Nielsen Accussed of PEU Ethics

Courthouse News Service reported:

Nielsen, a "once-noble company," colluded with a former competitor to publish ratings data that had been corrupted by a bribery scheme, a New Delhi-based broadcaster claims in a $580 million lawsuit.

Corrupted, bribery, collusion...those are historical PEU attributes.   Nielsen's PEU owners included KKR, The Blackstone Group, The Carlyle Group, Thomas H. Lee Partners, Alpinvest Partners, Hellman & Friedman and Centerview Partners.

PEU's Deserve Better

Carlyle Group co-founder David Rubenstein lamented the trashing of private equity underwriters in the Presidential political campaign on CNBC. 

the (PEU) industry “deserves better defense than what we’re getting” from US public officials

Elected officials have two distinct audiences, those providing money for political campaigns and those likely to vote in elections.

PEU's deserve better as they provide campaign cash.  It can come straight from a billionaire to a 529 organization, originate from the PEU's political action committee, be laundered through an affiliate's PAC or come straight from the personal account of a PEU.

President Obama loves PEU's behind closed doors, while Mitt has PEU blood.  Once the election is over Red and Blue cater to PEU's.  Rubenstein is well aware of this, given Carlyle's base is Washington, D.C.

Carlyle's Distressed IMO Carwash Bid

Rothschild ran an auction for The Carlyle Group's IMO Carwash, which TDR Capital LLC won.  Carlyle and TDR entered negotiations on IMO Carwash, which Carlyle acquired in 2006 from JPMorgan Partners, a frothy time for private equity underwriter (PEU) acquisitions.  Carlyle loaded IMO Carwash with debt, £355 million in 2009, the year it stuck it to lenders:

The sponsor (Carlyle) wants senior ranking creditors to cut their debt claims by a third and junior creditors to write off all their debt, in exchange for equity stakes.

Unlike what Carlyle did to Mrs. Fields or Brintons, IMO's creditors and a London bankruptcy judge played along, enabling The Carlyle Group to retain control.  Nearly half of IMO's debt turned to equity,  £185 million at present.

TDR Capital treated IMO Carwash like the distressed investment it is.  Carlyle refused TDR's bid and will go to the debt market for refinancing.  Carlyle has billions in dry powder.  If no Carlyle fund will provide credit, IMO's truly a PEU.

Update 7-30-12:  I wondered how Carlyle retained control of their bankrupt affiliate.  Apparently, Carlyle did not cram itself down.  Bloomberg got fooled by the Sunday Telegraph, as did I.

Hirschfeld Industries Virtual Nonprofit Like Carlyle Group

In our PEU fractal world patterns repeat themselves at varying levels.  Two private equity underwriter (PEU) IPO filings revealed the extent to which the greed/leverage boys avoid taxes.  On a national level The Carlyle Group paid a miniscule tax rate.  That pattern repeated locally with Hirschfeld Industries, an affiliate of PEU Insight Equity. 

I wonder if PEU insider Josh Lerner will study this phenomenon at his Private Capital Research Institute.  Doubtful. 

I'm glad Josh didn't steal my trade moniker for the industry, Private Equity Capital Knowledge Executed Responsibly (PECKER). It fits.

PEU Economic Net Income Redefined

Private equity underwriters (PEU's) use economic net income, a nonstandard measure when reporting earnings.  It purports to reflect profitability by estimating "profits" from sold and unsold investments.  Blackstone adjusted the vaporware number, in part to show greater earnings.  WSJ reported:

There is one thing to look out for in the firms’ 10-Qs this time around: economic net income, a widely-used performance benchmark for alternative asset managers. For the second quarter, Blackstone excluded the provision for income tax in its ENI, so that the number reflected economic income. It did, however, account for the impact of actual income tax.

 

Someone close to the matter said Blackstone made the change in part because of advice of analysts who cover the firm. The analysts said inclusion of tax provision inflated the taxes, and that including only the actual tax better reflects the firm’s true earnings, the person said.

Are PEU analysts now setting accounting standards? 

IRS Doesn't See PEU People

Tax Analysts reported:

A growing class of business entities - from investment funds like the Carlyle Group to private hedge, private equity, and venture capital funds - largely escape IRS audits due to their forms of organization.

Large, widely held partnerships, including publicly traded partnerships (PTPs) - which generally have thousands of direct and indirect partners - seem largely to escape the scrutiny that the Service gives to their C corporation counterparts.

PTPs (such as oil and gas and real estate funds and investment funds like the Blackstone Group LP, the Carlyle Group LP, and KKR & Co. LP) aren't the only lucky ones," she writes. "While private hedge, private equity, and venture capital funds might not be widely held in terms of the number of direct partners, if one of their investors is a fund of funds, the number of indirect partners balloons.

The Carlyle Group employs former IRS Commissioner Charles Rossotti.  Private equity underwriters (PEU's) are a key link in the chain of the Government Corporate Monstrosity, Eisenhower's Military-Industrial Complex on trillions in federal steroids and billions in tax breaks.  The IRS doesn't see PEU people.  That goes for Red and Blue versions. 

Carlyle's Energy Mezzanine Opportunities Fund-A in Caymans

WSJ reported:

Carlyle Group has raised more than $512 million so far for its first mezzanine energy fund, according to regulatory filings.

Filings have been posted this year for three distinct entities, but they actually constitute capital raised for a single debut mezzanine energy vehicle, Carlyle Energy Mezzanine Opportunities Fund LP, according to a person familiar with the matter. The total amount raised is now greater than the $512.8 million combined total of those filings, he said.

SEC filings show the three entities, all in DC:

0001509539	Carlyle Energy Mezzanine Opportunities Fund, L.P.	DC
0001509538	Carlyle Energy Mezzanine Opportunities Fund-A, L.P.	DC
0001553963	Carlyle Energy Mezzanine Opportunities Fund-Q, L.P.	DC

The first fund listed started with a minimum investment of $1.5 million.  Fund A, with a minimum investment of $5 million,  is incorporated in The Cayman Islands:

Fund Q had a minimum investment of $200 million, which is the rumored amount invested by Pennsylvania Public School Employees’ Retirement System.  That March investment turned into a June deal on a Philadelphia refinery, with layers of government subsidy. The White House effectively brokered the deal.

Philadelphia freedom includes off-shoring profits.