RBS Locks Out Private Equity

Posted by John Carney, May 14, 2008, 3:22pm

How bad is the reputation of private equity? Months after private equity companies began to back away from deals that no longer seem promising in our credit crunched world, the Royal Bank of Scotland has told many of the biggest private equity firms they aren’t welcome in the first round of the auction of the bank’s insurance business, according to the Financial Times reports.

Kohlberg Kravis Roberts, Blackstone and Apax Partners had reportedly planned to bid in the auction, but were told by RBS that they were being excluded. Exclusion from the auction is widely being interpreted as demonstrating a clear vote of no-confidence in the ability of private equity buyers to secure financing necessary to close acquisitions.

RBS spurns buy-out groups [Financial Times]

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Posted in: Blackstone Group, KKR, Private Equity

Comments

Posted by guest, May 14, 2008 3:47PM

wow, RBS ain't exactly the sh!t either

Posted by guest, May 14, 2008 4:08PM

This is great news. Blackstone, KKR, Apax and other hedgers may get the message if more banks besides RBS shut them out.

The message is: "Hedgers have been fucking up for so long already that we don't want to encourage them to continue. Also, we don't want to pay any more of their fucking fees."

Posted by guest, May 14, 2008 4:16PM

Yes, and I am sure that those PEs won't remember this when they decide who sits to the left on the next deal they do. Looks like RBS just decided to sit out the next 5 years or so of large LBOs. Or maybe they figured they were f-ed anyway when they tried to scuttle Clear Channel....so why the f*ck not? Let's see who else they can piss off?

Posted by guest, May 14, 2008 4:21PM

RBS had to write down $11 billion for the subprime thing. So, do I put the dollar sign in the "loss" brackets like this:

($11 billion) or,

$ (11 billion). You see I don't lose money (I print it, you know) so I have never had to do the loss thingy. It's a lot like being an airplane without a partner in many ways.


Posted by Anal_yst, May 14, 2008 4:39PM

@ 4:08
Do you have any idea what you're talking about? Any, whatsoever?

Posted by guest, May 14, 2008 4:41PM

@4:08
Hedgers? Paying THEM fees? WTF are you talking about? You are joking right?

Posted by guest, May 14, 2008 5:41PM

@4:39PM,@4:41PM,

No, I guess I must not know WTF I'm talking about. Perhaps you two stars can tell me where I went wrong.

The @4:08PM Poster

Posted by AJ, May 14, 2008 5:51PM

@4:08/5:41: Well, just as an initial stab, Blackstone, KKR, Apax, et al are (primarily) private equity funds not hedge funds. Second, they are major *clients* of the investment banks, which mean they pay the banks fees, not the other way around...

Posted by GinNTonic, May 14, 2008 9:25PM

Guys,
It's a $14Bn deal, even if they decided to put in 50% equity it would be tough to raise $7bn in this market. So since there would be no serious bids, RBS doesn't want to open up the books for non-serious bidders.

Posted by guest, May 15, 2008 2:17AM

So who are the serious strategic bidders for the insurance unit if PE guys are out?

Is it true that Buffett's Berkshire is the front-runner?

Posted by guest, May 15, 2008 9:16AM

Read the article:

Bidders are: Allianz, Zurich, Generali, Berkshire, Allstate, Travelers, Ping An and AIG.

Though, I'd drop AIG and Generali and add Hancock (Manulife)

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