Tuesday’s Headlines: Eurozone Financial Crisis Takes its Toll on Private Equity

Oh European economy! You are making a mess of everything. According to Bloomberg, the value of private equity deals on that continent have plummeted by 51 percent so far this year over the same period in 2011 – despite the fact that PE firms have raised $122.4 billion for corporate takeover in Europe – more than even 2006. The culprit, Bloomberg writes, is “the lack of bank loans needed to make buyouts profitable for their investors and an unwillingness on the part of sellers to accept lower-than-expected prices.” These forces lead to a bucking of the expected, which is that private equity swoops in to buy when economies are at their worst and prices are low. Meanwhile, capital is available, but no deals can be made.

This wave is spawning new trends: big buyout firms are raising billions for North American and global funds, and Blackstone has expanded its fixed-income unit. KKR now has as eight of its 17 special situation investors in London now, up from one in 2010.

 

Other News:

BofA cut its network of ATMs by 9 percent to cut costs. [Bloomberg]

Investment banks have no choice but to make further cuts. [Reuters]

Buffett is leading the bid for Residential Capital. [New York Post]

Banks try new advertising tactics. [American Banker]

Italy’s Intesa Sanpaolo bank is partnering with Russia’s Gazprombank to jointly invest $365 million in Italian and Russian companies. [Reuters]

Pershing Square’s Scott Ferguson plans to begin his own hedge fund. [NY Times]

Carlyle and BC Partners are in talks to buy the industrial unit of United Technologies for $3.5 billion. [NY Times]

Man Group plans to cut $100 million in costs. [Telegraph]