Trump Meets with Carlyle's Rubenstein

Carlyle Looks to Expand Romanian Oil Assets

SeeNews reported:

Romania's anti-trust regulator said on Tuesday it is looking into a deal between  Romania's top oil and gas group OMV Petrom [BSE: SNP] and Mazarine Energy Romania for 19 oil fields and three rig.

The transaction is expected to be completed at the end of 2016, when Mazarine Energy Romania will assume operatorship of the fields and employment of over 200 staff currently employed by OMV Petrom, the oil and gas group said at the time. 

The capital for the transaction will come from the $500 million equity line provided by Carlyle International Energy Partners, a $2.5 billion fund that invests in global oil and gas exploration and production, mid- and downstream, oil field services and refining and marketing in Europe, Africa, Latin America and Asia. 

Carlyle's first investment in Romanian oil and gas came in 2015, courtesy of financially strapped Sterling Resources.

Supplying Europe energy is critical for the U.S. as it wants to decrease Russia's influence.  Carlyle may soon be in a better spot to make that a reality. 

Update 11-30-17:   European Bank for Reconstruction and Development (EBRD) said on Wednesday it has acquired an equity stake in Romania’s Black Sea Oil & Gas (BSOG).  Backed by the global alternative asset manager Carlyle Group, BSOG’s current portfolio consists of the XV Midia Shallow Block and XIII Pelican Block concession in the Romanian Black Sea.  

Update 9-1-21:  Romania-Insider.com reported:

Black Sea Oil and Gas (BSOG), a Romanian company backed by US investment fund Carlyle, could start gas deliveries from Romania’s Black Sea section at the end of this year when work on the Midia Gas Development project will be finalized.

The Carlyle Group purchased Sterling’s Romanian business in 2015 and set up a new company Black Sea Oil & Gas SRL.

Update 2-22-23:  Carlyle may be shopping its energy stake in the Black Sea:

...plans by BSOG's investor Carlyle to potentially sell the company were "normal" for an equity firm after it has finished building the project. 

It doesn't want to pay increased energy taxes like any good PEU.

Carlyle Affiliate to Buy Cybersecurity and Threat Assessment Firm

Denver Business Journal reported:

Colorado cybersecurity firm Coalfire Systems Inc. is acquiring Veris Group to become a major cybersecurity and threat assessment consultancy to federal agencies, businesses and cloud-computing service providers looking to do business with the federal government.

Veris Group, based outside Washington D.C. in Vienna, Virginia, began looking in mid-2016 to make a deal to expand. One of Coalfire’s owners, The Carlyle Group, introduced the two companies soon after.

Veris Group draws half its business from federal government departments and intelligence agencies, lines of work Coalfire wanted to be in but hadn’t yet cracked.

Privately-held Coalfire is majority owned by The Carlyle Group and the Chertoff Group, two investment companies well connected to U.S. national security circles and the federal government.

Coalfire may consider other acquisitions leveraging Carlyle Group resources as opportunities become available.

Especially those with business with the federal government.  Carlyle cut its teeth with USIS, courtesy of President Bill Clinton's privatization of government security checks.  What does Carlyle see with President elect Trump that has them investing heavily in cyber and threat security?

Viola Benefited from Public Money

The DailyMail reported:

President-elect Donald Trump has selected Vincent Viola to be the next secretary of the Army, choosing yet another billionaire to join his historically loaded team of top advisors and administrators.

Viola is founder of Virtu Financial, an electronic trading firm. He also previously chaired the New York Mercantile Exchange and is a co-owner of the Florida Panthers National Hockey League team. 

Trump appointed another billionaire who has benefited from public subsidies.  The SunSentinel reported:

The Florida Panthers hockey team won one of the most important contests of its existence Tuesday, when the Broward County Commission agreed to give it $86 million in public funds.

The agreement increases the public investment in the team to $342 million, county officials confirmed.

Billionaires benefiting from public money will be in charge of the federal government's multi-trillion dollar budget.  It doesn't take a rocket scientist to see where this is going.  We'll see how much trickles down to the economically disaffected voters who put Trump in office.

Update 2-4-17:  Viola withdrew his nomination for Army Secretary citing "his inability to successfully navigate the confirmation process and Defense Department rules concerning family businesses."

Private Jets Sign of the Times

Global Jet Capital, a private equity affiliate, published research on the number of private jets delivered to the Middle East and the method of financing.  File this research under "the rich get richer" folder and set it on "they currently trust one another to make good on their debts" stack.

I smell a PEU IPO or flip in the near future. 

CEO Rex Tillerson: Exxon's 147 Subsidiaries

The Guardian reported:

Rex Tillerson, the businessman nominated by Donald Trump to be the next US secretary of state, was the long-time director of a US-Russian oil firm based in the tax haven of the Bahamas, leaked documents show.

Tillerson – the chief executive of ExxonMobil – became a director of the oil company’s Russian subsidiary, Exxon Neftegas, in 1998.

Exxon had 147 subsidiaries as of 12-31-15.  Thus, there are more potential board slots for Mr. Tillerson.  Exxon has two subs in Kazakhstan and two Kazahkstan named affiliates, the one in the Bahamas and another Delaware based.

Nineteen Exxon companies are in the Bahamas.  Oddly, not one map in the company's analyst presentation showed any presence in the Bahamas. 

Six subsidiaries are based in Qatar, while three are in Saudi Arabia.  The Cayman Islands have but one Exxon affiliate.

Exxon is a global company.  Corporate structures and executive incentive compensation are complex and intertwined in today's world. 

President Obama's health reformer Nancy-Ann DeParle received private equity payouts from her former employer CCMP while in the White House.  This occurred after the Obama team declared DeParle "divested all conflicting assets."

The Guardian helped shed light on Mr. Tillerson's longtime board seat with Exxon Neftegas.  There likely are many more scattered around the globe. 

Exxon's analyst presentation showed another key metric.

Mr. Tillerson's production of jobs during his tenure was not nearly robust as his executive pay.  One could even call him a job terminator for the elimination of 40,000 jobs.

This is the management swamp that enriches executives and funds political campaigns of both stripes.  It's the Red Team's turn.

Forbes Columnist Predicts PEU Double Under Trump

Forbes Antoine Gara believes private equity underwriters could become much richer under President elect Donald Trump's tax reform initiative. 

Trump's talk of killing the private equity industry's carried interest tax deduction has generated major headlines, but if it comes with broader tax reform it could create the biggest opportunity for the industry since firms like Apollo, Blackstone, Carlyle and KKR listed their shares on public stock markets. Lowering corporate and individual tax rates could give private equity firms reason to convert from tax-avoiding pass through partnerships into ordinary corporations, opening up their shares to a far broader investor base.

Massive profits from disruption is the PEU way.  It's government's job to set the tea leaves for Leon Black, Stephen Schwarzman, David Rubenstein and Henry Kravis to read.

Such a move could unwind a chronic discount attached to private equity stocks despite their master of the universe pedigree. Eventually, it could double the wealth of the industry’s billionaire class.

That's the billionaire class that has done very well the last few decades no matter the political party in power.

The Carlyle Group just inked a deal for Revolution Studios.  The public may need to be swayed as to the patriotic value of the greed/leverage boys.   The heroes journey could be a corporate flip at 7x equity investment.  It may swell wallets but likely not hearts. 

American movies during WWII promoted the need to dismantle an enemy that allowed so much wealth and power to be concentrated in the hands of axis governments and their wealthy industrialist supporters. 

Time will reveal what comes out of Carlyle's Revolution Studios and the Trump administration but the prospect of billionaire's doubling their already obscene wealth is not appealing.