At first glance there may not appear to be much of a similarity between a private equiteer and Koby Abberton, but in 2007 they share one thing in common. In 2007, they’ve both managed to ride a monster wave and get dumped by one. Fortunately for Abberton, he doesn’t have to spend 20 hours per day in front an excel spreadsheet before getting dumped.
While the first half the year saw a neverending stream of private equity deals globally, culminating in almost $120b of deals in the Americas in each of the months of May and June, the market has since collapsed. The global credit crunch has well and truly bitten and ended the party.
Significantly in October and November, the value of deals done in Europe, the Middle East and Africa has been greater than in the Americas.
The list of deals that has fallen over in the 2H around the world includes such high profile ones as the $6b+ bid by Cerberus Capital for Affiliated Computer Services in October and Texas Pacific Group’s $5b bid for Iberia in Spain.
Perhaps locally the most telling sign of the times however was the consortium bidding for Nufarm which decided not to proceed last week. When a consortium which includes a Chinese government backed company (ChemChina) decides to pull the plug, then you know times have changed for the private equiteers.
One aspect of the pulled bid which was largely overlooked by the domestic finance press, was the share price performance of one of the consortium members, Blackstone.
Blackstone was one of the big IPOs of the year and was a classic example of the smartest private equity guys in the room selling equity at the top of the market. Unfortunately for their investors, including the Chinese government, it has been all downhill since then with the stock price falling from $38 in late June to $24.
The big guys like Blackstone will always be around as they simply are the smartest guys in the room. If things do not pick up for some smaller private equiteers in 1H2008 however, some may be joining Paris Hilton and calling Koby for surfing lessons.
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