During the UBBest consequences of the "Private equity"-Bubble probably still before standing, the next-year-boom is already on
One of the ies among the skeptics, which had foreseen the outbreak of the current financial crisis, was whether they will respond under the name "Subprime crisis" or as a "private equity" crisis. Although "Subprime" had clearly made the race, but also the "buy-out" / "private equity" boom took the premixed end (final spurt for private equity?To).
The most powerful survey wave, which had ever seen the world. So called "private equity" funds in 2006 and 2007 alone in the US alone by more than 300 billion. USD companies bought and only minimal equity ratios spent. Financed were the considerations with so-called "Levereged Loans" (ll), which understood loans to companies that already have high debts.
At this time, however, the liquidity in the markets was unusual and secure financial assets such as government bonds were extremely low interest. In addition, in the market, obviously, the opinion that Furderhin is hardly any more difficult with heavier crises, but – in the sense of the "Great Moderation" by the US Federal Reserve – with eternally a constant recovery.
As these loans, which should be operated from the cash flows of the supersomed companies, promise some high interest rates, they increase in international investors on frightening sales. However, at that time was already a official side to horen that the risk ramies ("spreads") in no ratio to the risks received, as among other Melvin King, the boss of the Bank of England, had stressed very urgently.
In any case, with the collapse of credit markets, the investees have received the foreseeable problems: the Farried company Raider Kohlberg Kravis Roberts (KKR) had a loss of 1.1 billion dollars in the first half of 2008, the world’s largest private equity house Carlyle Group. Ready every tenth of its 1000 employees and the Blackstone Group lost in the third quarter of 2008 considerable $ 510 million. In addition, the PE funds were consistently affected by a massive loss of customer allowances, while at the same time it was as good as impossible to raise debt financing.
Consequently, the PE-Business last saw very sadly. So were in the 3. Quarter in Great Britain, for example, only 31 PE deals for a total of 556 million pounds finalized, which is the lowest number for 25 years. In total, this year, according to the Center For Management Buyout Research (CMBOR) British companies for just 3,6 billion. Pound from PE funds, after 18.2 billion. throughout the previous year and 43.4 billion. in the year 2007. In the US, this year was at least Deals for 17 MD. USD announced until September of the previous year, it was still 57bn. and a year before even 356 billion. Usd. Similarly, the revenues with Leveraged Loans, which in 2007 in the US with 535 billion. Dollars reached a record, in 2008 to 152 USD and according to SP Leveraged Commentary Data this year so far at modest 42 billion. lying, which were also used mainly for debts.
Previously, however, the investment banks deserved to finance the activities of private equity managers and then transform the leveraged loans into structured securities and to continue to invest in investors. When there were doubts about the stability of the financial markets, the banks were located on the one hand on the overalls arranged by them, on the other hand, it turned out that they have not previously passed on rough parts of independent investors, but in their own special purpose companies and thus from their balance sheets had outsourced.
These special purpose companies had financed a relatively high-interest portfolio of such loans with cheap short-term loans, which was a good business when the refinancing had been easy and cheap. With the outbreak of the crisis, however, not only the independent investors refused to suppose the LLS-based bonds. The special purpose companies did not receive no more independent financing, which, with the banks behind it now as "Toxic Waste" recovered into the books and came into the well-known difficulties.
No wonder so that it had gotten half a year ago, this business is always died forever – which is just as far as high. Because in the meantime, the financing conditions at Leverged Loans have improved dramatically again. That can be on the standard Reading Poor’s / LSTA Index, which resembles the prices of most of the US revolving leveraged loans. The LSTA prints out at which price revolving leveraged leans are traded in the ratio at your nominal value. At a stand of 100, with which the index was started in 1996, the circumferential bonds thus record a nominal value.
At a long-term section of just over 95, the index in the boom times from 2004 to the summer of 2007 was consistently over a hundred, which clearly demonstrated the loose financing conditions of the PE industry rather clearly.
Due to the financial crisis, however, the index slipped to around 60 payers until the turn of the year 2008/2009, and no investor only thought in the dream of engaging in this market. Since then, however, the index has continuously worked up in accordance with the stock markets and is now close to reaching the brand of 90 numbers. This could mean that the PE funds will soon be able to find investment banks and investors who finance them spectacular deals.
As the US Magazine Forbes reported, the financing banks had actually again managed to accommodate leveraged loans at investors. So surprisingly heavy interest had passed on Warner Chilcott’s superseafter the drug division of Procter Gamble or to participate in the investment of Silver Lake Partners in eBay and also blackstone is press information just before the use of the theme parks of the world-growing brewery company Anheuser-Busch and wants to spend it up to three billion.
However, the lenders are currently still strategic consideration such as the Treasury Cadburys by Kraft Foods, the merger of the miner companies Anglo American and Xstrata or the suppure of Perot Systems by Dell to prefer.
Probably it will not be long until the hunts for returns the investors returned to the PE market. After all, the fact that in the face of the crisis anyway a reorganization of the global corporate landscape is pending and the reaction prices were now much more realistic could be made. In particular, some industrial filetettchen were also allowed to come to the market, which were not to be reasonable prices in normal times. Incidentally, not least not-selling auxiliary PE funds are responsible, the strategic builders in boom times had frequently massively superior.
Prerequisite for a revival of the PE funds was allowed, of course, that the market will continue to be believed in a rapid end of the economic crisis, and continue to boom the Borsen and the central banks do not reveal the money tap. Some sand was allowed in the medium term, however, in the financing gears, if refinancing for the revolutions of the boom years are falling down. Thus, it is estimated in the coming three years more than $ 100 billion to the prolongation and 2014 should be according to the standard Poor’s already 192bn. Be USD. At the same time, the default rates of these LL-junk bonds are rising dramatically, which should vapor the enthusiasm of investors a little steam.