How-To Edition: How to keep your investors, how to pretend everything’s OK (Ahem, Blackstone), how to equitize a deal and how to raise prices at a store named “99 Cents Only.”
Bloomberg: 99 Cents Only is a no-bullshit dollar store—when they say 99 cents, they mean there is no item over 99 cents in their store. Unlike say, their KKR-backed peers, Dollar General (more like, A Dollar, Generally). But the store’s founders didn’t account for long term headwinds like rising costs and inflation with that philosophy. How to solve it? They’ve raised prices, for the first time since opening in 1981, by a whole penny, to 99.9 cents. Genius. (Via Wall Street Folly.)
Reuters: Megan Davies reports from the Lehman Brothers financial conference. Blackstone Group’s Tony James says PE funds can’t finance deals over $5 billion. The firm is interested in distressed real estate deals and has been aggressively buying up leveraged loans. Lastly, Blackstone Group has $8.7 billion worth of deals under its PCC (post credit crunch) belt. Touché.
Wall Street Journal: Hedge funds are losing their investors, but not without a fight. Or a desperate plea, you tell me which. Camulos Capital and others are lowering their fees to 1.25% from 2% in exchange for agreements to keep money invested in their funds. Will this work? Would PE firms desperate to close hteir funds this year do the same?
On The Left: Churchill Capital’s weekly leveraged lending newsletter lays out exactly how much more equity mid-market deals are requiring–equity checks in LBOs are now averaging around 42% of the total deal value.
Dealscape and Reuters: The (sort of) Warburg Pincus-backed sale of Huiyuan to Coke looks promising to Reuters, but Dealscape disagrees (on the basis of the Chinese people not liking the deal? Seems implausible…)
Dealscape: India is not cooling off as a target for private capital. Real estate is looking particularly attractive to a couple of new funds outlined by George White. (This includes one announced by Donald Trump Jr., who, the article absurdly clarifies, is the son of Donald Trump, the real estate tycoon and reality TV star.)