Bob Geldof: Well, tonight, thank God, it's mine instead of yours

Who was the keynote speaker at the annual global gathering of Private Equity firms in Berlin last month?

Why, it was Bob Geldof.

Not just there because 'putting Geldof on the bill' is an easy way to pretend you're socially responsible and ethical, but also because Geldof is one of them:

He is now the chairman of an Africa-focused private equity fund which said earlier this month it had raised $200 million from investors, close to half its targeted size of $450 million.

Dubbed 8 Miles, the fund plans to invest in companies that can develop into "African champions" in sectors such as agribusiness, telecoms and consumer goods.

"We put together our little thing - a goldilocks thing, not too small, not too big, just right. And we will make a lot of money, a lot. For me I want to leave behind me firms, farms, factories. Fuck the money, that's me," Geldof said.

Geldof's fund is promising a rate of return of 25% - or, in other words, is promising to take a large chunk of any wealth created straight back out of the continent into the developed world.

But remember, Geldof's not really bothered about the money:

Geldof referenced the big payday of some of private equity's titans, including Henry Kravis and George Roberts, who got $94 million each in 2011 from buyout firm KKR & Co LP , in also making a wider case for philanthropy.

"You have got the four houses, the three jets, the 10 cars, the 65th fucking Picasso. What's the point? So its stuff, and right now it's the stuff that will get us out of that mess," Geldof said.

So, Geldof's big idea is that you encourage people to invest in Africa, to rake enormous profits out the natural resources and endeavours of those who live there, on the sort-of-off-chance that the people who've made all that money will decide they don't really need it and give some of it back?

Righto, Bob.

Because, as we know, it's not like Bob Geldof is greedy, is it?

In other news: Oh, look, Geldof's playing a tax dodge:

The country is missing out on more than £1bn in tax as the rich and famous have registered thousands of their exclusive properties into offshore companies, it has been revealed.

Town houses, mansions, vast country estates and castles are among the 94,760 properties which have been placed offshore, according to the Land Registry.
[...]
Rock stars Mick Jagger and Bob Geldof and Ringo Starr are among the many who have taken advantage of the loophole.
[...]
BVI companies own poverty campaigner Geldof's homes in London and Kent which his spokesman said was 'perfectly legitimate' tax planning and not a way to avoid stamp duty.

Ah, 'prefectly legitimate tax planning'. It's an irregular verb, isn't it?

I plan my taxes
You avoid your taxes
He dodges his taxes

Did I say that the private equity industry could cite inviting Geldof as an example of its social commitment? Maybe I was wrong. Maybe they should have avoided tarnishing their reputation by bringing him along.

EMI's likely buyers

It's looking more and more likely that EMI will be split into two as the auction continues.

Warner Music will probably pick up the recorded music part of the company, with BMG Rights Management - a 50-50 Bertlesmann/ KKR group - taking the bit that makes money.

Ah, yes, KKR are private equity - that's been something of a success for EMI in the past, hasn't it?

Warners are expected to kill the EMI brand in America - or at least finish off the parts that are still twitching following Bungling Hands' time in charge - but might retain it in the UK. It wouldn't be too surprising if some form of EMI America label clung on at the edges, just to play to the sentimental amongst the people who still buy records.

Welcome back, Koppelman?

Throwing his hat into the EMI-purchasing ring (or rather, hurling a hat underwritten by Apollo Global Management) is Charles Koppelman, who was - at one time - CEO of EMI.

Bringing together someone from the olden days and private equity? What could possibly go wrong.

There are a surprising number of people interested in the label. You suspect it's not so much the opportunity to release whatever Robbie Williams might turn in a couple of years hence that's the attraction.

Terra Firma looking for someone to blame

While they're desperately trying to find someone willing to invest in their business, Terra Firma are trying to shift the blame for their ridiculous investment in EMI. They're suing Citigroup for fraud.

Oh, yes:

British equity firm Terra Firma Investments has sued Citigroup Inc., claiming it paid a "fraudulently inflated price" of 4 billion pounds for EMI's label and music publishing interests in 2007 as a result of misrepresentations made by the lender. In the action, filed Friday in New York Supreme Court, Terra Firma claims to have lost equity in the billions of dollars as a result of its heavily leveraged purchase of the struggling music company.

The suit adds that Citi has "sought to wrest control of EMI by pushing it into, or to the brink of bankruptcy."

I'm sure that everyone was saying how clever Terra Firma were back when they were buying up EMI, detailing the wisdom of Hands and the shrewd investment choices they were known for making. Now, it seems, Terra Firma are trying to convince us they were like country schmoes, turning up and being duped by a naughty bank.

Sure, everyone hates banks and bankers, Terra Firma. But they also hate private equity groups. And a private equity group trying to claim it was bamboozled by a bank elicts very little sympathy in the real world, as your claim seems to consist of whining there weren't enough people to sack and assets to flog off to keep your profit levels aloft.

Still, good luck with seeking someone to put a billion quid into a business you're simultaneously claiming in court is fundamentally flawed. Let us know how that works out for you.

Bookmarks: Some stuff to read on the internet - Michael Jackson

Amongst the acres of coverage of Jacko, there are some things worth reading - The New York Times dealbook on his dealings with Private Equity companies, for example:

A lot of Mr. Jackson’s monetary dealings have been conducted in private. But several of the pivotal moments have been described in media reports over the years.

Driving many of the deals was Mr. Jackson’s increasingly unmanageable debt load — something that private equity firms can probably relate to these days.

A 2006 article in The New York Times said the principal drains on Mr. Jackson’s finances may have been “monumentally unwise investments that apparently produced equally colossal losses” — and, later, the payments to service his debt.

A financial adviser to Mr. Jackson described how he might have frittered away $50 million on things like amusement-park ideas and “bizarre, global kinds of computerized Marvel comic-book characters bigger than life.”

EMI: Hands off, Pryce is up

It's being spun as a fantastic move for Guy Hands, but his move from CEO of Terra Firma, with day-to-day control of the company, to being group chairman and chief investment officer instead, is hardly a promotion. Especially with that massive write-down on investments. He's being replaced by Tim Pryce.

The press release makes it all sound exciting, though:

Guy Hands said:

"Having worked closely with Tim for nine years, I am delighted that he has agreed to take up this position. He will make an excellent CEO of Terra Firma. Tim has been an integral part of Terra Firma since its formation and has done an outstanding job in his previous roles at the firm. Terra Firma has grown significantly since its creation in 2002. Over this period, staff numbers have increased from approximately 60 to over 110 people, investor relationships have expanded from one UK party to over 200 relationships in 26 countries, and assets under management have grown from €2 billion to €11 billion while 80% of our portfolio businesses’ revenues are now from outside the UK. As Chief Executive, Tim will be responsible for Terra Firma’s day to day operations while I will concentrate on investments, investors and developing the business internationally."

That might read a little oddly, but Guy made his statement while on a sponsored 'how many times can you say Terra Firma' challenge.

Pryce, meanwhile, did his best to make it sound like he was slipping onto a well-run deck and not being handed a bucket of manure with no bottom or handle:

"I am delighted to take on this role. Guy has built one of the leading private equity groups in Europe in a very short space of time which now manages and invests money on behalf of institutions all over the world. I look forward to making sure that the organisation works optimally in supporting Terra Firma's global investment and fundraising activities and to continuing to work with Guy on developing the business."

... once Guy has finished emptying the bins and given a polish to my new name plaque, of course.

Hands back money: How much of a mess is EMI in?

Terrible times for Guy Hands and the Terra Firma stewardship of EMI: Hands has had to buy out some of the investors who helped buy the label in the first place.

Still, he's not had to pay much to buy them out. I say "still", although that would imply it's a good thing. In fact, the investors were quite prepared to take a bath on their shares just to be rid of the valueless investment.

Bad Idea explains why it's, well, a bad idea:

taking on the responsibility will increase Terra Firma’s indebtedness once the calls for funding come in - the money will have to come from the fund managers themselves, a rare and strange thing to happen.

It comes as Hands is gearing up to pay Citigroup a £32m quarterly loan payment, and spewing out cliched metaphors concerning his rather worrying portfolio of deals made at the top of the market. He’s noted that “the darkest time is before the dawn”, that he’s “getting out of both sides of the bed” (?), and has compared his pricey investments to ‘83 and ‘87 Bordeaux wines, a comparison that could only be understood by the most ridiculously wealthy people on the planet - at least Hands knows his audience.

To be fair, I think we can all understand the wine metaphor - it costs an absolute bloody fortune, there's every chance the thing has ruined before you get to enjoy it, and once you have the first taste, your asset starts to free-fall in value to almost zero straight away.

[Thanks to Michael M]

Guy Hands: Max Bialystock, for real

If you invested in a bunch of really, really horrible films in the hope of making a huge loss to set against tax, and somehow managed to end up losing millions of quid, you might keep quiet.

Not so Guy Hands. He had been advised backing cinematic donkeys would net him back £1.40 for every £1 he threw away; trouble was, the loophole he was crawling through was blocked. So, now he's suing the accountants whose advice he followed.

Good lord: throwing tonnes and tonnes of money into a rubbish entertainment endeavour in order to profit from the loss. That wouldn't explain the EMI purchase, would it? Does he keep peering at the sales figures for Living La Vida Loca or whatever that Coldplay album is called and crying bitter, bitter tears?

There's something less than noble about a man who hoped to suck resources from the Exchequer by deliberately making worthless films having a strop because his plans failed - the money he hoped to make would have come from all of us, money which could be spent on hospitals, schools, painting the Queen's bedroom, and so on. He gambled, and lost; rather than taking it on the chin, he - and 74 others - are now demanding that the advisors make good their "losses".

Besides making him look like a bad loser and somewhat greedy, it also means that the world now knows that Guy Hands helped fund the movie Nine Dead Gay Guys, by all accounts a nasty piece of work trading on sexual and racial stereotypes to no great effect. If it had been us, we'd have happily swallowed the loss of a few million to keep that information on the back burner.

The dark side of equity EMI

While the approach to the customer-facing business of Terra Firma's EMI has been encouraging, the nasty underbelly of private equity buyouts is still there: hundreds of jobs are being threatened as the company looks to balance its high-debt buyout; it's also seeking a range of partners to spread the risks across.

Clear Channel starts the long, slow fade-down

The evilest radio media empire in the US, Clear Channel, is starting to smash itself to pieces. It's shareholders gave approval for the sale of itself to a private equity partnership, Thomas H. Lee Partners LP and Bain Capital Partners LLC, with a plan for the new CC to slim down by selling off its television holdings and 440 of its smaller radio stations - roughly a quarter of its total. It still owns more stations than anyone else, but at least there's a bit of room for some plurality now.

A glimpse into the Private Equity future for EMI

As it prepares to disappear into the clutches of Terra Firma, EMI has outlined what the future holds. They're going to take the music that means something to people, and whore it out until it's an empty husk:

"Our back catalog is so prestigious and so rich in heritage in its impact on pop culture that half our effort is reminding people and recreating awareness of the music's availability, " said Ronn Werre, president of EMI Music Marketing.

Over the next year, Saatchi & Saatchi will help EMI seek new ways for fans to reconnect to music they might hear on a commercial or TV show and ultimately translate that into a transaction, Werre said in an interview.

In other words, you can expect to hear a lot of songs you loved being flung onto car adverts. Oh.

EMI joins Private Equity firm

BBC News is reporting that Terra Firma's bid to buy EMI has won ninety percent shareholder approval. We're looking forward to the new EMI exploiting the opportunities for promotional work with its new sister companies - a Robbie Williams tour of German motorway service stations sounds just the ticket.

Private equity buys up Dick Clark

Dick Clark Productions, which owns rights to American Bandstand, the American Music Awards and a massive catalogue of live performances has been snapped up by a partnership between Redzone, the PE fund controlled by Washington Redskins owner Daniel Snyder, and Six Flags, the amusement park operator. (Six Flags, in its turn, is owned largely by Redzone.)

The talk is of synergy and digitisation:

"This is the next step in the evolution of Six Flags — moving into the family entertainment space," said Shapiro, a former programming executive at ESPN and ABC.

Cross-promotional opportunities are plentiful, he said. Six Flags' concerts could be re-branded to promote the American Music Awards, for example, and during the New Year's countdown show, "I can see Dick or Ryan saying, 'Let's check in on Los Angeles at Magic Mountain, where such-and-such band is performing live.' "

Clark will continue to co-host the New Year's Eve show with Ryan Seacrest, Shapiro said.

Having seen Dick struggling somewhat on the last New Year's Eve programme, we suspect that wasn't considered the deal breaker.

Blender goes private

Dennis publishing has offloaded its US arm - which publishes Blender, alongside Stuff and Maxim - to A private equity group. Quadrangle Capital Partners II is the fund which has taken the company out of public hands.

Shaky ground? EMI seeks sanctuary in Terra Firma

So, EMI is set to disappear from the stock market - at least for a while, until it's been eviscerated, loaded up with debt and sent back. Private Equity group Terra Firma has bid GBP3.2 million, including debt pay-off, which EMI has grabbed like a starving man offered a Ginsters Pasty. Despite a bad cheese allergy.

"Terra Firma's offer delivers cash now, without regulatory uncertainty and with the minimum of operational risk to the company," said EMI chairman John Gildersleeve.

He said the deal would enable EMI to "build on its current position as one of the world's leading music companies and accelerate the development of its digital and online strategy to fully exploit this long-term growth opportunity".

So, what companies will EMI now be sitting alongside?

Tank And Rast, the German motorway grease-and-toilet stops; here, Terra Firma has "refinanced" the company along the lines of a UK Private-Public Partnership (in other words, flogging the property and forcing the company to dribble away money in years to come to access the buildings its business relies upon.)

Odeon/UCI, bought by Terra Firma in 2004, is currently seeing unions fight plans to change the working conditions for projectionist staff, including revising down their pay and conditions and reducing overtime to just a single-time payment. Elsewhere, staff have been laid off at call centres.

East Surrey Holdings includes a company called Phoenix Natural Gas, which is the only supplier of natural gas in Northern Ireland. Terra Firma bought ESH in April 2005. In September 2005, , Phoenix put gas prices up 30%. And then another 17% in January 2006. And then another 14.5% the following September. To be fair, it did cut prices a little last month, but only by 14%. So, if you're wondering where the money to buy EMI has come from - a chunk has been provided by pensioners in Northern Ireland choosing to not freeze to death over the winter.

EMI offers peek under its skirts

EMI is now apparently seriously looking for someone to take away its pain - it might only be at a "preliminary" stage, but people with money are being given the chance to rifle through the company's books with a view to a takeover. Reuters reckons the oft-mooted Warners merger is now a total-write off (too many regulatory worries, too little money) but EMI could bend over for a private equity buy-out.

What that would mean for the company's staggering steps towards towards selling un-DRMed downloads (staggering in both senses) is anyone's guess. It depends, of course, on the buyer.

EMI: bleak future

EMI's position as a standalone company is looking incredibly dodgy, as it gets circled by a number of private equity companies. These, the shark-lions of the financial world, have a basic way of working: they pay over the odds for struggling companies, take them private, flog off any bits worth anything, load the eviscerated corpse up with debt, and flog it on before it falls over. Anyone who's seen, say, the AA descend from motoring organisation to understaffed, asset-stripped nightmare will recognise the basic idea.

If EMI falls out of the public arena, it's likely the new owners will try and lob the record company part off to Warners - although why a sale from Permira, One Equity, Cerberus or Fortress would be thought plausible when a straight merger between the two companies would have stalled when seeking approval from EU regulators, is anyone's guess.

So, bad news for the bands and staff, then; but with the company performing less pleasingly than Paolo Nutini after a Celtic victory - it's just suspended paying a dividend - it's likely shareholders will sign up to any deal which promises to dig them out of the sorry mess.