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While many expect bigger deals,[URL="http://www.burberryoutletonlinese.com/"]Burberry outlet online store 60% off & free shipping[/URL], firms are under pressure to find exclusive transactions and avoid "pass-the-parcel" secondary buyouts -- where one firm buys a business from a rival -- that were the hallmark of 2010.</p>They are also gearing up to plow more capital into rapidly growing emerging markets, as they seek out higher returns and become more comfortable with the risks,polo outlet.
"I do think that 2011 will hold a $15 billion deal," said John Eydenberg,burberry outlet, Global Head of Financial Sponsors, Deutsche Bank AG (DBKGn.DE) in New York. "About $10 billion is the amount that a group of banks can put together, but what is trickier is the equity,gucci outlet, as very few folks want to put $1 billion into the ground."
Leveraged buyout deals, which dropped dramatically after the credit crisis, have started to rebound. A total of $211 billion of buyside private equity deals were struck globally this year, up from $121 billion in 2009,[URL="http://www.burberryoutlet1.org/"]burberry outlet[/URL], and the busiest fourth quarter since 2007, Thomson Reuters data shows.
Still, the year's volume is about a quarter of the amount struck in the boom years of 2006 and 2007 and deal sizes remained in the single digit billions.
That could change, particularly in the United States, where the leveraged credit market -- the "rocket fuel" for buyouts,[URL="http://www.burberryoutletonlinese.com/"]burberry outlet bags[/URL], according to Eydenberg -- has benefited from massive inflows.
"The conditions (for go-private, private equity-driven M&A) have been very good in the past year," said Andy O'Brien co-head of the syndicated leveraged finance group at JPMorgan Chase & Co (JPM.N).
He cited very strong credit markets,[URL="http://www.hangbagsmy.com/"]burberry outlet online[/URL], private equity funds still having a fair amount of cash to invest and public equity levels trading at attractive discounts to historical highs.
Karim Assef, global head of financial sponsors at Bank of America Merrill Lynch (BAC.N) expects to see more leveraged buyouts in the $5 billion-to-$10 billion range in 2011.
"We are now seeing a very healthy pipeline of LBOs, many of which are going-private transactions, and of a size that is consistently higher than we've seen all year," Assef said.
Buyout funds are currently sitting on $437 billion, according to London-based private equity research firm Preqin. They have been sitting on between $400 million and $500 billion for the past four years.
The year's biggest private equity deals ranked as Kohlberg Kravis Roberts & Co's (KKR.N) $5.3 billion acquisition, including debt, of Del Monte Foods Co DLM.N and $4.6 billion acquisition, including debt, by Canadian investors of British car parts maker Tomkins.
Bigger deals such as a talked-about $15 billion leveraged buyout of Fidelity National Information Services Inc (FNF.N) did not make it past infancy, mainly due to differing price expectations by buyers and sellers. But that could ease.
"Purchase price multiples at this point in the cycle are higher than in past cycles and that's largely because there is more competition -- not due to higher leverage," said Matt Grinnell, head of financial sponsors in Europe for Barclays Capital.
"The competition should ease off a bit. You are seeing private equity firms be a bit choosier in which assets they seek to acquire,burberry outlet," Grinnell said.
He believes that could lead to a reduction in asset prices.
EXCLUSIVITY SOUGHT
Next year could start with a bang and the biggest buyout since the credit crisis. Apax Partners has a couple of months to raise cash from co-investors to support its $8.5 billion secondary buyout bid for Danish cleaning services company ISS, sources have said.
But facing some criticism from investors for the wave of secondary buyouts, firms are beginning to steer clear of competition and are seeking out exclusive deals.
BoA's Assef said private equity firms will likely spend less time chasing auctions in 2011 and said there has already been a pull back from broad auctions.
"We are seeing a bit of fatigue toward the year end," said Matteo Canonaco, global sector head financial sponsors group and sovereign wealth funds at HSBC. Processes started in August and September are being pulled or are finishing with just one horse in the race, Canonaco said.
The auctions of CVC's Mivisa and Providence's Phones4u have, in each case, drawn only one binding bid, sources have said.
"We are seeing public company boards more willing to conduct limited (auction) processes," said Matthew Stopnik,burberry bags, head of UBS AG's (UBSN.VX) U,coach outlet sale.S. financial sponsors group.
A limited auction could see a seller agree a deal with a buyer, but have a 'go-shop' period where it can solicit other bids for a few weeks. It could also see a minimal 'break-up fee' if the deal falls apart.
Stopnik added that boards are beginning to recognize they can maximize value without conducting broad auctions.
As appetite for auctions dwindles, firms are eyeing public markets and corporate disposals, finding targets more receptive,burberry outlet online.
EMERGING MARKETS
Global buyout firms are also beefing up their presence in fast-growing emerging markets and will be looking to invest more money in Asia and Latin America in 2011.
Private equity investments in emerging markets totaled $18.3 billion for the year to date, up 110 percent from the same period in 2009, Thomson Reuters data showed. Overall, emerging markets accounted for 8.7 percent of private equity investments this year compared with 7.3 percent last year.
The top five countries targeted by value of deals were Brazil, India, China, Malaysia and Indonesia.
Blackstone Group LP (BX.N) this year bought a share of a private equity firm in Brazil and has installed a top executive in Hong Kong, expecting to invest a significant part of its latest fund in Asia.
It is what investors are demanding. Advent International's fifth Latin America fund,[URL="http://www.hangbagsmy.com/"]Burberry Outlet 2012[/URL], which closed on $1.65 billion was oversubscribed and was 25 percent larger than its predecessor.
(Editing by Andre Grenon)
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