Filed under: The Blackstone Group, Financials and analyticals, Private equity industry, Shareholders

The Blackstone Group L.P. (NYSE: BX) has reported earnings this morning, and the initial response is lower. The private equity giant posted a GAAP net loss of $246.7 million after items, and its “economic net income” was also a loss at -$93.6 million.

The company stated that its total net reportable segment revenues were $32.3 million, driven down by declines in all business segments from $1.23 billion in 2007. Its GAAP revenues were $68.5 million.

Corporate Private Equity had negative first quarter revenues; Real Estate revenues down 94%; Marketable Alternative Asset Management down 81%; Financial Advisory Revenues decreased 24%

You can look through the entire release, but as the company noted, most business segments were indeed lower.

Interestingly enough, the company now has $113.53 billion in assets under management. It has also decided to make a dividend payment of $0.30.

Shares of Blackstone are down about 4% at $18.70 in pre-market trading.

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Filed under: Deals, Top deals, Financials and analyticals, Bain Capital, Thomas H. Lee Partners, Morgan Stanley Capital Partners, Citigroup

The nearly never-ending Clear Channel Communications Inc. (NYSE: CCU) buyout may finally clear. Numerous reports speak about a settlement was reached this weekend between the banks and the buyers. The New York Times has a full report, while the WSJ also has data on its reporting too.

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Filed under: Deals, The Blackstone Group, Financials and analyticals, Private equity industry, Investments, Value and lack thereof

The Blackstone Group L P (NYSE:BX) has announced the closing of three newly created collateralized loan obligation funds totaling $1.3 billion. Those CLO’s are trading again. These were all created over the past month, and these are just the CLO’s that Blackstone participated in.

In March, Blackstone merged its existing CLO group with the team from its newly acquired GSO Capital Partners. This 35 person CLO team has offices in New York and London. The combined CLO group now manages $14 billion across 26 funds in the US and Europe.

This shows a breakdown in the actual amount per CLO, compares it to Q1 and to 2007, and it even puts the lower volume blame now on the lack of AAA rated part needed for each CLO.

Interestingly enough, Blackstone shares are up almost 50% from their post-IPO lows.

Continue reading the full story and spot analysis at 247WallSt.com.

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Filed under: Rumors, Financials and analyticals, Raising money, Texas Pacific Group, Merrill Lynch, Investments

In a report from the Financial Times, Merrill Lynch & Co. Inc. (NYSE: MER) is holding talks with TPG to discuss closer ties. This might include the possibility of the private equity firm potentially investing in Merrill Lynch if the investment bank needs more capital. John Thain met with key executives from TPG according to the report.

The companies have apparently been in discussions since last fall. One affiliate had offered to put in as much as $3 billion into Merrill Lynch. Merrill Lynch raised some $12+ billion in funds elsewhere for different terms.

What is interesting here is that the article also notes that TPG doesn’t want to appear too close with Merrill Lynch, because of the appearance of being too close and (and therefor a competitor).

The company has also raised additional funds this month by selling fixed income and preferred securities.

John Thain’s suspenders and belt might be a tiny tighter since he went on record saying Merrill Lynch will not need any more capital.

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Filed under: Top deals, Financials and analyticals, Value and lack thereof, Public or private?

Liberty Mutual has agreed to acquire Safeco Corp. (NYSE: SAF) for some $6.12 billion this morning. Liberty offered to purchase all outstanding common shares at $68.24 per share, representing roughly a 50% premium to the closing price on Tuesday.

Safeco sells $5.9 billion worth of insurance policies annually, compared to Liberty Mutual selling some $20 billion annually. The deal will create the country’s fifth largest property insurer with a combined 15,000 independent agencies. Safeco will join Liberty Mutual’s Bureau Markets business unit.

The boards of both companies have approved the merger and the deal is expected to close by the end of the third quarter upon regulatory and shareholder approval.

Continue reading on 247WallSt.com.

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Filed under: The Blackstone Group, Financials and analyticals, The Carlyle Group, Permira, Private equity industry, Value and lack thereof, Public or private?

Freescale is the old chip giant that was acquired by a private equity group led by The Blackstone Group (NYSE: BX), The Carlyle Group, and Permira Advisers. Prior to being public, this was a unit of Motorola Inc. (NYSE: MOT).

The company still has to report earnings as though it was a public company because of its ratings and because of its public debt. The company has shown that over the last twelve months, the company’s adjusted EBITDA was $1.55 billion.

Net sales for Q1-2008 were $1.405 billion, up from $1.361 Billion in Q1-2007 and down from $1,539 billion in Q4-2007. Unfortunately, the company is still posting an operating loss of $152 million for the quarter, compared to $654 million in operating losses in Q1-2007 and $595 million in Q4-2007. The net loss after items for this last quarter was $245 million, also down from a loss of $539 million in Q1-2007 and down from a loss of $525 million in Q4-2007.

Its cash and total short term investments were $1.25 billion on March 28, 2008, compared to $751 million at the fourth quarter ending December 31, 2007; and its accounts receivable were $680 million and inventory was $732 million. But here is where things get tricky. Its long-term debt is $over $9.3 billion alone. Of the company’s total asset base of $15.197 billion, more than $5.3 billion is goodwill and more than $3.6 billion was listed as intangible assets.

If you go back to the BloggingBuyouts article, “Why private equity firms avoid technology companies,” you’ll see that being a highly leveraged technology company that requires high capital expenditures isn’t always the greatest place to be be. Unfortunately for all the private equity partnersm the company can’t live on EBITDA alone and many believe that Freescale will need more capital and thus more leverage.

The original private equity deal was put at $17.6 billion for an enterprise value. So far that isn’t turning out too great. Who knows, maybe a re-IPO of Freescale isn’t too far off.

Jon Ogg is a producer and editor of the Special Situation newsletter for 247WallSt.com.

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Filed under: Deals, Financials and analyticals, Private equity industry, Investments, Value and lack thereof, Public or private?

It was almost incredible that private equity funds never acquired many banks or other depository institutions, despite the lending woes that came to pass. For some time there was value there before the logic and rationale behind credit evaluations were tossed out the window. We’d discussed this with many groups last year and the answer was always that the private equity firms were sitting out to avoid the relative valuation erosion as peer-pressure drove down the value of the solid companies.

Wilbur Ross might soon be making a change to this approach of avoiding the group. Last week there many reports out of Reuters, Crains, and others discussing Ross’s intent to go after depository institutions.

The past articles discussed and pondered different aspects that Ross and his new backers might pursue, but new information from this day may shed a bit more light on Ross intends to invest this money and how sovereign wealth funds may be involved in this.

Continue reading the full article at 24/7 Wall St.

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Filed under: Financials and analyticals, Raising money, Texas Pacific Group, Investments, Value and lack thereof

There was an interesting report that surfaced over the weekend that took greater hold on Monday morning, yet nothing official has been released.

Washington Mutual (NYSE: WM) shares are rising sharply this day on “weekend talk” that they will be supported by an investment from private-equity group led by TPG Inc, also known as Texas Pacific Group. The company has been forced to write-down billions on home-mortgages and loan losses since the credit crisis, and WaMu is also one of the large quasi-money-center banks that is at-risk of being in jeopardy on its own. According to Reuters, it said “a source” says the deal could be announced as soon as this day

It could be a substantial investment of some $5 billion, although once you get into details the number mysteriously changes wildly among sources as far as terms and as far as dollars. Whatever it is, it’s working for the banking giant whose stock has been battered. Shares are up $2.70, over 26%, to $12.87 on the speculation. The 52-week range is $8.72 to $44.66.

What is perhaps more interesting than anything, is that this doesn’t necessarily include Wells Fargo (NYSE: WFC). That company has been listed as one of several companies in a position to be a savior for distressed financial companies. This would also lend credibility to a bank or private equity saving grace for National City Corp. (NYSE: NCC), which has also been in the soup.

If private equity ends up being a savior for the banks, even if it is an iconic trend it would be nothing short of ironic if you’ve been reading about all the private equity deals that have failed.

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Filed under: Financials and analyticals, Private equity industry

JP Morgan Chase & Co. (NYSE: JPM) has announced the launch of DealVault. This is a new technology that tracks private equity investments valuations, performance, risk and exposure analysis. JP Morgan’s unit called Private Equity Fund Services (PEFS) developed the system to provide CFOs, deal and investor relations professionals with a platform to centralize deal tracking information.

DealVault will also integrate with bookkeeping and back office systems, in order to grant administration one platform. Private equity managers will be able to store portfolio company information in a web-based solution, package information in an auditor-friendly format, grant independent valuation reviews, and to cut time spent aggregating and reconciling volumes of data.

This “PEFS” unit already provides a full suite of administration services to private equity firms, real estate firms, and institutional investors; and it currently services more than 200 funds representing $50 billion in committed capital, and serves the world’s largest institutions with $110 billion in aggregate committed capital across thousands of private equity investments.

Does something seem wrong or off about the timing of this launch? In 2006 this would have garnered much attention. In 2007 it would have been mandatory. While the billionaires are all supposed to be immune to economic sensitivity, that just isn’t quite holding up right now. Another wave of private equity will come again, at least that’s what history dictates. But the launch timing is probably one that could have been picked better.

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Filed under: Financials and analyticals, Private equity industry, Management fees

It’s been a year since Fortress Investment Group (NYSE: FIG) went public. At that time, the offering got a nice reception. After all, investors were hungry for hedge fund and private equity operators.

Of course, that’s no longer the case. And the stock of Fortress has gone from $34 to a low of $9.50.

Well, this week, the firm announced its fiscal Q4 results. There was a net loss of $29.3 million, or $0.43 per share and pre-tax distributable earnings were down 43% to $78 million, or $0.18 per share. Revenues were also lackluster - falling 22% to $196 million. Even though, with a large amount of assets under management (roughly $33.2 billion), Fortress saw a 43% spike in management fees.

With the roiling credit and equity markets, it’s tough to complete deals. As a result, there hasn’t been much chance to realize gains.

Despite all this, the Fortress conference call was upbeat. Keep in mind that the company focuses on asset-based investments, which tend to have less leverage and lower valuations. Besides, as major banks repair their balance sheets, there should be opportunities for players like Fortress to get some choice deals.

Interestingly enough, Fortress thinks that the second half of 2008 will be quite active. And, if the company can scoop up some transactions at compelling valuations, it could position itself nicely for the next couple years, when things get back to normal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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