P rivate equity is back in from the doghouse. Though President Obama has planned restrictions readied for bank-owned businesses, and their hedge funds too, if it’s anything like former ‘grandiose’ White House visions such as healthcare for all, then they need not worry for at least a decade or two. It might never happen.
The January sale of Pets At Home, the UK retailer of rabbit hutches and fish tanks, to KKR, the US private equity giant – which also has Legg Mason, Toys ‘R’ Us, and Alliance Boots, among its portfolio names – could be the start of good times for independent private equity houses.
Pets At Home was snapped up for a whopping £1bn (€1.14bn), half of its debt will be underwritten by Nomura, Calyon and Commerzbank – significantly not a UK bank debt capital market team in sight, but nevertheless it shows liquidity is beginning to flow again – and State Street’s private equity index was up 5 per cent at the end of last year.
But a quick scout for pension fund comment on an asset class that had largely been written off in 2009 reveals nothing has changed from the buyers’ viewpoint – hot and cold but rarely lukewarm.
One Swiss pension fund dismissed it altogether, grumbling: “It’s an asset class that does nothing but make us lose money, so we’re not interested.”
On the other hand, Warwickshire County Council, after a period of negotiation, has been given the go-ahead to start investing. Woof! And luckily Middle England is stuffed full of dog-loving families making trips to toy stores, no doubt piling into pharmacies for remedies to keep the winter cold at bay.
Welcome back, private equity.
nat.mankelow@ft.com
