Redskins Snyder Beneficiary of Richmond Taxpayer Funds

The Washington Redskins, valued at $1.6 billion, will conduct their summer training camp in Richmond, Virginia in a $10 million facility funded by taxpayers.  The Richmond Times Dispatch showed the extent to which billionaire Dan Snyder will be burdened by Redskins training:

The team is not contributing to the cost of the camp.

The city is ready to break ground on the new facility.  Billionaire Dan Snyder gets a free training camp for eight years.  That's a PEU worthy deal.

Yes, Virginia is Santa Claus

Virginia Governor Bob McDonald will finance 83% of a $1.4 billion to build a new U.S. 460 from Suffolk to Petersburg. The remaining 17% will have the benefit of a tax free bond designation

The state will contribute $903 million, the Virginia Port Authority $250 million and the rest will be tax exempt bonds from the Route 460 Funding Corporation of Virginia.  Earlier financing reports mentioned possible federal loan funding for the project. 

Private companies behind the deal include Ferrovial Agroman, S.A. and American Infrastructure. 

Private equity underwriters wanted in on the deal, but their expected 20% annual returns made the project too expensive. 

State officials ditched plans to use private equity when it became apparent that such a financing model would produce tolls that were twice as high or higher than the current rates, Layne said.

“If we did attract equity, it was going to be very expensive,” he said.

Rather, the state now plans to create a special nonprofit corporation, controlled by appointed board members, that will issue debt for the work. Layne said he will serve as chairman of the corporation. The state will own the road and maintain it.

The mostly public equity project involves interest costs.

The public contribution will come from a transportation fund that McDonnell established with bonds intended for public-private partnerships and “mega” transportation projects.

Who carries the burden of this interest expense? Please tell me, Governor.  The only role for US 460 Mobility Partners is designing and building the road.

"The private-sector team will design and build the project at a fixed cost by a fixed date and will take significant risks associated with delivering the project.

Given America's longtime experience with road building, I find it hard to believe there are significant risks in the Governor's contract.  What's 460 Mobility Partner's fee for building the new 460?  Is it 3% of the project, $42 million?  Might it be more?

It's an odd public-private partnership. 

VDOT, in coordination with the Office of Transportation Public-Private Partnerships, procured the project under Virginia's Public-Private Transportation Act, which allows the Commonwealth to partner with the private sector to finance, design and build transportation improvements. 

The Commonwealth brings the lion's share of funding.  One could view Virginia as Santa Claus in this deal.

PEU to Focus Exclusively on Marijuana

Forbes reported:

Leafly’s founders established a second business–Privateer Holdings, believed to be the only private-equity firm focused exclusively on marijuana. It is closing its first-round investment pool of $7 million, which it intends to use to buy existing marijuana-related businesses. One possibility is a vaporizer manufacturer, a mainstay of the medical-user community, because it creates steam (much like the vaporizers of our childhood), instead of smoke.

Privateer Holdings, marijuana PEU.

We are a private equity firm strategically investing in the emerging legal cannabis field. 

This may be the sign of PEU ubiquity.  

Carlyle Christmas

The Carlyle Group issued a press release on December 25th.  It announced the sale of Qualicaps, a Japanese drug capsule maker.  Carlyle purchased Qualicaps in October 2005.

Under Carlyle's seven years of ownership revenues grew 50%.  When Carlyle purchased Qualicaps the press release stated:

Steady market growth is also expected for hard capsules in the health and nutrition sector. 

How much market growth was expected vs. the result of Carlyle's global hegemony?  Qualicaps was the second largest global capsule maker in 2005.  It's still #2.

Qualicaps has a more than 20% market share in the pharma-grade capsules segment, the largest segment of the capsule market

Carlyle didn't reveal the price paid for Qualicaps, but it shared the expected $654 million in proceeds from the sale to Mitsubishi Chemical Holdings Corp.

Chuck Hagel PEU

Ex-Senator Chuck Hagel sits on the advisory board of Corsair Capital. a private equity underwriter (PEU) focused on the financial services industry.  Hagel's PEU appointment came in February 2009  His Corsair bio states:

Prior to his election to the U.S. Senate, Senator Hagel was president of McCarthy & Company, an investment banking firm in Omaha, Nebraska. 

He also serves on the Board of Directors of Chevron Corporation and Zurich’s Holding Company of America; and the Advisory Board of Deutsche Bank America, and is a Senior Advisor to Gallup.

Hagel also serves as Senior Advisor for McCarthy Capital.and director of Wolfensohn and Company, an investment and advisory firm specializing in emerging market economies..

The Pentagon helped make the world safe for American branded multinationals.  Hagel faces a difficult nomination for his stance on Israel and the looming war with Iran over nuclear technology.

Update 1-7-13:  President Obama nominated Hagel for Pentagon Chief.   So far the press is silent on Chuck's PEU ties.

American Christmas Update

It's Christmas Eve and this year's flight found the airline close to emerging from bankruptcy.  I recalled last year's crew, which went to extra lengths to share the spirit of the Season.  They inspired this poem

Twas two nights before Christmas

and all through the plane,

weary travelers expected the usual inane.

But this safety briefing rang with humor and heart

that no corporate script could ever impart.

Travelers perked up their ears, smiles broadened wide

as Stewardess #1 delivered line after line.

The pilot announced he and the first mate

would hold up the trip, making us a little late.

Important packages were destined for the hold.

Gifts for our loved ones, young and old.

These acts took place on one solitary flight 

of an airline in bankruptcy, what a terrible plight.

Pay will be cut and pensions obliterated,

so executive bonuses can be liberated.

Yet this crew set aside the cards they face,

giving great joy to the human race.

Keep this a secret, whatever you do.

Corporate PR would never approve.

Christmas flickers in each heart's light,

especially in those facing challenges of blight.

Many thanks to the creative word stew,

the pilot, first mate, the whole inspired crew.

They brought me home for Christmas,

long before the plane finished its flight.

Love and joy to all,
and to all a good night!

The flight attendant said they'd struck a deal, with less pay, higher costs for health insurance and less retirement (from frozen pension plans).  She just wanted it over with.  At the end, she said she was thankful to have a job.

My flying experience this past year involved full planes.  This Christmas' fare wasn't cheaper than last.  Where will the employee savings go?  How will management incentive compensation grow on the backs of workers?  It remains to be seen. 

It's a Carlyle Christmas

International Business Times reported on Christmas week's financial news.  It included:

Goldman Sachs (NYSE:GS) and Carlyle Group (NYSE:CG) are among a number of defendants that will go before United States District Judge Edward Harrington in Boston, for what they say are legitimate private-equity practices against investor allegations that buyout firms and their bankers colluded to rig offers on takeovers, according to Bloomberg.

Other stories included the expected UBS $1.5 billion fine for LIBOR rigging, a suit by credit unions against Bear Stearns/J.P. Morgan for misconduct in selling mortgage backed securities, a potential £350 million RBS fine for LIBOR rigging, and Morgan Stanley paying $5 million for selectively sharing sensitive Facebook financial information in the IPO process.

Meanwhile, Carlyle invested in an energy private equity venture, NGP Energy Capital Management.  NGP has $12.1 billion in assets under management.  Carlyle expects U.S. domestic energy to boom.

Carlyle’s growing natural resources investing platform includes energy mezzanine financing, energy infrastructure & power generation (Cogentrix), and commodities (Vermillion).

Will that get Carlyle back on track to make 30% annual returns for its faithful?

Warms the heart, doesn't it.   Moneychangers are back, PEU (private equity underwriter) and otherwise.