Does anyone want to own Coles (ASX:CGJ)? The company must be blushing furiously these days. If private equity outfits like the Texas Pacific Group, Blackstone, Kohlberg, Kravis, Roberts, CVC, and Carlyle are not interested in you at the height of the biggest credit boom/leveraged buyout bubble the world has ever seen, it’s best to call it a night, go home, wipe off the make up, take off the fishnets, and get a good night’s sleep. You won’t remember any of it tomorrow.
Only Coles’ shareholders are still enduring the nightmare of the company that couldn’t sell itself to save itself. Maybe it wasn’t the Blackstone IPO that marked the symbolic top of the private equity boom. Maybe it was the buyout that didn’t happen – or hasn’t happened yet – at Coles.
It’s not just a question of price and asset quality at Coles. For the first time in a long-time, the market’s appetite for the debt issued by private equity to finance takeovers has slackened. Bear Stearns, as it revealed to the market the depth of its exposure to bad subprime bets, was also forced to withdraw the planned IPO of Everquest Financial, a firm that – get this – specialised in the collateralised debt and mortgage obligations that got Bear’s two hedge funds in trouble to begin with.
But wait, there’s more.
“In yet another sign that the buyout boom of the past two years may be hitting a wall, US Foodservice has postponed its sale of $650m in bonds that were expected to finance the unit’s $7.1bn leveraged buyout. The US unit of the Dutch supermarket Royal Ahold had already twice scaled back its debt offering to help finance its takeover by the private equity firms Kohlberg Kravis Roberts and Clayton Dubilier & Rice,” reports yesterday’s New York Times.
Markets and Money
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