PE HUB Wire Highlights, 7.29.19

Should first-time GPs put every dime they have into a first fund?; Thoma Bravo, Silver Lake bid for J.D. Power; Bain-backed Swift Prepaid weighs sale

Morning, Hubsters!

We have a big fintech deal in the offing. In case you were stuck under a rock, Thomson Reuters and Blackstone are in talks to sell Refinitiv to the London Stock Exchange. The $27 billion deal is expected to be in announced in a week, according to press reports.

The transaction is a huge win for Blackstone, which hasn’t even owned Refinitiv for a year. In October 2018, Thomson Reuters closed the sale of a majority stake in its Financial & Risk unit to BX, Canada Pension PlanInvestment Board and GIC. This deal was valued at $20 billion and saw Blackstone buy 55 percent of the TR unit, that was later called Refinitiv.

Now I know this is a huge deal, but I want to know about the annual payments. The sale to Blackstone called for Refinitiv to make minimum annual payments of $325 million to Reuters over 30 years to secure access to its news service. Will Refinitiv still provide this as part of the sale to LSE? These payments are valued at almost $10 billion.

Separately, Jonathan Ford, city editor of the Financial Times, has written an opinion on the role private equity plays in “looting” companies. Yes, this is a continuation of Sen. Elizabeth Warren‘s legislation to regulate PE firms.

According to Ford, the “Heads I win, tails you lose” form of capitalism that buyout shops use to load debt on companies, hurts taxpayers who must meet the social costs of company closures. LPs, Ford said, are too conflicted and return-hungry to trouble themselves much with the havoc created by PE.

Warren’s proposals would also do nothing to harm responsible private equity firms, Ford said. The Warren regulations would limit the ability of buyout shops to use their privileged position to milk portfolio companies unduly and pay extravagant prices for firms by using other people’s money, the FT said.

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