German steel and industrials manufacturer ThyssenKrupp has taken a hit by selling its world-leading MetalCutting division to US investors, including US$4bn distressed debt and equity hedge fund Silver Point Finance. New York-based manufacturing holding company Maxcor and Silver Point, which was founded three years ago by ex-Goldman Sachs fixed income bankers Edward Mule and Robert O’Shea, are expected to merge MetalCutting with US machine tool maker Cincinnati Lamb in an agreement back-dated to the end of June. Silver Point owns equity positions in at least three businesses – Knology, Schwark and SMTC – and lends to others including Tiscali.
- Schroder and SVG Advisers have held a first close on the Schroder Private Equity Fund of Funds III (SPEFOFIII) at €167m. The fund is advised by SVG Advisers, the fund management business of SVG Capital, the FTSE 250 private equity investor. The fund will invest mainly in top performing private equity partnerships in Europe and the US. The portfolio will consist of about 20 private equity funds, with a focus on later stage and buyout funds. Commitments have already been made to three funds totalling more than €65m. Investors in the first and second fund of funds have continued their support. The second Schroder Private Equity FoF raised €285m in 2004.
- The count of fallen angels in 2005 has outpaced the level recorded a year ago, but the number of entities at risk of declining into fallen angel territory has decreased relative to last year, according to Standard & Poor’s. September was a busy month for fallen angel activity globally, with seven issuers achieving fallen angel status, a report from the ratings agency said. Up until October 6, some 36 companies were downgraded to speculative grade. A further 44 entities globally are at risk of becoming fallen angels, with rated debt totalling US$72.5bn (€59.7bn). This is two fewer than the 46 reported last month and four fewer than the number reported in October 2004. Of the 44 potential fallen angels, 19 are members of major Standard & Poor’s equity-based indices.
- Australia’s second-biggest investment bank, Babcock & Brown, has bought a 12.5% stake in Eircom Group, the Republic of Ireland’s largest fixed line telecoms operator, for US$307m. The stake-building follows widespread market rumours last week of a takeover of Eircom by Swisscom or Portugal Telecom, which has just completed a €423m rights issue to fund the purchase of mobile phone operator
Meteor. Eircom, formerly state national provider Telecom Eireann, was acquired by a private equity-backed consortium led by Sir Anthony O’Reilly. The other investors in the 2001 public-to-private were Providence Equity Partners, Soros Equity Partners (now TowerBrook) and Goldman Sachs Capital Partners. All the private equity firms sold out at Eircom’s IPO last year.