If you haven’t heard much about KKR (Kohlberg, Kravis, Roberts and Co) its probably not your fault. Like many Pac Man style private equity groups gobbling up vast proportions of businesses in every sector… They tend to be “publicity shy”, and like to operate in the dark of night, with a cloak of anonymity.
In other words, since they and other P.E.’s own much of the media designed to inform us of these matters, its not hard to keep things on the QT.
Private Equity basically means that since they have no stockholders to answer to, (except within the compartmentalization of the various individual companies they leverage)….They do not have to justify acquisitions and mergers… Which simply get announced in the back pages of newspapers. (They can also classify just who is investing in the myriad of companies under their control!)
According to an updated 2008 ranking created by industry magazine Private Equity International(The PEI 50), the largest private equity firms include The Carlyle Group, Kohlberg Kravis Roberts, Goldman Sachs Principal Investment Group, The Blackstone Group, Bain Capital and TPG Capital. These firms are typically direct investors in companies rather than investors in the private equity asset class and for the most part the largest private equity investment firms focused primarily on leveraged buyouts rather than venture capital.
(Thomas Lee Partners should definitely be mentioned here, and it is rather suspicious that they have been “omitted”)
Preqin ltd (formerly known as Private Equity Intelligence), an independent data providers provides a ranking of the 25 largest private equity investment managers. Among the largest firms in that ranking were AlpInvest Partners, AXA Private Equity, AIG Investments, Goldman Sachs Private Equity Group and Pantheon Ventures.
Yeah – You got it…. The “equity” they raise (at least in the case of AIG and Goldman Sachs) came out of your pockets through things like T.A.R.P and QE1,QE2, 3, 4, 5….. Thanks to the “Federal” Reserve.
In many circumstances these behemouths work together to pool their combined resourses in joint ventures. The Bain Capitol Partners / Thomas Lee buyout of Clearchannel is just one example.
The standard operating procedure for P.E. Co’s appears to be one of using connections and influence to drive the price down of said targeted company for takeover; and then use those same connections to grow the business to astronomical proportions… At this time it is either sold for profit, or used for more leverage.
These Private Equity firms also work together so they do not have to bid against each other, and this of course keeps prices down and eliminates competition. The charges of bid rigging are many.