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The share prices of private equity firms like Blackstone Group (NYSE: BX) and Fortress Investment Group (NYSE: FIG) tell the story; that is, Wall Street thinks the sector is virtually dead.
Well, it might be an exaggeration. In fact, there are actually some signs of life. Just look at Apollo Management LP. According to Reuters, the firm was able to pull off a miracle by raising a whopping $14.8 billion fund.
OK, with the credit crunch still in full force and the economy lagging, why are investors doing this? Aren't they already overloaded on alternative assets? Hey, when making money in this game, it's about finding an entry point in a down cycle.
Keep in mind that it took Apollo about 16 months to raise the fund. Along the way, the firm put the money to work, with the main focus on credit securities.
What's even more amazing is that -- during this period -- Apollo has suffered a variety of recent blow-ups, such as the botched deal for Huntsman (NYSE: HUN) and the bankruptcy of Linens 'n Things. Other deals, like Harrah's, look dicey.
Yet, the new Apollo fund is encouraging, indicating that private equity operators are willing to take risks, despite the pervasive doom and gloom.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
1-25-2009 @ 9:26PM
jd said...
And just what are they doing with the fund? Oh, right. Buying the very securities that we know have no value. Ha Ha. They THINK they know better than everyone else, like Warren Buffet, but if there is one thing you can count on in the near term, shorting the market is the only way to make money. Period.
1-26-2009 @ 9:23AM
BHarrison said...
The basic problem behind all of this is that the American people have been defrauded of their investments in the stock markets, their homes, and their savings. The ultra-wealthy CEOs and uppermanagement have LITERALLY DEFRAUDED the American people out of the value of their assests, and now of their incomes.
Our economy depended upon the American consumer for 70% of the economic activity . . . and 30% of that was "desposable income". Now these "corporate leaders" have substantially DEFRAUDED the American people out of the value of their assests necessary to continue normal economic activiey.
Our corporate "leaders" have CRIMINALLY DEFRAUDED our society to a point where massive unimployment and business failures are unavoidable . . . yet these scum bags STILL feel that they are "entitled" to obscenely exorbitantly horrific salaries, bonuses, and other compensations. It is past time for the indictment and prosecution of these business executives for the blatant frauds that they have committed.
The American people need to demand that Congress take actions in regard to these matters.