Wednesday, September 17, 2008

Private Equity is like so yesterday

In early 2007 if the deal was there several large private equity firms could have teamed up and found 75 billion dollars.

No problems except that they couldn’t find the deal to do.

The deal is there today. AIG, 75 billion down at 10%, 60% equity stake out the back.

Alternatively buy the whole shebang for another 4 billion and be done with it.

The deal makes sense. Certainly a whole lot more sense than paying 30% over 2006 stock market values for most large private equity deals.

But the AIG can’t be done because private equity is a shadow of its former self.

That I guess is a measure of how long the certainties of Wall Street last. A week is a long time in the markets. 18 months is like - forever...

John Hempton

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.