Are private-equity firms the new conglomerates? The two look more and more alike. The dozen or so top private-equity firms have taken positions in an extraordinarily diverse range of operating companies, much as big conglomerates have done. Each week brings another batch of multi-billion-dollar deals.
Today, Blackstone Group LP raised its cash offer for Equity Office Properties Trust to $39 billion to thwart rival bidder Vornado Realty Trust a day before shareholders vote on what would be the largest-ever leveraged buyout. (Bloomberg)
So what, exactly, are private equity firms such as Carlyle Group, Blackstone Group, Texas Pacific Group, and Kohlberg Kravis Roberts nowadays? Part buyout shop, part investment bank, part asset-management firm. Colin Blaydon, director of the Centre for Private Equity & Entrepreneurship at Dartmouth’s Tuck School of Business says “There are going to be some major financial institutions that emerge from the phenomenal growth [in private equity] of the last years.” For example “Carlyle is very deliberately moving in that direction. It looks a bit like the mid-’80s, when a handful of big, multiline investment-banking firms emerged as the bulge bracket.” (BusinessWeek)
Another trend, the art of private equity is finding and polishing diamonds in the rough. No wonder, then, that more firms are venturing off the beaten path in search of uncut gems. With record sums pouring into the asset class in recent years, more investors and fund managers are turning to the developing world. (Economist)
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