Thursday’s Headlines: Buyouts are Back – Smaller and More Boring Than Ever

Private equity is seeing a slow crawl back from the dark days of 2008, as companies have more money and are fetching bigger pricetags, reports The Wall Street Journal. Despite having bought $64.7 billion in purchases since the start of the year – the most since 2007 – the nature of the business may never be the same.

“Wall Street, meanwhile, is balancing investor demand for the high-yield debt that buyouts produce with a hesitancy to return to the multi-billion dollar gambles that marked the pre-crisis years,” the paper reports.

The latest trend is smaller deals on lesser-known companies. The 414 deals completed in 2012 to-date averaged $156 million per deal, compared with $356 million in 2007. The name cache is smaller, too, as five years ago Dollar General and Kinder Morgan were on sale, while this year’s targets include mattress maker Serta and retailer Party City.

Reasons for smaller deals include the trend of large corporations shedding individual assets to raise capital, companies that are now flooding the market after owners took previously for-sale firms off the market in the down economy, a lack of affordable debt and the global financial crisis.

 

Other News:

Citi blames Nasdaq for Facebook’s lousy IPO. [DealBook]

Tokyo Stock Exchange received tenders totaling 80 percent of its Osaka rival. [NY Times]

Bank of China’s profit grew at the slowest pace in three years. [DealBook]

Florida’s pension board committed $150 million to Och-Ziff. [Reuters]

An Asian hedge fund started by a former Perry Capital exec raised a record $940 million. [Reuters]

An inside look at Wall Street’s political pull. [Economix]

Economics and finance make Top 15 list for best college degree investments. [Fortune]

Qatar’s sovereign wealth fund bought a 22 percent stake in the Chinese asset management firm Citic Capital which manages $4.4 billion. [DealBook]

Deals are being passed between different private equity firms through “secondary buyouts.” [Fortune]

Real estate investment firm Behringer Harvard to tell its clients its fund for wealthy, accredited investors is under water. [Investment News]

State actions against investment firms on a steep rise. [Investment News]