care.  Ask the Brintons family.

Update 3-10-20:  Bloomberg reported private equity got hammered in yesterday's market meltdown, in part due to energy holdings.  The story talked about deteriorating energy credit/debt markets and how they can spark a wider credit crisis.

Update 1-11-21:  Carlyle failed to close on Dr. Martens, which will go public on the London Stock Exchange

Thursday, March 5, 2020

Carlyle Group to Profit from Coronavirus

STAT reported:

When it comes to creating treatments for Covid-19, the disease caused by the novel coronavirus, the first line of defense may be a century-old technology: purified blood plasma.

Patients who have recovered from a disease have permanent antibodies generated by the immune system floating in their blood plasma, the liquid component of blood. To turn that into a drug, the plasma is harvested, tested for safety, and purified to isolate those protective antibodies. When injected into a new patient, the “plasma-derived therapy” — also known as convalescent plasma — provides “passive immunity” until the patient’s immune system can generate its own antibodies.
British medical journal The Lancet published a paper on the use of plasma to treat COVID-19 on February 27th.  A week before this paper The Carlyle Group invested in MAK Systems which makes software for blood management solutions, including blood plasma.

Carlyle Co-CEO Kewsong Lee predicted the virus impact with be worse than people think.  Carlyle has a number of investments in China and likely has seen firsthand the impact of a widespread outbreak on people and supply chains.

Congress plans an $8 billion coronavirus package and the IMF announced $50 billion for international efforts to address the pandemic.  Surely, Carlyle will get their hands on some of this money.  Reading tea leaves and making big money off human misery.  It's what they do.

Update 3-24-20:  The State of New York will conduct a clinical trial using plasma to treat seriously ill coronavirus patients.

Update 4-11-20:  Carlyle co-founder David Rubenstein "recounts that a number of years ago he asked Fauci whether he might want to leave government for the private sector, he responded that he didn't need the money and wanted to stay where he was." 

Update 3-31-20:   The United Kingdom joined the U.S. in offering convalescent plasma therapy to sick COVID-19 patients.

Update 4-7-20:  Chinese medical studies show the benefit of convalescent plasma on seriously ill coronavirus patients.

Update 4-8-20:  The FDA approved Johns Hopkins' use of convalescent plasma therapy for COVID-19 patients.  "On Friday, the FDA approved a clinical trial specifically for Johns Hopkins that will allow its researchers to further test the therapy as a means of preventing otherwise healthy people, notably front-line medical staff, from getting sick. FDA approval is pending for a second Hopkins clinical trial on patients who are slightly or moderately ill to see if the serum will keep them out of ICUs and help bring them back to health."