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On Wednesday, led by a group of Parliamentary Democrats, Elizabeth Warren, we reintroduced the Stop Wall Street Robbery Act, which is part of a bill signing designed to castrate the modern private equity industry through a series of transformative measures.
If the bill is passed, he will have a private mutual fund that will be responsible for the company’s portfolio debt. This would prohibit companies from deducting dividends from portfolio companies in the first two years of ownership. In general, leveraged companies are much less intrusive and unattractive.
This is not the first time Warren has turned down private equity. The Stopwall Street Theft Act was first introduced in 2019 but only died in the vineyard due to a lack of support. And at first glance, there is no reason to believe that this experience is any different.
Warren, Sherrod Brown and other lawmakers held two hearings this week to publicize their efforts, but attendance was low. Unlike in 2019, the Democratic Party now dominates parliament. But the legislature appears to have different priorities. Washington’s sentiment may be changing, but the private equity tally is unlikely to come any time soon.
This is, of course, a good scenario for the private investment firms themselves. In the same week that lawmakers continue their bid to seize power in the industry, the world’s largest private equity fund firms are busy showing how strong and how ambitious their ambitions are. ..
Apollo Global Management On Tuesday we held a Virtual Investor Day to focus our supporters and potential supporters on our strategic vision for the next five years. The main problem still comes from the new CEO, Mark Rowan. He announced Apollo’s desire to reach a net worth of $1 trillion by 2026. That’s more than double the company’s current $472 billion claim on AUM. His drive to grow the company’s asset base is focused on increasing investment capital, which is focused on Apollo properties. Athens, a leader in retirement planning, has been critical to the company’s recent explosive growth.
The House wants to limit private equity funds by turning off leverage. However, the Apollo presentation emphasized that these LBOs will be part of a key industry lesson for private equity funds as they continue to grow in the world’s largest financial institutions. Lower.
By the way: Black Stone has published excellent financial results for the third quarter of this week. It includes a list of new distributable earnings every three months and associated commission income. The company’s private equity portfolio was up 10% and the value of its properties was up 16 percent. Again, its development was not necessarily led by the LBO. Blackstone’s ownership of life science software, storage and laboratory space is a key growth driver.
This doesn’t mean that Blackstone has stopped the buying business or anything like that. The company agreed this week to buy printmaker Spanx, which is worth $1.2 billion, according to PitchBook, and has made $6 billion in the past two months. Bloomberg announced this week that Blackstone will raise $30 billion for its next flagship fund. This will be the largest pool of capital purchased to date. Leverage buying is still an important element of corporate strategy. But they are only some of the many.
The same is true for KKRA, another heavyweight with private equity, which this week demonstrated a diversity of interests. In one move, the company agreed to pay $1.1 billion in cobalt music. Get a portfolio of 62,000+ songs, including the Grammys Load When Weekend. Done through a new platform called Code Music Partner, for private investments that make a lot of money on intellectual property. Shortly after the deal was announced, KKR signed a purchase agreement. Guns, 100th Floor Observatory 30 Hudson Yard The New York skyscraper is reported by Bloomberg to be paying about $500 million. The observatory, which is still open to the public, is only a few dozen floors above the TRC headquarters.
The fourth member of the core private equity quartet also has a lot to do: Carlyle Group announced this week that it will acquire Therma Technologies – the company’s final bet on life sciences for up to $430 million. As I wrote extensively this week, Saama is a data analytics company that attracted a lot of attention last year for its value. Pfizer is helping the pharmaceutical giant cut the time it takes to bring a COVID-19 vaccine to market by one month.
Democrats in Congress want to put the brakes on the private equity industry. But last but not least, the biggest names in the industry are accelerating to take advantage of the highly attractive trading environment created by the pandemic. Don’t expect trade to slow down until the environment changes or the wind blows from Washington the other way.