P-E firms eye minority stakes rather than just full buyouts

With $585B of "dry powder" money to put to use in North America, private-equity firms are increasingly looking to take minority stakes in companies and partner with them rather than buy them outright.

Carlyle (CG) and Blackstone (BX) are among those taking such an approach, with the latter this week agreeing to purchase a 13% stake in Crocs for $200M.

The logic of the strategy is that full deals are expensive, competition for minority stakes is less, the transactions can be custom-made, and they often don't involve auctions.

However, the story of Hicks, Muse, Tate & Furst should serve as a bit of a warning - one of the biggest P-E firms of the 1990s spent too much on telecom investments that didn't pay off, leading to its closure.

Other P-E firms include KKR (KKR), Fortress Investment Group (FIG), BlackRock (BLK) and Apollo Global (APO).

From other sites
Comments (5)
  • june1234
    , contributor
    Comments (4504) | Send Message
    Not a bad deal for Blackstone. Deal includes increasing Crocs share buybacks which 'Im sure Blackstone will have a hand in underwriting
    1 Jan 2014, 09:06 AM Reply Like
  • 96815234
    , contributor
    Comments (2466) | Send Message
    Would love to see a definitive list of these deals and deals with stub equity.
    1 Jan 2014, 05:36 PM Reply Like
  • rambler1
    , contributor
    Comments (1069) | Send Message
    So what does that say for the stock market in general? These guys having been sellers & now they don't want to be buyers.
    1 Jan 2014, 06:27 PM Reply Like
  • King Rat
    , contributor
    Comments (1902) | Send Message
    how much of this "dry powder" is line credit, true cash, and how much is debt issued in anticipation of rising interest rates?


    Just food for thought, I'd gladly sit on 20 year 3% loan for a couple of years if I believed at that point current rates would be 6% and equities 20% cheaper.
    1 Jan 2014, 08:07 PM Reply Like
  • stoj
    , contributor
    Comments (788) | Send Message
    Blackrock is totally different from Blackstone, when it comes to leverage and investment into it's own financial instruments. Do NOT confuse the names, or different markets and different structure. Blackrock benefits from increased trading ( smaller spreads etc ) and cost savings of its clients, Blackstone has the "possibility" of larger returns, with added risk in real estate and specific companies. It's like comparing ICE to JPM. If you do not yet understand the difference ? stay away from direct investing, you won't miss anything but headaches, stress and confusion. Well, Happy new year !
    1 Jan 2014, 10:48 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs