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Insatiable Investment Funds In Hot Pursuit Of Huge Prey
Washington (AFP) Feb 25, 2007 The widely anticipated takeover of a Texas energy giant by Texas Pacific Group and Kohlberg Kravis Roberts for more than 30 billion dollars, likely to be announced Sunday, showcases the insatiable appetite and deep pockets of private investment funds. According to The New York Times, the board of TXU Corp. could agree to a buyout valued at between 30 billion and 45 billion dollars, if debt of roughly 12 billion dollars is included. The parties in the expected transaction were not available to comment on the report. The Natural Resources Defense Council, which has been involved in the negotiations, said late Saturday the deal will involve an unprecedented set of commitments by new owners to reverse the company's drive to build a raft of new coal power plants in favor of a new strategy to cut global warming pollution. The new owners, the council said, were likely to withdraw permit applications for eight of eleven pulverized coal power plants proposed in Texas and throw their support behind a mandatory nationwide limit on global warming emissions. "What we're witnessing is the beginning of the end of investments in old-fashioned coal plants," said David Hawkins, head of the NRDC's Climate Center. "Strategies to fight global warming and save energy are crucial for anyone hoping to succeed in today's electricity industry." The deal would set a new record for private equity funds, after Blackstone's recent purchase of real estate manager Equity Office Properties Trust for 39 billion dollars, including 16 billion dollars in debt. The Blackstone deal and other such private equity takeovers sizzled to a world record in 2006: nearly 600 billion dollars, of which 353 billion were in the United States -- a 70 percent jump from 350 billion in 2005, according to market researcher Dealogic. Private money accounts for more than 17 percent of global mergers and acquisitions, compared with only 4.0 percent in 2000, the market data firm says. Thanks to these funds, global mergers and acquisitions were expected to have climbed to a record 3.70 trillion dollars in 2006, topping the 3.32 trillion dollars attained in 2000 at the height of the Internet boom, according to Dealogic. By contrast, the more "classic" types of operations -- strategic takeovers by one company of another -- were losing momentum. In the United States, the main arena for private investment, the funds' takeovers represented 25 percent of US mergers and acquisitions last year, up 150 percent from 2005, according to Thomson Financial. Driving the appetite for takeovers are coffers awash in cash. According to another study by Thomson Financial, cited Saturday by The New York Times, private equity firms in 2006 raised more than 174 billion for 205 funds. "I have never seen a time like this when money is so available and so global," Henry Kravis, co-founder of Kohlberg Kravis Roberts (KKR), was quoted as saying in an interview by The Wall Street Journal published on Saturday. The US business newspaper, however, pointed out that the buyout of TXU, if confirmed, would face a series of regulatory hurdles. In that respect, it would be a good test of investment funds' capacity, often controversial, to penetrate business sectors that are significantly regulated, the newspaper said. It would not be the first time that KKR and Texas Pacific Group have operated in the energy sector. In 2004, the two partners linked up with rival private equity group Blackstone and bought Texas Genco, and then sold it for a considerable profit.
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Clean Energy Incubator And Austin Energy Agree to Test
Austin TX (SPX) Feb 26, 2007The Austin Technology Incubator's Clean Energy Incubator and Austin Energy have agreed to create the first test-bed environment in the United States for alternative energy companies to prepare their technologies for commercialization. The partnership will allow clean technology companies to accelerate their path to market through early product validation with a leading utility. |
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