Investments

Here is the latest overview of major equity investment companies and how they are faring :

Wall Street Journal reports that Carlyle is feeling the Squeeze now which includes layoffs !

Carlyle Group LLC is cutting 10% of its staff, the first large U.S. private-equity firm to announce firmwide layoffs as the industry braces for leaner times.

The Washington buyout shop will cut about 100 positions, the first layoffs in Carlyle’s 20-year history. Other large firms also are considering cutbacks, according to two people familiar with discussions.

The layoffs show how no part of Wall Street’s ecosystem is immune from the recession. There was a belief that private-equity firms would be a refuge from the financial crisis. But for firms such as Carlyle, declining asset values and a paucity of new deals have taken their toll.

It seems that Carlyle’s Co-Founder David Rubenstein issued a warning late 2007 about greed taking over, yet with few listening during the days of bull markets, the results seemed inevitable - the article then concludes :

As the effects of those credit decisions continue to shake up the world’s banks, private-equity activity has disappeared in tandem. That is a reversal from the leveraged-buyout bonanza of 2006 and 2007. During that stretch, private-equity shops snapped up companies valued at roughly $1.4 trillion in debt and equity, according to data provider Preqin. Adjusted for inflation, that is about one-third of all LBOs ever.

Like its peers, Carlyle has had a difficult year, registering losses from the collapses of its mortgage-securities hedge fund, Carlyle Capital; energy-trading company SemGroup LP; and telecom operator Hawaiian Telcom Communications Inc.

Despite its woes, the firm remains a fund-raising juggernaut, recently closing on $14 billion for its next buyout fund. Across its 64 funds, Carlyle has about $40 billion of uninvested capital. The firm also closed one of the year’s largest buyouts, a $2.54 billion acquisition of Booz Allen Hamilton Inc.’s U.S. government-consulting business.

Elsewhere, The Times reports on troubled Lehman Brothers and how people from the inside is trying to salvage the company from hostile take-overs :

A management buyout team (MBO) yesterday beat two of America’s biggest private equity firms to buy a majority stake in Lehman Brother’s prized investment management business.

The team led by George Walker, the bank’s global head of investment management, outbid a consortium comprising Bain Capital and Hellman & Friedman in an auction run by the US Bankruptcy Court in New York. A third, unnamed bidder had also been in the auction but only for a select few assets.

Lehman Brothers went bust in September with debts of $613 billion, (£414 billion) making it America’s biggest-ever bankruptcy. Alvarez & Marsal, the defunct investment bank’s liquidators, said that the MBO team’s offer represented greater value and certainty of closing than a $2.15 billion bid from the private equity consortium.

Investment management and banking sure are not what they used to be but perhaps the MBO can save Lehman - the article goes on :

The deal will see represent 51 per cent of Lehman’s investment management business go to the MBO team, while Lehman Brothers Holdings, which is overseen by Alvarez & Marsal, will retain 49 per cent. Mr Walker will become chief executive of the spun-off business, to be called Neuberger Investment Management. Joe Amato will continue to run Neuberger Berman as the new company’s biggest operating unit.

The Bankruptcy Court is scheduled to approve the deal on December 22, with the deal likely to close in the first quarter of next year. Mr Walker said: “I am thrilled to be moving forward towards becoming an independent, standalone company.”

 

Equity Investment, Investment Banking, Investment Management, Investment News Carlyle, Equity, Lehman Brothers