Equity firms seen making bigger deals
By Edward Evans
Published: February 28, 2007
FRANKFURT: A day after he helped set a $45 billion record for the biggest buyout in the world, David Bonderman, co-founder of Texas Pacific Group, said Tuesday that he expected buyout firms to maintain their acquisition spree.
Speaking at a conference here, Bonderman said, “2006 was a record year, and I predict we’ll have another record year in 2007.” He added, “I see no reason why private equity won’t be a substantial part of the capital markets — a much more substantial part than it is today.”
With low-cost debt, Bonderman said, buyout firms would single out publicly traded U.S. companies as their stock market valuations languished and executives sought to avoid the disclosure rules created by the Sarbanes- Oxley Act. Buyout firms will continue their record deal-making until the debt available dried up, he added.
Texas Pacific and a partner, Kohlberg Kravis Roberts, agreed Monday to buy the Texas power producer TXU for $45 billion in cash and debt in the biggest leveraged buyout ever. Texas Pacific, like other buyout firms, is under increasing pressure from investors to complete larger deals after it amassed a record $15 billion fund last year.
Closely held buyout firms like KKR and Texas Pacific finance their deals using cash from investors, their own funds and debt secured by the companies they are buying. They typically seek to expand companies or to improve their performance before selling them, usually within five years.
Lenders are relaxing the rules they require borrowers to follow, Bonderman said. In July, Texas Pacific and Leonard Green & Partners bought Petco Animal Supplies for a second time. This time, the lenders did not set leverage limits or specify how much cash they would require Petco to set aside to cover interest payments.
Bonderman played down growing political scrutiny of the industry, saying private equity firms’ activities amount to just a “rounding error” in the global capital markets.
The industry has less purchasing power than the combined market value of Siemens, Microsoft, Toyota Motor and Royal Dutch Shell, he said.
What has drawn attention, he added, is the number of public companies taken private. “There’s plenty more room for this phenomenon to continue and plenty more room for anxiety for those who feel anxious about private equity transactions,” he said.
Blackstone takes on KKR
Stephen Schwarzman, co-founder of Blackstone Group, said Tuesday that his rival, Henry Kravis, had destroyed demand for initial public offerings of private equity funds.
In May, KKR raised $5 billion — triple the amount it originally sought — for its first publicly traded leveraged buyout fund. The shares have since dropped by as much as 16 percent and have never traded above their IPO price. That performance prompted the buyout firm Doughty Hanson to drop plans for a €1 billion, or $1.32 billion, fund IPO.
“KKR did a great job with their vehicle,” Schwarzman said during a panel discussion at the Frankfurt conference. “They destroyed the market for everyone else, which was their objective.”
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
