118-469: TPG Inc. , previously known as Texas Pacific Group and TPG Capital , is an American private equity firm based in Fort Worth, Texas . TPG manages investment funds in growth capital, venture capital , public equity , and debt investments. The firm invests in a range of industries including consumer/retail, media and telecommunications , industrials, technology, travel, leisure, and health care. TPG became
236-406: A financial sponsor agreeing to an acquisition without itself committing all the capital required for the acquisition. To do this, the financial sponsor will raise acquisition debt, which looks to the cash flows of the acquisition target to make interest and principal payments. Acquisition debt in an LBO is often non-recourse to the financial sponsor and has no claim on other investments managed by
354-524: A private equity fund . Certain institutional investors have the scale necessary to develop a diversified portfolio of private-equity funds themselves, while others will invest through a fund of funds to allow a portfolio more diversified than one a single investor could construct. Returns on private-equity investments are created through one or a combination of three factors that include: debt repayment or cash accumulation through cash flows from operations, operational improvements that increase earnings over
472-425: A venture capital fund, or an angel investor ; each category of investor has specific financial goals, management preferences, and investment strategies for profiting from their investments. Private equity provides working capital to the target company to finance the expansion of the company with the development of new products and services, restructuring of operations, management, and formal control and ownership of
590-474: A $ 290 million IPO and Simon made approximately $ 66 million. The success of the Gibson Greetings investment attracted the attention of the wider media to the nascent boom in leveraged buyouts. Between 1979 and 1989, it was estimated that there were over 2,000 leveraged buyouts valued in excess of $ 250 million. During the 1980s, constituencies within acquired companies and the media ascribed
708-879: A 50 MW photovoltaic plant in Bavaria , Germany , with MEMC supplying the solar wafers and Q-Cells converting them into solar cells . Both partners invested $ 100 million each, in return for a 50%-each ownership of the project. As planned, the plant was sold to an investment firm, Nordcapital , after operations started at the beginning of 2010. In November 2009 MEMC acquired the privately owned company SunEdison LLC, North America's largest solar energy services provider. Founded by Jigar Shah and Claire Broido Johnson SunEdison had been developing, financing, building, operating, and monitoring large-scale photovoltaic plants for commercial customers, including many national retail outlets, government agencies, and utilities, since 2003. The company had pioneered solar-as-a-service, and
826-416: A bid of $ 112, a figure they felt certain would enable them to outflank any response by Kravis's team. KKR's final bid of $ 109, while a lower dollar figure, was ultimately accepted by the board of directors of RJR Nabisco. At $ 31.1 billion of transaction value, RJR Nabisco was by far the largest leveraged buyouts in history. In 2006 and 2007, a number of leveraged buyout transactions were completed that for
944-441: A broad asset allocation that includes traditional assets (e.g., public equity and bonds ) and other alternative assets (e.g., hedge funds , real estate, commodities ). US, Canadian and European public and private pension schemes have invested in the asset class since the early 1980s to diversify away from their core holdings (public equity and fixed income). Today pension investment in private equity accounts for more than
1062-477: A buyback of TPG's PIPE convertible in 2000, which would ultimately be acquired by UnitedHealth Group , in 2004. In 1999, TPG invested in Piaggio S.p.A. , Bally International (including Bally Shoe ), and ON Semiconductor . T3 Partners was started in 2001 to invest alongside the main fund in technology-oriented investments. In 2000 TPG and Leonard Green & Partners invested $ 200 million to acquire Petco ,
1180-411: A deal for ₹ 39 billion . In 2020, TPG joined Diligent Corporation 's Modern Leadership Initiative and pledged to create five new board roles among its portfolio companies for racially diverse candidates. On February 25, 2021, AT&T announced that it would spin-off DirecTV , U-verse and AT&T TV into a separate entity, selling a 30% stake to TPG Capital while retaining a 70% stake in
1298-551: A fee of around $ 600 million. TPG and movie producer Robert Simonds, Jr. , announced in March 2014 that they had entered a partnership with China's Hony Capital to produce up to 10 "star-driven" films a year, with mid-range budgets of about $ 40 million per film. In April 2014, it was announced that TPG had invested £200 million in Victoria Plumb after buying a majority stake. In November 2014, Prezzo Holdings agreed to
SECTION 10
#17328511263581416-777: A fine of $ 650 million – at the time, the largest fine ever levied under securities laws. Milken left the firm after his own indictment in March 1989. On 13 February 1990 after being advised by United States Secretary of the Treasury Nicholas F. Brady , the U.S. Securities and Exchange Commission (SEC), the New York Stock Exchange and the Federal Reserve , Drexel Burnham Lambert officially filed for Chapter 11 bankruptcy protection. The combination of decreasing interest rates, loosening lending standards and regulatory changes for publicly traded companies (specifically
1534-502: A form of growth capital investment made into a publicly traded company . PIPE investments are typically made in the form of a convertible or preferred security that is unregistered for a certain period of time. The Registered Direct (RD) is another common financing vehicle used for growth capital. A registered direct is similar to a PIPE, but is instead sold as a registered security. Mezzanine capital refers to subordinated debt or preferred equity securities that often represent
1652-681: A generally low likelihood of facing liquidity shocks in the medium term, and thus can afford the required long holding periods characteristic of private-equity investment. The median horizon for a LBO transaction is eight years. MEMC Electronic Materials SunEdison, Inc. (formerly MEMC Electronic Materials ) is a renewable energy company headquartered in the U.S. In addition to developing, building, owning, and operating solar power plants and wind energy plants, it also manufactures high-purity polysilicon , monocrystalline silicon ingots , silicon wafers , solar modules , solar energy systems , and solar module racking systems . Originally
1770-453: A joint venture with Korea-based Jusung Engineering, to combine its proprietary Solaicx CCZ monocrystalline wafers with Jusung's high-efficiency cell manufacturing equipment to provide low-cost, high-efficiency solar cells. In September 2011, MEMC acquired Fotowatio Renewable Ventures Inc., the U.S. unit of Fotowatio Renewable Ventures, a developer, operator and owner of solar power plants. The FRV purchase added up to 1.4 GW of solar projects in
1888-475: A large and active asset class and the private-equity firms, with hundreds of billions of dollars of committed capital from investors are looking to deploy capital in new and different transactions. As a result of the global financial crisis, private equity has become subject to increased regulation in Europe and is now subject, among other things, to rules preventing asset stripping of portfolio companies and requiring
2006-429: A notable slowdown in issuance levels in the high yield and leveraged loan markets with few issuers accessing the market. Uncertain market conditions led to a significant widening of yield spreads, which coupled with the typical summer slowdown led many companies and investment banks to put their plans to issue debt on hold until the autumn. However, the expected rebound in the market after 1 May 2007 did not materialize, and
2124-463: A number of the same tactics and target the same type of companies as more traditional leveraged buyouts and in many ways could be considered a forerunner of the later private-equity firms. Posner is often credited with coining the term " leveraged buyout " or "LBO". The leveraged buyout boom of the 1980s was conceived by a number of corporate financiers, most notably Jerome Kohlberg Jr. and later his protégé Henry Kravis . Working for Bear Stearns at
2242-735: A period in which a significant and apparently unexplained spike occurred in the market value of the certificates. On June 10, 2010, TPG announced an acquisition of Vertafore, a provider of software for the insurance industry, for $ 1.4 billion. On July 13, 2011, affiliates of TPG Capital acquired PRIMEDIA for approximately $ 525 million, or $ 7.10 per share in cash. TPG and fellow private equity firm Apollo Global Management are set to IPO their stake in Norwegian Cruise Lines in 2013. In July 2013, TPG announced it would buy global education publisher TSL Education, later TES Global, publishers of TES magazine ) from Charterhouse Group , for
2360-475: A private equity investor in Greek mobile phone operator WIND Hellas , formerly TIM Hellas, which filed for bankruptcy protection late 2009. Morgenson raised questions about the circumstances in which TPG and fellow private equity investors Apax Partners of London redeemed a significant quantity of "convertible preferred equity certificates" held by them to repay their own "deeply subordinated shareholder loans " during
2478-700: A public company in January 2022, trading on the NASDAQ under the ticker symbol “TPG”. TPG has historically relied primarily on private equity funds , pools of committed capital from pension funds , insurance companies , endowments , fund of funds , high-net-worth individuals , sovereign wealth funds , and from other institutional investors . Texas Pacific Group, later TPG Capital, was founded in 1992 by David Bonderman , James Coulter and William S. Price III . Prior to founding TPG, Bonderman and Coulter had worked for Robert Bass , making leveraged buyout investments during
SECTION 20
#17328511263582596-400: A reputation as a ruthless corporate raider after his hostile takeover of TWA in 1985. Many of the corporate raiders were onetime clients of Michael Milken , whose investment banking firm, Drexel Burnham Lambert helped raise blind pools of capital with which corporate raiders could make a legitimate attempt to take over a company and provided high-yield debt ("junk bonds") financing of
2714-560: A restructured, smaller, private company. The establishment of Monsanto Electronic Materials Company (MEMC) , a silicon wafer –manufacturing division to serve the emerging electronics industry, was announced on August 6, 1959, as an arm of the U.S.-based multinational corporation Monsanto . In February 1960 MEMC started production of 19mm silicon ingots at its location in St. Peters, Missouri , 30 miles west of Monsanto's headquarters in St. Louis. As one of
2832-507: A silicon-wafer manufacturer established in 1959 as the Monsanto Electronic Materials Company, the company was sold by Monsanto in 1989. It is one of the leading solar-power companies worldwide, and with its acquisition of wind-energy company First Wind in 2014, SunEdison became the leading renewable energy development company in the world. In 2015, SunEdison sold off its subsidiary SunEdison Semiconductor, marking
2950-461: A symbolic dollar and offered MEMC $ 150 million in credit lines. TPG restructured MEMC's debt, increased its stake in the company to 90%, and cut one third of its workforce. MEMC returned to profitability following the appointment of Nabeel Gareeb , who was CEO of MEMC from April 2002 to November 2008. MEMC's market share rose again and by 2003 it reported positive earning figures. MEMC's sales topped $ 1 billion in 2004, and it
3068-399: A third of all monies allocated to the asset class , ahead of other institutional investors such as insurance companies, endowments, and sovereign wealth funds. Most institutional investors do not invest directly in privately held companies , lacking the expertise and resources necessary to structure and monitor the investment. Instead, institutional investors will invest indirectly through
3186-477: A total of $ 748 billion in 2018. Thus, given the abundance of private capital available, companies no longer require public markets for sufficient funding. Benefits may include avoiding the cost of an IPO, maintaining more control of the company, and having the 'legroom' to think long-term rather than focus on short-term or quarterly figures. A new phenomenon in the Twenties are regulated platforms which fractionalise
3304-588: A transformational event in their life cycle. These companies are likely to be more mature than venture capital-funded companies, able to generate revenue and operating profits, but unable to generate sufficient cash to fund major expansions, acquisitions or other investments. Because of this lack of scale, these companies generally can find few alternative conduits to secure capital for growth, so access to growth equity can be critical to pursue necessary facility expansion, sales and marketing initiatives, equipment purchases, and new product development. The primary owner of
3422-421: A £303.7 million takeover by TPG. In the first half of 2014, the company started to raise funds for a real-estate specific fund. It had a goal of $ 1.5 billion to $ 2 billion. By October 2015, the company had exceeded its goal, raising more than $ 2 billion. In 2016, TPG partnered with Bono and Jeff Skoll to launch The Rise Fund, a social impact investment fund. In August 2016, TPG Growth,
3540-513: Is acquired from the current shareholders typically with the use of financial leverage . The companies involved in these transactions are typically mature and generate operating cash flows . Private-equity firms view target companies as either Platform companies, which have sufficient scale and a successful business model to act as a stand-alone entity, or as add-on / tuck-in / bolt-on acquisitions , which would include companies with insufficient scale or other deficits. Leveraged buyouts involve
3658-410: Is offered instead to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage, "private equity" can refer to these investment firms, rather than the companies in which that they invest. Private-equity capital is invested into a target company either by an investment management company ( private equity firm ),
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3776-602: Is often most closely associated with fast-growing technology , healthcare and biotechnology fields, venture funding has been used for other more traditional businesses. Investors generally commit to venture capital funds as part of a wider diversified private-equity portfolio , but also to pursue the larger returns the strategy has the potential to offer. However, venture capital funds have produced lower returns for investors over recent years compared to other private-equity fund types, particularly buyout. The category of distressed securities comprises financial strategies for
3894-485: Is sold two years after the buy-out for $ 13bn, yielding a profit of $ 2bn. The original loan can now be paid off with interest of, say, $ 0.5bn. The remaining profit of $ 1.5bn is shared among the partners. Taxation of such gains is at the capital gains tax rates , which in the United States are lower than ordinary income tax rates. Note that part of that profit results from turning the company around, and part results from
4012-695: The Carnegie Steel Company using private equity. Modern era private equity, however, is credited to Georges Doriot , the "father of venture capitalism" with the founding of ARDC and founder of INSEAD , with capital raised from institutional investors, to encourage private sector investments in businesses run by soldiers who were returning from World War II. ARDC is credited with the first major venture capital success story when its 1957 investment of $ 70,000 in Digital Equipment Corporation (DEC) would be valued at over $ 355 million after
4130-691: The Nasdaq stock exchange through an IPO at a $ 9 billion valuation. In April 2022, the company purchased a majority stake in Morrow Sodali, a proxy firm based in New York. In May 2023, TPG agreed to acquire alternative investment firm Angelo Gordon in a cash and stock deal valued at $ 2.7 billion. In July 2023, together with Francisco Partners, TPG agreed to acquire web tracking and analytics firm New Relic in an all-cash deal valued at $ 6.5 billion. On September 30, 2024, AT&T announced that it
4248-510: The New York Stock Exchange with an initial public offering in 1995. The IPO raised over $ 400 million, which went to finance an aggressive growth plan and repay some of the debt to its parent company, and Hüls/VEBA retained a majority interest in the company. The cyclical downturn in the semiconductor business in the late 1990s hit MEMC hard. In 1998 the company reported a loss of $ 316 million on revenues of $ 759 million. In June 2000 VEBA AG, still holding 72% of MEMC,
4366-622: The Sarbanes–Oxley Act ) would set the stage for the largest boom private equity had seen. Marked by the buyout of Dex Media in 2002, large multibillion-dollar U.S. buyouts could once again obtain significant high yield debt financing and larger transactions could be completed. By 2004 and 2005, major buyouts were once again becoming common, including the acquisitions of Toys "R" Us , The Hertz Corporation , Metro-Goldwyn-Mayer and SunGard in 2005. As 2006 began, new "largest buyout" records were set and surpassed several times with nine of
4484-532: The " corporate raid " label to many private-equity investments, particularly those that featured a hostile takeover of the company, perceived asset stripping , major layoffs or other significant corporate restructuring activities. Among the most notable investors to be labeled corporate raiders in the 1980s included Carl Icahn , Victor Posner , Nelson Peltz , Robert M. Bass , T. Boone Pickens , Harold Clark Simmons , Kirk Kerkorian , Sir James Goldsmith , Saul Steinberg and Asher Edelman . Carl Icahn developed
4602-483: The $ 2.3 billion leveraged buyout of Burger King from Diageo . However, in November the original transaction collapsed, when Burger King failed to meet certain performance targets. In December 2002, TPG and its co-investors agreed on a reduced $ 1.5 billion purchase price for the investment. The TPG consortium had support from Burger King's franchisees, which controlled approximately 92% of Burger King restaurants at
4720-515: The 1980s. In 1993, Coulter and Bonderman partnered with GE Capital vice president of strategic planning and business development William S. Price III to complete the buyout of Continental Airlines . In 1994, TPG, Blum Capital and ACON Investments created Newbridge Capital, a joint-venture to invest in emerging markets, particularly in Asia and, later, in Latin America. In June 1996, TPG acquired
4838-638: The 1986 buyout of the Revco drug stores, Walter Industries, FEB Trucking and Eaton Leonard. Additionally, the RJR Nabisco deal was showing signs of strain, leading to a recapitalization in 1990 that involved the contribution of $ 1.7 billion of new equity from KKR. In the end, KKR lost $ 700 million on RJR. Drexel reached an agreement with the government in which it pleaded nolo contendere (no contest) to six felonies – three counts of stock parking and three counts of stock manipulation . It also agreed to pay
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4956-537: The AT&;T Paradyne unit, a multimedia communications business, from Lucent Technologies for $ 175 million. Also in 1996, TPG invested in Beringer Wine , Ducati Motorcycles and Del Monte Foods . In 1997, TPG raised over $ 2.5 billion for its second private equity fund. TPG's most notable investment that year was its takeover of the retailer J. Crew , acquiring an 88% stake for approximately $ 500 million;
5074-537: The California-based solar tech company Solaicx in mid 2010. The acquisition included Solaicx's high-volume proprietary "continuous crystal growth" manufacturing technology, which produces low-cost monocrystalline silicon ingots for high-efficiency solar cells. In February 2011 Samsung Fine Chemicals and MEMC announced a 50/50 joint venture to build a polysilicon production plant in Ulsan, South Korea . The plant
5192-535: The Japanese semiconductor market, becoming the first non-Japanese wafer maker with manufacturing and research facilities in Japan. MEMC experienced heavy price-pressure from Japanese competition during the mid 1980s. Despite its success and increasing revenues, MEMC had to account for losses for a few years, leading to the decision of Monsanto, which was refocusing on chemicals, agriculture, and biotechnology products, to sell
5310-405: The NASDAQ under the ticker "SEMI", with SunEdison, Inc. maintaining a majority stake as the largest shareholder. The IPO generated $ 94 million, used to fund the company's growth. In July 2014, SunEdison created a yieldco subsidiary, called TerraForm Power, Inc., with SunEdison, Inc. maintaining a majority stake as the largest shareholder. TerraForm began publicly trading in an IPO under
5428-505: The U.S. to MEMC's portfolio. In December 2011 MEMC undertook restructuring measures in reaction to a cyclical downturn in its semiconductor business and a slump in the whole supply chain of photovoltaic modules. The company announced a headcount reduction of 1,300 employees (18% of the workforce), plus capacity reduction and productivity increase for polysilicon and wafers. In 2012 MEMC developed its Silvantis line of multi-crystalline 290-watt solar modules. With 1,000-volt UL certification,
5546-457: The US private-equity industry were planted in 1946 with the founding of two venture capital firms: American Research and Development Corporation (ARDC) and J.H. Whitney & Company . Before World War II, venture capital investments (originally known as "development capital") were primarily the domain of wealthy individuals and families. In 1901 J.P. Morgan arguably managed the first leveraged buyout of
5664-548: The asset class, to invest in private equity from older vintages than would otherwise be available to them. Secondaries also typically experience a different cash flow profile, diminishing the j-curve effect of investing in new private-equity funds. Often investments in secondaries are made through third-party fund vehicle, structured similar to a fund of funds although many large institutional investors have purchased private-equity fund interests through secondary transactions. Sellers of private-equity fund investments sell not only
5782-634: The assets making investment sizes of $ 10,000 or less possible. Although the capital for private equity originally came from individual investors or corporations, in the 1970s, private equity became an asset class in which various institutional investors allocated capital in the hopes of achieving risk-adjusted returns that exceed those possible in the public equity markets . In the 1980s, insurers were major private-equity investors. Later, public pension funds and university and other endowments became more significant sources of capital. For most institutional investors, private-equity investments are made as part of
5900-409: The buyouts. One of the final major buyouts of the 1980s proved to be its most ambitious and marked both a high-water mark and a sign of the beginning of the end of the boom. In 1989, KKR (Kohlberg Kravis Roberts) closed in on a $ 31.1 billion takeover of RJR Nabisco . It was, at that time and for over 17 years, the largest leveraged buyout in history. The event was chronicled in the book (and later
6018-434: The company may not be willing to take the financial risk alone. By selling part of the company to private equity, the owner can take out some value and share the risk of growth with partners. Capital can also be used to effect a restructuring of a company's balance sheet, particularly to reduce the amount of leverage (or debt) the company has on its balance sheet . A private investment in public equity (PIPE), refer to
SECTION 50
#17328511263586136-525: The company to be acquired) as well as the interest costs and the ability of the company to cover those costs. Historically the debt portion of a LBO will range from 60 to 90% of the purchase price. Between 2000 and 2005, debt averaged between 59.4% and 67.9% of total purchase price for LBOs in the United States. A private-equity fund, ABC Capital II, borrows $ 9bn from a bank (or other lender). To this, it adds $ 2bn of equity – money from its own partners and from limited partners . With this $ 11bn, it buys all
6254-405: The company's initial public offering in 1968 (a return of over 5,000 times its investment and an annualized rate of return of 101%). It is commonly noted that the first venture-backed startup is Fairchild Semiconductor , which produced the first commercially practicable integrated circuit, funded in 1959 by what would later become Venrock Associates . The first leveraged buyout may have been
6372-409: The company. As a financial product, the private-equity fund is a type of private capital for financing a long-term investment strategy in an illiquid business enterprise. Private equity fund investing has been described by the financial press as the superficial rebranding of investment management companies who specialized in the leveraged buyout of financially weak companies. Evaluations of
6490-539: The completion of SunEdison's transition from a semiconductor-wafer company to a dedicated renewable-energy corporation. Following years of major expansion and the announcement of the intent—which eventually fell through—to acquire the residential-rooftop solar company Vivint Solar in 2015, SunEdison's stock plummeted, and its more than $ 11 billion in debt caused it to file for Chapter 11 bankruptcy protection on April 21, 2016, eventually emerging in December 2017 as
6608-645: The controversial acquisition of Gemplus SA , a smart card manufacturer. TPG won a struggle with the company's founder, Marc Lassus, for control of the company. Also in 2000, TPG completed an investment in Seagate Technology . In 2001, TPG acquired Telenor Media , a Norwegian phone-directory company, for $ 660 million, and shortly thereafter acquired a controlling interest in silicon-wafer maker MEMC Electronic Materials . In July 2002, TPG, together with Bain Capital and Goldman Sachs Capital Partners , announced
6726-456: The cost of solar energy. In 2011 MEMC also extended its solar-energy business. In June 2011, it acquired another North American solar-power project developer, Axio Power. Axio Power, founded in 2007, developed, financed, and constructed large-scale solar projects, and had more than 500 MW of utility-scale photovoltaic power projects in Canada and the western U.S. In July 2011, MEMC established
6844-519: The definitive sale for $ 1.04 billion in cash of its consumer packaging division to the Texas Pacific Group. In early 2006, as TPG was completing fundraising for its fifth private equity fund, co-founder Bill Price announced that he would reduce his work at the firm. On December 1, 2006, it was announced TPG and Kohlberg Kravis Roberts had been exploring the possibility of a $ 100 billion leveraged buyout of Home Depot . In early 2007,
6962-576: The early 1970s, MEMC opened a production plant in Kuala Lumpur , Malaysia , and sent its St. Peters–produced 2.25-inch ingots there for slicing and polishing. In 1979, MEMC became the first company to manufacture 125mm (5-inch) wafers; in 1981 the first to produce 150mm (6-inch) wafers; and, in partnership with IBM , in 1984 the first to produce 200mm (8-inch) wafers. In 1986 MEMC opened its production and R&D facility in Utsunomiya , Japan to serve
7080-536: The electronic materials division. In 1989 the German company Hüls AG , the chemicals arm of the German conglomerate VEBA , acquired Monsanto Electronic Materials and combined it with Hüls' previous acquisition Dynamite Nobel Silicon (DNS) to form MEMC Electronic Materials. DNS already operated silicon wafer plants in Merano and Novara , Italy and integrated them within the new MEMC Electronic Materials. Hüls supported
7198-410: The financial sponsor. Therefore, an LBO transaction's financial structure is particularly attractive to a fund's limited partners, allowing them the benefits of leverage, but limiting the degree of recourse of that leverage. This kind of financing structure leverage benefits an LBO's financial sponsor in two ways: (1) the investor only needs to provide a fraction of the capital for the acquisition, and (2)
SECTION 60
#17328511263587316-501: The firm officially changed its name to TPG , rebranding all of its funds across different geographies. In August 2007, Midwest Air Group, parent company of Midwest Airlines, signed a definitive merger agreement to be acquired by an affiliate of TPG Capital in a transaction valued at approximately $ 450 million. On April 7, 2008, TPG led a $ 7 billion investment in Washington Mutual . On September 25, 2008, Washington Mutual
7434-651: The first companies to produce semiconductor wafers, MEMC was a pioneer in the field, and some of its innovations became industry standards into the 21st century. MEMC used the Czochralski process (CZ process) of silicon crystal production, and developed the Chemical Mechanical Polishing (CMP) process of wafer finishing. In 1966 MEMC installed its first reactors for the production of epitaxial wafers , and developed zero-dislocation crystal growing, which made large-diameter silicon crystals possible. In
7552-409: The first time surpassed the RJR Nabisco leveraged buyout in terms of nominal purchase price. However, adjusted for inflation, none of the leveraged buyouts of the 2006–2007 period would surpass RJR Nabisco. By the end of the 1980s the excesses of the buyout market were beginning to show, with the bankruptcy of several large buyouts including Robert Campeau 's 1988 buyout of Federated Department Stores ,
7670-468: The formation of Kohlberg Kravis Roberts in that year. In January 1982, former United States Secretary of the Treasury William E. Simon and a group of investors acquired Gibson Greetings , a producer of greeting cards, for $ 80 million, of which only $ 1 million was rumored to have been contributed by the investors. By mid-1983, just sixteen months after the original deal, Gibson completed
7788-413: The fund close, the firm formed Rise Climate Coalition, organized to scale climate technologies and share best-practices. Members include individuals and representatives from companies such as Apple , Bank of America , Honeywell , Boeing , and John Deere . In April 2022, the fund announced the final close of TPG Rise Climate with $ 7.3 billion in total commitments. On January 13, 2022, TPG went public on
7906-467: The general increase in share prices in a buoyant stock market, the latter often being the greater component. Notes: Growth capital refers to equity investments, most often minority investments, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a major acquisition without a change of control of the business. Companies that seek growth capital will often do so in order to finance
8024-628: The growth equity and smaller buyout investment arm of TPG Capital, acquired technology staffing firm Frank Recruitment Group in a deal that valued the company at £200 million. In January 2017, TPG acquired a majority of A&O Hotels and Hostels , Europe's biggest privately owned hostel platform, based in Germany. On January 25, 2017, TPG announced that after a nearly two-year search, it had hired Bradford Berenson as its general counsel. Berenson had been vice president and senior counsel for litigation and legal policy for General Electric (GE), where he
8142-494: The investment struggled due to the high purchase price paid relative to the company's earnings. The company was able to complete a turnaround , beginning in 2002, and to complete an IPO in 2006. In 1998, TPG led a minority investment in Oxford Health Plans . TPG and its co-investors invested $ 350 million in a convertible preferred stock that can be converted into 22.1% of Oxford shareholding. The company completed
8260-434: The investments in the fund but also their remaining unfunded commitments to the funds. Other strategies that can be considered private equity or a close adjacent market include: As well as this to compensate for private equities not being traded on the public market, a private-equity secondary market has formed, where private-equity investors purchase securities and assets from other private equity investors. The seeds of
8378-454: The lack of market confidence prevented deals from pricing. By the end of September, the full extent of the credit situation became obvious as major lenders including Citigroup and UBS AG announced major writedowns due to credit losses. The leveraged finance markets came to a near standstill during a week in 2007. As 2008 began, lending standards tightened and the era of "mega-buyouts" came to an end. Nevertheless, private equity continues to be
8496-577: The launch of startup companies to late stage and growth capital that is often used to fund expansion of existing business that are generating revenue but may not yet be profitable or generating cash flow to fund future growth. Entrepreneurs often develop products and ideas that require substantial capital during the formative stages of their companies' life cycles. Many entrepreneurs do not have sufficient funds to finance projects themselves, and they must, therefore, seek outside financing. The venture capitalist's need to deliver high returns to compensate for
8614-402: The launch of a seed or startup company, early-stage development, or expansion of a business. Venture investment is most often found in the application of new technology, new marketing concepts and new products that do not have a proven track record or stable revenue streams. Venture capital is often sub-divided by the stage of development of the company ranging from early-stage capital used for
8732-457: The leading renewable energy development company in the world. In 2015, MIT Technology Review named SunEdison #6, and the top energy company, in its annual "50 Smartest Companies" list. The review characterized SunEdison as "Aggressively expanding its renewable energy products and building a business to provide electricity to the developing world." In June 2015, SunEdison, Inc. announced its full divestiture from its semiconductor business,
8850-449: The levels that traditional lenders are willing to provide through bank loans. In compensation for the increased risk, mezzanine debt holders require a higher return for their investment than secured or other more senior lenders. Mezzanine securities are often structured with a current income coupon. Venture capital (VC) is a broad subcategory of private equity that refers to equity investments made, typically in less mature companies, for
8968-583: The life of the investment and multiple expansion, selling the business for a higher price than was originally paid. A key component of private equity as an asset class for institutional investors is that investments are typically realized after some period of time, which will vary depending on the investment strategy. Private-equity investment returns are typically realized through one of the following avenues: Large institutional asset owners such as pension funds (with typically long-dated liabilities), insurance companies, sovereign wealth and national reserve funds have
9086-749: The loan debt. Lewis Cullman's acquisition of Orkin Exterminating Company in 1964 is often cited as the first leveraged buyout. Similar to the approach employed in the McLean transaction, the use of publicly traded holding companies as investment vehicles to acquire portfolios of investments in corporate assets was a relatively new trend in the 1960s popularized by the likes of Warren Buffett ( Berkshire Hathaway ) and Victor Posner ( DWG Corporation ) and later adopted by Nelson Peltz ( Triarc ), Saul Steinberg (Reliance Insurance) and Gerry Schwartz ( Onex Corporation ). These investment vehicles would utilize
9204-455: The major banking players of the day, including Morgan Stanley , Goldman Sachs , Salomon Brothers , and Merrill Lynch were actively involved in advising and financing the parties. After Shearson's original bid, KKR quickly introduced a tender offer to obtain RJR Nabisco for $ 90 per share—a price that enabled it to proceed without the approval of RJR Nabisco's management. RJR's management team, working with Shearson and Salomon Brothers, submitted
9322-461: The market turned sour last summer and investors soured on its business model." During the three years preceding the bankruptcy filing, SunEdison invested $ 18 billion in acquisitions. During that time, the company also raised $ 24 billion in debt and equity. In March 2016, the U.S. Department of Justice began an investigation into the company regarding its financial practices. Internally, SunEdison's board completed its own investigation, concluding that
9440-519: The modules created considerable overall energy-production and systems savings on solar projects due to the ability to be more efficiently wired. On May 30, 2013, MEMC Electronic Materials changed its name to SunEdison, Inc. , and also changed its stock-market ticker from "WFR" to "SUNE", reflecting the company's focus on solar energy. In May 2014, SunEdison formally separated its electronics-wafer business from its solar-wafer and solar-energy business. SunEdison Semiconductor, Ltd. spun off in an IPO on
9558-455: The money. When it filed for bankruptcy, the company asked the court for an independent examiner to audit the company's recent financial transactions. SunEdison requested that the examiner's work start immediately and finish within 60 days, and that the maximum budget be $ 1 million. Reuters noted that, comparatively, the 2015 independent examination in the bankruptcy of Caesars Entertainment Corp. took one year and cost $ 40 million. During
9676-439: The most junior portion of a company's capital structure that is senior to the company's common equity . This form of financing is often used by private-equity investors to reduce the amount of equity capital required to finance a leveraged buyout or major expansion. Mezzanine capital, which is often used by smaller companies that are unable to access the high yield market , allows such companies to borrow additional capital beyond
9794-462: The movie), Barbarians at the Gate : The Fall of RJR Nabisco . KKR would eventually prevail in acquiring RJR Nabisco at $ 109 per share, marking a dramatic increase from the original announcement that Shearson Lehman Hutton would take RJR Nabisco private at $ 75 per share. A fierce series of negotiations and horse-trading ensued which pitted KKR against Shearson and later Forstmann Little & Co. Many of
9912-562: The new standalone company. The deal was closed on August 2, 2021. In July 2021, TPG announced it had raised $ 5.4 billion in a first close for its inaugural TPG Rise Climate fund, a climate investing strategy focused on commercially viable climate technologies. Institutional investment backers included Allstate , the Ontario Teachers’ Pension Plan , and the Washington State Investment Board. Concurrent with
10030-521: The new subsidiary with $ 50 million, for research and development and for manufacturing expansion. In 1991 MEMC developed the first process using granular polysilicon , which provided cost and productivity advantages over "chunk" polysilicon. Four years later MEMC acquired Albemarle Corporation 's granular polysilicon production facility in Pasadena , Texas , which had been producing granular polysilicon since 1987. MEMC's stock began trading on
10148-630: The notification and disclosure of information in connection with buy-out activity. From 2010 to 2014 KKR , Carlyle , Apollo and Ares went public. Starting from 2018 these companies converted from partnerships into corporations with more shareholder rights and the inclusion in stock indices and mutual fund portfolios. But with the increased availability and scope of funding provided by private markets, many companies are staying private simply because they can. McKinsey & Company reports in its Global Private Markets Review 2018 that global private market fundraising increased by $ 28.2 billion from 2017, for
10266-407: The pet supplies retailer as part of a $ 600 million buyout. Within two years they sold most of it in a public offering that valued the company at $ 1 billion. Petco's market value greatly increased by the end of 2004 and the firms would ultimately realize a gain of $ 1.2 billion. Then, in 2006, the private equity firms took Petco private again for $ 1.68 billion. In 2000, TPG completed
10384-411: The previous record set in 2000 by 22% and 33% higher than the 2005 fundraising total The following year, despite the onset of turmoil in the credit markets in the summer, saw yet another record year of fundraising with $ 302 billion of investor commitments to 415 funds Among the mega-buyouts completed during the 2006 to 2007 boom were: EQ Office , HCA , Alliance Boots and TXU . In July 2007,
10502-537: The profitable investment of working capital into the corporate equity and the securities of financially weak companies. The investment of private-equity capital into distressed securities is realised with two financial strategies: Moreover, the private-equity investment strategies of hedge funds also include actively trading the loans held and the bonds issued by the financially-weak target companies. Secondary investments refer to investments made in existing private-equity assets. These transactions can involve
10620-421: The publicly traded company SunEdison Semiconductor. SunEdison Semiconductors was acquired by GlobalWafers Co., Ltd on December 2, 2016 and subsequently had its name changed back to MEMC LLC. The completion of the sell-off finalized SunEdison's transition into a dedicated renewable-energy company. Following years of major expansion and the announcement of the intent – which eventually fell through – to acquire
10738-446: The purchase by McLean Industries, Inc. of Pan-Atlantic Steamship Company in January 1955 and Waterman Steamship Corporation in May 1955 Under the terms of that transaction, McLean borrowed $ 42 million and raised an additional $ 7 million through an issue of preferred stock . When the deal closed, $ 20 million of Waterman cash and assets were used to retire $ 20 million of
10856-403: The purchase on March 10, 2005. TPG entered the film production business in late 2004, in the major leveraged buyout of Metro-Goldwyn-Mayer . A consortium led by TPG and Sony completed the $ 4.81 billion buyout of the film studio. The consortium also included media-focused firms Providence Equity Partners and Quadrangle Group , as well as DLJ Merchant Banking Partners . The transaction
10974-553: The residential-rooftop solar company Vivint Solar in 2015, SunEdison's stock plummeted and its more than $ 11 billion in debt caused it to face bankruptcy in April 2016. It filed for Chapter 11 bankruptcy protection on April 21, 2016. To continue its operations and pay staff, the company received $ 300 million in bankruptcy debt financing. It continued operations during bankruptcy. The debt financing money came from first-lien and second-lien lenders. The bankruptcy court approved
11092-426: The returns of private equity are mixed: some find that it outperforms public equity, but others find otherwise. Some key features of private equity investment include: The strategies private-equity firms may use are as follows, leveraged buyout being the most common. Leveraged buyout (LBO) refers to a strategy of making equity investments as part of a transaction in which a company, business unit, or business asset
11210-467: The returns to the investor will be enhanced, as long as the return on assets exceeds the cost of the debt. As a percentage of the purchase price for a leverage buyout target, the amount of debt used to finance a transaction varies according to the financial condition and history of the acquisition target, market conditions, the willingness of lenders to extend credit (both to the LBO's financial sponsors and
11328-434: The risk of these investments makes venture funding an expensive capital source for companies. Being able to secure financing is critical to any business, whether it is a startup seeking venture capital or a mid-sized firm that needs more cash to grow. Venture capital is most suitable for businesses with large up-front capital requirements which cannot be financed by cheaper alternatives such as debt . Although venture capital
11446-399: The sale of private equity fund interests or portfolios of direct investments in privately held companies through the purchase of these investments from existing institutional investors . By its nature, the private-equity asset class is illiquid, intended to be a long-term investment for buy and hold investors. Secondary investments allow institutional investors, particularly those new to
11564-465: The shares of an underperforming company, XYZ Industrial (after due diligence , i.e. checking the books). It replaces the senior management in XYZ Industrial, with others who set out to streamline it. The workforce is reduced, some assets are sold off, etc. The objective is to increase the valuation of the company for an early sale. The stock market is experiencing a bull market , and XYZ Industrial
11682-400: The solar power purchase agreement (PPA) for no-money-down customer financing. With the acquisition of SunEdison, MEMC became a developer of solar power projects and North America's largest solar energy services provider. CEO Ahmad Chatila announced that "MEMC will now participate in the actual development of solar power plants and commercialization of clean energy, in addition to supplying
11800-494: The solar and semiconductor industries with our traditional silicon wafer products." SunEdison was purchased for $ 200 million, 70% in cash and 30% in MEMC stock, plus retention payments, transaction expenses, and the assumption of net debt. Following its acquisition of SunEdison, MEMC also began to focus on developing and acquiring advanced technologies used in the production of low-cost, high-performance solar panels. It acquired
11918-517: The solar module surface. That month it also announced the implementation of "high-pressure fluidized bed reactor " (HP-FBR) technology, producing high-purity polysilicon up to 10 times more efficiently and with 90% less energy used than non-FBR technologies. In November 2014, with its subsidiary TerraForm Power, SunEdison purchased First Wind , one of the largest wind power developers in the United States, for $ 2.4 billion. The acquisition added wind energy to SunEdison's capacity, and made it
12036-457: The solar wafer market. Having returned MEMC to a foundation of profitability and having helped it enter the solar market, CEO Nabeel Gareeb resigned in November 2008. Ahmad Chatila was appointed president and CEO in February 2009. In July 2009 MEMC and Q-Cells , which specialized in construction and operation of photovoltaic plants, formed a joint venture to build Strasskirchen Solar Park ,
12154-576: The summer of 2015, SunEdison was worth almost $ 10 billion, and in July 2015 shares traded upward of $ 33.44. On the day of the bankruptcy filing, the company's trading price on the New York Stock Exchange was 34 cents per share. According to the Wall Street Journal : "SunEdison used a combination of financial engineering and cheap debt to buy up renewable-power projects around the world before
12272-464: The takeover of RJR Nabisco at the end of the 1980s leveraged buyout boom. At the time of its announcement, SunGard would be the largest buyout of a technology company in history, a distinction later ceded to the buyout of Freescale Semiconductor . The involvement of seven firms in the consortium was criticized by investors in private equity who considered cross-holdings among firms to be generally unattractive. On May 15, 2006, Smurfit-Stone reported
12390-463: The three Bear Stearns bankers would complete a series of buyouts including Stern Metals (1965), Incom (a division of Rockwood International, 1971), Cobblers Industries (1971), and Boren Clay (1973) as well as Thompson Wire, Eagle Motors and Barrows through their investment in Stern Metals. By 1976, tensions had built up between Bear Stearns and Kohlberg, Kravis and Roberts leading to their departure and
12508-465: The ticker "TERP". This IPO of the power-generation subsidiary spin-off raised roughly $ 500 million. SunEdison launched a second yieldco subsidiary, TerraForm Global, in 2015, to manage renewable-energy projects in emerging markets like Brazil, China, and India. This second yieldco trades on the NASDAQ under the ticker "GLBL". In October 2014 SunEdison announced the development of "zero white space" solar modules, which eliminate wasted space on
12626-455: The time of the transaction. Under its new owners, Burger King underwent a brand overhaul including the use of The Burger King character in advertising. In February 2006, Burger King announced plans for an initial public offering . In November 2003, TPG provided a proposal to buy Portland General Electric from Enron . However, concerns about debt and local politics led to Oregon's Public Utilities Commission regulators to deny permission for
12744-456: The time, Kohlberg and Kravis along with Kravis' cousin George Roberts began a series of what they described as "bootstrap" investments. Many of these companies lacked a viable or attractive exit for their founders as they were too small to be taken public and the founders were reluctant to sell out to competitors and so a sale to a financial buyer could prove attractive. In the following years
12862-403: The top ten buyouts at the end of 2007 having been announced in an 18-month window from the beginning of 2006 through the middle of 2007. In 2006, private-equity firms bought 654 U.S. companies for $ 375 billion, representing 18 times the level of transactions closed in 2003. Additionally, U.S.-based private-equity firms raised $ 215.4 billion in investor commitments to 322 funds, surpassing
12980-411: The turmoil that had been affecting the mortgage markets , spilled over into the leveraged finance and high-yield debt markets. The markets had been highly robust during the first six months of 2007, with highly issuer friendly developments including PIK and PIK Toggle (interest is " P ayable I n K ind") and covenant light debt widely available to finance large leveraged buyouts. July and August saw
13098-713: Was "responsible for litigation, government and internal investigations, compliance, and legal policy worldwide." From 2001 to 2003, Bereson served as Associate White House Counsel to President George W. Bush . In 2017, Bonderman left the board of Uber "after he made a sexist comment in response to Arianna Huffington at an Uber meeting". In July 2017, Ajay Kanwal and Naveen Chopra joined TPG as senior advisors. In September 2017, TPG Capital acquired majority stake in Australia's largest contract research organization, Novotech Clinical Research. In November 2017, TPG Capital acquired Mendocino Farms ; former Yard House CEO Harald Herrmann
13216-476: Was announced in September 2004, and completed in early 2005. Also in 2005, TPG was involved in the buyout of SunGard in a transaction valued at $ 11.3 billion. TPG's partners in the acquisition were Silver Lake Partners , Bain Capital , Goldman Sachs Capital Partners , Kohlberg Kravis Roberts , Providence Equity Partners , and Blackstone Group . This represented the largest leveraged buyout completed since
13334-453: Was appointed as its CEO. In 2017–2018 TPG invested in Solinftec . In February 2018, TPG backed former AOL CEO Jon Miller in acquiring Fandom (formerly Wikia, Inc.). Miller was named co-chairman of Wikia, alongside Jimmy Wales , and TPG Capital director Andrew Doyle assumed the role of interim CEO. In March 2018, Manipal Hospitals and TPG Capital acquired Fortis Healthcare as part of
13452-493: Was merged with VIAG to form the new E.ON AG. E.ON wanted to focus on its core business of electric utilities, and assigned Merrill Lynch to sell MEMC. Merrill was unable to find a buyer until MEMC announced that it was on the verge of illiquidity in the middle of 2001. Finally in October 2001 E.ON was able to agree on a deal with the private equity company Texas Pacific Group (TPG), which purchased E.ON's stake in MEMC for
13570-659: Was number three in market share. Through a secondary offering, TPG reduced its share of MEMC in 2005 to 34%, and by the end of 2007, to zero. On October 30, 2008, Gareeb stepped down as president and CEO of the company. In 2006 MEMC announced its large-scale entry into the burgeoning solar wafer market, via longterm agreements to supply China-based Suntech Power and Taiwan-based Gintech Energy with solar-grade silicon wafers. Similar contracts followed with Germany-based Conergy in 2007, and Taiwan-based Tainergy Tech in 2008. The company cultivated short-term solar wafer customers as well. By 2007, MEMC held approximately 14% of
13688-478: Was selling its remaining 70% stake in DirecTV to TPG. On September 30, 2024, TPG Angelo Gordon and a certain amount of its co-investors, as well as DirecTV, provided $ 2.5 billion of financing to fully refinance DISH DBS’ November 2024 debt maturity. Private equity Private equity ( PE ) is stock in a private company that does not offer stock to the general public. In the field of finance , private equity
13806-640: Was taken over by the U.S. government, costing TPG a $ 1.35 billion investment. It has been called by some analysts "the worst deal in private equity history." On October 31, 2008, TPG completed the purchase of a 35% interest in P.T. Bumi Resources , from its previous owner Bakrie & Brothers, Indonesia, for $ 1.3 billion. In June 2009, Republic Airways Holdings Inc., a provider of regional flights for larger carriers, agreed to buy Midwest Airlines from TPG Capital. On March 12, 2010, Gretchen Morgenson , in The New York Times , discussed TPG's role as
13924-435: Was to have an initial capacity of 10,000 metric tons per annum. As of late 2014 the joint venture, called SMP, is 85% owned by SunEdison (50% by SunEdison, Inc. and 35% by SunEdison Semiconductor) and 15% by Samsung, and the plant has a capacity of 13,500 metric tons per annum. By October 2014, the plant began producing the world's first high-pressure fluidized bed reactor (HP-FBR) polysilicon, enabling sizeable reductions in
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