Jim Coulter, David Bonderman, Daniel D'Aniello, Henry Kravis, George Roberts, David Rubenstein, Steve Schwarzman, William Sonneborn, Mitt Romney...
Tuntemattomat taustavaikuttajat
Kuka tunnistaa? Mitt Romney, siis republikaanien ehdokas USA:n presidentinvaaleissa? Kyllä, hän on yksi heistä. Nimittäin pääomasijoittamisen pioneereista. Yllä olevat yritykset ovat maailman suurimpia pääomasijoitusyhtiöitä. Maailman uusia omistajia, voisi perustellusti nimittää, koska nämä yhtiöt löytyvät yhä useampien globaalien suuryritysten taustalta. Erään arvion mukaan pääomasijoitusyhtiöiden omistamat yritykset muodostavat noin 8% USA:n BKT:sta. Blackstonen omistamissa yrityksissä työskentelee 680 000 ihmistä, enemmän kuin esimerkiksi General Electricilla. Toki vertailu ei ole relevantti, koska nämä ihmiset eivät työskentele suoraan Blackstonelle, mutta antaa kuitenkin kuvaa siitä, millaisista kokonaisuuksista on kyse. Silti vain harva tunnistaa näitä taustavaikuttajia.
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| Jason Kelly: The New Tycoons - Inside The Trillion Dollar Private Equity Industry That Owns Everything |
Jason Kellyn The New Tycoons New Tycoons - Inside the trillion dollar private equity industry that owns everything avaa maailman suurimpien pääomasijoittajien maailmaa. Tai siis amerikkalaisten pääomasijoittajien maailmaa, jotka nyt sattuvat dominoimaan globaalisti. Kirjan lukemalla saa hyvin käsityksen siitä, kuinka isosta toiminnasta on kyse. Kelly alkaa kirjan myötä tarkkailemaan, kuinka usean yrityksen taustalla on pääomasijoittaja ja havahtuu: hän voisi hyvinkin viettää viikon tai kuukauden asioimalla ainoastaan pääomasijoittajien omistamissa yrityksissä, samalla tavalla kuin Supersize Me asioi vain McDonaldsissa.
Pääomasijoittajat eivät näy, mutta he kyllä päättävät monien yritysten omistajina ja hallituksissa. Vaikka toimiala onkin kooltaan massiivinen ja vuosikymmeniä vanha, nousi se ennennäkemättömällä tavalla otsikoihin vasta viime vuonna, kun Bain Capitalin perustaja Mitt Romney pyrki USA:n presidentiksi. Kampanjan aikana käytiin värikästä keskustelua siitä, keitä pääomasijoittajat ovat ja miten heidän toimintansa vaikutta yhteiskunnassa. Romneyn valinta maailman vaikutusvaltaisimpaan tehtävään olisi kruunannut pääomasijoittajien valta-aseman, mutta valitettavasti se jäi vielä toteutumatta.
Kirjan nimi juontaa juurensa aiemmasta teoksesta The Tycoons, jossa esitellään Amerikan yritysmaailman rakentajia kuten Henry Fordia ja Rockefellereita. He olivat yrittäjiä, he olivat yhden toimialan imperiumin rakentajia. He loivat omaisuutensa pääosin itse. Pääomasijoittajat sen sijaan ovat finanssitaustaisia henkilöitä, joiden keskeinen kyky on koota yhteen institutionaalista pääomaa ja kasvattaa jo olemassaolevista yrityksistä vieläkin suurempia ja kannattavampia globaaleja markkinajohtajia.
Kirjan lukemista voi suositella alan toimijoille, mutta aloittelijoille se on liian toimialakeskeinen, eikä siitä välttämättä saa juurikaan irti. Kirja on tehty pääosin toimialan kärkinimiä haastattelemalla, mutta sisällöllisesti se jää vähän kevyeksi. Se on viihdyttävää luettavaa, mutta tarjoaa turhan vähän uutta tietoa. Kirjasta löytyy joitain hyviä kirja-arvosteluja mm. Forbesilta, Huffington Postista ja Kellyn haastattelu (toinen täällä) ovat myös katsomisen arvoinen.
Poiminnot
- Private equity firms globally and collectively had almost USD 3 trillion in assets at the end of 2011. The companies they own account for about 8 percent of the U.S. gross domestic product by one estimate.
- Private equity is like a teenager with a lot of potential, but still struggling with adolescent tendencies - at times unresponsive, rash, selfish, and fluctuating between arrogance and self-doubt.
- Abu Dhabi Investment Authority is called the largest sovereign wealth fund with assets at around USD 750 billion. The Abu Dhabi fund bought a stake in Apollo itself, paying to own a slice of the manager, not just participating in the funds. Carlyle cut a similar deal with Abu Dhabi-based Mubadala Development Company.
- Berkshire Hathaway have avoided buying companies outright from buyout firms in part because they "don't love the business" in the same way long-time owners do. Warren Buffet's preference is to keep owners after the acquisition to take advantage of their "passion" for the company.
- Doing The Big Deal is quintessential KKR.
- At KKR people played high-stakes poker game where "the house" extended people's credit for their bets.
- Henry Kravis asks job candidates to describe their personal balance sheet - that is, what they perceive to be their assets and liabilities.
- How to succeed in an increasingly transactional Wall Street: "Be interesting, be relevant".
- Don't congratulate me when I buy something. Congratulate me when I sell. - Henry Kravis.
- Kravis and Roberts initiated a multi-faceted approach. They decided each investment would have a 100-day plan, like General Electric had for its businesses, forcing the dealmakers to think beyond the closing dinner.
- Kravis and Roberts saw a business opportunity in capital markets, specifically raising equity and debt for companies they owned.
- Many Wall Street firms had a "Eat what you kill" culture whereby your compensation was largely based on what business you brought in. Kravis described a culture where you locked your office or your desk when you went home at night so no one took clients or business ideas. The KKR founders decided that everyone would have a piece of the firm, however small. It helps make it feel like it's bigger than any one person. It's the difference between being a firm and a franchise.
- ...Kravis and Roberts took to personally walking around the office handing out distribution checks. In one memorable case in the 1980s, the sale of a single portfolio company meant secretaries each got a one-time USD 80 000 check for their participation in that deal hand-delivered by the bosses.
- KKR, ever opportunistic.
- The total "dry powder, or committed, unspent capital in all types of private equity funds was close to a trillion dollars in 2011, with about 41 percent of that held in leveraged buyout funds. Stiff competition for almost anything is a foregone conclusion.
- KKR has never thought as being in the distressed business - that is, targeting deeply broken businesses and making radical changes. Some of their deals ended up being worse than they'd thought, but KKR's general approach is to buy businesses that are undervalued or poorly managed. In recent times, the latter investments have often been in the energy sector, where KKR has made a bet on, say, shale deposits, where very little operational expertise is needed.
- One way private equity firms are making noticeable operational changes to their companies is by a different kind of leverage, the kind that comes when you control massive budgets and huge employee bases. In that regard, they've reviving a corporate concept largely abandoned in the 1980s: the conglomerate. The notion of the conglomerate - a holding company controlling a sprawling set of companies found it disparate industries largely went the way of the dinosaur as companies found it difficult to convince investors that there was value that was even equal to the sum of parts. A few have hung on, including the Tisch family's Loews Corporation, which owns everything from hotels to oil fields to insurance companies. And the most famous remains Warren Buffet's Berkshire Hathaway. Private equity in its early days was in part a conglomerate dismantler, a solution for those wanting to disassemble empires. For example Blackstones owns companies with USD 117 billion in aggregate annual revenue and 680 000 employees, more in headcount than General Electric or Home Depot.
- The "three box model" of private equity, divided among stock-pickers, deal guys and portfolio managers.
- Like Kravis and Roberts, Coulter (TPG) obsesses over his firm's culture. TPG partners are quick to mention Coulter's "No assholes" rule.
- U.S private equity firms employ 8.1 million people by one estimate, out of a total workforce of roughly 154 million. That is one in 20 workers.
- Each company is technically owned by a distinct partnership created by Blackstone, a partnership that shares nothing other than a common owner.
- KKR companies together had annual revenues in 2010 of USD 210 billion. That's more than USD 50 billion more than General Electric had that same year.
- One researcher pegged the average cash earnings for a private equity executive at USD 248 000 in 2011. That's roughly five times the median household income at the end of 2010 in the U.S.A of USD 50 046.
- Private equity managers justify their enormous fees at the end of the day: because they can deliver returns investors can't find anywhere else.
- Overall, the study says, private equity is neither a massive job creator nor a massive job destroyer.
- A crucial element of the entire conversation around private equity is not just the ultimate returns, but how they are measured and, ultimately, how they are judged. One way that argument has played out in recent years is a nerdy debate on evaluating a firm on percentage returns versus cash returns. Call it the "You can't eat IRR" debate. Pension funds can't use IRR to fund a retirement plan. A university endowment can't give financial aid or pay a maintenance in IRR. They need cash, real money that can be deposited in a bank. For a private equity fund to really be of use to its investors, it needs to deliver those returns in the form of money coming back, in healthy multiples of what the pension or endowment put in. "At the end of the day, I care about how much do I give you, and how much money do I get back".
- The average person can't in fact invest in a typical private equity fund. They are by design limited to accredited investors, which means meeting a threshold of net worth of USD 1 million in liquid assets or USD 200 000 in annual income for a single person. This, of course, cuts both ways. It protects the retail investor from putting her money at undue risk. It also prevents her from participating in the lush profits that can be generated through these vehicles.
- There is one element of the private equity conversation that seems clear: Returns are going down. The competition for deals surely hurt returns. The best returns come from investments where there is an information advantage - in other words, I win because I simply know something you don't or before you do.
- It's the barbell theory of private equity. On one end there are the bulge bracket names best known on Wall Street and in the world at large: Blackstone, KKR, Apollo, Bain, Carlyle, and TPG. These firms measure their total assets under management in tens of billions, or in some cases hundreds of billions. It's highly unlikely that they limit their business to private equity. They have some combination of hedge funds, real estate, and credit investments in various stages of development. On the other end of the barbell are the mono-line private equity firms, those who have actively chosen, or passively accepted, that they'll focus almost exclusively on the buyout business. The model has changes and you have two kinds of players: public and diversified and private and focused.
- "There will be people who continue to make 20 percent IRRs off reasonable pool of capital. I'm not a believer in just making 5 percent over the S&P. I believe in 2,5 times your money and 25 percent returns." - Thomas Lister, Permira
- Alpha is a proxy for manager skill.
- "Hilton was a sleeping giant. This sort of deal allows you to reboot the company's hard drive, to really ask yourself what is should be". - Chris Nassetta
- Public investors seem to have decided that they can't find a coherent and consistent way to value private equity... Public valuations are by their nature forward looking. Investors who buy stocks are betting the stock will gain in value in the short- or long-term, allowing the holder to profit by selling it at a later time. Or they may see that a company pays a predictable, generous dividend and hold it for that steady income stream, even if the stock doesn't rise dramatically in value. With that in mind, investors and analysts place a value on a stock that's usually based on a multiple of earnings. With private equity among the biggest questions is actually constitutes those earnings and when investors will actually see evidence of them.
- I briefly considered for living a week or month using only private equity products, a sort of Supersize Me, private equity style.
- I began to realize that companies that weren't owned by private equity firms could someday be, or that some enterprising analyst tucked in a windowless cubicle at Blackstone or KKR probably built an Excel spreadsheet about it. Somewhere, someone has run the numbers. Even in a subdued, post-LBO boom age, it seemed that there was nothing they couldn't buy at least a piece of.
- Private equity barons are, truly, the new tycoons.
- Private equity isn't good or bad - it just is.
- Anyone who directly has say over that much money and can so deeply impact millions of lives has a big responsibility. Such people can't be judged solely on how much money they make for their investors or themselves. And they can't even be judged simply on how many jobs they create or destroy.
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