tag:blogger.com,1999:blog-15238351743462011662024-03-18T22:45:07.821-05:00PEU ReportPEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comBlogger3574125tag:blogger.com,1999:blog-1523835174346201166.post-75635449257765082972024-03-18T22:42:00.004-05:002024-03-18T22:44:35.220-05:00Carlyle Buying OL Reign: Renaming it<p><i></i></p><div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkbEq8FHuGQkcW5QDm6Ff5y19zCXw6LW4YtFqg3dXwbE6RAg45KQGNxFwZlLAAedJcIVpN0IX_HdClYeoQV7EnDuyuwWXaxHlI2ltmyBt1jgdU6HJpfkbgiY6UrSHXnDbqM8kwAMw_NZhsnvdDh42oS1Da63biCey_161jR6WTvXQwTdhnU7UY44pzXiw/s960/Carlyle%20OL%20Reign.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkbEq8FHuGQkcW5QDm6Ff5y19zCXw6LW4YtFqg3dXwbE6RAg45KQGNxFwZlLAAedJcIVpN0IX_HdClYeoQV7EnDuyuwWXaxHlI2ltmyBt1jgdU6HJpfkbgiY6UrSHXnDbqM8kwAMw_NZhsnvdDh42oS1Da63biCey_161jR6WTvXQwTdhnU7UY44pzXiw/w456-h257/Carlyle%20OL%20Reign.jpg" width="456" /></a></i></div><i><br />Sportico</i> <a href="https://www.sportico.com/business/team-sales/2024/carlyle-sounders-reign-nwsl-sale-58-million-1234771244/" target="_blank">reported</a>:<p></p><p></p><blockquote><p><span style="color: #351c75;">A group led by <b>private equity giant Carlyle Group </b>and the Seattle Sounders have reached an agreement to purchase the NWSL’s Seattle Reign FC in a deal that values the NWSL club at $58 million.<br /></span></p><span style="color: #351c75;">Carlyle is providing the majority of the financing, according to someone familiar with the details, though that doesn’t necessarily mean the private equity fund will have operational control of the club.</span><p><span style="color: #351c75;">The Reign are currently owned by John Textor’s Eagle Football, which bought the French soccer holding company OL Groupe in December 2022. (OL Groupe, best known for the Lyon teams, purchased the Reign back in 2019 for around $3 million.) The NWSL team was put on the market last year shortly after <b>Michele Kang</b>, owner of the NWSL’s Washington Spirit,</span> <b><a href="https://www.forbes.com/sites/assiletoufaily/2024/02/08/michele-kang-is-the-new-owner-of-olympique-lyonnais-fminin/?sh=19cd3ca72cad" target="_blank">bought</a> <span style="color: #351c75;">the Lyon women’s team</span></b><span style="color: #351c75;">.</span></p></blockquote><p></p>The Carlyle Group targeted professional soccer years ago. Carlyle <a href="https://www.bloomberg.com/news/articles/2022-03-02/carlyle-deal-sees-italian-football-club-tap-private-credit" target="_blank">provided</a> financing for Italian club Atalanta in March 2022. For the NWSL:<div><blockquote><span style="color: #351c75;">Amid the <b>influx of new deals, private equity</b> has become a bigger investor.</span></blockquote></div><div>Carlyle co-founder David Rubenstein is buying the Baltimore Orioles alongside other billionaires and sport stars. One investor is the Michele Kang mentioned above.</div><div><br /></div><div>It's relative common for private equity underwriters to rename affiliates. To <a href="https://www.king5.com/article/sports/soccer/ol-reign-returns-original-name-seattle-reign-fc/281-04e1b55d-f21b-44a1-8ca0-1957fb58c5d2" target="_blank">clear up</a> any likely confusion:</div><div><blockquote><span style="color: #351c75;">The name "Seattle Reign FC" was used for the team's first six seasons, then the team was renamed to "Reign FC" in 2019. This name lasted just one season before the team's name was changed to "OL Reign" in 2020. "OL Reign" came as part of the Olympique Lyonnais family under OL Groupe's acquisition of the team in 2020. </span></blockquote>The renaming happened in January 2024. It's not clear if Carlyle had any input into this decision.</div><div><br /></div><div>Private equity underwriters (PEU) are <a href="https://www.washingtonpost.com/sports/2023/09/29/everton-777-partners-josh-wander/" target="_blank">the blob</a> taking over professional sports, an escape for employees who've suffered under PEU ownership. </div><div><br /></div><div>PEUs and their billionaire founders have reigned over tax policy and carry outsized influence in government circles. They <a href="https://www.nbcnews.com/health/health-care/card-blackstone-kids-autism-private-equity-bankruptcy-rcna118544" target="_blank">want</a> your every dollar. It's getting harder and harder to <a href="https://www.carlyle.com/media-room/news-release-archive/carlyle-provide-financing-ottobock" target="_blank">avoid them</a>.</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-78670841845648128122024-03-16T11:15:00.006-05:002024-03-17T12:44:03.966-05:00Beware of Black Holes<div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZDo2NK7_eI5SamggLPpQ86X2hnyNTUXu72SX94hLfzCIZ0Zo6HyirXOMoyDKjltXOWs8kDm93_VM8RLIfoht27utM4aE22NQuTl5Jt7f_YQd2WN0T2Ci1CJA7pjoTic_nKNsAYlzgBBdY08iDNNISOgCgnI52iZI2vGHXoFJ6lRaejt_0OSvX-0kyX44/s960/Black%20hole%20PEU.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="343" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZDo2NK7_eI5SamggLPpQ86X2hnyNTUXu72SX94hLfzCIZ0Zo6HyirXOMoyDKjltXOWs8kDm93_VM8RLIfoht27utM4aE22NQuTl5Jt7f_YQd2WN0T2Ci1CJA7pjoTic_nKNsAYlzgBBdY08iDNNISOgCgnI52iZI2vGHXoFJ6lRaejt_0OSvX-0kyX44/w457-h343/Black%20hole%20PEU.jpg" width="457" /></a></i></div><i><br />CNBC</i> <a href="https://www.cnbc.com/2024/03/13/nearly-half-of-young-adults-have-money-dysmorphia-survey-finds.html?utm_source=pocket-newtab-en-us" target="_blank">reported</a>:<p></p><blockquote><span style="color: #351c75;">“What we found was a really strong connection between feeling badly about your money situation and how much time you spend on social media,” said Isabel Barrow, director of financial planning at Edelman Financial Engines.“</span></blockquote><blockquote><span style="color: #351c75;">"There’s this perception that you have to portray yourself as successful and that means having an expensive watch or nice car....."</span></blockquote><div>Social media can take good kids and turn them into black holes, endlessly sucking ever increasing amounts of external validation. </div><div><br /></div><div>It should be no surprise the false god of luxury lifestyle has poisoned their minds. </div><div><br /></div><div>And what is social media pushing now? Cryptocurrencies, especially Bitcoin, and <a href="https://money.usnews.com/investing/articles/largest-private-equity-firms" target="_blank">private equity</a>, Tony Robbin's financial Holy Grail.</div><div><br /></div><div><i>Better Markets</i> <a href="https://twitter.com/BetterMarkets/status/1767593445055410491" target="_blank">has been</a> battling crypto:</div><div></div><blockquote><div><span style="color: #351c75;">Given crypto has no legitimate use & the industry’s long rap sheet of, criminal convictions, bankruptcies, lawsuits, & scandals, it has to use its predatory profits for campaign contributions to buy political allies to keep its scams going.<br /></span></div></blockquote><blockquote><div><span style="color: #351c75;">It's up to candidates and elected officials to reject the crypto industry's special interests and protect the public from this worthless, speculative, high-risk gambling.</span></div></blockquote><div>The same people who won't protect constituents from the clear harms of social media created a giant on ramp for crypto legitimacy by allowing Bitcoin ETFs' </div><div><br /></div><div>There are two burgeoning ways social media users can feel bad about their financial situation. One, missing the Bitcoin <a href="https://www.urbankaoboy.com/p/re-investing-institutionalizing-the" target="_blank">speculation party</a> and two, not snorting PEU stakes alongside the greed and leverage boys. </div><div><br /></div><div><i>Semafor</i> <a href="https://www.semafor.com/article/03/12/2024/apollo-veteran-josh-harris-firm-cuts-ties-with-777-insurance-alum" target="_blank">reported</a>:</div><div><blockquote><span style="color: #351c75;">Josh Harris’ investment firm, 26North, fired a top executive because of concerns over his previous work at 777, the investment firm and would-be Everton soccer club buyer that is under criminal investigation by federal prosecutors, people familiar with the matter said.</span> </blockquote><blockquote><span style="color: #351c75;">
26North hired Jorge Beruff in September to help lead its insurance business. Beruff had spent six years at 777, including at its Bermudan reinsurance arm, which invested policyholders’ money into risky and illiquid deals including European soccer teams, payday lenders, and failing airlines.</span> </blockquote><blockquote><span style="color: #351c75;">Over the past few months I’ve been hearing from executives at Apollo, KKR, and other firms active in this space who are worried about the scrutiny that 777 is putting on the entire business model, which rests on being seen as responsible stewards. The 26North moves suggest that the blast radius is starting to widen.</span></blockquote>Josh Harris co-founded Apollo before leaving to start a new PEU, 26North. Harris <a href="https://fortune.com/2024/02/24/washington-commanders-nfl-apollo-global-josh-harris-pe-deals-nba-football/" target="_blank">bought</a> the Washington Commanders for $6 billion, calling it a bargain. The jury is out on Harris' impact on the team. The "hands on" leader recently <a href="https://sports.yahoo.com/commanders-owner-josh-harris-sitting-in-on-qb-prospect-interviews-at-nfl-combine-143108522.html" target="_blank">sat in</a> on quarterback interviews at the NFL combine.</div><div><br /></div><div>There is a track record for Harris' control stake in Crystal Palace, an English Premier League soccer team. When Harris <a href="https://www.theguardian.com/football/2015/dec/18/crystal-palace-us-investment-josh-harris" target="_blank">bought</a> his stake in 2015 Crystal Palace stood at 6th out of twenty teams. Since then they've <a href="https://www.google.com/search?q=crystal+palace+standing+since+2015&sca_esv=ebdc76ad041d5bb0&rlz=1C1CHBD_enUS801US852&ei=r8D1ZdjBHKH7kPIPzt-dEA&ved=0ahUKEwiY1ZWbkvmEAxWhPUQIHc5vBwIQ4dUDCBA&uact=5&oq=crystal+palace+standing+since+2015&gs_lp=Egxnd3Mtd2l6LXNlcnAiImNyeXN0YWwgcGFsYWNlIHN0YW5kaW5nIHNpbmNlIDIwMTUyBRAhGKABSNBsUKsEWKRpcAN4AJABAJgBywGgAd8jqgEGNy4yOC4xuAEDyAEA-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&sclient=gws-wiz-serp" target="_blank">been below</a> that mark, 15th, 14th, 11th, 12th, 14th, 14th, 12th, 11th and currently 14th. That's consistently in the bottom half of the table, or underperforming.</div><div><br /></div><div>Washington Commanders tickets are a unique currency for PEU Josh Harris in our nation's capital. </div><div><br /></div><div>There is zero chance elected officials will reign in private equity underwriters (PEU). Politicians Red and Blue love PEU and increasingly, more are one.</div><div><br /></div><div><a href="https://www.youtube.com/watch?v=ha3bxwEYFeE&t=1s" target="_blank">Beware</a> of black holes. They will suck <a href="https://www.washingtonpost.com/sports/2023/09/29/everton-777-partners-josh-wander/" target="_blank">you in</a>....</div><div><br /></div><div><b>Update 3-17-24:</b> <i>WaPo</i> <a href="https://www.washingtonpost.com/sports/2023/09/29/everton-777-partners-josh-wander/" target="_blank">reported</a>:</div><div><blockquote><span style="color: #351c75;">....777 Partners has financed several businesses that have been accused of profiting from what critics deem predatory financial practices that target economically vulnerable people\</span> </blockquote><blockquote><div><span style="color: #351c75;">“They prey on individuals who are very young or very naive or drug addicts or people with problems,” said Farva Jafri, a former executive at a 777 subsidiary </span> </div></blockquote>In the case of one person taken advantage of by a 777 subsidiary:</div><div><blockquote><span style="color: #351c75;">For years, her mother, Lori Goney, had sent letters to politicians and law enforcement officials, calling on them to investigate 777’s business practices.
“Nobody did anything about it,” she said. “Nobody helped me.”</span></blockquote><blockquote></blockquote></div>Beware the PEU black hole.PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-12768817877697679042024-03-14T10:17:00.003-05:002024-03-14T10:17:35.560-05:00Sign of PEU Times<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeMj7rQCaMhotz6Yd3FVBkGbxVILSyaOydVRgHICfTQmqym4ULZ9gJskdGwfWI_RC1crXr-ssGKTmOL-gQ2l6MNOMA0_5pORg9SB6sogixXJqxttJQCzrE3PwuNqjTeB-oiH_3RQaR92us9RaZCb0wiAJVoIbxbqdFu4ZoOguAzOBQmXUrPQD_vjJo1sE/s960/Forbes%20PEUniverse.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="960" data-original-width="720" height="438" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeMj7rQCaMhotz6Yd3FVBkGbxVILSyaOydVRgHICfTQmqym4ULZ9gJskdGwfWI_RC1crXr-ssGKTmOL-gQ2l6MNOMA0_5pORg9SB6sogixXJqxttJQCzrE3PwuNqjTeB-oiH_3RQaR92us9RaZCb0wiAJVoIbxbqdFu4ZoOguAzOBQmXUrPQD_vjJo1sE/w328-h438/Forbes%20PEUniverse.jpg" width="328" /></a></div><br /> It is the golden age of the private equity underwriter (PEU). <p></p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-34520013858434407932024-03-11T22:44:00.002-05:002024-03-11T22:44:32.987-05:00New Energy Pathways: Old Related Party Transactions<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNBnSKPA26B2ZmSB0umKIN5Ylf-Q_Oew2_iIwvYT6t2OOg40hDhSOwbiYzncBXfI5F7BaINgmSEHti3FLZJlJqsSOOVoN1SlSCGsm_DoVBrjve0Q2l4cb0OV5_4WjNuNzNbz3SLqOboOV-yfHpdegfJVkfhK-xDT2OBAGcJHuQRLnN2cqg0JV4Z1hSTco/s960/Slide3.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNBnSKPA26B2ZmSB0umKIN5Ylf-Q_Oew2_iIwvYT6t2OOg40hDhSOwbiYzncBXfI5F7BaINgmSEHti3FLZJlJqsSOOVoN1SlSCGsm_DoVBrjve0Q2l4cb0OV5_4WjNuNzNbz3SLqOboOV-yfHpdegfJVkfhK-xDT2OBAGcJHuQRLnN2cqg0JV4Z1hSTco/w457-h257/Slide3.JPG" width="457" /></a></div><br />The Carlyle Group named a new head of energy strategy, Jeff Currie. Their <a href="https://www.carlyle.com/media-room/news-release-archive/carlyle-names-jeff-currie-chief-strategy-officer-energy-pathways" target="_blank">press release</a> stated:<p></p><p></p><blockquote><span style="color: #351c75;">Carlyle believes the energy transition is entering a new phase amidst the backdrop of significant geopolitical and macroeconomic shifts globally. Decarbonizing our global economy is not a simple linear transition from carbon-intensive energy generation to lower-carbon energy sources. It is a complex, multi-dimensional transition that involves energy production, distribution, transportation, refining, efficiency, and end usage, along with decarbonizing all other sectors of the economy. An effective and orderly energy transition will <b>require new energy pathways </b>– balancing energy availability, security, and affordability, as our energy systems simultaneously decarbonize. Carlyle has a large and diverse global energy platform that invests across the full spectrum of electrons and molecules necessary to develop these new energy pathways. </span></blockquote>Marcel van Poecke is Carlyle's <a href="https://www.carlyle.com/about-carlyle/team/marcel-van-poecke" target="_blank">Chair of Energy</a>. That's not his only job. Marcel founded AtlasInvest in 2007. <div><div><blockquote><span style="color: #351c75;">Through its partnership with the Carlyle Group, AtlasInvest also <b>manages the Carlyle International Energy Partners funds.</b> These Carlyle Group funds manage more than $7bn of assets and invest in conventional energy businesses globally (outside of North America).</span></blockquote></div><div>While not listed as a family office AtlasInvest employs a number of van Poeckes.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqGPQaJXx1O0Gp276qvPnd2F9JWNX3Moa7f9d9Q-AVaygQ9rWTYsdlOHr1knzu7eF92IdjW7jEL0eK7FR2hQp-NaWtf_tPI_3JRzt71xafPXxTc8pzu5G7PVXEivzkYHXABrh8KCNrnaxDQYcU4qx-Fc6vARt16FoF0Pw16Pdyq-qaxXa9ngk1Ik7PJK0/s960/Slide1.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="261" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiqGPQaJXx1O0Gp276qvPnd2F9JWNX3Moa7f9d9Q-AVaygQ9rWTYsdlOHr1knzu7eF92IdjW7jEL0eK7FR2hQp-NaWtf_tPI_3JRzt71xafPXxTc8pzu5G7PVXEivzkYHXABrh8KCNrnaxDQYcU4qx-Fc6vARt16FoF0Pw16Pdyq-qaxXa9ngk1Ik7PJK0/w464-h261/Slide1.JPG" width="464" /></a></div><br /><div>SEC filings <a href="https://www.sec.gov/cgi-bin/own-disp?action=getowner&CIK=0001723852" target="_blank">show</a> Marcel van Poecke as an officer for Regalwood Global Energy.</div><div></div><blockquote><div><span style="color: #351c75;">Regalwood Global Energy Ltd. is an international energy-focused special purpose acquisition company sponsored by an affiliate of Carlyle International Energy Partners, L.P., formed as a <b>Cayman Islands exempted company</b> for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. Regalwood Global Energy Ltd. is led by Marcel Q. H. van Poecke, Chairman of the Board of Directors; Robert Maguire, a member of the Board of Directors; Brooke B. Coburn, President; and Kevin R. Gasque, Chief Financial Officer.<br /></span></div><div></div></blockquote><div>SPAC Regalwood <a href="https://www.spacinsider.com/news/spacinsider/regalwood-global-energy-announces-liquidation" target="_blank">rolled up</a> in late 2019 without making any business combinations.</div><div><br /></div><div>AtlasInvest and two Poeckes <a href="https://pitchbook.com/profiles/company/490723-12#overview" target="_blank">formed</a> Tree Energy Solutions (TES) in 2019. </div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-6kBo4ZjPbMC405NHFmryyr93w2jpditjdbgFgHtq95u29GGNHj6qby4EfbPTfxyV7Ch9VvKo07d0LH7Bi7AxbulGu0AeP0BJfu7O0I8_mZOfAz8NTV2aSXjtwMzQwkBF3QsKmTCLAEDfttDtd9pxHPFqbzcYZlsPOp3PHPwNc8vYszugxvR9GwZ9zDY/s960/Slide2.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh-6kBo4ZjPbMC405NHFmryyr93w2jpditjdbgFgHtq95u29GGNHj6qby4EfbPTfxyV7Ch9VvKo07d0LH7Bi7AxbulGu0AeP0BJfu7O0I8_mZOfAz8NTV2aSXjtwMzQwkBF3QsKmTCLAEDfttDtd9pxHPFqbzcYZlsPOp3PHPwNc8vYszugxvR9GwZ9zDY/w454-h256/Slide2.JPG" width="454" /></a></div><br /><div>Carlyle Energy offered its second renewable and sustainable fund in 2023, hoping to raise up to $2 billion. It states the fund will use a "private equity value creation approach." That generally involves nondemocratic means in profit making.</div><div><br /></div><div>And that brings us back to Marcel van Poecke's first <a href="https://www.fnlondon.com/articles/carlyle-and-riverstone-close-in-on-petroplus-20050128" target="_blank">stint</a> with Carlyle. </div><div></div><blockquote><div><span style="color: #351c75;">1993 - Dutchmen Marcel Van Poecke and Willem Willemstein found Petroplus International B.V. from a management buyout.</span></div><div><span style="color: #351c75;">2005 - Private equity firms Carlyle and Riverstone Holdings buy Petroplus,<br /></span></div><div><span style="color: #351c75;">2006 - Petroplus lists company on the Swiss exchange, raising $2.4 billion and making big profits for Carlyle and Riverstone. Marcel van Poecke resigns from the company.</span></div></blockquote><div>Carlyle executed a number of PEU moves at Petroplus. It <a href="https://www.carlyle.com/media-room/news-release-archive/4gas-and-keltic-petrochemicals-inc-advance-nova-scotia-lng-terminal" target="_blank">spun off</a> noncore assets in December 2005:</div><div><blockquote><span style="color: #351c75;">As part of the new strategy of Petroplus, all the LNG activities of Petroplus will be operated on a stand-alone basis with a management team dedicated entirely to LNG and power in a new entity called "4Gas". </span></blockquote>The CEO of 4Gas was none other than Paul van Poecke. </div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgebTav_v22PZCXH_Tkpl4WguEaxFqgmBKdWRslQ_bc_0ITEzhaK2rHEkl4DoQ4f-davFRxJr7AOvKLY8Yb9BRTiNhFBtkERqN9Es01ICbDRlkhiKX3QCMpuJA13uRWofb0czxaig57XNPuiI-FIJc3HG6Plaorst406ZhDnfykNQvZXZ6lI00CV8O6leY/s960/Slide4.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="259" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgebTav_v22PZCXH_Tkpl4WguEaxFqgmBKdWRslQ_bc_0ITEzhaK2rHEkl4DoQ4f-davFRxJr7AOvKLY8Yb9BRTiNhFBtkERqN9Es01ICbDRlkhiKX3QCMpuJA13uRWofb0czxaig57XNPuiI-FIJc3HG6Plaorst406ZhDnfykNQvZXZ6lI00CV8O6leY/w460-h259/Slide4.JPG" width="460" /></a></div><br /><div>And who did <a href="https://www.sec.gov/Archives/edgar/vprr/0702/07028226.pdf" target="_blank">they spin</a> 4Gas off to? Their owners, Carlyle/Riverstone.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbgp92yprI99ufyOi0KBhY4IcGqanxVv9I7iHkLyUIBKO_YOL5QBOMGRWVWmzqbHYls75YW2dMjZVAzrOI0cWZZHAW9YDDHPysCSSfS33-qx5hlBnpD0y9hUXhOTP0r5rnXHMN5ZG4d316FlYT0K_CBR6fomyetVaKLQdb77trul7udJZwn-geCSQ1qVU/s960/Slide5.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhbgp92yprI99ufyOi0KBhY4IcGqanxVv9I7iHkLyUIBKO_YOL5QBOMGRWVWmzqbHYls75YW2dMjZVAzrOI0cWZZHAW9YDDHPysCSSfS33-qx5hlBnpD0y9hUXhOTP0r5rnXHMN5ZG4d316FlYT0K_CBR6fomyetVaKLQdb77trul7udJZwn-geCSQ1qVU/w457-h257/Slide5.JPG" width="457" /></a></div><br /><div>The holding company of Petroplus sold off "noncore assets" to other entities run by Carlyle/Riverstone. That hardly seems arms length. </div><div><br /></div><div>Petroplus sold one asset to SemGroup LP, a fellow Carlyle/Riverstone affiliate.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijgypHrfhuwHAnCrs-YhynI4TV9z69odmyGyxfv4fBi5ETcHIOCbJd1RHhKJSrig4uE5KHXQfnuAoi1jEdfoktkPMoNxbX5r3tn4DXzX7gw1bn07A-ofBQz8y7mqmzyXIauw1PchCF3IwOsuJj9A2DnYMH_UPRHkyyUgu5TDizPQsGQ8k8G3vrjSFCpEg/s960/Slide7.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="254" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijgypHrfhuwHAnCrs-YhynI4TV9z69odmyGyxfv4fBi5ETcHIOCbJd1RHhKJSrig4uE5KHXQfnuAoi1jEdfoktkPMoNxbX5r3tn4DXzX7gw1bn07A-ofBQz8y7mqmzyXIauw1PchCF3IwOsuJj9A2DnYMH_UPRHkyyUgu5TDizPQsGQ8k8G3vrjSFCpEg/w452-h254/Slide7.JPG" width="452" /></a></div><br /><div>Carlyle only controlled 30% of SemGroup.</div><div><blockquote><span style="color: #351c75;">"We are very excited about the opportunity to work with Carlyle/Riverstone and believe that our partnership will build upon SemGroup's financial and operating success. Carlyle/Riverstone is known as one of the premier private equity players in the energy and power sectors. The transaction will provide SemGroup with a <b>strategic partner that offers a distinct combination of investment and industry professionals who have highly successful track records</b>," Tom Kivisto, SemGroup president and chief executive officer, said.</span></blockquote>So what role did the strategic partner play in the sale of Petroplus' noncore assets to another holding of that same strategic partner? </div><div><br /></div><div>Private equity underwriters (PEU) revel in leverage, whether they be personal or family relationships, sitting on both sides of the table in deals and driving affiliate business inside the PEU corporate family.</div><div>. </div><div>New energy pathways will likely come with Carlyle's same old tricks, deal fees, management fees, debt for dividends and cross selling services within the One Carlyle family. </div></div><div><br /></div><div>Ride up the boom while generating fees, monetize and get out before the bust. That's the PEU way.</div><div><br /></div><div><b>Other interesting facts:</b></div><div><br /></div><div><div>Ironically Petroplus went on to do a joint venture with Blackstone and First Reserve. Unfortunately, refining margins fell too far to support Petroplus' massive debt and the company <a href="https://www.reedsmith.com/en/perspectives/2012/01/petroplus-group-enters-insolvency-proceedings" target="_blank">declared</a> bankruptcy in 2012.</div><div><br /></div><div>In 2008 SemGroup <a href="https://www.forbes.com/2008/07/28/semgroup-oil-kivisto-biz-energy-cz_ch_0728semgroup.html?sh=5db1f3b83518" target="_blank">declared</a> bankruptcy under Carlyle's 30% ownership due to billions in bad energy bets. SemGroup's <a href="https://www.wsj.com/articles/DJFDBR0020100330e63u00006" target="_blank">owners</a> sucked $56 million in dividends before the firm imploded.</div></div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-14612372127119956532024-03-08T15:18:00.002-06:002024-03-08T15:19:02.486-06:00PEU Legend Aims at Poor<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7R_3BqthhEsyhj-b_YAtvwgMNtH3vgtkolTWV81vdefxWFDja6dTR9Sb4ZhA2_aJqj-lxkEY7GMCWXC-D9d-N4Zj1bFVTX99Dsv6TP-dSyNiTcn3SWSm-quM-UkBMHpRb2LjqR0XTeUF6AaT_TfviHrVlmIgFW3M044lOYaVGx8O53GyZXsE3mtjVmV8/s960/Rubenstein%20CAPMF.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="273" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7R_3BqthhEsyhj-b_YAtvwgMNtH3vgtkolTWV81vdefxWFDja6dTR9Sb4ZhA2_aJqj-lxkEY7GMCWXC-D9d-N4Zj1bFVTX99Dsv6TP-dSyNiTcn3SWSm-quM-UkBMHpRb2LjqR0XTeUF6AaT_TfviHrVlmIgFW3M044lOYaVGx8O53GyZXsE3mtjVmV8/w485-h273/Rubenstein%20CAPMF.jpg" width="485" /></a></div><br />Carlyle Group cofounder David Rubenstein wants individual investors to have access to private equity investments. At Private Equity International's Nexus 2024 event Rubenstein <a href="https://www.privateequityinternational.com/david-rubenstein-carlyle-will-try-to-be-at-forefront-of-retail-capital-push/" target="_blank">said</a>: <p></p><p></p><blockquote><span style="color: #351c75;">"We should allow people who need to invest in things that get a higher rate of return because they don't have much income."</span></blockquote><p></p><p>Carlyle launched a PE secondaries fund, Carlyle AlpInvest Private Markets Fund. It abbreviates to an appropriate, CAP-MF. That should sell to the homies. </p><p>Rubenstein can help the masses invest in cyprotcurrencies via Paxos, a holding in his family office.</p><p>If they can con poor people into crypto investing, selling PEU vehicles should be a breeze. We may get another David Rubenstein <a href="https://www.youtube.com/watch?v=qIUG3rDyP-Y" target="_blank">rap video</a>. <i>"Need income? CAP that MF...."</i></p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-21514261381688513012024-03-07T10:58:00.007-06:002024-03-08T16:56:15.172-06:00We Live in PEU Times<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1glpxlrTeBb-vQr6DN_FyVV2KV9GTizUqyMx_vhEggeEPdW5QgvuGyQPD9hG_Tq7NYOtxS-BTkz1BrxDO2Mkhg3y_Issp6-klA5CScknHWhxOC3d2yS4u_iNsMNFCtkYWNoNXaMCt2EeaciGX6l6dxJfPIPYzu99T9DLwEf2-yLIG9aJ809KdUT_BrD4/s960/PEU%20times.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="246" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg1glpxlrTeBb-vQr6DN_FyVV2KV9GTizUqyMx_vhEggeEPdW5QgvuGyQPD9hG_Tq7NYOtxS-BTkz1BrxDO2Mkhg3y_Issp6-klA5CScknHWhxOC3d2yS4u_iNsMNFCtkYWNoNXaMCt2EeaciGX6l6dxJfPIPYzu99T9DLwEf2-yLIG9aJ809KdUT_BrD4/w437-h246/PEU%20times.jpg" width="437" /></a></div><br />The average person knows something isn't right. They may or may not have worked for a private equity affiliate. If so, they've experienced a hard change in priorities, seen co-workers lose their job so money could be repurposed to interest expenses, management fees and or sponsor dividends.<p></p><div>The image above came from an <a href="https://www.ft.com/content/55837df7-876f-42cd-a920-02ff74970098?sharetype=blocked" target="_blank">excellent story</a> by FT, "Is private equity actually worth it?" A Norwegian Sovereign Wealth fund wants to dedicate more money to private equity underwriters (PEU), my pet name for the greed and leverage boys. </div><div><br /></div><div>I started <i>PEU Report</i> in 2007 to shine the light on this burgeoning asset class that seemed to be a parasite on the federal budget. Non-lobbyist PEU founders ponied up to the political class in ways that preserved their preferred "carried interest" taxation to <a href="https://twitter.com/ncsmiff/status/1766128534366355885" target="_blank">this day</a>. They became <a href="https://www.nytimes.com/2011/11/27/sunday-review/policy-making-billionaires.html" target="_blank">known</a> as "policy making billionaires."</div><div><br /></div><div>Last night comedian Stephen Colbert described his "not right" as "a constant, grinding existential dread."</div><div><br /><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/mA_mmhQOjdg?si=3aWAYlmblCxG-SMQ&start=37" title="YouTube video player" width="560"></iframe></div><div><br /></div><i>The Real News Network's</i> Chris Hedges did a two part story on private equity, "How private equity conquered America." The <a href="https://www.youtube.com/watch?v=shv9g-4xXww" target="_blank">second part</a> of Chris' interview with author Gretchen Morgenson is below:<div><br /><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" src="https://www.youtube.com/embed/shv9g-4xXww?si=aWcf4dQCtTn_KEkD" title="YouTube video player" width="560"></iframe></div><div><br /><div><i>Naked Capitalism</i> did an <a href="https://www.nakedcapitalism.com/2024/02/bizarre-valedictory-interview-by-calstrs-investment-chief-chris-ailman-asks-private-equity-to-be-nice-and-share-with-workers.html" target="_blank">outstanding piece</a> on private equity in mid February. It highlighted an <i>FT</i> story on a pension fund executive stepping down. That executive said private equity needed to share more with workers and their communities.</div></div><div><blockquote><span style="color: #351c75;"> Limited partners like CalSTRS, who are, in Wall Street parlance, the money, have not even been able to get basic disclosures from the general partners like how much in total the private equity firms hoover out in fees and expenses, despite many years of pleading. Mind you, it’s a requirement for a fiduciary to evaluate the costs and risks of any investment, yet these investors have accepted this abuse.</span> </blockquote><blockquote><span style="color: #351c75;">Limited partners don’t get P&Ls of portfolio companies. They don’t get independent valuations even though that is considered to be essential for every other type of investment. So it’s ludicrous to think that general partners will share money with one of the very weakest parties in the picture, mere workers, when they won’t give information to the limited partners.</span></blockquote>There is a significant power imbalance and throw away statements won't impact anything. I am encouraged the word is getting around. </div><div><br /></div><div>Politicians Red and Blue love PEU and increasingly, more are one. That isn't right.</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-13784106355026233772024-03-06T15:10:00.002-06:002024-03-06T15:10:43.488-06:00Turnover at Carlyle Secured Lending<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn3hceCMAXA1BBVDI4ysK5Mg6BCg-aZo_hg2z1DXvgpIX5XJRXOF5MHeN4fFpqa8-txTKWz4iC9c9n-RBd1vs7B4bIKSSavA57QkWgyk2PBpxTnW87RpL8UeRQn1afWsvuYextU5L0jYrIImU4LUL3EPSSIPYqweViq1Cvm6TElRuMop0Y2zMVHXXZ8Dk/s960/Leekong%20leaving%20Carlyle.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="338" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjn3hceCMAXA1BBVDI4ysK5Mg6BCg-aZo_hg2z1DXvgpIX5XJRXOF5MHeN4fFpqa8-txTKWz4iC9c9n-RBd1vs7B4bIKSSavA57QkWgyk2PBpxTnW87RpL8UeRQn1afWsvuYextU5L0jYrIImU4LUL3EPSSIPYqweViq1Cvm6TElRuMop0Y2zMVHXXZ8Dk/w451-h338/Leekong%20leaving%20Carlyle.jpg" width="451" /></a></div><br />The Carlyle Group named Justin Plouffe as CEO of Carlyle Secured Lending. It came after the <a href="https://www.privatedebtinvestor.com/direct-lending-head-leaves-carlyle-internal-memo/" target="_blank">resignation</a> of Aren LeeKong, who'd Carlyle promoted to that <a href="https://www.carlyle.com/about-carlyle/team/aren-leekong" target="_blank">position</a> in September 2022.<p></p><p>The SEC filing <a href="https://ir.carlylesecuredlending.com/static-files/d5311afe-9c22-49f0-8d21-5188f1c97cce" target="_blank">stated</a>:</p><blockquote><span style="color: #351c75;">
On March 1, 2024, <b>Aren C. LeeKong</b> informed Carlyle Secured Lending, Inc. (the “Company”) that he is <b>resigning</b> from the Board of Directors of
the Company (the “Board”) and his positions as the President and Chief Executive Officer of the Company, in each case effective March 1, 2024, to pursue
other opportunities. Carlyle and the Board thank him for his efforts and wish him the best for the future. </span><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">On March 1, 2024, the Board appointed <b>Justin Plouffe</b> as a Class II Director of the Company and its <b>President and Chief Executive Officer</b>, effective
immediately.
Justin Plouffe, 47, is a Managing Director and the Deputy Chief Investment Officer of Carlyle Global Credit. </span></div><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">Plouffe is <b>Chief Executive Officer of TCG Securities, L.L.C.</b>, the
SEC-registered broker/dealer affiliate of The Carlyle Group.</span></div></blockquote><div></div>The news came shortly after Carlyle Secured Lending released Q4 2023 earnings. The SEC <a href="https://ir.carlylesecuredlending.com/static-files/24edb16f-e0b1-4942-80e0-96361bd16fcb" target="_blank">filing</a> indicated:<div><blockquote><span style="color: #351c75;">Weighted average yields <b>exclude investments placed on non-accrual status</b>.</span></blockquote></div>One of CSL's nonperforming loans is American Physician Partners (APP). APP was owned by Brown Brothers Harriman Capital Partners, a private equity underwriter (PEU). APP <a href="https://www.wbir.com/article/news/local/surprise-medical-bills-impact-people-in-east-tennessee/51-6a9a8114-04a9-4189-9bef-3d1e41918f62" target="_blank">sent</a> surprise medical bills to ER patients, like KKR's Envision. Physicians raised <a href="https://www.nbcnews.com/health/health-care/er-doctors-said-profit-driven-company-officials-pressed-work-covid-sym-rcna33237" target="_blank">concerns</a> about APP's operations.<div><br /></div><div>The hospital emergency room operator <a href="https://www.medpagetoday.com/special-reports/features/105562" target="_blank">declared</a> bankruptcy last <a href="https://www.fiercehealthcare.com/providers/hospital-ed-staffer-american-physician-partners-files-chapter-11-bankruptcy" target="_blank">summer</a>. Carlyle Secured Lending addressed the loans in its Q4 earnings report:</div><div><div><blockquote><span style="color: #351c75;">The net change in unrealized depreciation for the year ended December 31, 2023 compared to the comparable period in 2022 was primarily driven by <b>depreciation in the value of our investments in American Physician Partners, LLC</b>.</span></blockquote></div></div><div>Carlyle holds $38.5 million million in APP loans (face value). It shows Carlyle's amortized cost for those loans to be $33.2 million. Carlyle shows an unfunded $1.5 million revolver commitment. </div><div><br /></div><div>APP blamed its downfall, in part, to laws restraining surprise medical billing. Others <a href="https://emworkforce.substack.com/p/apps-cause-of-death-the-pe-business" target="_blank">blame</a> it on PEU ownership.</div><div><br /></div><div>As debt repayment can evaporate, so too can a CEO disappear. LeeKong gone Plouffe instated...</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-31641888258315389002024-03-04T14:54:00.007-06:002024-03-18T21:50:21.700-05:00LGP May Bankrupt JOANN<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdPFAp1UotOd2X6pcE3AsDeymhLmxMnO_Pp0f8BESWK_-JbMnoymk2tIw63_7Pbs5Ku8swav3bJayEMU4bj-hsMr6EM54Oq05RDh3-acRqtEHcMHgswL-7198gTZg0Cj5mVwKzs9pL6dFfFj4DxgVvAo-uH62GCkor3xLRqMm0Qz1WfVrKPjXj46fezIw/s960/Joann%20LGP.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="272" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhdPFAp1UotOd2X6pcE3AsDeymhLmxMnO_Pp0f8BESWK_-JbMnoymk2tIw63_7Pbs5Ku8swav3bJayEMU4bj-hsMr6EM54Oq05RDh3-acRqtEHcMHgswL-7198gTZg0Cj5mVwKzs9pL6dFfFj4DxgVvAo-uH62GCkor3xLRqMm0Qz1WfVrKPjXj46fezIw/w484-h272/Joann%20LGP.jpg" width="484" /></a></div><br />Joann may <a href="https://www.the-sun.com/money/10567138/retailer-joann-file-bankruptcy-closing-down-sale/" target="_blank">declare</a> bankruptcy. The publicly traded company is majority owned by Leonard Green Partners, a private equity underwriter (PEU).<p></p><p>Green <a href="https://pitchbook.com/newsletter/lgp-takes-jo-ann-stores-private" target="_blank">bought</a> Joann in 2011 for $1. 6 billion. In October
2012 it loaded the company with more debt for a dividend (source Moody's). An SEC <a href="https://www.sec.gov/Archives/edgar/data/1834585/000119312521075434/d108458ds1a.htm#rom108458_22" target="_blank">filing</a> said the following about that event.</p><p></p><blockquote><span style="color: #351c75;"> JOANN Inc. (formerly known as Jo-Ann Stores Holdings Inc.) is the issuer in this offering. Our principal operating subsidiary is Jo-Ann Stores, LLC (formerly Jo-Ann Stores, Inc.), which was previously an independent publicly traded corporation until its acquisition on March 18, 2011 by a subsidiary of Needle Holdings LLC (formerly known as Needle Holdings, Inc.), a company incorporated on December 16, 2010 by LGP for the purpose of the acquisition. On September 19, 2012, Jo-Ann Stores Holdings Inc. was formed solely for the <b>purpose of reorganizing the corporate structure</b> of Needle Holdings LLC and its wholly owned subsidiary Jo-Ann Stores, LLC, and on October 16, 2012, Needle Holdings LLC became our wholly owned subsidiary. Upon consummation of this offering, assuming the sale of 5,468,750 shares in this offering by the Selling Shareholders and 5,468,750 shares by us, LGP will own approximately 69% of our shares of common stock.</span></blockquote><p></p><p>That move brought a ratings downgrade. Moody's <a href="https://www.moodys.com/research/Moodys-downgrades-Jo-Ann-Stores-to-B3-outlook-is-stable--PR_300857?cy=aus&lang=en" target="_blank">described</a> it as:</p><p></p><blockquote><span style="color: #351c75;">The downgrade reflects Moody's expectation that Jo-Ann's lease adjusted leverage will remain in excess of
6.5 times, as a continuation of soft operating performance trends experienced <b>since the company's October
2012 leveraged dividend </b>are expected to continue to weigh on credit metrics. </span></blockquote><p></p><p>It's not clear how much cash Leonard Green siphoned from Joann in that dividend recap.</p><p>Leonard Green took Joann <a href="https://www.bloomberg.com/news/articles/2021-03-12/fabric-retail-chain-joann-returns-to-market-in-131-million-ipo" target="_blank">public</a> in 2021. It hoped for a $17 share price but got $12. The S-1 showed the PEU owner received nearly $30 million in management fees since 2016.</p><p>Moody's rated Joann B2 in March 2021. By July 2022 it dropped to B3. January 2023 saw the rating fall to Caa2. January 2024 Joann's debt dropped to Caa3. Moody's stated in that report:</p><p></p><blockquote><span style="color: #351c75;">a high likelihood of a distressed exchange given its unsustainably high leverage and its private equity ownership.</span></blockquote><div>High leverage is a hallmark of PEU ownership. It's <a href="https://ir.law.utk.edu/cgi/viewcontent.cgi?article=1063&context=utk_studlawbankruptcy" target="_blank">doomed</a> many affiliates. Is that a PEU wildfire on the horizon? If so, one must act quickly and smartly. That includes buying discounted debt in order to have an equity stake on the other side of the prepack.</div><div><br /></div><div>How much discounted Joann debt has LGP purchased in the run up to bankruptcy? Like most things PEU, it's a secret.</div><div><br /></div><div><b>Update 3-18-24: </b> JOANN <a href="https://www.yahoo.com/news/fabric-store-joann-files-bankruptcy-015201672.html" target="_blank">filed</a> for bankruptcy today.</div><div></div><blockquote><div><span style="color: #351c75;">"Following this process, the Company expects that JOANN will become a private company owned by certain of its lenders and industry parties.."<br /></span></div><div></div></blockquote><div>Back to my question: How much discounted Joann debt has LGP purchased in the run up to bankruptcy? Is failed equity holder LPG now a lender? It's the PEU way.</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-15118868426621937122024-02-28T17:16:00.003-06:002024-03-16T16:37:22.191-05:00Future is Past<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpKMvSg2sEpPqeHY7LfkrDUcT-wfW9ZYNrz67QcL6HWuDAhlWmlx9BByR5e8KvEEk-c7GokJrDlYATX8l3esNLrW2mqspLONxgJefZd252PDnPAHozl6vuB09Cmz5x6PbJoZ_tNEVEtGakdngpOvklX5LG3eSHT_18qTnsMNGQwnvYi8AqWN9nCASJadw/s960/Slide9.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="272" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgpKMvSg2sEpPqeHY7LfkrDUcT-wfW9ZYNrz67QcL6HWuDAhlWmlx9BByR5e8KvEEk-c7GokJrDlYATX8l3esNLrW2mqspLONxgJefZd252PDnPAHozl6vuB09Cmz5x6PbJoZ_tNEVEtGakdngpOvklX5LG3eSHT_18qTnsMNGQwnvYi8AqWN9nCASJadw/w484-h272/Slide9.JPG" width="484" /></a></div><br />The future is the past, at least that's the hope for FTX's Sam Bankman-Fried (SBF). <i>CNBC</i> <a href="https://www.cnbc.com/2024/02/28/ftx-fraudster-sam-bankman-fried-seeks-less-than-7-years-in-prison.html" target="_blank">reported</a>:<p></p><p></p><blockquote><span style="color: #351c75;">Lawyers for Sam Bankman-Fried are asking a judge for a relatively <b>short sentence like “junk bond king” Michael Milken</b> instead of the 100 years that a presentence investigation report calls for.</span></blockquote><p></p><p>Milken kept most of his ill-gotten gains and spent two years in prison out of a ten year sentence. In 2020 President Donald Trump expunged Milken's record via a grant of <a href="https://www.cnn.com/2020/02/18/investing/michael-milken-pardon/index.html" target="_blank">clemency</a>.</p><p>Michael Milken was a founding father of leveraged buyouts. Leveraged buyout organizations morphed in private equity underwriters (PEU). The Milken Global Institute Annual Conference is a gathering of the influential, many are PEUs. Some call his gathering "the California Davos."</p><p>"Like Mike" is the mantra of SBF's lawyers.</p><p></p><blockquote><p><span style="color: #351c75;">“Milken was released from custody at an age when he was young enough to still make a positive impact,” the lawyers argued. “And he became a tremendous force for good in the world.” </span></p><p><span style="color: #351c75;">“Milken’s two-year sentence gave him a second chance. He has changed the lives of countless others for the better with that chance,” the filing said. </span></p><p><span style="color: #351c75;"> “Given the same chance, Sam would <b>dedicate his post-prison life to charitable works</b>, finding the best ways to help others, and put them into practice, consistent with his commitment to effective altruism.”</span></p></blockquote><p><i>WSJ</i> recently wrote a piece on Milken. It <a href="https://www.wsj.com/articles/michael-milken-bond-king-felon-billionaire-philanthropist-3aa50cbc" target="_blank">starts with</a> "Michael Milken wants to live forever." Is it ever enough for these guys?</p><p>SBF's parents want their son not to die in jail. His lawyers are doing their part:</p><p></p><blockquote><span style="color: #351c75;">Defense lawyers in their sentencing submission said that the loss calculation is unsupported by evidence, arguing that “the <b>most reasonable estimate of loss is zero</b>.”</span></blockquote>Zero losses don't send a series of interconnected companies into bankruptcy. The ring fenced assets can appreciate. Bitcoin <a href="https://www.coindesk.com/markets/2023/08/13/first-mover-asia-bitcoin-steady-below-30k-as-sbf-goes-back-to-jail/" target="_blank">traded</a> below $30,000 when SBF went to jail. It's <a href="https://www.coindesk.com/business/2024/02/28/bitcoin-pushes-through-60k-for-first-time-since-november-2021/" target="_blank">now over</a> $60,000.<p></p><p>SBF was the face of crypto regulation on Capital Hill. How might the <a href="https://foreignpolicy.com/2024/02/18/crypto-ftx-bitcoin-bubble-fraud/" target="_blank">approval</a> of Bitcoin ETFs by the SEC help SBF's case? </p><p>My wise friend wrote about Bitcoin and the PEU milieu's crypto fandom:</p><p></p><blockquote><span style="color: #351c75;">This contrived ecosystem is the power grab of the century, similar to the way trade routes around the world created the East India Companies and their brethren. Think of Bitcoin as the rails for money/investments/tokens/influence into every country of the world for the investment platforms of the oligarchs. Numbers only go up with the fiscal pulse and monetization of everything. It seems insane but it keeps pushing forward and nothing seems to get in the way. At the end maybe they nationalize all the REITs and private equity firms like they did with the East Indian Companies and give the insiders big dividends into perpetuity.
</span></blockquote>The East Indian Companies <a href="https://www.youtube.com/watch?v=hwd26ehENRs&t=436s" target="_blank">undertook</a> PEU like strategies, asset stripping, levered debt, indifference to common people, an obsession with increased profits and the use of <a href="https://confoundedinterest.net/2024/02/25/washington-dcs-reverse-robin-hood-model-steal-from-the-middle-class-and-bottom-50-and-give-to-the-elites-the-new-forgotten-man/" target="_blank">government connections</a> and funding to achieve their global aims.<p></p><p>This wise friend wrote about Milken and his ilk:</p><p></p><blockquote><p><span style="color: #351c75;">Perfidious acts deserve pEutrid returns unless you can institutionalize darkness in a portfolio. Thank you Mike Milken and gang. </span></p><p><span style="color: #351c75;">The PEU Boys mastered the art of issuing discounted notes where the accretion goes to them in fees and other splits while the partner gets a warrant in the event of spectacular return. Along the way there were overlays: leverage, structured products, permission of conflict of interest, dilution of fiduciary rules, revolving door, accounting rule changes, plus others too long to list. </span></p><p><span style="color: #351c75;">I always thought this would end but it keeps getting worse. The Crypto/ AI mania moves on forecasts that only the legalization of Ayahuasca can bridge.</span> </p></blockquote><p>Milken Conference 2019 had a <a href="https://www.youtube.com/watch?v=GWiS_byjcj8" target="_blank">session</a> on psychedelics, Tim Ferris moderated a panel</p><p></p><blockquote><span style="color: #351c75;">in front of a standing-room-only crowd at the Milken Institute’s Global Conference 2019. It includes a great <b>overview of psychedelic science</b>, investing opportunities, anecdotal personal benefits, legal challenges, and much more.</span></blockquote><p></p><p>Motivational guru Anthony Robbins recently released a book calling private equity the "holy grail of investing." Robbins spoke of his <a href="https://www.youtube.com/watch?v=jYvfx6Ihp5I" target="_blank">experiences</a> with Ayahuasca in a podcast. He didn't say if that helped <a href="https://peureport.blogspot.com/2024/02/tony-robbins-peu-holy-grail-is-cracked.html" target="_blank">change</a> his view of PEUs.</p><p>The upcoming Milken <a href="https://milkeninstitute.org/events/global-conference-2024" target="_blank">meeting</a> runs May 5-8, 2024. It's theme: "Shaping a Shared Future." Seems a bit dubious given the PEU boys' <a href="https://defector.com/here-are-the-seven-best-sentences-from-the-financial-times-story-about-michael-milkens-high-finance-jamboree" target="_blank">propensity</a> to not share. </p><p><b>Update 3-16-24:</b> SBF's sentencing is <a href="https://twitter.com/JohnReedStark/status/1768811898097598475" target="_blank">scheduled</a> for the end of March. The Ruth Bader Ginsburg Prize is normally given to women who advance the causes Justice Ginsberg supported during her lifetime. Elon Musk, Rupert Murdoch and Michael Milken received the prize this year. Ginsburg's family <a href="“strayed far from the original mission of the award and from what Justice Ginsburg stood for.”" target="_blank">wants</a> her name removed from the award as it "strayed far" from the mission of the award.</p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-65647011470367108122024-02-26T10:08:00.000-06:002024-02-26T10:08:04.982-06:00PEU Biden Family Office<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM2HRhGERbpW07ngeHarW0zojCZC0Qh7RYH1oIrir2EQyQSX3DVaxnD2d_7zbt6rrZTgQS_EhntHPz8BjymbLjxPGm4J36z48OGdrIyaQG06UgAnIhNZkY-XD2VoEETH2NaGZGS_2zpdckT3ez44HADoXYlakYqY2xwa0hk75LtH0JAGUF4VdtDBQkGII/s960/Biden%20Rubenstein.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="343" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhM2HRhGERbpW07ngeHarW0zojCZC0Qh7RYH1oIrir2EQyQSX3DVaxnD2d_7zbt6rrZTgQS_EhntHPz8BjymbLjxPGm4J36z48OGdrIyaQG06UgAnIhNZkY-XD2VoEETH2NaGZGS_2zpdckT3ez44HADoXYlakYqY2xwa0hk75LtH0JAGUF4VdtDBQkGII/w457-h343/Biden%20Rubenstein.jpg" width="457" /></a></div><br />President Joe Biden has long loved private equity underwriters (PEU). His son Hunter is one and Biden's Cabinet is chock full of them. <p></p><p>Flashback to <a href="https://peureport.blogspot.com/2012/08/mitt-romneys-foreign-policy-adviser-peu.html" target="_blank">2012</a> to <a href="https://peureport.blogspot.com/2014/05/hunter-biden-carlyle-group-ukrainian.html" target="_blank">2015</a> when Hunter Biden was coursing the PEU world: <i>Fox News</i> <a href="https://news.yahoo.com/joe-biden-allegedly-considered-joining-195932643.html" target="_blank">reported</a>:</p><blockquote><span style="color: #351c75;">"Our objective was to build a <b>diversified private equity platform</b>, which would be anchored by a globally known Wall Street brand together with a globally known political name," Galanis testified. "Our goal — that is, Hunter Biden, Devon Archer and me — was <b>to make billions</b>, not millions."</span><div><span style="color: #351c75;"><br />"Burnham was the focal point for<b> integrating a ‘Biden family office’ </b>into a large-scale financial company with international influence," he explained, adding that they acquired some of Hunter Biden’s companies like RSP Investments and Rosemont Seneca Advisors.</span></div></blockquote><div></div><div>The greed and leverage boys dominate the executive and legislative branches. The Carlyle Group cut its teeth hiring former political heavyweights and then levering their influence for PEU gains. Carlyle co-founder David Rubenstein is famous for <a href="https://www.propublica.org/article/how-david-rubenstein-helped-save-the-carried-interest-tax-loophole" target="_blank">his role</a> in the Great Eskimo Tax Scam.</div><div><blockquote><span style="color: #351c75;">In 1986, Stephen Norris, a lawyer for Marriott, learned of a change to the federal tax code recently initiated by Sen. Ted Stevens, Republican of Alaska. It allowed Alaska Native corporations, created under the Alaska Native Claims Settlement Act, to sell their paper losses at a discount to companies that could use them to reduce their own taxes. Norris started a business that matched companies with Native Alaskans and persuaded Rubenstein to leave Shaw, Pittman and join him. In a single year, they brokered the transfer of a billion dollars in losses, earning at least ten million dollars in fees. In 1987, they were on the verge of another big transfer when the government closed that loophole. The episode became known in Washington business lore as the Great Eskimo Tax Scam.</span></blockquote>Jason Galanis did a Native American deal that landed him in jail:</div><div><blockquote><span style="color: #351c75;">Galanis is serving a 14-year prison sentence after pleading guilty to securities fraud based on bonds issued by a company affiliated with a Native American tribe in South Dakota. The funds were reportedly supposed to be used for certain projects but were instead used for his personal finances.</span></blockquote>Selling influence, taking advantage of Native Americans, these are foundational events in PEU history.</div><div><br /></div><div>The Biden PEU story shows how long the game has been underway. For decades politicians Red and Blue have loved PEU, so much so, at times they are nearly interchangeable. </div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-76083532633677021372024-02-19T20:00:00.006-06:002024-02-19T20:02:58.273-06:00Crown Prince Question for PEU Jared Kushner<p><i></i></p><div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguYWTmySK3Ojgqzpgz40Exjqu7J5Jiu_ygFPy9fo2c-qsPWKoePoHWMzVXEtbIjxbvBD9X92dEV25shky-aBq1vm6OOUuz6s_Tqi7ZNl3rkPbFiHn8mMTvBy8xsElZa6E3PiR16uT_-DH62QtYhNdayxjCjZBrcksM6dNQzB6mRVu6tGQp_hxFYtcxLy4/s960/Slide4.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguYWTmySK3Ojgqzpgz40Exjqu7J5Jiu_ygFPy9fo2c-qsPWKoePoHWMzVXEtbIjxbvBD9X92dEV25shky-aBq1vm6OOUuz6s_Tqi7ZNl3rkPbFiHn8mMTvBy8xsElZa6E3PiR16uT_-DH62QtYhNdayxjCjZBrcksM6dNQzB6mRVu6tGQp_hxFYtcxLy4/w456-h342/Slide4.JPG" width="456" /></a></i></div><i><br />The Wrap </i><a href="https://www.yahoo.com/entertainment/jared-kushner-gets-petulant-over-040726469.html" target="_blank">reported</a>:<p></p><p></p><blockquote><p><span style="color: #351c75;">Donald Trump’s son in law Jared Kushner doesn’t want to talk about the $2 billion he received from a fund led by Saudi Arabia’s Crown Prince Mohammed bin Salman in 2021, two years after the latter approved the murder and dismemberment of <i>Washington Post</i> columnist Jamal Khashoggi. </span></p><p><span style="color: #351c75;"> When faced with a question about the deal during an interview at the Axios BFD conference in Miami on Tuesday, Kushner asked, “<b>Are we really still doing this?</b></span><b>”</b></p></blockquote><p></p><p>After leaving the White House Kushner formed Affinity Partners, a private equity underwriter (PEU). Kushner went from running the country to running the country <a href="https://peureport.blogspot.com/2024/02/the-peu-cycle.html" target="_blank">stealthily</a>, bolstered by $2 billion in Saudi <a href="https://www.vanityfair.com/news/2021/02/wall-street-isnt-letting-jamal-khashoggis-killing-get-in-the-way-of-saudi-business" target="_blank">investments</a>. </p><p>The story made me wonder how Jared fared on <a href="https://therealdeal.com/magazine/new-york-october-2018/cracking-cadres-code/" target="_blank">Cadre</a>, a tech real estate company he co-founded in 2014. I'd seen where David Rubenstein's family office Declaration Partners had a stake in the firm. Declaration bought its Cadre stake in January 2018.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHPVpUefShPajSepF81ffLtfgNmrsBlNOyu36xkUiNt_ysFiD5fk1BEqDjzYFeQCERbaDgNqfPW6Ns4tZXRdeyvxZjqTnWVj_r9EcYHh7fWercQW9PnO1MvI5yhZYVx0hNhoTSBLtyLyt3EWzi6EYrF2ezkCKtXgKuCZp5bfjLqUf-KGYfqY2JvRDBvak/s960/Slide2.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="333" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhHPVpUefShPajSepF81ffLtfgNmrsBlNOyu36xkUiNt_ysFiD5fk1BEqDjzYFeQCERbaDgNqfPW6Ns4tZXRdeyvxZjqTnWVj_r9EcYHh7fWercQW9PnO1MvI5yhZYVx0hNhoTSBLtyLyt3EWzi6EYrF2ezkCKtXgKuCZp5bfjLqUf-KGYfqY2JvRDBvak/w444-h333/Slide2.JPG" width="444" /></a></div><br /><i>NYT</i> <a href="https://www.nytimes.com/2020/03/05/us/politics/jared-kushner-cadre.html" target="_blank">reported</a> in March 2020:<p></p><p></p><blockquote><p><span style="color: #351c75;">President Trump’s son-in-law and adviser Jared Kushner is selling his stake in Cadre, a New York-based real estate start-up that has sought to profit from a special tax break (opportunity zones) included in the package Mr. Trump signed into law in late 2017. </span></p><p><span style="color: #351c75;">In selling his stake, Mr. Kushner also took advantage of a special federal program that would allow him to defer paying income taxes on any gain on his investment in Cadre, which he helped found in 2014.</span> </p></blockquote><blockquote><p><span style="color: #351c75;">Any taxes owed could be avoided permanently if Mr. Kushner transfers the new investments he made with the proceeds of the Cadre sale to his heirs, without ever selling them.</span></p></blockquote><p>In November 2023 Yieldstreet announced it <a href="https://techcrunch.com/2023/11/30/yieldstreet-to-acquire-real-estate-investment-platform-cadre/" target="_blank">would acquire</a> Cadre. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGw6jeBbEzqc_6-v4Ifhs9WLWJ2n-_EouthNpEU7Dr72q_JubnpH2meHWII4W5Gy5PIFHYkfAalPozIhtOi6X-eNo6zTLcLeOn56xMRAlXcPbt0WA-1ihCD6NWSO54Uetnb3hBjFElEFf83-lk4Ik9rFPafRvx_d8wvebFFTJBQBHWZspvECb2BnymcIc/s960/Slide3.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="361" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhGw6jeBbEzqc_6-v4Ifhs9WLWJ2n-_EouthNpEU7Dr72q_JubnpH2meHWII4W5Gy5PIFHYkfAalPozIhtOi6X-eNo6zTLcLeOn56xMRAlXcPbt0WA-1ihCD6NWSO54Uetnb3hBjFElEFf83-lk4Ik9rFPafRvx_d8wvebFFTJBQBHWZspvECb2BnymcIc/w482-h361/Slide3.JPG" width="482" /></a></div><br /><p>Nobody knows how Jared or David Rubenstein made out on Cadre. Private is private. It certainly helped that Jared could exit his stake tax free, three years into his "public service." </p><p>The greed and leverage boys forgave the murderous Crown Prince years ago. That explains Kushner's indignation at the question. The money is too good to pass up.</p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-49326219387635577212024-02-18T15:25:00.011-06:002024-03-06T22:43:33.769-06:00The PEU Cycle<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_Ot6ktWyxj_HtdmowabzVwQl8JK4frs2-dZVBJzDNy-WrlwX5W8rxZPiTYCHjjMhHI1w_AnYbOFglgVU1rHE0I0FxXVqPmGVWvA0NvnvESNEEQn7pZwsExfsv1vo6pkRpGQAZ1Yk-CX_c42rpt5zj6dwKWxA7Bi_KF1E-6nrQV9OkBa_QiNBDtPWRCHA/s960/Unvirtuous%20Cycle.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_Ot6ktWyxj_HtdmowabzVwQl8JK4frs2-dZVBJzDNy-WrlwX5W8rxZPiTYCHjjMhHI1w_AnYbOFglgVU1rHE0I0FxXVqPmGVWvA0NvnvESNEEQn7pZwsExfsv1vo6pkRpGQAZ1Yk-CX_c42rpt5zj6dwKWxA7Bi_KF1E-6nrQV9OkBa_QiNBDtPWRCHA/w501-h282/Unvirtuous%20Cycle.jpg" width="501" /></a></div><br /><p></p><p>Twelve years ago the public <a href="https://www.nytimes.com/2011/11/27/sunday-review/policy-making-billionaires.html" target="_blank">learned</a> about policy making billionaires. Two years ago we learned that they like <a href="https://www.nytimes.com/2022/04/06/magazine/billionaire-politics.html" target="_blank">operating</a> in secret, <a href="https://fastercapital.com/topics/how-billionaires-shape-politics-and-policies.html" target="_blank">behind</a> the scenes:</p><p></p><blockquote><p><span style="color: #351c75;">The main reason Billionaires <b>practice stealth politics</b>, Benjamin Page says, is that taken collectively, their political preferences do not align with what a majority of Americans want.<br /></span></p><p><span style="color: #351c75;">“What we see basically is a class of people who have more money than God, who are very politically active in relatively unknown ways and who we have reasons to believe have been politically influential and have used their political influence in ways that don’t really serve the interests or preferences of what most Americans want.”</span></p></blockquote><p>Many of those policy making billionaires are private equity underwriters (PEU). That leads to the next level of the unvirtuous cycle, elected officials.</p><p></p><blockquote><p><span style="color: #351c75;">And yet Americans whose interests are not being served by those wealthy contributors are being swayed by <b>politicians working toward the billionaires’ ends</b>.<br /></span></p><p><span style="color: #351c75;">“They’re mobilizing them on the basis of cultural grievances,” Lacombe says. “And I think those two things in conjunction are fairly large contributors to the dysfunction that we’ve observed in American politics.”</span></p></blockquote><p>Government is not protecting citizens from the dangers of big tech or <a href="https://foreignpolicy.com/2024/02/18/crypto-ftx-bitcoin-bubble-fraud/" target="_blank">cryptocurrencies</a>. Maria Ressa <a href="https://sanford.duke.edu/story/rubenstein-lecture-journalist-and-nobel-peace-laureate-maria-ressa-believes-power/" target="_blank">raised</a> concerns long ago about predatory tech companies.</p><p></p><blockquote><span style="color: #351c75;">Ressa <b>blames Big Tech for the spread of corruption and dishonesty</b>, saying it “insidiously manipulates at the cellular level of democracy.” She cited an MIT study from 2018 that found that <b>social media is designed to spread lies six times faster than truth</b> to keep users scrolling.</span></blockquote>Ironically Ressa's words were delivered in the David M. Rubenstein Lecture at Duke's Sanford School of Public Policy. Rubenstein co-founded The Carlyle Group, a <a href="https://peureport.blogspot.com/2021/09/carlyles-rubenstein-hosts-elected.html" target="_blank">politically connected</a> PEU. Carlyle's co-founders <a href="https://peureport.blogspot.com/2011/11/policy-making-peu-billionaires.html" target="_blank">qualify</a> as policy making billionaires.<div><br /></div><div>The public is not being served by the layers above us, Policy Making PEU Billionaires, Elected Officials/Government Organizations or Big Tech/<a href="https://peureport.blogspot.com/2022/05/california-davos-hosts-crypto-related.html" target="_blank">Crypto</a>. It's common for manipulators to migrate <a href="https://peureport.blogspot.com/2022/05/ungodly-peu-gods.html" target="_blank">through</a> these various <a href="https://peureport.blogspot.com/2022/09/peu-unethical-waves.html" target="_blank">categories</a>.<p></p><div>Money and greed are <a href="https://peureport.blogspot.com/2022/04/peus-perpetual-dynasties.html" target="_blank">driving</a> the system, not public good. A few rich people are being served. That's for the most part, not you or me.</div></div><div><br /></div><div><b>Update 3-4-24:</b> Crypto to revolutionize healthcare? Maybe, but not the way its being sold:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVp6nKPYdo1YYWfLv4ST-3ohgsd51zFlnPY4CHfi3dwkROagV2fCW-U9-ueupAS3E44hEpgiBS-fQIVOUa6Go91TB7_kjvHU0CejlMwOdWU5w7dIOBH8oPSwxyYPTiwLieCot_TLD0JJbVw0_WW2eA26o-hPtzRm9o5cU2SSO3sfcQkI1K63AXqyGjUf4/s678/Bitcoin%20for%20criminals%20hc.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="133" data-original-width="678" height="104" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiVp6nKPYdo1YYWfLv4ST-3ohgsd51zFlnPY4CHfi3dwkROagV2fCW-U9-ueupAS3E44hEpgiBS-fQIVOUa6Go91TB7_kjvHU0CejlMwOdWU5w7dIOBH8oPSwxyYPTiwLieCot_TLD0JJbVw0_WW2eA26o-hPtzRm9o5cU2SSO3sfcQkI1K63AXqyGjUf4/w528-h104/Bitcoin%20for%20criminals%20hc.png" width="528" /></a></div>UnitedHealth sponsored Change Healthcare <a href="https://www.wired.com/story/alphv-change-healthcare-ransomware-payment/" target="_blank">paid</a> a ransomware attacker $22 million in Bitcoin. Put that in your retirement account. <div><br /></div><div><b>Update 3-6-24:</b> Patients or healthcare workers, who to harm so rogue criminals <a href="https://www.yahoo.com/news/patients-payroll-us-healthcare-hack-110711380.html" target="_blank">can get</a> their <a href="https://amycastor.com/2024/03/04/bitcoin-mining-riot-platforms-10-k-is-full-of-tentacles/" target="_blank">Bitcoin</a>?</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-422773524071604132024-02-15T21:32:00.006-06:002024-02-25T20:12:34.955-06:00Forbes PEU Briefing on Juggernaut Blackstone<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWN88eedxsvkfhMzgoj6MtThTJFyGP5LezERfBpYlep3xzU3SG4PqDKR0ZjHMaaSeAUURJnry2IfIk9gqcgclTOlCet5Obp0p_ep3URCBwKZMrCz5CppwqsR1Crn1785jXStO7NVv3oNrWCrs40jvsKDdKnhon5HwbfZyF2Ye9E2jLDXP9IpTnniQAs0Q/s960/Slide2.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="258" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWN88eedxsvkfhMzgoj6MtThTJFyGP5LezERfBpYlep3xzU3SG4PqDKR0ZjHMaaSeAUURJnry2IfIk9gqcgclTOlCet5Obp0p_ep3URCBwKZMrCz5CppwqsR1Crn1785jXStO7NVv3oNrWCrs40jvsKDdKnhon5HwbfZyF2Ye9E2jLDXP9IpTnniQAs0Q/w459-h258/Slide2.JPG" width="459" /></a></div><br /><i>Forbes</i> Daily Briefing recently <a href="https://www.youtube.com/watch?v=gWOBbMt6Shc&t=262s" target="_blank">focused</a> on Blackstone. Much of the video sounded like a private equity informercial. The briefing highlighted Blackstone's international footprint, citing a number of details:<p></p><p></p><blockquote><p><span style="color: #351c75;">Paris - new 26,000 square foot office</span></p><p><span style="color: #351c75;">Frankfurt - opened 14,000 square foot office</span></p><p><span style="color: #351c75;">17 offices around the world, double international headcount in just five years</span></p><p><span style="color: #351c75;">Toronto -- new office, first in Canada</span></p><p><span style="color: #351c75;">Singapore - doubling staff</span></p><p><span style="color: #351c75;">India - owns forty companies and largest real estate operator, top performing Asian market</span></p><p><span style="color: #351c75;">Globally, private equity investment is in "its infancy"</span></p><p><span style="color: #351c75;">$80 trillion wealth globally for Blackstone to tap</span></p></blockquote><p>Their briefing nailed Blackstone's global growth story and future opportunity. <i>Forbes</i> then juxtaposed "old" private equity with the "new" alternatives version. </p><p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwVhy4286GAMmflwc313E5FpdzK4YY2jq5kfN6erL2FRuth7M0fm2aoyQHqgz8GGsKtnBn04m6COiv5tHJMcoudl5_D2u-bq-amqa6nlz6RpC14k1gaMx4X-ZMyLXGXOqWoUz5QasoBjp0N3kcwfBVKshIpYFQpknYL986TC6zzh0nSU0bdXUPjk71w7s/s960/Slide1.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiwVhy4286GAMmflwc313E5FpdzK4YY2jq5kfN6erL2FRuth7M0fm2aoyQHqgz8GGsKtnBn04m6COiv5tHJMcoudl5_D2u-bq-amqa6nlz6RpC14k1gaMx4X-ZMyLXGXOqWoUz5QasoBjp0N3kcwfBVKshIpYFQpknYL986TC6zzh0nSU0bdXUPjk71w7s/w427-h240/Slide1.JPG" width="427" /></a></div><br />The narrator said:<p></p><p><span style="color: #351c75;"></span></p><blockquote><span style="color: #351c75;">"Traditional private equity--raising money from large institutions to acquire stodgy companies, taking on mountains of debt and then slashing costs and rejiggering the capital structure for quick profits--that's dying or at best, a slow growth business."</span></blockquote><p></p><p>Language like that would not have gotten any <i>Forbes</i> reported access to storied private equity founders like Blackstone's Stephen Schwarzman. Flashback to <a href="https://peureport.blogspot.com/search?q=business+writing" target="_blank">Summer 2011</a>:</p><p></p><blockquote><span style="color: #351c75;">There are very few people out there who will talk and write honestly about private equity. I know from personal experience that the financial press is so eager to break news on "deals" that reporters (who are increasingly compensated on the number of "market moving stories" they write) can't afford to be critical of Carlyle, KKR and Blackstone, and risk losing access to people at those firms.</span></blockquote>New private equity is "alternatives:"<p></p><p></p><blockquote><span style="color: #351c75;">The new game, dubbed alternatives, is all about growth. Firms buy companies in areas like logistics, infrastructure, life sciences and e-commerce, and make them bigger not smaller.</span></blockquote><p></p><p>That rings untrue as private equity underwriters (PEU) have long said they offered "growth capital" and for some time invested in many of the listed industries. Sponsors frequently made affiliates bigger through acquisitions. later monetizing them.</p><p>Blackstone Infrastructure Partners is <a href="https://www.blackstone.com/news/press/blackstone-infrastructure-partners-closes-on-14bn-in-commitments-in-its-inaugural-fundraising-phase/" target="_blank">nearly</a> seven years old.</p><p></p><blockquote><span style="color: #351c75;">BIP was formed in 2017 with a $20 billion long-term matching anchor commitment from the Public Investment Fund of Saudi Arabia.</span></blockquote>Back to new private equity or alternatives as described by the narrator:<p></p><p></p><blockquote><p><span style="color: #351c75;">Unlike old school buyouts in which fund lifespans were limited to ten or twelve years, contributing to a slash and churn culture, the hottest funding source in the business is now something called perpetuals. Buyout funds that are often individual investor friendly and have no end date.</span></p><p><span style="color: #351c75;">Blackstone's new schtick it to buy and hold. New funds enforce this by limiting redemptions.</span></p></blockquote><p></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJ2M_PFV2vPUS6NZNg64GtAvT-AjJF9zcQdEy2mgHhfZBjhFbRvWJBqkjup3iMKAEhdMbytd1M6LmFiZXnwrce7yho7N5YNYPvP4LhTv0UYhm1_R-kxa0-Nm0fVx6RyCccXjREabQniHUZOvswdhsbjpMXSC06RT0A73omV-ls1_dU827DYO3Y5HZd48E/s960/Slide3.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="254" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJ2M_PFV2vPUS6NZNg64GtAvT-AjJF9zcQdEy2mgHhfZBjhFbRvWJBqkjup3iMKAEhdMbytd1M6LmFiZXnwrce7yho7N5YNYPvP4LhTv0UYhm1_R-kxa0-Nm0fVx6RyCccXjREabQniHUZOvswdhsbjpMXSC06RT0A73omV-ls1_dU827DYO3Y5HZd48E/w451-h254/Slide3.JPG" width="451" /></a></div><br />To .sum up, <i>Forbes</i> believes the "greed and leverage" boys were once evil, but have seen the error of their ways. They've turned over a new leaf and are now the "fee and credit" boys. Amend that to "fee and senior credit boys."<p></p><p>PEUs mostly took over companies by buying equity. The future suggests they will take over firms by holding senior credit positions and force debt restructurings. It's not new. </p><p>Ask the Brintons' family. They <a href="https://peureport.blogspot.com/2016/11/carlyles-final-screwing-of-brintons.html" target="_blank">once had</a> a stodgy British carpet company. The Carlyle Group bought discounted debt and pulled the capital rug from under "the owners."</p><p>Credit is the new/old way for PEUs to get affiliates. As for their metastasizing around the globe my wise friend said:</p><p></p><blockquote><span style="color: #351c75;">We are perpetually ****. They don't have to sell, They monopolize everything, they are funded, subsidized and take advantage of every TAX destination available.</span></blockquote>My friend shared a graph that shows how the super-wealthy's advantages are perpetual. <p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDrv9ibDxySmmpK_v7V7sBTco_Ds2GegAoP7yQE950c38R9FhnqSfCjM0lJeeifaqs4On1irxovNjZNlzNUJp9P8fo0G-OoTIpu9k75FnqO5lDrULJC3fvgTIQlvCZZFrb4FbjhfvNlHXwlGWkTwWG5-XYBB2dyEPo51qx3YVT9CROMWaSbY_hCItW9Zo/s960/Wealth%2093-23.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="960" data-original-width="720" height="481" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDrv9ibDxySmmpK_v7V7sBTco_Ds2GegAoP7yQE950c38R9FhnqSfCjM0lJeeifaqs4On1irxovNjZNlzNUJp9P8fo0G-OoTIpu9k75FnqO5lDrULJC3fvgTIQlvCZZFrb4FbjhfvNlHXwlGWkTwWG5-XYBB2dyEPo51qx3YVT9CROMWaSbY_hCItW9Zo/w361-h481/Wealth%2093-23.jpg" width="361" /></a></div><br /><p>I added two lines, one for the 2008 financial crisis and another for 2013 when the World Economic Forum targeted income inequality The top 1% blew through both of those potential barriers.</p><p><i>Forbes</i> Blackstone piece suggests they will continue blowing.</p><p><b>Update 2-25-24:</b> Politicians Red and Blue love PEU and increasingly, more are one. They <a href="https://confoundedinterest.net/2024/02/25/washington-dcs-reverse-robin-hood-model-steal-from-the-middle-class-and-bottom-50-and-give-to-the-elites-the-new-forgotten-man/" target="_blank">serve</a> the billionaire class, not the middle class.</p><p></p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-20211057073117485932024-02-14T21:23:00.011-06:002024-02-21T21:11:31.249-06:00Tony Robbins PEU "Holy Grail" is Cracked Shot Glass<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDIo9q3I-5J6TgJ8eMI2xZDWMBqCK42Zh_CzuW-tjdcetqVq5GWTEQzgdPFIBBfCQQQ9WDbCgw0Jo9_l0IXcN9qy8RK7aodIujU7R6bkVXexFMT13pS-yFofUZh4pBwe5gpwf4WnNfunPMvN99y562dyWJilM2zI1TEsD287B44cBohfk__-YhK0pJuDM/s960/Slide1.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="273" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhDIo9q3I-5J6TgJ8eMI2xZDWMBqCK42Zh_CzuW-tjdcetqVq5GWTEQzgdPFIBBfCQQQ9WDbCgw0Jo9_l0IXcN9qy8RK7aodIujU7R6bkVXexFMT13pS-yFofUZh4pBwe5gpwf4WnNfunPMvN99y562dyWJilM2zI1TEsD287B44cBohfk__-YhK0pJuDM/w485-h273/Slide1.JPG" width="485" /></a></div><div><br /></div><div>Motivation guru Tony Robbins released his new book, the third in a trilogy, titled "The Holy Grail of Investing." It's about private equity underwriters (PEU). Tony and co-author Chris Zook are huge PEU fans. </div><div><br /></div><div>Brian Sullivan of <i>CNBC</i> <a href="https://www.cnbc.com/video/2024/02/12/global-entrepreneur-tony-robbins-talks-investing-in-private-equity.html" target="_blank">interviewed</a> Tony about his new book. Tony shared the following framework in the interview.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWwg_KglZshCuLXTZfbOAuKZXKSGWaZq0mFvsDbw3LbBC3INykobxtX-EsbcY_m_vIfI0hpZVBcgVRxKlSrnswV3LGijwG5OzPvwMIudz0kx2AKa_Wm2vV_hzR7RmYpUH8aEJejkSYhkxV3OIngKFmnmYhWb6U3dICVe8iLKk6BF6xJzerrSWjVXUYYeM/s960/Slide2.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWwg_KglZshCuLXTZfbOAuKZXKSGWaZq0mFvsDbw3LbBC3INykobxtX-EsbcY_m_vIfI0hpZVBcgVRxKlSrnswV3LGijwG5OzPvwMIudz0kx2AKa_Wm2vV_hzR7RmYpUH8aEJejkSYhkxV3OIngKFmnmYhWb6U3dICVe8iLKk6BF6xJzerrSWjVXUYYeM/w497-h280/Slide2.JPG" width="497" /></a></div><br /><div>They started with general partnerships. Robbins explained how PEU fees go to the general partner, 2% annual management fee and 20% of profits from any investment. Tony said:</div><div><blockquote><span style="color: #351c75;">"You can get the 2 and 20."</span></blockquote></div><div>Robbins cited a firm in Houston, CAZ investments that sells GP stakes in private equity firms. And the head of <a href="https://cazinvestments.com/our-team/" target="_blank">that firm</a> is Tony's co-author Chris Zook.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgB_DzzkthCBwq_T-NtiiL3ZwyTzTZmqtsHnRK6_-eZTk-LPHLE6ync0PjU7qWAF9FLf8J-wIQzAr_GKDtueBSGydWI7sDpF-ebPrh0qgh0sOjMi1JFkaSCBhNYSwkMT5v9klpKRGsmERbgj4pf1w2bd3tVDli8fX7kfoSCh4xaxev87eVhPEz92GidElc/s960/Slide3.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="282" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgB_DzzkthCBwq_T-NtiiL3ZwyTzTZmqtsHnRK6_-eZTk-LPHLE6ync0PjU7qWAF9FLf8J-wIQzAr_GKDtueBSGydWI7sDpF-ebPrh0qgh0sOjMi1JFkaSCBhNYSwkMT5v9klpKRGsmERbgj4pf1w2bd3tVDli8fX7kfoSCh4xaxev87eVhPEz92GidElc/w501-h282/Slide3.JPG" width="501" /></a></div><br /><div>Caz Investments fund listing has the same seven strategies as Robbins interview. The only difference is Tony added "disruptive technologies" after venture capital. Caz uses those words in their website <a href="https://cazinvestments.com/strategy/venture-capital/" target="_blank">description</a> of venture capital</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjB3OKig5MrJULw8kVfQDIlgfIn6Aa4uRztGMbq17bad0ouWzaCWGdfK_GF20-iQTu-il7lvA0uCEw-sDSDIPJlvy6SDScvh7iNbMmQfoXIdJp9yIG2_fvzMdxv1j5as8CPT-0UfK_KVJhwDxxA2LCpwZsQgTi220KeQa3gssX8DJFSmyKRfYNJlm_t7s/s960/Slide3.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="283" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjB3OKig5MrJULw8kVfQDIlgfIn6Aa4uRztGMbq17bad0ouWzaCWGdfK_GF20-iQTu-il7lvA0uCEw-sDSDIPJlvy6SDScvh7iNbMmQfoXIdJp9yIG2_fvzMdxv1j5as8CPT-0UfK_KVJhwDxxA2LCpwZsQgTi220KeQa3gssX8DJFSmyKRfYNJlm_t7s/w504-h283/Slide3.JPG" width="504" /></a></div><br /><div>Tony owns GP stakes in 65 PEUs thanks to CAZ. He didn't say anything about fees associated with buying those stakes. </div><div><br /></div><div>Robbins did not mention that "the 2 and 20" are topline revenues. From those PEU expenses are paid. "You get the difference between the 2 and 20 and operating costs in proportion to your holdings." </div><div><br /></div><div>Flashback to 2015 when Tony released <i>"Money: Master the Game."</i> <i>Investment News</i> <a href="https://www.investmentnews.com/industry-news/features/tony-robbins-wants-to-be-the-new-voice-for-independent-advisers-59901" target="_blank">reported</a>:</div><blockquote><div><span style="color: #351c75;">The move into financial services has been several years in the making, according to Mr. Robbins, who said he began to turn his attention to investing after 2008. “<b>I saw so many people suffering</b>,” he remembers. </span></div><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">He watched “Inside Job,” a 2010 documentary that charged top players in financial services, enforcement and politics had caused the market collapse, and decided that he <b>wanted to advocate for the average investor</b>. </span></div><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">"It’s not an evil industry. It’s an industry that has been set up where making a <b>profit is the largest goal</b>.” Tony Robbins </span></div><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">He spent the next four years <b>interviewing well-known figures in financial services</b>, including Charles Schwab, Warren Buffett and Ray Dalio, founder of hedge fund investment firm Bridgewater Associates.</span></div><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">(The book is) a fierce indictment of an industry he says is not acting in clients’ best interests and is <b>selling overpriced products to investors who don’t understand what they are paying for.</b> One of the myths in his book is, “I’m your broker, and I’m here to help.”</span></div></blockquote><div></div><div>Robbins told <i>CNBC's</i> Sullivan he wasn't looking to write a third book. </div><div><span style="color: #351c75;"></span><blockquote><span style="color: #351c75;">"But I had a chance to interview thirteen of the Masters' of the Universe, masters of private equity."</span></blockquote></div><div>These guys don't give their time away lightly. It's not clear why Tony changed his mind but I imagine it involves personal PEU investments that he wants to grow exponentially.</div><div><br /></div><div>Tony quoted annual returns of 20%, even 30%, numbers the PEU boys have thrown around for decades.</div><div><br /></div><div><i>Institutional Investor</i> recently ran <a href="https://www.institutionalinvestor.com/article/2cr4z1fwlg1hjjz0pbpq8/corner-office/how-ludovic-phalippou-became-the-bete-noire-of-private-equity" target="_blank">a story</a> on a University of Southern California economics professor:</div><blockquote><div><span style="color: #351c75;">Professor Phalippou has also become the bête noire of private equity, which he has deconstructed in academic research dating back to 2003, when he first learned that “data point after data point . . . I found that virtually everything sold as a fact was not quite so,”</span></div><div><span style="color: #351c75;"><br />The professor’s fame exploded in 2020 with a blockbuster paper titled “An Inconvenient Fact: Private Equity Returns & the Billionaire Factory,” which laid out how the asset class has <b>created massive fortunes for the owners of private equity firms</b>.</span></div><div></div></blockquote><div>Phalippou's analysis poked large holes in PEU outsized returns, the tantalizing ones tossed around by Robbins. </div><div><br /></div><div>The <i>Institutional Investor </i>story noted difficulties facing PEUs. </div><div><blockquote><span style="color: #351c75;">Fundraising is down, firms have been unable to unload their portfolio companies at a profit, and high interest rates are beginning to take a toll on their heavily indebted holdings.</span></blockquote></div><div><i>Bloomberg</i> reiterated those facts with <a href="https://www.bloomberg.com/news/articles/2024-02-12/private-equity-returns-plunge-to-global-financial-crisis-levels" target="_blank">their story</a>:</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF9AwpHfTVMeGchPH0BJNrXSyS1skeTiVZWeDoSUybFptfuF6v7CMirx5-YvOb2yxppc2XNr-4BwmduTWMk-8jE42yA62t973RiLfGEoyXpbns2aa15eYoRfcNpYLHzgjHqfcFT0eXsPUH9ugOiBITGUdKEMoEl1D9KuCqCbBjR9c_nKKQZndTTVZ_IyY/s960/Slide4.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhF9AwpHfTVMeGchPH0BJNrXSyS1skeTiVZWeDoSUybFptfuF6v7CMirx5-YvOb2yxppc2XNr-4BwmduTWMk-8jE42yA62t973RiLfGEoyXpbns2aa15eYoRfcNpYLHzgjHqfcFT0eXsPUH9ugOiBITGUdKEMoEl1D9KuCqCbBjR9c_nKKQZndTTVZ_IyY/w454-h256/Slide4.JPG" width="454" /></a></div><br /><div>Who better for Robbins to motivate? Downtrodden greed and leverage boys in need of a capital injection.</div><div><br /></div><div>What is a PEU to do if they can't flip affiliates for grand returns? Sell some of their equity, i.e. GP stakes at a premium. </div><div><br /></div><div>A decade ago Tony Robbins <a href="https://www.investmentnews.com/industry-news/features/tony-robbins-wants-to-be-the-new-voice-for-independent-advisers-59901" target="_blank">purported</a> to "clean up" the investment advisory industry. </div><div><span style="background-color: white; font-family: "Helvetica 55 Roman"; font-size: 16px;"><blockquote><span style="color: #351c75;">“And he’s really coming in as an <b>amazing champion of the concept of the fiduciary standard</b>, where the investor really deserves to have someone who is <b>looking out primarily or solely in their best interests</b>.”</span></blockquote></span></div><div><span style="background-color: white; font-family: "Helvetica 55 Roman"; font-size: 16px;">One publicly traded private equity <a href="https://www.sec.gov/Archives/edgar/data/1527166/000152716616000018/cg2015123110-k.htm#s45C29CC611ED5AA6AB33291D09829FAA" target="_blank">disclosed</a> in 2015 under "risks":</span></div><div></div><blockquote><div><span style="color: #351c75;">Investments in <b>highly leveraged entities</b> are also <b>inherently more sensitive </b>to declines in revenue, increases in expenses and interest rates and adverse economic, market and industry developments. </span></div><div></div></blockquote><div>That same PEU <a href="https://peureport.blogspot.com/2012/04/carlyle-group-pu-partnership-units.html" target="_blank">disclosed</a> in 2012:</div><div><blockquote><span style="color: #351c75;">Contracts between us, on the one hand, and our general partner and its affiliates, on the other, will <b>not be the result of arm’s-length negotiations</b>.</span></blockquote>Cleanup is needed. Tony Robbins is far away from a fiduciary standard in his blatant <a href="https://www.fastcompany.com/1675170/tony-robbinss-personal-branding-breakthrough" target="_blank">promotion</a> of the greed and leverage boys.</div><div><br /></div><div>My wise friend recently wrote in two different communications:</div><div><blockquote><span style="color: #351c75;">We are going from "who took the cheese" to "we are on the cheese plate."</span> </blockquote><blockquote><span style="color: #351c75;">No one wants price stability or prices to come down. Everyone wants to be saved no matter how reckless they behave in the way they finance, in the way they take risk, in the way they leverage BUT if the little guy needs A crumb to make it through the day or if it was his investments in the tank, they would coat him in tar and flatten him with a roller pushed by an 18 wheeler with turbocharged diesels. I don't know how more people aren't disgusted.
</span></blockquote></div><div>Private equity wants individual investor money (cheese plate) while they try to save their highly leveraged entities (affiliate values not going down). </div><div><br /></div><div>Robbins did not talk about Pro Sports Ownership in the Sullivan interview but the public saw Carlyle Group co-founder and Declaration Partners founder David Rubenstein lead a PEU club deal for the Baltimore Orioles. I asked my wise friend how Rubenstein might change the rule of baseball. He stated:</div><div><blockquote><span style="color: #351c75;">Change the rules? Rubenstein will figure out a way to borrow three times the high end estimate in the shadow market non-recourse. He will then transfer ownership into another entity avoiding all tax liabilities. The players will have to buy their own benches. Any fan will be tokenized and have to pay a fee to park at the stadium. Rules are made to be broken.
</span></blockquote>I trust my wise friend <a href="https://www.fastcompany.com/1675170/tony-robbinss-personal-branding-breakthrough" target="_blank">more than</a> Tony Robbins. </div><div><b><br /></b></div><div><b>Full disclosure:</b> I invested in Robbins' DreamLife when it <a href="https://peureport.blogspot.com/2024/01/peu-fanboy-tony-robbins.html" target="_blank">went public</a> via a "reverse merger into a shell" in 1999-2000 and lost money. That was Robbins first PEU dance but clearly not his last. He's Texas Two Stepping with CAZ.</div><div><br /></div><div><b>Update 2-15-24: </b> More billionaire non-arm's length transactions, one involving <a href="https://finance.yahoo.com/news/billionaire-brothers-behind-british-supermarket-122018734.html" target="_blank">private jets</a>.</div><div><br /></div><div><b>Update 2-17-24:</b> <i>FT</i> <a href="https://www.ft.com/content/de9fe9d1-d5bd-4cb1-9b04-42915dd9ef7f" target="_blank">reported</a>:</div><div></div><blockquote><div><span style="color: #351c75;">Last quarter, Carlyle earned a 37 per cent margin on its fee revenue, while Blackstone earned 57 per cent.</span></div></blockquote><p>You don't get the whole "2 and 20." </p><p><b>Update 2-21-24: </b> Fresh off the press is another <a href="https://finance.yahoo.com/news/carlyle-former-pr-boss-working-124144856.html" target="_blank">PEU book </a>by former Carlyle Communications Chief Chris Ullman.</p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-12366542224067678722024-02-13T16:32:00.007-06:002024-02-13T16:44:23.550-06:00David Rubenstein Show: Early Season 8 Not Aging Well<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguZRDA1he4F-d71ud2q2ImkH_dWQ_eKiLOpM3UZU4xLfvf0ZJiggUh75uUKaVycL7irs0RbIIF86u2WuKzHYTw0Fg61EjRsVLcnKm5e_ZoJfj9SavTohkIOxr0N1Yd_H97J1rwSJsDYXtLEh2oMjz-ZJgS-P5Sczqnze1xhryEwqM-8z6EoMbE7wBi3vE/s960/Rubenstein%20show%20sbf%20aw.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="269" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguZRDA1he4F-d71ud2q2ImkH_dWQ_eKiLOpM3UZU4xLfvf0ZJiggUh75uUKaVycL7irs0RbIIF86u2WuKzHYTw0Fg61EjRsVLcnKm5e_ZoJfj9SavTohkIOxr0N1Yd_H97J1rwSJsDYXtLEh2oMjz-ZJgS-P5Sczqnze1xhryEwqM-8z6EoMbE7wBi3vE/w479-h269/Rubenstein%20show%20sbf%20aw.jpg" width="479" /></a></div><br />Season 8 of the David Rubenstein show <a href="https://www.bloomberg.com/news/videos/2022-08-11/david-rubenstein-show-anne-wojcicki?srnd=peer-to-peer" target="_blank">started with</a> 23andMe CEO Anne Wojcicki and episode 3 starred Sam Bankman-Fried. SBF currently sits in jail. Wojcicki is scrambling to hold onto 23andMe's NASDAQ listing while trying to rescue her company from a monster data breach and a burgeoning financial crisis. Yes, she was at the helm the whole time.<div><p>David Rubenstein asked Wojcicki about going public via an SPAC with Sir Richard Branson. Her reply included: </p><p><span style="color: #351c75;"></span></p><blockquote><span style="color: #351c75;">I'm very much of a CEO,,,I like to operate and I like to <b>be in the weeds</b>, like how are we executing.</span></blockquote><p></p><p>3 and Me's stock imploded from a high of just over $17 to 74 cents today. The stock has been as low as 54 cents recently. <i>Salon</i> reported last week:</p><blockquote><span style="color: #351c75;">The company’s DNA database contained the most sensitive medical information of at least 14 million people — and <b>6.9 million of them had their genetic data stolen and put up for sale.</b> Each person’s file contained account IDs, full names, sex, date of birth, full DNA profiles and location. Of that total, more than a million Ashkenazi Jewish profiles have also now been curated into a list by attackers. </span><div><span style="color: #351c75;"><br /></span></div><div><span style="color: #351c75;">The <b>cyberattack went unaddressed from April 29 to Sept. 27</b>, and the company finally asked people to change their passwords in October. By December, it notified customers of the breach, according to TechCrunch. And, by Jan. 11, calls began for Congress to investigate.</span></div></blockquote><div><p></p><p>Hands on Anne Wojcicki oversaw the company's <a href="https://techcrunch.com/2024/01/03/23andme-tells-victims-its-their-fault-that-their-data-was-breached/" target="_blank">response</a> which blamed customers:</p><p></p><blockquote><span style="color: #351c75;">...users negligently recycled and failed to update their passwords following these past security incidents, which are unrelated to 23andMe. Therefore, the incident was not a result of 23andMe’s alleged failure to maintain reasonable security measures</span>.</blockquote>There may be feces in those weeds. Rubenstein closed the interview with Anne Wojcicki:<p></p><p><span style="color: #351c75;"></span></p><blockquote><span style="color: #351c75;">Would you be upset if they (your kids) <b>went into something important like private equity</b>?</span></blockquote><p></p><p>Private equity may be in 23andMe's future. Both <a href="https://www.cnn.com/2024/02/02/investing/23andme-stock-anne-wojcicki/index.html" target="_blank">love</a> new drug discovery. Declaration Partners has affiliate Synthegro, which <a href="https://www.youtube.com/watch?v=gPoVlFM3nJc" target="_blank">does</a> gene editing to cure diseases. </p><p></p><blockquote><span style="color: #351c75;"><b>Synthegro:</b> CRISPR-based genome engineering company delivering industrial scale-tools, consumables, and services</span></blockquote><p></p><p>Mr. Rubenstein's interview with SBF was <a href="https://www.forbes.com/sites/brandonkochkodin/2022/11/11/the-red-flags-on-ftx-we-all-seemed-to-miss/?sh=3dbd3e8211f6" target="_blank">notable</a> for many reasons. At the top of my list is the pair's failure to disclose their respective ownership stakes in Paxos. <i>CoinDesk</i> <a href="https://www.coindesk.com/policy/2022/11/14/paxos-ordered-by-us-officials-to-freeze-19m-in-crypto-tied-to-ftx/" target="_blank">reported</a>:</p><p></p><blockquote><span style="color: #351c75;">After Bankman-Fried's arrest <b>Paxos was ordered by federal officials to "freeze $19 million</b> worth of crypto tied to the bankrupt FTX exchange." </span></blockquote><p></p><p>SBF hit Rubenstein's family office up for a big investment in FTX. <i>Barron's</i> reported that Declaration Partners turned down FTX. When asked if he invested in FTX Rubenstein said:</p><p></p><blockquote><span style="color: #351c75;">I didn't. My family office team looked at FTX at the $30bn valuation [earlier this year]. It didn’t move forward, and the <b>memo never reached me</b>, but the other day they showed me what they had prepared. The memo pointed out all the <b>concerns about conflicts of interest</b>. There wasn’t a lot of transparency. </span></blockquote><p></p><p>Rubenstein had research on FTX at his disposal prior to his show's softball SBF interview and did not use it. "Conflicts of interest" and "lack of transparency" are standard features of private equity.<br /></p><p>SBF's vaunted "risk management" was nonexistent. Anne Wojcicki's security measures sacrificed half of her customers confidential information.</p><p><i>CNBC</i> <a href="https://www.cnbc.com/2024/02/08/23andme-considers-splitting-up-company-to-revive-stock-price-.html" target="_blank">reported</a>:</p><p></p><blockquote><span style="color: #351c75;">During 23andMe’s quarterly call with investors, co-founder and CEO Anne Wojcicki said the company is <b>considering splitting up its consumer and therapeutics businesses</b> to help expand its investor base.</span></blockquote>Will Carlyle of Rubenstein's <a href="https://declarationpartners.com/tactical-growth-equity/" target="_blank">Declaration Partners</a> offer Wojcicki pennies on the dollar for 23andMe assets? Will a PEU debtholder take over the company through a debt cramdown, the way Carlyle took over Brinton's? <p></p><p>Let's hope Rubenstein's other interviews age better. These particular "peers" rose and fell. Billionaires no more. </p></div></div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-43014329724339527272024-02-07T17:08:00.005-06:002024-02-07T19:55:06.711-06:00Record Carlyle Group FEAUM<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR1tY_kVKLlmpGLX85MxMkQ08gMKUnxONVoJaNv4Ev-bI9vxiRrm2-7GjrkuZZ8Qh1fKKrs2TUQ2H7SATTwBtNVzeC46KKKl0Hk2vnEwiC3jmjhcBXp0dvEMVCPnYM_zNiTqDCxfN8a-P_AHLQ1FOwHwTL8pO2wO13MpsU40aXLjjKQ0-RictBSAlZB24/s960/Carlyle%20fee%20aum%20q4%2023.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiR1tY_kVKLlmpGLX85MxMkQ08gMKUnxONVoJaNv4Ev-bI9vxiRrm2-7GjrkuZZ8Qh1fKKrs2TUQ2H7SATTwBtNVzeC46KKKl0Hk2vnEwiC3jmjhcBXp0dvEMVCPnYM_zNiTqDCxfN8a-P_AHLQ1FOwHwTL8pO2wO13MpsU40aXLjjKQ0-RictBSAlZB24/w456-h342/Carlyle%20fee%20aum%20q4%2023.jpg" width="456" /></a></div><br />The Carlyle Group held a Q4 2023 earnings call and it was noteworthy as fee related earnings (FRE) reached record levels. CEO Harvey Schwartz <a href="https://seekingalpha.com/article/4668241-carlyle-group-inc-cg-q4-2023-earnings-call-transcript" target="_blank">stated</a>:<p></p><blockquote><span style="color: #351c75;">We set several records last year which you see on Page 6. They include: record FRE at $859 million; record Q4 FRE margin of 43%, and we finished the year with record AUM at $426 billion.</span></blockquote><p>Schwartz is excited about 2024:</p><p></p><blockquote><span style="color: #351c75;">We are targeting FRE of $1.1 billion. We are targeting FRE margins to increase to a range of 40% to 50%. We are targeting inflows to exceed $40 billion in 2024. And again, we have significantly increased our ability to return capital to shareholders by expanding the share buyback capacity. Again, we intend to be active buyers of our stock as we see strong value returning capital to you, our shareholders. We began 2024 with clear momentum.</span></blockquote><p>Harvey noted in the Q&A:</p><p></p><blockquote><span style="color: #351c75;">...we are 100% making sure we invest in growth. And we think the growth opportunities for Carlyle are pretty extraordinary, and we have the momentum. And I think you see it in the financial targets.</span></blockquote>One item struck me:<p></p><p></p><blockquote><span style="color: #351c75;">...we incurred a onetime non-cash GAAP <b>charge of $1.1 billion</b>, largely related to the value of <b>future carry going to employees</b>. </span></blockquote>Harvey characterized that as allowing Carlyle to "generate higher FRE for shareholders more quickly." Carlyle chiefs know how to spin. <p></p><p>Carlyle Group co-founder David Rubenstein was recently announced as the lead owner of the Baltimore Orioles in a PEU club deal. The public is on the hook for $600 million in subsidy for development around the stadium.</p><p>In 2014 Carlyle <a href="https://peureport.blogspot.com/2014/05/carlyles-love-hate-relationship-with.html" target="_blank">invested</a> in apartments next to the planned Atlanta Braves stadium through a joint venture with Atlantic Realty.</p><p>In a message from the ownership group Rubenstein <a href="https://peureport.blogspot.com/2024/02/club-deal-for-mlb-orioles.html" target="_blank">highlighted</a> development opportunities at Camden Yards, the Orioles home stadium. </p><p>My wise friend commented on Mr. Rubenstein's $600 million public subsidy:</p><p></p><blockquote><span style="color: #351c75;">How do you spell welfare? All around me I see the same game, using others people's money to get rich with no accountability. All these guys and their junior brethren entice people to forward funds to their partnerships, where they graze on fees with imaginary marks and follow on deals supported by more debt. It's a fantasy that breathes reality for these quite extraordinary times we live in. Those that are enriched on the pump never get to experience the dump. This model of economics has infiltrated the psyche of this exclusive club to think, and maybe rightly so now, that they are in control, that they are excluded from from the aftermath of this spectacle.
</span></blockquote>Rather quickly he added:<p></p><p></p><blockquote><span style="color: #351c75;">One more thing. We have exchanged meritocracy for mediocrity especially for the billionaire class. What they are guaranteed for failure and fees and assets under management coupled by low tax rates and bankruptcy laws that favor their grip on the system is a corrosion that affects all of us and our children. Forty years ago when you raised money it was very rare that they would let you pay for expenses let alone a lifestyle. You had to produce good results to draw an income with a hammer that would come down if you didn't. Today's capitalism is a mutation beyond repair.
</span></blockquote>Bravo to that contribution.<p></p><div><b>Update:</b> One can generate lots of fees <a href="https://www.themiddlemarket.com/latest-news/carlyle-provides-750m-debt-financing-for-pe-backed-the-parking-spot" target="_blank">doing this</a>:</div><div><blockquote><span style="color: #351c75;">Carlyle served as the sole manager, sole structuring agent and ratings advisor for the transaction. </span></blockquote></div><div>No conflicts of interest here. Move along...</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-79907823451091677942024-02-05T17:41:00.006-06:002024-02-12T10:07:43.841-06:00Club Deal for MLB Orioles<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlzU_XaVPl10hYou5fB60x-bTte1DNPz9HRpMbmR44Avjg18GvRQ2Vo6doqEJrWuRQio_e5NmzCPaPbJ8XRWreA2FjOQX351WbUCKYopMXIeagZPRQMeZFVNYLF-bxfVdpwV2vnjAwBxnCpe4jGz2hXofQGRH3AICmLYfERAdqzT30Stb2TBgBNgiPZPo/s960/Orioles%20Club%20Ownership%202-24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="271" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlzU_XaVPl10hYou5fB60x-bTte1DNPz9HRpMbmR44Avjg18GvRQ2Vo6doqEJrWuRQio_e5NmzCPaPbJ8XRWreA2FjOQX351WbUCKYopMXIeagZPRQMeZFVNYLF-bxfVdpwV2vnjAwBxnCpe4jGz2hXofQGRH3AICmLYfERAdqzT30Stb2TBgBNgiPZPo/w482-h271/Orioles%20Club%20Ownership%202-24.jpg" width="482" /></a></div><br />The new Baltimore Orioles ownership group is an exclusive club, led by Carlyle Group co-founder David Rubenstein. Three Ares Management executives bring their credit expertise to the Orioles. Billionaire Michael Bloomberg is in, as is baseball great Cal Ripkin and basketball legend Grant Hill. <p></p><p><i>Forbes</i> <a href="https://www.forbes.com/sites/leeigel/2024/02/04/what-orioles-1725b-ownership-change-brings-to-camden-yards-and-baltimore/?sh=59e84209107b" target="_blank">reported</a>:</p><p></p><blockquote><span style="color: #351c75;">The agreement unlocked <b>$600 million in public funding</b> for upgrades to the ballpark. As part of the 30-year deal, there is an option to end it after 15 years if the franchise does not receive state approval to <b>develop parcels of land </b>surrounding Camden Yards.</span></blockquote><p>Carlyle <a href="https://commercialobserver.com/2024/02/upper-west-side-luxury-tower-aire-trades-for-265m/" target="_blank">just saved</a> a luxury high rise in the Upper West Side of New York City. Rents in <a href="https://nypost.com/2024/02/04/business/upper-west-side-luxury-rental-tower-aire-sells-for-265m/" target="_blank">The Aire</a> are sky level:</p><p></p><blockquote><span style="color: #351c75;">$3,825 a month for a sub-400-square-foot studio to $13,000 a month for a three-bed, three-bath unit spanning 1,400 feet</span></blockquote>Tickets to professional games are unaffordable for families (<a href="https://www.cnn.com/2024/02/04/business/its-not-just-the-super-bowl-going-to-a-game-is-becoming-unaffordable/index.html#:~:text=MLB%20tickets%20increased%203.5%25%20to,prices%2C%20according%20to%20the%20BLS." target="_blank">CNN</a>). <p></p><p></p><blockquote><span style="color: #351c75;">Through public-private partnerships, the Orioles, organizations throughout Baltimore, and people in the area can renew efforts in using Camden Yards as a <b>hub for economic development</b>, social impact, and community benefits.</span></blockquote>The Baltimore Sun <a href="https://www.baltimoresun.com/2024/01/31/orioles-sale-politics-wes-moore-disappointed/#:~:text=State%20leaders%20did%20not%20learn,source%20familiar%20with%20the%20call." target="_blank">reported</a> state officials were blindsided by the deal.<p></p><p></p><blockquote><span style="color: #351c75;">State leaders did not learn of the sale until Tuesday evening when news outlets began to report on it. The agreement comes less than two months after Angelos told Moore in a phone call that he would not be selling the team, according to a source familiar with the call.</span></blockquote><p></p><p>The PEU boys don't ask for permission. Look for any Carlyle, Ares or Declaration Partners tie up to Camden Yards development.</p><p>Time will tell if $600 million in public funding actually helps local citizens. I think it's going to be a long time coming.</p><p><b>Update 2-6-24: </b><i>CBS News</i> reported lead owner David Rubenstein <a href="https://www.cbsnews.com/baltimore/news/baltimore-orioles-sale-needs-to-clear-these-steps-before-david-rubenstein-takes-control/" target="_blank">wrote</a> about the Orioles PEU sellout.</p><p></p><blockquote><p><span style="color: #351c75;">Our <b>collective goal </b>will be to bring a World Series trophy back to the City of Baltimore.<br /></span></p><p><span style="color: #351c75;">"In his statement, Rubenstein <b>referenced development opportunities</b> around the ballpark.</span></p></blockquote><p>A <i>Forbes</i> sports reporter wrote:</p><p></p><blockquote><span style="color: #351c75;">"I would hope for Baltimore fans that a new, rich owner coming in means a lot more spending on players, stadium, and all other resources, but I guess we'll have to wait and see."</span></blockquote><p></p><p>Snort. I expect a business reporter to know a bit more about private equity. The PEU model generally involves siphoning off large amounts of cash while spending way more on interest expenses. Those two priorities often bode poorly for employees (players) and capital expenditures (facility updates).</p><p>The public is on the hook for $600 million, which surely enticed the new PEU Club ownership group.</p><p><b>Update 2-12-24: </b> <i>CNN</i> <a href="https://www.cnn.com/2024/02/08/business/sports-stadiums-real-estate-cities?cid=external-feeds_iluminar_yahoo" target="_blank">reported</a>:</p><p></p><blockquote><p><span style="color: #351c75;">
Professional sports teams are becoming real estate empires, building luxury apartments and shopping malls.<br /></span></p><p><span style="color: #351c75;">Billionaire owners have built dozens of new stadiums and arenas, often with hundreds of millions of dollars in taxpayer funding. State and local governments spent $33 billion in public funds to build stadiums in North America between 1970 and 2020, with the median public contribution covering 73% of costs, a study published last year found. As part of teams’ agreements with cities and states, they have been handed the rights to transform the land around these ballparks into offices, apartment buildings, hotels and shopping malls.</span></p></blockquote><p>David Rubenstein cut his PEU teeth selling Alaskan Native tax losses to corporations. Surely he can take advantage of a few poor people who live around a ballpark by making the area more billionaire friendly.</p><p>Carlyle did a joint venture with Atlantic Realty Partners in 2014 for apartments <a href="https://peureport.blogspot.com/2014/05/carlyles-love-hate-relationship-with.html" target="_blank">close to</a> the new Atlanta Braves stadium.</p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-12131724972205670632024-02-05T15:30:00.003-06:002024-02-05T15:37:45.435-06:00Carlyle Group $200 Million Loan Clogs iROBOT<p><i></i></p><div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiA_pGOBKu-CQgnRAy54Ure8nUFHi6NWwFtijYVOklpiv4VFyHB_NRYai_0Wj61pd8bL8kjVrrPrMerN8oiq6P_biypLaABu2QHIiOyutUnQslxC6QrfpvnGNs4D6wnmUTSqUNCJtdMZYUxPoVjXDhGAGbAJKN8JIH-VzwAUnlja890QMdJVfwSwWy5lv4/s960/iRobot%20Carlyle%20debt%20-.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiA_pGOBKu-CQgnRAy54Ure8nUFHi6NWwFtijYVOklpiv4VFyHB_NRYai_0Wj61pd8bL8kjVrrPrMerN8oiq6P_biypLaABu2QHIiOyutUnQslxC6QrfpvnGNs4D6wnmUTSqUNCJtdMZYUxPoVjXDhGAGbAJKN8JIH-VzwAUnlja890QMdJVfwSwWy5lv4/w476-h268/iRobot%20Carlyle%20debt%20-.jpg" width="476" /></a></i></div><i><br />Reuters</i> <a href="https://www.reuters.com/technology/amazons-abandoned-acquisition-leaves-irobot-carlyle-debt-straightjacket-2024-01-31/" target="_blank">reported</a>:<p></p><blockquote><span style="color: #351c75;">The collapse of iRobot's (IRBT.O) $1.4 billion sale to Amazon (AMZN.O) will test the cash-strapped robot vacuum cleaner maker's ability to repay a $200 million loan it took from private equity firm Carlyle Group (CG.O) last year.</span></blockquote><p>The loan charges iRobot 14.9% interest and <a href="https://www.sec.gov/Archives/edgar/data/1159167/000119312523192865/d502452ddefa14a.htm" target="_blank">includes</a> numerous covenants favorable to Carlyle. </p><p></p><blockquote><span style="color: #351c75;">Carlyle negotiated a <b>minimum guaranteed return</b>, so that even if iRobot prepays the loan, the private equity firm will have made 1.4 to 1.7 times the loan's principal.</span></blockquote>The remedy should iRobot flounder and default on <a href="https://www.carlyle.com/media-room/news-release-archive/carlyle-provides-200-million-term-loan-to-irobot" target="_blank">the loan</a>:<p></p><p></p><blockquote><span style="color: #351c75;">....declare the <b>unpaid principal </b>amount of all outstanding Loans, all <b>interest accrued</b> and unpaid thereon, and all <b>other amounts owing</b> or payable hereunder or under any other Loan Document to be <b>immediately due and payable.</b></span></blockquote>What happens if iROBOT can't get the cash to pay Carlyle back? Carlyle would have a new affiliate. <div><br /><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Tye6iKZKg08sQrg0hxdARaV9dddJLo4esrm31rZTns0l_NaEMGAXWvbBuexHi676_tCbDM0xjauzg0MX_yti5FRMtr3oL0LS_7GzqbVMeOVn3TeIN3cF9V8_WBBPaHNMNY5ZRd17yD7il1yiWA5HMhd4v36Wh4AaKooGRbzEwRpjh1Ec7QWR1yawLzo/s960/Slide2.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="258" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4Tye6iKZKg08sQrg0hxdARaV9dddJLo4esrm31rZTns0l_NaEMGAXWvbBuexHi676_tCbDM0xjauzg0MX_yti5FRMtr3oL0LS_7GzqbVMeOVn3TeIN3cF9V8_WBBPaHNMNY5ZRd17yD7il1yiWA5HMhd4v36Wh4AaKooGRbzEwRpjh1Ec7QWR1yawLzo/w458-h258/Slide2.JPG" width="458" /></a></div><p>The Carlyle Group took over Brintons and Mrs. Fields via forced restructurings. Might it hoover up iROBOT in similar fashion? </p></div></div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-86829495070552498502024-02-01T21:51:00.010-06:002024-02-04T15:25:15.399-06:00Juiced Olympics by Peter Thiel<p><i></i></p><div class="separator" style="clear: both; text-align: center;"><i><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEji8ebWvkL0sTLLagVJcnzGngN_09zsSEAbJStmxntpposocnDnNCnmGDrKjHl5Ad21l8xPAeKU8wh2Tl_sIZ7qNroYdST8vwJyR8BElPdiPivTizy8xQN_ZDc-X-TZzg-zfQl4u3h8xKGJrFNWxFcx5ikyHQqHMZsByWPVpuELGER3b6q1qXxCeZGlOPc/s960/Juiced%20Olympics%20Thiel.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEji8ebWvkL0sTLLagVJcnzGngN_09zsSEAbJStmxntpposocnDnNCnmGDrKjHl5Ad21l8xPAeKU8wh2Tl_sIZ7qNroYdST8vwJyR8BElPdiPivTizy8xQN_ZDc-X-TZzg-zfQl4u3h8xKGJrFNWxFcx5ikyHQqHMZsByWPVpuELGER3b6q1qXxCeZGlOPc/w473-h266/Juiced%20Olympics%20Thiel.jpg" width="473" /></a></i></div><i><br />Deadspin</i> <a href="https://deadspin.com/enhanced-games-peter-thiel-olympics-steroids-1851213251" target="_blank">reported</a>:<p></p><p></p><blockquote><p><span style="color: #351c75;">A who’s who of extremely online investors pitched in to fund a series of <b>events called the Enhanced Games</b>, which describes itself as “the 21st Century <b>Olympics without drug testing</b>.” The list includes Christian Angermayer, venture capitalist, Balaji Srinivasan, former Coinbase CTO, and Peter Thiel, PayPal co-founder and frenemy of Elon Musk. </span></p><p><span style="color: #351c75;"> “Unlike the Olympic Games, Enhanced believes that excellence deserves to be rewarded,” said Aron D’Souza, President of the Enhanced Games, in a press release. “Support from the world’s leading venture capitalists enables us to <b>create the structures that pay athletes fairly</b>.”</span> </p></blockquote><blockquote><p><span style="color: #351c75;"> Enhanced promises its upcoming show will be a “world-class sporting event” that’s<b> fit for the modern era. </b></span></p></blockquote><p>The juiced games are a perfect fit for our bizarre world where social media <a href="https://www.thedailybeast.com/mark-zuckerberg-declined-2021-request-to-expand-meta-child-safety-team-report?via=newsletter&source=CSAMedition&user_emailA=d9245537ea2445c01b2685e012b63a1a&user_emailB=d6fb4cd25c4d83125dff7fd473090a43638b69f4beefbd5074b8e4967bac64c7&utm_source=Sailthru&utm_medium=email&utm_campaign=240131-Cheat%20Sheet%20AM&utm_term=B%20List%20New%20Cheat%20Sheet%20AM" target="_blank">harms</a> children and billionaires have so much money they want to sling it at athletic cheats. </p><p></p><blockquote><span style="color: #351c75;">“Enhanced will be adopting a<b> sophisticated safety protocol</b> which puts the athlete’s health first—including comprehensive health checks before and after competitions.”</span></blockquote><p></p><p>That brought to mind FTX Sam Bankman-Fried's testimony before Congress, just months before FTX imploded:</p><p></p><blockquote><p><span style="color: #351c75;">We (FTX) also have <b>strong customer protections</b> under our model. It is a <b>safe and conservative risk model </b>which would have helped to alleviate some of the instances that we have seen with recent futures exchanges like the LME nickel fiasco earlier this year by having the collateral pre-funded at the clearinghouse rather than relying on credit, and having a real-time risk engine. </span></p><p><span style="color: #351c75;"> We (FTX) also have enhanced customer protections. We have <b>all of the customer protections that exist on traditional features exchanges</b> and on FCMs because we understand deeply that we have a responsibility to ensure that if there is direct access to the platform, that users are still afforded the same level of protection. On top of that, we <b>have further customer protections, suitability, and transparency</b> than what you find on most other platforms. </span></p></blockquote><p>All that talk from SBF was a bald faced lie. The fraudster sits in jail awaiting his sentence.</p><p>The premise of juiced games is nonsensical. Consider the health <a href="https://nida.nih.gov/research-topics/anabolic-steroids#:~:text=Anabolic%20steroids%20can%20cause%20severe,kidney%20failure%2C%20and%20psychiatric%20problems." target="_blank">risks</a> of steroid use:</p><p></p><blockquote><span style="color: #351c75;">Anabolic <b>steroids can cause severe, long-lasting, and in some cases, irreversible damage</b>. They can lead to early heart attacks, strokes, liver tumors, kidney failure, and psychiatric problems.</span></blockquote><p></p><p>Enhanced Games website had another nonsensical statement under its values:</p><p></p><blockquote><p><span style="color: #351c75;">Because we embrace capitalism, we reject corruption.<br /></span></p><p></p></blockquote><p>Billionaire Peter Thiel is a private equity underwriter (PEU) via Founders Fund, Mithral Capital and Thiel Capital. PEUs <a href="https://prospect.org/health/2024-01-26-massachusetts-hospital-nightmare-steward-health/" target="_blank">often turn</a> affiliate Human Resources into People Abuse departments. </p><p>Flashback to 2011 when "modern" private equity was <a href="https://peureport.blogspot.com/2011/07/business-writing-in-peu-world.html" target="_blank">accelerating</a>:</p><p></p><blockquote><p><span style="color: #351c75;">I have seen so many people -- particularly those in their 50s - 70s -- taken apart by what has happened in their industry as <b>greed has hollowed out the economy</b>. 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. </span></p><p><span style="color: #351c75;"> The Carlyle Group scares me more than anything I've ever seen on Wall Street. It seems to <b>exist to corrupt politicians</b> and it's hard to know who they even represent. </span></p><p><span style="color: #351c75;">I watched a video interview of (David) Rubenstein and his <b>arrogance is really beyond tolerance</b>. 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!</span></p></blockquote><p>Asking these gits to pay more in taxes puts them in a PEU rage. </p><p>Is Enhanced Games another "let's see what we can get away with" experiment for the "live forever" billionaire crowd? Rest assured, many will be harmed by <a href="https://www.institutionalinvestor.com/article/2cr4z1fwlg1hjjz0pbpq8/corner-office/how-ludovic-phalippou-became-the-bete-noire-of-private-equity" target="_blank">their greed</a>.</p><p><b>Update 2-2-24:</b> My wise friend wrote:</p><p><span style="color: #351c75;"></span></p><blockquote><span style="color: #351c75;">"The juice must flow. All the rules and disciplines that keep things balanced must be removed for the mighty. But those that need help must have it taken away because it makes you stronger."</span></blockquote><p><b>Update 2-4-24: </b> Local horse tested positive for meth after <a href="https://fox8.com/news/local-race-horse-tested-positive-for-meth-activists-want-trainers-license-revoked/#:~:text=The%20horse%20named%20Gardy's%20Legacy,first%20race%20of%20the%20day." target="_blank">winning</a> race in Ohio. Innovators are all around.</p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-17143025601054387832024-01-31T15:27:00.020-06:002024-03-12T21:53:59.552-05:00Orioles New PEU Owners<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrTCUywov1uZ9rMGXiO2dWu-meJ47dbkOkf8K8hJ4zSYKCj6xqfemAVxxxSJPaDDuFMgZH6yIg_esjVhZr7BJ-O5YbXQlgAM6cx92qVyb71nO68KpkLlB9pbWgtYCGQ4uz4y6fJqaS5ltFtKyxK1YVypUOXOXxQ8k7hGtjdeXpzNbIlu22lhMlBWOV4a8/s960/Orioles%20go%20PEU.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="337" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrTCUywov1uZ9rMGXiO2dWu-meJ47dbkOkf8K8hJ4zSYKCj6xqfemAVxxxSJPaDDuFMgZH6yIg_esjVhZr7BJ-O5YbXQlgAM6cx92qVyb71nO68KpkLlB9pbWgtYCGQ4uz4y6fJqaS5ltFtKyxK1YVypUOXOXxQ8k7hGtjdeXpzNbIlu22lhMlBWOV4a8/w450-h337/Orioles%20go%20PEU.jpg" width="450" /></a></div><br />The owners of the Baltimore Orioles agreed to sell the team to billionaires David Rubenstein and Mike Arougheti. Rubenstein co-founded The Carlyle Group and family office Declaration Partners while Arougheti <a href="https://www.forbes.com/profile/michael-arougheti/?sh=251c57615506" target="_blank">started</a> Ares Management. Both men are private equity underwriters (PEU).<div><br /></div><div><i>CBS</i> <a href="https://www.cbssports.com/mlb/news/angelos-family-to-sell-orioles-for-1-725b-to-private-equity-moguls-cal-ripken-jr-involved-per-report/" target="_blank">reported</a>:</div><div><blockquote><span style="color: #351c75;">Rubenstein, who is from Baltimore, will become <b>the club's "control person"</b> with Major League Baseball -- a fancy way of saying the franchise's main decision maker.</span></blockquote></div><div>Let's hope Rubenstein fares better than fellow PEU David Tepper, owner of the Carolina Panthers (NFL). Tepper sought public subsidies but showed what he thinks of the common folk when he pitched his drink on a Jacksonville Jaguars fan from his safe skybox position.</div><div><br /></div><div>Rubenstein is known more for his tennis game. I can't wait for him to throw the first pitch. Seventy four year old man throws seventy four mile per hour fastball? Doubtful, but he has an incredible sales pitch. Imagine the <a href="https://declarationpartners.com/tactical-growth-equity/" target="_blank">possibilities</a>:</div><div></div><blockquote><div><ul style="text-align: left;"><li><span style="color: #351c75;">Rent a Declaration Partners owned apartment and get free Orioles tickets.</span> </li></ul></div></blockquote><blockquote><div><ul style="text-align: left;"><li><span style="color: #351c75;">Buy a ten pack of Vault COVID tests and enter a drawing to sit with Rubenstein in his skybox.</span></li></ul></div></blockquote><blockquote><ul style="text-align: left;"><li><span style="color: #351c75;">Buy Paxos Gold cryptocurrency and get a free Orioles NFT showing you with Cal Ripken</span></li></ul></blockquote><p>If you buy your Orioles tickets on <a href="https://www.paulweiss.com/practices/transactional/private-equity/news/declaration-partners-forms-pe-syndication-fund-acquires-stake-in-viagogo?id=30675" target="_blank">StubHub</a> anchor investor Rubenstein gets a cut <a href="https://www.sec.gov/Archives/edgar/data/1801780/000095014220000310/xslFormDX01/primary_doc.xml" target="_blank">through</a> Declaration. </p><p>The commercialization cross selling opportunities are incredible.</p><p><b>Update 2-4-24:</b> <i>CNN</i> ran <a href="https://www.cnn.com/2024/02/04/business/its-not-just-the-super-bowl-going-to-a-game-is-becoming-unaffordable/index.html" target="_blank">a story</a> on why tickets to games are unaffordable for families.</p><p></p><blockquote><span style="color: #351c75;">Ticketmaster and StubHub use sophisticated <b>dynamic pricing algorithms that change minute-by-minute</b> based on demand. Teams such as the New York Yankees have taken a stake in ticket resale platforms. These clubs see an opportunity to make more money by <b>taking a cut of the secondary ticket sale</b> between buyers and sellers.</span></blockquote><p>Billionaire team owners rely on public funds for their new stadiums/arenas:</p><p></p><blockquote><span style="color: #351c75;">“The new generation of stadiums are designed to <b>maximize the number of really good seats</b> at the expense of large numbers of cheap seats,” Matheson said. “You <b>design arenas for a super-premium experience</b>. There’s no sense in trying to make arenas that have large numbers of cheap seats.”</span></blockquote><p></p><p>The public pays but doesn't garner the benefits. It's a familiar PEU refrain....</p><p>CBS <a href="https://www.cbsnews.com/baltimore/news/expected-new-baltimore-orioles-owner-david-rubenstein-shares-more-details-of-agreement/" target="_blank">provided</a> more names in the ownership group headed by Rubenstein. It's a club deal for a baseball club. In addition to Rubenstein and Arougheti new owners include:</p><p></p><blockquote><span style="color: #351c75;">Mitchell Goldstein and Michael Smith, Co-Heads of the Ares Credit Group; Orioles' legend Cal Ripken Jr.; Kurt Schmoke, former Baltimore Mayor; Grant Hill, NBA Hall of Famer; Mike Bloomberg, entrepreneur and philanthropist; Michele Kang, business leader; and other investors.</span></blockquote><p><b>Update 2-12-24: </b> <i>CNN</i> <a href="https://www.cnn.com/2024/02/08/business/sports-stadiums-real-estate-cities?cid=external-feeds_iluminar_yahoo" target="_blank">reported</a>:</p><p></p><blockquote><p><span style="color: #351c75;">Professional sports teams are becoming real estate empires, building luxury apartments and shopping malls.<br /></span></p><p><span style="color: #351c75;">Billionaire owners have built dozens of new stadiums and arenas, often with hundreds of millions of dollars in taxpayer funding. State and local governments spent $33 billion in public funds to build stadiums in North America between 1970 and 2020, with the median public contribution covering 73% of costs, a study published last year found. As part of teams’ agreements with cities and states, they have been handed the rights to transform the land around these ballparks into offices, apartment buildings, hotels and shopping malls.</span></p></blockquote><p>David Rubenstein cut his PEU teeth selling Alaskan Native tax losses to corporations. Surely he can take advantage of a few poor people who live around a ballpark by making the area more billionaire friendly. </p><p>Carlyle did a joint venture with Atlantic Realty Partners in 2014 for apartments <a href="https://peureport.blogspot.com/2014/05/carlyles-love-hate-relationship-with.html" target="_blank">close to</a> the new Atlanta Braves stadium.</p><p><b>Update 3-10-24:</b> <i>Yardbarker</i> <a href="https://www.yardbarker.com/mlb/articles/sources_mlb_ownership_committee_approves_orioles_sale/s1_17200_40081699" target="_blank">reported</a>:</p><p></p><blockquote><span style="color: #351c75;">...the MLB Ownership Committee recommended approval of the sale to David Rubenstein.</span></blockquote>Next step is full vote of MLB club owners.<p></p><p></p><div><b>Update 3-12-24:</b> <i>Birdwatcher</i> <a href="https://birdswatcher.com/posts/3-reasons-orioles-new-ownership-group-will-create-a-baltimore-dynasty-01hrhbccsh4y" target="_blank">predicts</a> Rubenstein will fork over big bucks to retain and recruit talent. Rubenstein laid out a World Series title as the goal. PEU peer David Tepper set a <a href="https://www.espn.com/nfl/story/_/id/24049997/sale-panthers-david-tepper-finalized" target="_blank">similar goal</a> when he purchased his NFL team, the Carolina Panthers:</div><div><blockquote><span style="color: #351c75;">"Winning is the most important thing both on the field and in the community, and I am committed to winning a Super Bowl championship together.</span></blockquote><blockquote><span style="color: #351c75;">As for the on-the-field product, Tepper said there are no plans to make changes to a team that has made the playoffs in four of the past five seasons, including the Super Bowl in 2015, under coach Ron Rivera.</span></blockquote></div><div> </div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-69821123325081249772024-01-29T14:25:00.002-06:002024-01-29T19:45:47.099-06:00Rubenstein's Family Office Competes with Carlyle<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi60nHFMAatyVoJi1yZJS1DKlgYbGcjQwJVOtgAD06Aueb0OkpR0IOLzdeDNH2_HZipEUstTfFm4Qv5DjTzOPuouweW5l_j9dHC6yHK1l2iXY_P6s6hFK4XVQVPJK_O6BgG-_TsDRW1wJFwxg-AV-LbJS4RoqwL-9Hlt5BqH5DeACoUd88uAF65Pf3UM4A/s960/Rubenstein%20Declaration%20RE%20fund%202.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="270" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi60nHFMAatyVoJi1yZJS1DKlgYbGcjQwJVOtgAD06Aueb0OkpR0IOLzdeDNH2_HZipEUstTfFm4Qv5DjTzOPuouweW5l_j9dHC6yHK1l2iXY_P6s6hFK4XVQVPJK_O6BgG-_TsDRW1wJFwxg-AV-LbJS4RoqwL-9Hlt5BqH5DeACoUd88uAF65Pf3UM4A/w480-h270/Rubenstein%20Declaration%20RE%20fund%202.jpg" width="480" /></a></div><br />Carlyle Group co-founder David Rubenstein started family office, Declaration Partners. He later opened it up to other wealthy individuals. <p></p><p>Declaration is <a href="https://fortune.com/2024/01/25/david-rubenstein-400-million-fundraising-multifamily-housing-industrial-properties/" target="_blank">raising</a> its second real estate fund, according to <i>Fortune</i>. </p><p>This fund/conflict of interest will focus on multifamily housing and industrial properties. </p><p></p><blockquote><span style="color: #351c75;">Declaration, which was created in 2017 with an anchor investment from Rubenstein’s family office,<b> initially relied on the billionaire’s money</b> with executives at the firm investing alongside him. It later raised capital from other wealthy individuals on a deal-by-deal basis before deciding to launch a fund.</span></blockquote>Rubenstein was Carlyle's primary fundraiser for decades and <a href="https://www.carlyle.com/about-carlyle/team/david-m-rubenstein" target="_blank">currently</a> Co-Chairman of Carlyle's Board of Directors. <p></p><p></p><blockquote><span style="color: #351c75;">Mr. Rubenstein is Co-Founder and Co-Chairman of the Board.</span></blockquote>What do you do when your competition for both fundraising and potential real estate investments is your board chair's family office? <p></p><p>Declaring conflicts of interest is so passé. Actually taking action to avoid them is non-existent.</p><p>David Rubenstein <a href="https://givingpledge.org/pledger?pledgerId=275" target="_blank">signed</a> <i>The Giving Pledge</i> in 2010. Signers commit to giving away more than half of their fortune. In 2012 Rubenstein had an estimated <a href="https://www.forbes.com/sites/nathanvardi/2012/10/03/david-rubenstein-and-the-carlyle-group-the-kings-of-capital/?sh=5b692c707e09" target="_blank">net worth</a> of $1.9 billion. </p><p>The <i>Fortune</i> story noted:</p><p></p><blockquote><span style="color: #351c75;">Rubenstein, 74, a former White House staffer who became a leveraged-buyout legend, built Carlyle into one of the world’s largest managers of alternative assets. He has a <b>net worth of about $5 billion</b>, according to the Bloomberg Billionaires Index, and also hosts a Bloomberg Television show.</span></blockquote>In twelve years Rubenstein's net worth rose 163%. What role did PEU preferred taxation play in his wealth accumulation? Mr. Rubenstein tends to avoid <a href="https://peureport.blogspot.com/2011/07/business-writing-in-peu-world.html" target="_blank">the topic</a> as it is not serious money.<p></p><div><b>Update: </b> Chairman Rubenstein is stepping down from the Kennedy Center board but will head up the new Kennedy Center Foundation. His bio for <a href="https://mdtheatreguide.com/2024/01/theatre-news-david-m-rubenstein-to-retire-as-kennedy-center-board-chair-in-2025-will-head-new-kennedy-center-foundation/" target="_blank">the article</a> failed to mention his conflict of interest with Declaration Partners. His association with Carlyle is front and center.</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-44752313968008764312024-01-26T11:24:00.012-06:002024-01-29T19:52:59.371-06:00BrightSpring IPO Dulls Market<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhy8k8t4npHBPIDG2jSqdixPvTNcKh3BDtbMd_VWiLivH-jyb53lStohvK1fMxLsB50x2C_11MkRHpBVoyePqgIejIM4FtJu64buYNiOg9CP88DGgXyncPH2hoYWGqHlqYXy5el9ctLaBXn0YA4C_V8g89TTwHKN8hQhJzBm3_k9EBhkscNun_nmbW0SDM/s960/Slide1.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="252" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhy8k8t4npHBPIDG2jSqdixPvTNcKh3BDtbMd_VWiLivH-jyb53lStohvK1fMxLsB50x2C_11MkRHpBVoyePqgIejIM4FtJu64buYNiOg9CP88DGgXyncPH2hoYWGqHlqYXy5el9ctLaBXn0YA4C_V8g89TTwHKN8hQhJzBm3_k9EBhkscNun_nmbW0SDM/w448-h252/Slide1.JPG" width="448" /></a></div><br />Brightspring Health Services' IPO <a href="https://www.reuters.com/business/kkr-backed-brightspring-set-price-ipo-below-targeted-range-source-2024-01-25/" target="_blank">priced</a> below the <a href="https://www.reuters.com/markets/deals/kkr-backed-brightspring-eyes-over-3-billion-valuation-us-ipo-2024-01-17/" target="_blank">desired range</a>, coming in at $13 per share vs. $15-18. Sponsor KKR hoped to garner up to $960 million but settled for $633 million.<p></p><p>Brightspring is yet to open this morning on the NASDAQ exchange.</p><p>Carlyle Group co-founder David Rubenstein <a href="https://www.bloomberg.com/news/videos/2024-01-18/david-rubenstein-m-a-private-equity-to-pick-up-in-2024-video" target="_blank">said recently</a> in Davos, Switzerland:</p><p></p><blockquote><span style="color: #351c75;">“Now the recession fears are gone, interest rates are coming down almost certainly very soon, so I think you’ll see a <b>lot more M&A activity and a lot more private equity activity</b>.”</span></blockquote>The <i>Bloomberg</i> story added:<p></p><p></p><blockquote><span style="color: #351c75;"> A pickup would be especially welcome in the private equity business, where sponsors and investors have found themselves <b>stuck in older investments</b> because they couldn’t find buyers or acceptable prices to help them exit.</span></blockquote><i>Fast Company</i> <a href="https://www.fastcompany.com/91017670/brightspring-health-services-ipo-stock-price-today-btsg" target="_blank">quoted</a> <i>Reuters</i> with:<p></p><p></p><blockquote><span style="color: #351c75;">Although it’s only January, the fact that one of the <b>first high-profile IPOs of the year</b> saw its <b>shares priced below their original range </b>could signal that investors aren’t as excited about the IPO market as they were in earlier years.</span></blockquote>It could also signal investors looked at the <a href="https://www.sec.gov/Archives/edgar/data/1865782/000119312524015164/d251968ds1a.htm#rom251968_5" target="_blank">S-1 </a>and its many amendments. Brightspring is an assemblage of a mish mash of healthcare companies, ResCare, PharMerica, Abode Hospice and others.<p></p><p></p><blockquote><span style="color: #351c75;">We own or have rights to use various trademarks, tradenames, service marks, and copyrights, which are protected under applicable intellectual property laws, including, for example: BrightSpring, PharMerica, ResCare, All Ways Caring, Amerita, Onco360, Chem Rx, Abode, Adoration, Springhealth, Pharmacy Alternatives, and Rehab Without Walls.</span></blockquote>BrightSpring purchased hospice provider Abode Healthcare in April 2021 for $750 million. Goodwill comprised 95% of the purchase price ($715 million). Goodwill can quickly evaporate under conditions of <a href="https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3102097" target="_blank">financial stress</a>.<p></p><p>Investors may remember the bath they've taken on Aveanna Healthcare, a similar mish mash of healthcare companies (with less total revenue than BrightSpring). Aveanna's IPO priced at $12 per share in April 2021. It now trades at $2.40 a share. IPO investors have an 80% loss.</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvYJtbJ1D-WmjgfGbHjV8UBau0KSR4_bmWJWABP1UEP9xAN09Jp3OgfUAO4W5WY-IF7nygQ-DT8d-keg6QXjq-Cs_DBIban-NcNu3mvJvgxdlsf3sQqkGEjOfX2jB5cXLUG79D511QM8ZSrEAQ2V98e9iKOAOClnnepVQgbRD7vC2N112HUlvPV9QbfZo/s960/Slide2.JPG" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgvYJtbJ1D-WmjgfGbHjV8UBau0KSR4_bmWJWABP1UEP9xAN09Jp3OgfUAO4W5WY-IF7nygQ-DT8d-keg6QXjq-Cs_DBIban-NcNu3mvJvgxdlsf3sQqkGEjOfX2jB5cXLUG79D511QM8ZSrEAQ2V98e9iKOAOClnnepVQgbRD7vC2N112HUlvPV9QbfZo/w457-h257/Slide2.JPG" width="457" /></a></div><br />Potential shareholders may have noticed KKR Capital Markets is the first underwriter listed under Goldman Sachs (the lead underwriter) and considered that a conflict of interest. <p></p><p></p><blockquote><span style="color: #351c75;"><b>KKR Capital Markets LLC</b>, an affiliate of KKR Stockholder and an underwriter in this offering, acted as an arranger and bookrunner for various financing transactions under the First Lien Facilities and the Second Lien Facility, and <b>received underwriter and transaction fees totaling approximately $5.8 million and $2.5 million </b>for the year ended December 31, 2021 and 2020, respectively</span></blockquote>How many ways has KKR made money off this? Management fees to sponsor totaled $17.5 million since KKR bought BrightSpring in March 2019. <p></p><p>Under related party transactions the S-1 <a href="https://www.sec.gov/Archives/edgar/data/1865782/000119312524015164/d251968ds1a.htm#rom251968_5" target="_blank">stated</a>:</p><p></p><blockquote><span style="color: #351c75;">KKR has ownership interests in a broad range of portfolio companies, and we may enter into commercial transactions for goods or services in the ordinary course of business with these companies. We do not believe such transactions are material to our business.</span></blockquote>Encouraging affiliates to buy goods/services from other affiliates is a time honored PEU tradition.<p></p><p>Investors may remember their experience with Gentiva or Kindred Healthcare, both chronic underperformers. BrightSpring's Jon Rousseau comes from that lineage.</p><p>Rousseau <a href="https://www.courier-journal.com/story/life/wellness/money/2016/09/28/rescare-names-jon-rousseau-president-ceo/91221584/" target="_blank">moved</a> from Kindred to ResCare in 2016, the same year Kindred <a href="https://www.justice.gov/opa/pr/nation-s-largest-nursing-home-therapy-provider-kindredrehabcare-pay-125-million-resolve-false" target="_blank">reached</a> a $125 million settlement with the Justice Department for fraudulent rehab billing.</p><p>They may recognize Mike McMaude (President of the Home Health Division) as the former President of the Home Health division of Amedisys. </p><p>Investors could recall Amedisys <a href="https://www.justice.gov/opa/pr/amedisys-home-health-companies-agree-pay-150-million-resolve-false-claims-act-allegations" target="_blank">settlement</a> with the Justice Department for fraudulent billing in 2014.</p><p></p><blockquote><p><span style="color: #351c75;">Amedisys Inc. and its affiliates (Amedisys) have agreed to pay $150 million to the federal government to resolve allegations that they violated the False Claims Act by <b>submitting false home healthcare billings</b> to the Medicare program.<br /></span></p><p><span style="color: #351c75;">The settlement announced today resolves allegations that, <b>between 2008 and 2010</b>, certain Amedisys offices improperly billed Medicare for ineligible patients and services. Amedisys allegedly billed Medicare for nursing and therapy services that were medically unnecessary or provided to patients who were not homebound, and otherwise misrepresented patients’ conditions to increase its Medicare payments. These billing violations were the alleged result of <b>management pressure on nurses and therapists to provide care based on the financial benefits to Amedisys</b>, rather than the needs of patients. </span></p></blockquote><p>McMaude left Amedisys prior to this period according to his Grant Capital "<a href="https://grantave.com/individual-bio-mike-mcmaude" target="_blank">advisor bio</a>":</p><p></p><blockquote><span style="color: #351c75;">Prior to Abode, Mike and the Managing Partner of Grant Avenue Capital partnered together on<b> Voyager HospiceCare</b>, where Mike was the <b>CEO from 2007 until its successful sale to Harden Healthcare in 2010.</b> Following the sale, Mike continued to serve as COO until 2012.</span></blockquote>McMaude was the man in charge for this $6.1 million fraudulent Voyager HospiceCare billing <a href="https://www.falseclaimsact.com/hospice-company-pays-6-1-million-for-submitting-false-claims/" target="_blank">settlement</a> with the Justice Department:<p></p><blockquote><span style="color: #351c75;">(The whistleblower) revealed that the hospice company was <b>submitting false claims over a course of four years</b> to Medicare for beneficiaries that did not have a terminal prognosis of six months or less. Later, the government found out that there were various practices that the company was involved in resulting in the submission of false claims such as implementation of an inadequate compliance program, <b>delaying discharges</b> of patients determined not to have a six month or less prognosis and instructions to staff to<b> document patient conditions in a misleading manner.</b></span></blockquote><div><i>IPOScoop.com</i> offered:</div><div><span style="color: #351c75;"></span><blockquote><span style="color: #351c75;">Investors <b>pushed back on price</b> due to their concerns about the company's valuation. its debt load and KKR's role.<br /></span><p></p></blockquote><p>I would add investors should be very concerned about management ethics, or lack thereof, especially under the greedy hand of KKR. There's alot more stock to sell.</p><p><b>Update: </b> BTSG last traded at $11.35, down $1.65 or over 12% with ten minutes left in the session. Reason for <a href="https://ir.brightspringhealth.com/news-releases/news-release-details/brightspring-celebrates-first-day-trading-nasdaq" target="_blank">celebration</a>?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_LvSVM2tuWMkGOGJcm5f6ckwWbejnVvpkEnTmL-tM9vrAOy5ekUhSmf9_oD6WiOEz9nYRrr2-F1cXPWqZmJW8Lcv3eSHIRGZQ35eptCHItL2veMfQYwM9hBPBJVy0OORsG0mIXdAL2swt-2UWJYgtTUl8hnqaASaLilcULxT0lHyG_hizi6FTh7oSg6c/s960/BTSG%20celebrates%20stock%20drop%201-26-24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="271" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_LvSVM2tuWMkGOGJcm5f6ckwWbejnVvpkEnTmL-tM9vrAOy5ekUhSmf9_oD6WiOEz9nYRrr2-F1cXPWqZmJW8Lcv3eSHIRGZQ35eptCHItL2veMfQYwM9hBPBJVy0OORsG0mIXdAL2swt-2UWJYgtTUl8hnqaASaLilcULxT0lHyG_hizi6FTh7oSg6c/w482-h271/BTSG%20celebrates%20stock%20drop%201-26-24.jpg" width="482" /></a></div><br /><p>BTSG closed at $11.00, down $2 for the day, a decrease of over 15%. Is BTSG a pothole on the <a href="https://www.bloomberg.com/news/articles/2024-01-24/private-equity-firms-begin-2024-in-sell-now-buy-later-mode" target="_blank">smooth path</a> of PEU montetization? Will it impact <a href="https://www.bloomberg.com/news/articles/2024-01-26/carlyle-said-to-mull-a-1-billion-sale-of-tech-services-firm-hso" target="_blank">future</a> IPOs or affiliate flips?</p></div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-42476625790206159362024-01-25T09:54:00.002-06:002024-01-25T10:13:03.103-06:00Carlyle Here to Help<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhyCiCXy9On3-ybQngeZ2_gDdffA2AMEVluIxFgx7wFLv6pO-a2uLXoWLXQrdFInAWqzFaQ8x7FAt_5dxSxx1WHM8bBFCxZLTtKS5KVZoZIRxrxTWfMMg_KTlC8tM2UqBZIQwOXBMjDpAy4YKHTWWRy6nzjDeMzlmNoPoyTkIKDCZV0l8bLGjITMFZ0Q/s960/Carlyle%20Monogram%20Student%20Loan%201-24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="257" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOhyCiCXy9On3-ybQngeZ2_gDdffA2AMEVluIxFgx7wFLv6pO-a2uLXoWLXQrdFInAWqzFaQ8x7FAt_5dxSxx1WHM8bBFCxZLTtKS5KVZoZIRxrxTWfMMg_KTlC8tM2UqBZIQwOXBMjDpAy4YKHTWWRy6nzjDeMzlmNoPoyTkIKDCZV0l8bLGjITMFZ0Q/w456-h257/Carlyle%20Monogram%20Student%20Loan%201-24.jpg" width="456" /></a></div><br /><p></p><div>The Carlyle Group <a href="https://www.monogramllc.com/news.php" target="_blank">announced</a> a two part deal involving student loans. Carlyle <a href="https://www.reuters.com/business/finance/carlyle-buys-415-mln-student-loan-portfolio-truist-2024-01-24/" target="_blank">bought</a> $415 million in packaged student loans from Truist Bank and took an equity stake in student loan provider Monogram. The press release stated:</div><blockquote><span style="color: #351c75;">"Carlyle is excited to partner with Monogram to <b>deliver attractive and competitive financing solutions</b> to the private student loan market."</span> </blockquote><blockquote><span style="color: #351c75;">Monogram will partner with Carlyle to <b>originate, acquire, and manage high-quality third-party</b> private student loan assets.</span></blockquote>Parents of student loans borrowers should be comforted by Carlyle's breadth of corporate offerings. Carlyle <a href="https://realassets.ipe.com/news/carlyles-open-end-us-property-fund-gets-150m-from-texas-permanent-fund/10066210.article" target="_blank">might provide</a> their college child student housing.<div><br /></div><div>Once their child graduates from college they can begin working for a private equity owned company that constrains wages and offers <a href="https://www.carlyle.com/our-business/portfolio-of-investments/benefitmall" target="_blank">reduced benefits</a>. Someone has to pay for those increased interest expenses and <a href="https://www.carlyle.com/media-room/news-release-archive/carlyle-preferred-investment-for-alera-group" target="_blank">it's usually</a> employees. <div><br /></div><div>Should their child become stressed trying to manage everyday bills and pay back their student loan, Carlyle has good news. Affiliate Acentra Health <a href="https://acentra.com/feature-news/acentra-health-announces-acquisition-eap-consultants-llc/" target="_blank">recently added</a> EAP Consultants:</div><div><blockquote><span style="color: #351c75;">Acentra Health, a leading provider of clinical services and technology solutions to government healthcare agencies, announced today that it has acquired EAP Consultants, LLC (“Espyr”), a leader in <b>workplace mental health and well-being programs</b>.</span> </blockquote><blockquote><span style="color: #351c75;">The companies will provide EAP solutions and services that support government agencies and commercial organizations, <b>serving employees, students, and their families.</b> Services include clinical intake and support; work-life services, such as legal, financial, child and elder care support; critical incident debriefings; and counseling services available by appointment, on-demand, in-person, virtually, and by phone and text.</span></blockquote>Mental health concerns can manifest physically and Carlyle <a href="https://www.carlyle.com/global-insights/grand-rounds-health" target="_blank">can help</a> there as well.</div></div><blockquote><span style="color: #351c75;">The current market for <b>third-party healthcare navigation and advocacy services</b> is over $1 billion today and we believe that strong industry tailwinds support the prospect of robust multi-year growth of over 25% in the market, particularly given the $300 billion problem of unnecessary U.S. healthcare spending from uncoordinated, unnecessary, and avoidable care.</span></blockquote>It's clear Carlyle cares deeply about your student and wants to make money off them over their lifetime. So what if that results in stress, causes mental health issues, even physical problems...<div><br /></div><div><b>Update: </b> <i>WSJ</i> ran <a href="https://www.wsj.com/personal-finance/financial-help-parents-money-ddc2f277?mod=rss_markets_main" target="_blank">a story</a> on nearly 60% of parents helping their adult kids financially. How much of that support goes to pay PEU affiliates, directly or indirectly?</div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-89988759659605555162024-01-24T14:30:00.000-06:002024-01-24T14:30:00.485-06:00Infrastructure Crapification<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeY6jVUofLxKjqWQgE8O-Kyr6Vw1hXhIKqA6uKAXmBiFcd1o4fhoelEEpxthLMlSC08prgKKIKzoS5oSBO473yy2SbFJ3dV9Fep8ZPHxuglkLU7_ZupBaIqEtWRHIaGn7IJ5eZjvOdouJhIQwKS4zqqiLdv3itbcuR2gUhd55ZCpKiopFsxJ98y9P7-3I/s960/Nextera%20water%20flushes%20towamencin%201-24.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="720" data-original-width="960" height="344" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjeY6jVUofLxKjqWQgE8O-Kyr6Vw1hXhIKqA6uKAXmBiFcd1o4fhoelEEpxthLMlSC08prgKKIKzoS5oSBO473yy2SbFJ3dV9Fep8ZPHxuglkLU7_ZupBaIqEtWRHIaGn7IJ5eZjvOdouJhIQwKS4zqqiLdv3itbcuR2gUhd55ZCpKiopFsxJ98y9P7-3I/w459-h344/Nextera%20water%20flushes%20towamencin%201-24.jpg" width="459" /></a></div><br />Pennsylvania towns and communities have the option <a href="https://twitter.com/LeeHepner/status/1749581324715962796" target="_blank">of selling</a> their water and sewer utilities to private companies, courtesy of a relatively new state law. Didn't state legislators research The Carlyle Group's history with public infrastructure? It includes:<p></p><p></p><blockquote><p></p><ul style="text-align: left;"><li>Bribing municipal officials for a Synagro Technologies city sludge contract in Detroit, Michigan.</li><li>Reneging on its promise to sell Mountain Water to the City of Missoula, Montana</li><li>Abandoning its lead developer role for the Harbor Island expansion at the Port of Corpus Christi, Texas</li></ul><p></p></blockquote><p></p>There is also the case of Chicago public parking. Privatization raised prices such that parking in Chicago <a href="https://www.chicagotribune.com/news/breaking/ct-parking-study-0712-20170711-story.html" target="_blank">became</a> the most expensive in the U.S. <i>WTTW</i> <a href="https://news.wttw.com/2023/07/27/wttw-news-explains-what-happened-chicago-s-parking-meter-deal" target="_blank">reported</a>:<blockquote><span style="color: #351c75;">The courts have called the deal “foolish, short-sighted or worse,” but, it turns out, it’s <b>not illegal to strike a bad deal</b>.
With some 60 years left on its lease, Chicago Park Meters LLC has already made back its initial investment — and then some!
An impressive return on investment for them, and a tough break for Chicagoans.</span></blockquote><div>Towamencin Township is finding out about bad deals and unreliable bidders. </div><div><blockquote><span style="color: #351c75;">In May 2022 supervisors voted four-to-one to<b> sell the township’s sewer plant and system </b>to Florida-based <b>NextEra </b>for an agreed purchase price of <b>$115.3 million</b>.</span></blockquote></div><div>Carlyle's latest public infrastructure joint venture VICO Partners bid on the sewage system <a href="https://www.towamencin.org/media/2137/summary-of-rfb-results-2-23-2022_final_revised.pdf" target="_blank">but came</a> in a distant fourth.</div><div><br /></div><div>Within a year winner NextEra reneged on <a href="https://northpennnow.com/nextera-backs-out-of-towamencin-sewer-purchase-assigns-contract-to-pa-amer-p6603-103.htm" target="_blank">the deal</a>:</div><div><blockquote><span style="color: #351c75;">Recently, NextEra made the township aware of its <b>business decision to redirect efforts away from water and wastewater acquisitions</b> and focus more on renewable energy projects. This decision, which was mainly due to the passage of the Inflation Reduction Act</span></blockquote></div><div>Not only did NextEra abandon their $115 million deal, they played hardball in doing so:</div><div><blockquote><span style="color: #351c75;">NextEra told the township that if it did not agree to the deal, then NextEra would close the sale and then <b>flip the system to PA American Water anyway</b>.</span> </blockquote><blockquote><span style="color: #351c75;">Supervisor Rich Marino said NextEra would face a $10 million penalty if it did not complete the deal.
“They expressed in no uncertain terms they were <b>not going to be on the hook for $10 million</b>,” he said..</span></blockquote></div>PA American will pay $11 million less than NextEra's winning bid. It's not clear which items township supervisors plan to remove from the privatization <a href="https://northpennnow.com/despite-public-opposition-towamencin-supervisors-sell-sewer-system-for-p5626-103.htm" target="_blank">candy list</a>.<div><br /></div><div><a href="https://whyy.org/articles/act-12-explained-customers-more-likely-to-see-rates-rise-with-pas-new-water-privatization-process/" target="_blank">Act Twelve</a> "allows the doubling and tripling of rates" <a href="https://www.foodandwaterwatch.org/2023/07/18/new-bill-aims-to-stop-predatory-water-system-pricing-in-pennsylvania/" target="_blank">paid by</a> citizens. It also exposes communities to less than ethical private corporations whose long term commitment is to only one thing, greed.<br /><div><br /></div><div>Our national government, Congress and the White House, have long been intertwined with private equity underwriters (PEU). </div><div><br /></div><div>Politicians Red and Blue love PEU and increasingly, more are one. Local elected officials should not emulate this unseemly practice.</div></div>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.comtag:blogger.com,1999:blog-1523835174346201166.post-92137613375839739972024-01-23T20:58:00.007-06:002024-01-24T15:32:15.694-06:00The Hands that Rule<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3UFhzQCwy9N8hHy2VbCeElu34ZzMjgI6Sbdufocb1C5K3MnWa85z735esB_u9c7K8GX4itFLd3bwBKJOoTxhF3mt_oEbACYsQBFPKnNzuC9lu-v-t7aZh50MsZyi9K0ey2XyR44-P55Wu6qn-IkYwVydqIKBXV15kmw6zxyye91-pvwMK-aMIPkjntv4/s960/Henry%20Kravis%20is%20marvelous%201-24.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="540" data-original-width="960" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi3UFhzQCwy9N8hHy2VbCeElu34ZzMjgI6Sbdufocb1C5K3MnWa85z735esB_u9c7K8GX4itFLd3bwBKJOoTxhF3mt_oEbACYsQBFPKnNzuC9lu-v-t7aZh50MsZyi9K0ey2XyR44-P55Wu6qn-IkYwVydqIKBXV15kmw6zxyye91-pvwMK-aMIPkjntv4/w473-h266/Henry%20Kravis%20is%20marvelous%201-24.jpg" width="473" /></a></div><br />Image is everything, especially for the financial elite. Kurt Anderson <a href="https://www.theatlantic.com/ideas/archive/2024/01/bill-ackman-neri-oxman-twitter-posts/677164/?utm_source=native-share&utm_medium=social&utm_campaign=share" target="_blank">wrote</a> in <i>The Atlantic</i> in his take down of Bill Ackman and his attempts to run the world like a marionette: <br /><p></p><p></p><blockquote><span style="color: #351c75;">(Henry) Kravis’s appearance as a character in this particular role is ironic, and in a work of fiction would prompt a quick flashback—in which, irony upon irony, I turn up as a minor character. I knew Henry Kravis, not well, nearly 30 years ago, when <b>KKR controlled the media company that owned </b><i>New York</i> magazine. In the mid-’90s I was <i>New York’s</i> editor in chief. One day Kravis invited me for breakfast in his 26-room Park Avenue triplex to tell me that the <b>magazine’s coverage of Wall Street displeased him and his friends and associates</b>, and that I should end it. I didn’t, and six months later I was fired. In other words, I had a significant but not good relationship with him. </span></blockquote><p></p><p>Ackman approached Henry Kravis and KKR with his concerns regarding <i>Business Insider's</i> applying the Ackman plagiarism standard to his wife. KKR's affiliate Axel Springer owns and operates <i>Business Insider</i>. </p><p>In 2011 financial reporters knew to <a href="https://peureport.blogspot.com/2011/07/business-writing-in-peu-world.html" target="_blank">tread lightly</a> around the greed and leverage boys.</p><p></p><blockquote><span style="color: #351c75;">There are <b>very few people </b>out there who will <b>talk and write honestly about private equity</b>.
I know from personal experience that the financial press is so eager to
break news on "deals" that reporters (who are increasingly compensated
on the number of "market moving stories" they write) can't afford to be
critical of Carlyle, KKR and Blackstone, and risk losing access to
people at those firms.</span></blockquote><p>Storied newspapers continue imploding, leaving fewer and fewer journalists to uncover the kajillion ways private equity underwriters (PEU) tilt the world, already obscenely oriented to their advantage. </p><p><i>CNN Business</i> <a href="https://www.cnn.com/2024/01/23/media/los-angeles-times-layoffs-strike?cid=external-feeds_iluminar_yahoo" target="_blank">reported</a> on the unraveling at the <i>Los Angeles Times</i>: </p><p></p><blockquote><span style="color: #351c75;">“We have a <b>billionaire who doesn’t understand media </b>and thinks he can
<b>cut his way to success</b>,” another staffer told me, likening the drama
playing out in the editorial leadership to the reality television show
“Survivor.”
</span></blockquote><p>My wise friend wrote:</p><p></p><blockquote><span style="color: #351c75;">I think the <b>billionaire class</b> has finally arrived at what it has always wanted: Controlling the Fourth Estate. Poor Upton Sinclair. He always pushed for an independent bank to fund news organizations throughout the land. But he was a <a href="https://monthlyreview.org/2002/05/01/upton-sinclair-and-the-contradictions-of-capitalist-journalism/" target="_blank">socialist</a>, so I guess that was bad and this is good (sarcasm).</span></blockquote>Enough Americans have worked for a PEU owned affiliate to know the carnage <a href="https://oi-files-d8-prod.s3.eu-west-2.amazonaws.com/s3fs-public/2024-01/Davos%202024%20Report-%20English.pdf" target="_blank">involved</a> in freeing up funds previously used for staff in order to service sponsor management fees, grossly higher interest expenses and PEU cash siphoning. Wealthy <a href="https://www.vox.com/2024/1/22/24043104/billionaire-get-rich-people-parents-generational-wealth-transfer-trust-fund" target="_blank">founders</a> and investors come first. <p></p><p>I expect Henry Kravis will slowly turn Axel Springer and <i>Business Insider</i> to his PEU will. It may not happen within Ackman's tantrum time frame, but it should happen just the same. <br /></p><p><b>Update 1-24-24: </b> <i>Institutional Investor</i> has a piece on an economist who long ago <a href="https://www.institutionalinvestor.com/article/2cr4z1fwlg1hjjz0pbpq8/corner-office/how-ludovic-phalippou-became-the-bete-noire-of-private-equity" target="_blank">called out</a> the PEU boys for fudging returns. It states:</p><p></p><blockquote><span style="color: #351c75;">conferences have <b>canceled his speaking engagements</b> at the request of well-heeled sponsors</span></blockquote>The economist uses KKR as an example of spurious IRR claims:<p></p><p></p><blockquote><span style="color: #351c75;">“This year, I put a LinkedIn post congratulating KKR for the 25th year in a row having a 26.3 percent return,” quips Phalippou, saying the number is that high because KKR’s early investments were highly profitable. “But logically, it makes no sense. Most people would understand that it means that if I had given $1 to KKR when they started in 1976, every year I would have accumulated 26 percent,” he explains. “That would mean a $1 million investment in 1980 would be worth about $100 billion. It’s not the case, by miles.”</span></blockquote><p></p>PEU Report/State of the Divisionhttp://www.blogger.com/profile/10269683860174947542noreply@blogger.com