KKR, Texas Pacific $44 Billion TXU Bid Includes CEO
By Dan Lonkevich
Feb. 24 (Bloomberg) -- Kohlberg Kravis Roberts & Co. and Texas Pacific Group plan to include TXU Corp. Chief Executive Officer C. John Wilder in their buyout of the largest power producer in Texas for as much as $44 billion, said a person familiar with the proposal.
The TXU board is meeting today to consider the offer to buy the company for $69 to $70 a share, said the person, who asked not be named because the discussions are confidential. The offer, almost $10 above yesterday's $60.02 closing price for TXU stock, would value the equity at about $32 billion. The buyers would also assume about $12 billion in debt, the person said.
The takeover, if completed, would be the largest-ever acquisition by a private-equity firm. KKR founders Henry Kravis and George Roberts held that title until earlier this month when Stephen Schwarzman's Blackstone Group LP bought Equity Office Properties Trust, the largest U.S. owner of office buildings, for $39 billion including debt.
``I have no doubt that the TXU board will approve this merger over the weekend,'' said Mark Williams, a professor of finance and economics at Boston University who studies energy markets. ``But that does not address the looming and real public policy issue.'' The Texas Public Utility Commission may object to the increased debt of a leveraged buyout, Williams said in an e-mail today.
Lisa Singleton, a spokeswoman for Dallas-based TXU, didn't respond to requests for comment. Ruth Pachman, a KKR spokeswoman, and Owen Blicksilver, a representative for Texas Pacific, declined to comment today.
Wilder
Wilder, 48, has overseen an almost fivefold gain in TXU shares since taking over in February 2004. He has returned the company to a focus on electric generation and distribution in the Dallas region. The company was near bankruptcy in 2002 after failed expansions overseas.
Wilder and other TXU managers are participating in the buyout offer, and he will continue to run the company if the transaction is completed, according to the person familiar with the matter. Before TXU, Wilder was chief financial officer at Entergy Corp., the New Orleans based utility owner.
While it's not unusual for executives to join in the buyout of their companies, it has caused some shareholders and regulators to question whether managers use their influence with directors to keep the price down. Some buyout agreements include a so-called go-shop provision that allows directors to consider rival bids if they are made.
Kinder Morgan
In August, an investment group led by Richard Kinder, cofounder of Houston-based Kinder Morgan Inc., sweetened its offer for the pipeline company by 7.5 percent to $15 billion after some shareholders balked at the initial price. His partners were American International Group Inc., Goldman Sachs Group Inc., Carlyle Group and Riverstone Holdings LLC.
The U.S. Justice Department has been investigating whether collaboration among buyout firms limits competition for takeovers. So-called club deals have become more common as private-equity firms pursue larger companies.
Five of the 10 largest acquisitions announced last year were by buyout firms. In four of those deals, there were two or more co-bidders.
TXU is the largest power producer in Texas with more than 18,300 megawatts and the largest electricity retailer in the state, selling power to more than 2.2 million homes and businesses.
Failed Deals
Wilder has stirred controversy in Texas in the past year with his plan to build as many as 11 coal-fired generators for $10 billion. Environmentalists, the mayors of Houston and Dallas and some lawmakers have said the plants will make it hard to get the state in compliance with federal clean air rules.
``We have had two private equity buyers turned down by state utility commissions,'' said Tom Burnett, director of research at Wall Street Access in New York, who tracks acquisitions. ``A lot of these state agencies frown on the extra leverage placed on these assets by the private-equity groups.''
Arizona state officials in December 2004 rejected the sale of UniSource Energy Corp., owner of the state's second-biggest utility, to a partnership backed by New York-based Kohlberg Kravis, J.P. Morgan Partners LLC and Wachovia Capital Partners.
Oregon in March 2005 rejected a purchase of Portland General Electric by Fort Worth, Texas-based Texas Pacific.
``This extremely high regulatory risk of not obtaining state approval is one variable which might not have received proper attention in KKR's financially driven models,'' Williams said in his e-mail.
Buyout Boom
Closely held buyout firms such as KKR use a mix of cash from investors plus their own funds and debt secured on the target they buy to finance their deals. They typically seek to expand companies or improve performance before selling them within five years to other funds or investors in initial public offerings.
The largest LBO before Equity Office was the $33 billion purchase in November of hospital chain HCA Inc. by Bain Capital LLC, Kohlberg Kravis, Merrill Lynch & Co. and HCA co-founder Thomas F. Frist Jr. That topped the $31.3 billion that Kohlberg Kravis paid in 1989 for RJR Nabisco Inc.
Private-equity firms announced a record of more than $700 billion in takeovers last year and almost $50 billion so far this year, Bloomberg data show. Investors, seeking returns that exceed stocks and bonds, poured $432 billion into buyout funds last year, also a record, according to London-based Private Equity Intelligence Ltd.
KKR has raised $16.1 billion for a new U.S. buyout fund and expects to reach its cap of $16.6 billion, a person familiar with the matter said Jan. 11.
``They're taking a very big political bet,'' said David Dreman, who helps manage $22 billion at Dreman Value Management including TXU shares. ``If things go well for TXU they're going to put on seven to nine coal-fired plants. KKR must have a degree of certainty they can get it done. There could be major upside.''
The company's biggest rival in the race to build new generation in Texas is NRG Energy Inc., which bought a Texas power company called Texas Genco from a group of buyout firms including Texas Pacific and Kohlberg Kravis in 2005 for $5.8 billion.
CNBC reported the possible acquisition of TXU after exchanges closed yesterday. TXU shares had gained $2.38, or 4.1 percent, to $60.02 in New York Stock Exchange composite trading, the biggest one-day gain in more than nine months. They jumped another $10 in after-hours trading.
20.2.07
FII Investment Via Open Market Not Part Of FDI In Domestic Airlines; SpiceJet Raises $15.4 Mn From BNP Paribas
FII Investment Via Open Market Not Part Of FDI In Domestic Airlines; SpiceJet Raises $15.4 Mn From BNP Paribas
by Sahad on Tue 20 Feb 2007 09:23 IST | Permanent Link | Cosmos
This will result in higher foreign institutional investment in Indian domestic airline companies. Reserve Bank of India has clarified that FIIs can pick up stake in airlines beyond the sectoral FDI cap of 49 per cent through secondary market purchases. RBI's view is that the sectoral cap of 49 per cent is not stipulated as a composite limit.
However, RBI is of the opinion that investment through GDRs should be within the overall FDI limit. Secondary market purchases by NRIs and erstwhile overseas corporate bodies (OCBs) will also be within the 49 per cent FDI limit.
In any case, FIIs can now buy shares of listed companies like Jet Airways, SpiceJet and Air Deccan from the secondary market immaterial of the FDI limit. RBI's clarification was in response to a query from SpiceJet, which has recently made a preferential placement to BNP Paribas to rasie Rs 68 crore ($15.4 million).
SpiceJet Raises $15.4 Million From BNP Paribas
In conjunction with RBI clarification, low-cost carrier Spicejet has announced the allotment of 13 million equity shares to BNP Paribas Arbitrage Fund out of the proposed preferential issue of 72 million equity shares for over Rs 68 crore ($15.4 million). BNP Paribas Arbitrage Fund's 13 million shares account for 5.43 per cent stake in the airline. The shares were issued at a price of Rs 52.69 per equity share.
In December, SpiceJet had planned to sell $80 million worth of shares on a preferential basis, while the company received offers amounting to $118 million. Tata Group, Ishtitmar, Telemnix, Goldman Sachs and UK's KBC Fund had invested, while private equity fund Texas Pacific group withdrew the offer.
by Sahad on Tue 20 Feb 2007 09:23 IST | Permanent Link | Cosmos
This will result in higher foreign institutional investment in Indian domestic airline companies. Reserve Bank of India has clarified that FIIs can pick up stake in airlines beyond the sectoral FDI cap of 49 per cent through secondary market purchases. RBI's view is that the sectoral cap of 49 per cent is not stipulated as a composite limit.
However, RBI is of the opinion that investment through GDRs should be within the overall FDI limit. Secondary market purchases by NRIs and erstwhile overseas corporate bodies (OCBs) will also be within the 49 per cent FDI limit.
In any case, FIIs can now buy shares of listed companies like Jet Airways, SpiceJet and Air Deccan from the secondary market immaterial of the FDI limit. RBI's clarification was in response to a query from SpiceJet, which has recently made a preferential placement to BNP Paribas to rasie Rs 68 crore ($15.4 million).
SpiceJet Raises $15.4 Million From BNP Paribas
In conjunction with RBI clarification, low-cost carrier Spicejet has announced the allotment of 13 million equity shares to BNP Paribas Arbitrage Fund out of the proposed preferential issue of 72 million equity shares for over Rs 68 crore ($15.4 million). BNP Paribas Arbitrage Fund's 13 million shares account for 5.43 per cent stake in the airline. The shares were issued at a price of Rs 52.69 per equity share.
In December, SpiceJet had planned to sell $80 million worth of shares on a preferential basis, while the company received offers amounting to $118 million. Tata Group, Ishtitmar, Telemnix, Goldman Sachs and UK's KBC Fund had invested, while private equity fund Texas Pacific group withdrew the offer.
9.2.07
Foreign investors drive European hotel deal frenzy
Hotel investment levels in Europe reached €21.6 billion in 2006 exceeding all expectations; 37.9% up on 2005 and more than doubling the deal volume of 2004. Despite this steep increase, the number of rooms which changed ownership grew at a slower pace, reflecting a significant growth in average price per room across Europe, says a report by Jones Lang LaSalle Hotels.
Mark Wynne-Smith, CEO Europe, Jones Lang LaSalle Hotels: “Europe boasts the most international profile of investors with almost half of the total investment coming from outside the continent: 26% global sources, 10% Middle Eastern, 9% from the US and 3% from Asia.”
“Last year saw portfolio transactions at an all time high across the region and the UK remained the leader in hotel investment activity taking 56% share of Europe’s total investment”, he continued. “Other Western European hot spots included Spain and Germany, but as predicted, the capital flowed further east too. In 2005 the focus was on Turkey and Russia but last year saw investors target other areas in the region including Poland, Bulgaria, Slovakia and Serbia. The market is set to stabilise this year and interest in the more traditional Western European cities may transfer to Central and Eastern Europe.”
Investment drivers
Last year the debt markets remained competitive, allowing investors to negotiate attractive loans thus driving hotel real estate prices upwards. Strong international demand combined with a shortage of stock in prime locations resulted in decreasing yields and started to force investors towards secondary locations in search of more attractive investment deals with lower income growth potential.
Major European Players
Across Europe, private equity houses have continued to hold the lion’s share of total hotel investment in 2006 representing 43%, while high net-worth individuals represented 13%, property companies 11%, REITs at 6% and institutional investors 5%. Hotel groups made up half of all the vendors.
Mark Wynne-Smith commented: “As hotel operators largely divested their hotel real estate a new type of vendor is likely to emerge in 2007. We may see a number of private equity investors selling off their hotel assets, perhaps looking to enter emerging markets. We also expect institutional investors to gain momentum in hotel investment. REITs may take a little longer to establish in the market as hotels must take further steps to restructure their rental agreements to become suitable for the REIT model.”
Theodore Koumelis - Friday, February 09, 2007
Mark Wynne-Smith, CEO Europe, Jones Lang LaSalle Hotels: “Europe boasts the most international profile of investors with almost half of the total investment coming from outside the continent: 26% global sources, 10% Middle Eastern, 9% from the US and 3% from Asia.”
“Last year saw portfolio transactions at an all time high across the region and the UK remained the leader in hotel investment activity taking 56% share of Europe’s total investment”, he continued. “Other Western European hot spots included Spain and Germany, but as predicted, the capital flowed further east too. In 2005 the focus was on Turkey and Russia but last year saw investors target other areas in the region including Poland, Bulgaria, Slovakia and Serbia. The market is set to stabilise this year and interest in the more traditional Western European cities may transfer to Central and Eastern Europe.”
Investment drivers
Last year the debt markets remained competitive, allowing investors to negotiate attractive loans thus driving hotel real estate prices upwards. Strong international demand combined with a shortage of stock in prime locations resulted in decreasing yields and started to force investors towards secondary locations in search of more attractive investment deals with lower income growth potential.
Major European Players
Across Europe, private equity houses have continued to hold the lion’s share of total hotel investment in 2006 representing 43%, while high net-worth individuals represented 13%, property companies 11%, REITs at 6% and institutional investors 5%. Hotel groups made up half of all the vendors.
Mark Wynne-Smith commented: “As hotel operators largely divested their hotel real estate a new type of vendor is likely to emerge in 2007. We may see a number of private equity investors selling off their hotel assets, perhaps looking to enter emerging markets. We also expect institutional investors to gain momentum in hotel investment. REITs may take a little longer to establish in the market as hotels must take further steps to restructure their rental agreements to become suitable for the REIT model.”
Theodore Koumelis - Friday, February 09, 2007
6.2.07
India's UTV to List on NASDAQ
Latest IPO's To Make Money : UTV to raise $100m from Nasdaq listing
UTV Software Communication is planning a Nasdaq float to raise about $100 million. UTV is believed to have valued itself at about $700 million. It will be the first entertainment listing from India on the Nasdaq. The move comes on back of the fact that UTV has entered into a binding term sheet with a major US broadcaster for the launch of six channels. The US broadcaster, it is learnt, will be looking at investing directly in the company post listing. The triggers for the listing comes from the fact that two of its Hollywood films with FOX, Namesake and a Chris Rock movie, is slated for a worldwide release in March. That apart, UTV’s co-production deal with Will Smith for two films will go into production this year. The company is also in advanced talks with Disney, FOX and Sony. According to a source, “It is true that Mr (Ronnie) Screwvala and the top management have been camped in the UK and the US most of this month, and everyone is very tight-lipped internally.” Ronnie Screwvala, CEO, UTV Software Communications, when contacted said, “We do not comment on market speculations.” UTV is also believed to be in talks to rope in Sameer Nair, the former COO of Star India, for a JV that will float a company to launch a clutch of channels for the Indian market.
More on.... http://www.stocks-shares2property.bravehost.com
UTV Software Communication is planning a Nasdaq float to raise about $100 million. UTV is believed to have valued itself at about $700 million. It will be the first entertainment listing from India on the Nasdaq. The move comes on back of the fact that UTV has entered into a binding term sheet with a major US broadcaster for the launch of six channels. The US broadcaster, it is learnt, will be looking at investing directly in the company post listing. The triggers for the listing comes from the fact that two of its Hollywood films with FOX, Namesake and a Chris Rock movie, is slated for a worldwide release in March. That apart, UTV’s co-production deal with Will Smith for two films will go into production this year. The company is also in advanced talks with Disney, FOX and Sony. According to a source, “It is true that Mr (Ronnie) Screwvala and the top management have been camped in the UK and the US most of this month, and everyone is very tight-lipped internally.” Ronnie Screwvala, CEO, UTV Software Communications, when contacted said, “We do not comment on market speculations.” UTV is also believed to be in talks to rope in Sameer Nair, the former COO of Star India, for a JV that will float a company to launch a clutch of channels for the Indian market.
More on.... http://www.stocks-shares2property.bravehost.com
3i to List Infrastructiure Fund
3i to list infrastructure fund
Just three months after saying it would hive off its infrastructure assets, previously held within its growth capital arm, into a separate, standalone vehicle, 3i has decided to list that fund, 3i Infrastructure, on the LSE.
A float was flagged as an option back in November when the private equity group said it was aiming to boost its infrastructure investments from around £350m at the time, to something approaching £600, or around 10 to 15 per cent of its balance sheet.
Now 3i is aiming to raise between £700m and £1.3bn, before any over-allotment provision, through the listing of ordinary shares and warrants to invest in infrastructure businesses and assets in Europe, North America and Asia. Subject to the float reaching its £700m minimum target, £325m of that will come from 3i itself.
That will be given a headstart with the purchase from 3i of a portfolio of assets including its investment in AWG, the owner of Anglia Water, an interest in Infrastructure Investments, one of the UK’s largest equity funds investing in secondary PFI projects and investments in two other PFI projects: Norfolk and Norwich Hospital and Alpha Schools, Scotland.
The fund is aiming for a 12 per cent total return annually over the long term, with a 5 per cent distribution yield once fully invested through dividends and capital returns.
Just three months after saying it would hive off its infrastructure assets, previously held within its growth capital arm, into a separate, standalone vehicle, 3i has decided to list that fund, 3i Infrastructure, on the LSE.
A float was flagged as an option back in November when the private equity group said it was aiming to boost its infrastructure investments from around £350m at the time, to something approaching £600, or around 10 to 15 per cent of its balance sheet.
Now 3i is aiming to raise between £700m and £1.3bn, before any over-allotment provision, through the listing of ordinary shares and warrants to invest in infrastructure businesses and assets in Europe, North America and Asia. Subject to the float reaching its £700m minimum target, £325m of that will come from 3i itself.
That will be given a headstart with the purchase from 3i of a portfolio of assets including its investment in AWG, the owner of Anglia Water, an interest in Infrastructure Investments, one of the UK’s largest equity funds investing in secondary PFI projects and investments in two other PFI projects: Norfolk and Norwich Hospital and Alpha Schools, Scotland.
The fund is aiming for a 12 per cent total return annually over the long term, with a 5 per cent distribution yield once fully invested through dividends and capital returns.
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