Erin Griffith

The excitement surrounding buyout-backed IPOs is heartening at best and over-hyped at worst. Even though companies have steadily filed for IPOs for the past ten weeks (the longest streak in over a year), some industry professionals believe the market recovery won’t heal most private equity wounds. “The idea that going public is a panacea for private equity guys is not really true,” said Dan O’ Donnell, the private equity chair at law firm Dechert LLP. Even with a successful portfolio company IPO, a buyout firm faces the same issues it did before, including frustrated limited partners, he said. That’s because an IPO does not translate directly to cash in the LP’s pocket, like a sale to a strategic buyer would. “Absent a dividend recap, it’s unlikely that the sponsor will be able to do a direct cashout,” O’Donnell said. The private equity firm is typically left with a large, somewhat illiquid position that it will gradually exit over time.

Charities find unlikely new champion in private equity: "The slash and burn culture of private equity seems ill-suited to the warm and well-meaning charity sector. But perhaps that is just what the latter needs." By applying private equity best practices to charities, one firm has increased the number of people they help by an average of 53p% every year over a five-year period. (Telegraph) The Bailout Bonanza: TARP's early returns are impressive. (Newsweek) Demerging markets: Private equity emerging markets are seen as being down in '09. (Reuters) OpEd: The New York Times approves of the FDIC's rules for private equity investment in failed banks. (NYT) More Positivity: More PE Groups in Europe have hinted that the worst is over for the industry. (FT) Don't Waste Time When You Travel: 10 tactics for being productive while traveling. (Lifehacker) CIC is Back: "As the effects of the credit crunch continue to ease, Chinese sovereign wealth fund China Investment Corp. is aiming to capitalize on the drop in valuations to load up on investments in private equity, hedge funds investments and funds-of-funds." (Dealscape)

Angelo Gordon & Co. has raised $258 million toward a distressed debt fund called AG Capital Recovery Partners VII, L.P. The vehicle has a $3 billion target and will invest in secured senior debt instruments of companies near or in Chapter 11. Angelo Gordon launched the effort earlier this year, and so far has commitments from 49 investors. LA Fire committed $35 million, while CalSTRS committed $100 million. Fresno County Employees’ Retirement Association is considering making a commitment to the fund as it seeks to expand its secondary and distressed investments.

Here's a look at the past two weeks of scoops, opinions and analysis from the peHUB blogging team. Read ‘em before they go behind a our subscriber paywall... Georgia On My Mind... Georgia On My Mind (Cont.) IPO Fever Private Equity Firms Should Think Hard About Investing In Newspapers Carlyle Group The Latest to Bulk Up In-House IR Stalking Horse Not Wanted: U.S. Shipping Rebuffs Bid, But Why? Laundry Room Chronicles: What Will The FDIC Do? Must See Video: FDIC Meeting While We Wait, More FDIC Chatter

On The Market: Blackstone Group Chief Executive Stephen Schwarzman has listed a 2.1-acre property in East Hampton, N.Y., for $7.2 million. Don't worry. He's wrapping up work on a house he's building on a 9.9-acre estate in nearby Water Mill, which he bought for $34 million in 2005. (NY Times) Rebuttals: The Private Equiteer takes issue with the Economist's "scathing" piece on the puzzle of private equity. Particularly the line which states that you are far more likely to achieve billionaire status by running an asset management business than by setting up an operating business. (Private Equiteer) Deals Deals Deals: Terra Firma purchased a wind energy business for $350 million. (Reuters) Deal Journal calls the deal "a bold move." (DJ) The Most Powerful Banker You've Never Heard of: Lewis Kaden is the ultimate behind-the-scenes power player. Lobbying the White House for Citi may be his biggest role yet. (BusinessWeek) Good News and Bad News: For the FDIC there's a long tunnel and little light. (Rolfe Winkler) But, you know, don't worry about the FDIC. (Felix Salmon)

Mergermarket today released its half-year private equity review, suggesting that private equity may have hit a bottom. Between Q1 and Q2, deal volume only decreased 4%. That’s a relatively shallow fall, when compared with the 49% plummet between Q3 and Q4 of last year. Exit data looks similar: After declining 44% from Q3 to Q4 last year, exit volume this year has been on a slow but steady rise, gaining an average of two deals in each quarter. Financial services and dominated deal activity, taking 70% of aggregate deal value in the first half of the year, thanks to deals like IndyMac, iShares and BankUnited. Many of the deals were in the asset management subsector, “which offered and continues to offer a variety of healthy, attractively priced businesses.” Thanks to parent company distress, forced divestitures have provided a fertile buying ground.

Alpine Investors, a San Francisco-based private equity firm, has held a second close on its fourth fund, according to an SEC filing. Since its launch in September, has gathered $45.25 million in commitments from 10 investors. Almost a year ago, peHUB reported that the effort has a $175 million target with a $205 million hard […]

As usual, we have a week's worth of ratings actions on the debt of sponsor-backed companies, via ratings agencies Standard & Poor's Ratings Services and Moody's Investors Service. A rare occurrence this week: S&P lowered its ratings on an actual private equity firm: American Capital, the BDC/buyout firm that's facing some creditor troubles, was downgraded to ‘B-'. No word on the progress of those creditor negotiations since the firm's earnings call earlier this month (which also provided no update). However, the firm did register to sell a $1.5 billion mixed-shelf offering on August 20. Company: American Capital Ltd. Sponsor: - Downgrade: S&P lowered the long-term counterparty credit rating on American Capital to 'B-' from 'BB-'. Highlights: "The rating action reflects the accelerated deterioration in the firm's realized earnings and reported leverage in second-quarter 2009, as well as the weakening performance of its portfolio companies. The firm's coverage of interest by realized earnings that are not dependent on investment exits declined significantly to 1.0x in the second quarter from 1.8x in the previous quarter and 2.9x for 2008. Moreover, while we had expected further portfolio depreciation, the unrealized write-downs in the second quarter, coupled with the slowdown in investment exits, has driven leverage to 2.3x--well above the 1.0x that had been required by covenants and is required for compliance with business development company (BDC) regulations."

Law Firms Not Hiring: This fall, law students are competing for half as many openings at big firms as they were last year in what is shaping up to be the most wrenching job search season in over 50 years. (NY Times) But Hedge Funds Are: "As returns have improved and redemptions slowed, some funds have grown confident enough about attractive investment opportunities to take on staff, particularly marketing executives to help lure back assets, operations staff and fund managers in popular strategies." (Reuters) Q&A: AIG's stock shot up today on the Reuters story that the firm's new CEO has reached out to former CEO Hank Greenberg. The three-hour interview with Benmosche is posted: (Reuters) Via Abnormal Returns: Blackstone Group (BX) has become the leading manager of hedge fund of funds. (NY Post)

Last week marked nine consecutive weeks of IPO filings in the US, and private equity firms are not waiting on the sidelines to get their companies listed. Since the middle of June, 32 companies have filed to take themselves public, including 14 with private equity sponsors. Thus far only Hyatt Hotels, which filed to sell $1.5 billion worth of shares, has topped the $1 billion mark. The private equity-backed deals include: