PEU Dash for Cash

Bloomberg reported Wells Fargo sold $2 billion of private equity assets to other private equity underwriters (PEU).  It's not clear what they sold, stakes vs. affiliates or a combination of the two.  Until the sale Wells Fargo was the sole institutional LP in NMP and NEP.

Norwest Mezzanine Partners made two SEC filings today, one for NORWEST MEZZANINE PARTNERS V, LP and another for NORWEST MEZZANINE PARTNERS V-A, LP.  Lazard was listed as the firm receiving compensation for selling the offerings.  Both filings stated:

The general partner is entitled to a carried interest. The investment manager is entitled to a management fee. The carried interest and management fee are fully discussed in the Issuer's confidential offering materials.

Bloomberg Law reported how the greed and leverage boys plan to screw their limited partners:

Investors with money stranded in private equity funds are weighing an expensive solution: borrowing against their stakes, sometimes at double-digit interest rates, until the market for their holdings turns around. 

“Net-asset-value” financing to free up cash has already taken off among private equity firms holding $4.8 trillion of assets who’ve balked at selling investments amid a soft market for mergers and acquisitions. 

Now lenders are pitching those firms’ clients on the loans as well. Lenders such as 17Capital, Apollo Global Management Inc. and Ares Management Corp.see a growing market targeting investors in the PE funds.  

The dash for cash is on.  Oh, and the Bank of England established a special loan facility to help non-banks, i.e. insurers, pensions and PEUs.....  Oh my!  

Something wicked this way comes.

Carlyle Negotiating with Medtronic

Reuters reported:

Private equity firm Carlyle Group Inc (CG.O) has entered into exclusive negotiations to acquire a majority stake in two medical device businesses of Medtronic Plc (MDT.N) at a valuation of more than $7 billion, according to people familiar with the matter.

Were an agreement to be reached in the coming weeks, it would mark the culmination of Medtronic's 12-month review of its patient monitoring and respiratory interventions businesses.  

Given Carlyle's ability to cross sell within its affiliate pool, what can a healthcare patient expect?  How about some music?

Litmus Music — a music catalog rights company backed by private-equity firm Carlyle Group LP

Maybe some respiratory therapy intervention dancing to Katy Perry or Keith Urban?

Carlyle drove two post acute care companies into bankruptcy, nursing home giant ManorCare and long term acute care hospital company LifeCare, so those cross selling options have closed for the politically connected private equity underwriter (PEU).  

Rest assured the greed and leverage boys will continue to crapify healthcare.  Profit over patients, it's in their nature.

Politicians Red and Blue love PEU, and that's why so many parasitic PEUs are deep in healthcare.  The PEU boys love the security of Uncle Sam's wallet!

Update 1-3-24:  NakedCapitalism did a great piece on the PEU boys bleeding healthcare firms and harming quality care.

Michelle Obama's Juggernaut Speaking Fee: $741,000

Former First Lady Michelle Obama received 700,000 euros or $741,000 as the headline speaker at the Bits and Pretzels Founders event in Munich, Germany.  That's a massive fee for a one hour talk, one reserved for insiders.

Mrs. Obama co-founded Plezi Nutrition, a public benefit company focused on healthy food and drink products for children.  PLEZi Nutrition is backed by Juggernaut Capital Partners, a private equity underwriter (PEU).  

Politicians Red and Blue love PEU and increasingly, more are one.

 

What's in the Box Mr. Griffin?

The SEC recently asked at least sixteen investment firms for their WhatsApp messages for the first half of 2021.  The list included five major private equity underwriters (PEU), several hedge funds and huge market maker Citadel.

Citadel is fresh off a $7 million settlement with the SEC for "alleged order placement errors and misrepresentation of short sales."

It appears Ken Griffin's firm will fight the SEC's request and may do so in conjunction with the PEU boys.  Billionaires have access to elected official at all levels.  

Politicians Red and Blue love PEU and increasingly, more are one.  Is any of that love in WhatsApp messages during the first half of 2021?  What kinds of evil may be lurking in PEUdora's Box?  Ken Griffin wants it kept closed.

SEC to Open PEUdora's Box?

Seeking Alpha reported:

The U.S. Securities and Exchange Commission has escalated its investigation into the financial industry's use of personal devices for communicating about business matters by collecting thousands of messages, according to a media report.

Now the SEC is asking at least 16 investment firms for messages from the first half of 2021 that pertain to their businesses, Reuters said, citing four people with direct knowledge of the matter. The companies include Blackstone (NYSE:BX), Apollo Global Management (NYSE:APO), KKR & Co. (NYSE:KKR), Carlyle Group (NASDAQ:CG), and TPG (NASDAQ:TPG), three of the people told the news organization. Another person said some hedge funds, including Citadel, were also involved.

Private equity underwriters (PEU) brought us nonlobbyist lobbying where billionaire founders set U.S. policy via "personal relationships" with legislators, governors and Presidents.

Indicted Blue Team Senator Bob Menendez had Blackstone and Apollo in his top five donor list.  Did any PEU insiders use their nonlobbyist lobbying relationships to fuel their insatiable greed?  PEU personal devices may shed light on that question.  

It will be interesting to see what evil flies out of PEUdora's WhatsApp box.

BIG's Take on PEU WCAS

Matt Stoller wrote on BIG:

“Awesome! Cha-ching!” 

That’s the phrase that an executive at private equity-owned financial firm U.S. Anesthesia Partners (USAP) used after acquiring yet another Texas anesthesiology practice, with the intent of hiking prices on Texas patients. And “Cha-ching!” was the right way to put it, since the excess profits amounted to tens, or even hundreds of millions of dollars, in just one medical specialty, in just one state. 

But the new quote should be ‘uh oh.’ Because today, the Federal Trade Commission, led by Chair Lina Khan, filed suit against USAP for monopolization, as well as its owner, New York City-based private equity firm Welsh Carson, which from its offices on Park Avenue engineered the entire strategy of gouging patients in Texas. It’s an important suit, for reasons I’ll go into, and it also reflects a more aggressive antitrust enforcement regime, and skepticism of private equity in health care.

Stoller quoted a NYT piece that concluded "private equity funded consolidation led to price increases" in a number of medical specialties.  He stated Welsh Carson ripped from that playbook.  

Actually WCAS wrote the playbook.   Brian Regan, General Partner in the Healthcare Group, implemented it at USAP.   Also in the Healthcare Group, former Medicare Chief Tom Scully.

WCAS is currently employing that very strategy in orthopedics with United Musculoskeletal Partners.  The December 2021 press release stated:

Welsh, Carson, Anderson & Stowe ("WCAS"), a leading private equity firm focused exclusively on the healthcare and technology industries, and Resurgens Orthopaedics, one of the nation's largest orthopaedic practices, today announced the formation of a new venture focused on building the premier physician-owned orthopaedic platform in the country.

The press release referenced WCAS past medical practice companies that rolled up

WCAS has deep experience building industry leading companies in partnership with physicians, including: US Radiology Specialists, US Anesthesia Partners, US Acute Care Solutions, US Oncology and USPI, among others.

WCAS' man at US Oncology is now CEO of Humana.  Bruce Broussard continues to use Humana funds for joint ventures with WCAS.  Humana makes significant profits from Medicare and Medicaid.  It invested alongside WCAS in occupational medicine, urgent care, primary care and home health/hospice ventures.

WCAS cashed out of its stake in Kindred Hospice, since renamed Gentiva by another private equity underwriter (PEU), Clayton, Dubilier and Rice. I'm sure WCAS's profit on Kindred Hospice was a majorly awesome cha-ching!

Tom Scully's ability to quote statistics supporting WCAS' greed is analogous to the Saudi Crown Prince bin Salman's recent data filled slide show.  They both have nefarious ends, more money, power, and influence....

Matt Stoller does fine work.  Consolidating and overcharging, it's been going on for a long time.  Yet, the future holds more threats than simple roll-ups.

In 2021 WCAS started Valtrius.  It is essentially a healthcare venture capital company.  Valtrius sounds like a herpes medicine and its aims to grow healthcare profits in virus like fashion.

Valtrius recently launched TailorCare:

Valtruis, a WCAS company, announces the launch of TailorCare, a risk-based company that provides evidence-based, clinically-designed care navigation to patients living with joint, back, and muscle pain.

TailorCare partners with in-market providers to deliver high-quality MSK care. This includes primary care and specialty providers, such as United Musculoskeletal Partners (UMP), TailorCare's anchor strategic orthopedic partner.

Layering of PEU affiliates will be the next challenge for any Federal Trade Commission. 

A round of applause for anyone who can hold, even turn back the PEU surge overrunning our healthcare system.  

Politicians Red and Blue love PEU, and increasingly, more are one. 

Update 9-25-23:  KKR owns healthcare provider Brightspring and appears ready to take it public.  Buzzfeed found serious care problems at the company.

Update 9-28-23:  Matt Stoller writes on Twitter/X:

Private equity is furious at Lina Kahn, everyone else is furious at private equity.

Private equity doesn't care if people are furious. They feel removed from affiliate customers and have the politicians at their beckon call.

Update 10-26-23:  Big by Matt Stoller reported the Pentagon's "hand's off position" on defense company buyouts has consequences:

Higher prices, worse quality, lower output. Wall Street and private equity firms prioritize cash out first, and that means a once functioning and nimble industrial base now produces more grift than anything else.  

Update 1-3-24:  NakedCapitalism did a great piece on the PEU boys bleeding healthcare firms and harming quality care.

Senator Bob Menendez Indicted for Self Serving

U.S, Senator Bob Menendez (Blue Political Team- New Jersey) got caught with his hand in the halal jar.   NBC News reported federal agents found forbidden booty during their years long investigation:

Agents found more than $480,000 in cash, “much of it stuffed into envelopes and hidden in clothing, closets, and a safe,” including jackets bearing the senator’s name that were hanging in his closet, as well as more than $70,000 in Nadine Menendez’s safe deposit box, the indictment alleges. 

Menendez "dismissed the allegations against him in a statement, saying prosecutors have 'misrepresented the normal work of a Congressional office.'"

So the "normal work" of a Congressman is to personally profit from the application of influence on behalf of "insiders?"  Thank you for that clarification, Senator!

Menendez' insiders included the founder of IS EG Halal.   In early 2020 the Egyptian Prime Minister decreed the company as the only entity capable of granting halal certification. 

This decree legitimizes the establishment of IS EG Halal (Edgewater, New Jersey) as Egypt’s sole authorized halal certification entity in the United States for food and beverage products exported to Egypt.

It also established IS EG Latin America SRL for certifying food exports from Latin and South America.

IS EG Halal's website states:

“Halal” in Arabic means permissible or lawful. When it is applied to food or other goods it denotes specific regulations as to which types of food/drink Muslims can consume as well as how those products are prepared. 

So why did IS EG Halal's founder need Senator Menendez?   The indictment states:

Menendez "provided sensitive U.S. Government information and took other steps that secretly aided the Government of Egypt." It also says the senator pressured an official at the U.S. Agriculture Department for the purpose of protecting a business monopoly granted by Egypt to Hana, who is an Egyptian American. 

According to the indictment, Hana and Nadine Menendez "were friends for many years" before she started dating the senator. In early 2018, she informed Hana that she was dating Menendez and "in the following months and years," they worked to introduce Egyptian intelligence and military officials to the senator "for the purpose of establishing and solidifying a corrupt agreement" in which Hana, with assistance from the two other businessmen, "provided hundreds of thousands of dollars of bribes" to the senator and his wife "in exchange for Menendez's acts and breaches of duty to benefit the Government of Egypt, Hana, and others, including with respect to foreign military sales and foreign military financing," the filing alleges.

With Senator Menendez even the date he met his current wife is under a cloud of suspicion.

Open Secrets showed Menendez' top donors from 2017-2022.  Two of the top five are private equity underwriters (PEU).  Blackstone and Apollo Global Management came in at #3 and #5.  The PEU boys are masters at tapping Uncle Sam's wallet and keeping their unjust preferred "carried interest" taxation in place.  

Everything about IS EG Halal reads PEU.  Worldwide franchise established by Egyptian government. Check.

Product becomes prohibitively more expensive due to change.  Check.

After Egypt disqualified the four previously designated companies, the price paid by retailers to get certified halal beef was expected to increase to about $200 a metric ton, up from about $20, according to a USDA report.

History doesn't repeat, but it echoes.  Recall the bribery of the wife of Congressman John Conyers by Synagro Corporation, an affiliate of The Carlyle Group, another politically connected PEU?  Conyers said at the time:

"Public officials must expect to be held to the highest ethical and legal standards."

The system is designed to produce otherwise.  

Politicians Red and Blue love PEU, and increasingly, more are one. 

Update 9-26-23:   The indictment can be found here.

Update 1-29-25:  Menendez was found guilty and sentenced to 11 years in prison.