Well, the Barbarians are becoming all soft and cuddly.
You may recall, before the credit crunch, private equity dominated the business pages of the press. Seen by some as asset strippers, by others as the saviour of traditional Western business, correcting bad business practice; private equity was controversial all right.
Then the credit crunch bit, and we were more interested in slagging off the banks, and the City. Private equity was all but forgotten.
But now it’s back. Kohlberg Kravis Roberts, the most famous, or perhaps most infamous, private equity of the lot is planning to float. Like the banks, it wants to be able to take care of itself through the forthcoming tornado that is set to blow over the markets.
Unlike the banks, it is not looking to do this as a defence manoeuvre, but rather because it sees opportunity.
Kohlberg Kravis Roberts first leapt to fame over the battle to control RJR Nabisco, and thanks to a book by Bryan Burrough and John Helyar became known as the Barbarian at the Gate.
Of course, the City wasn’t that keen on private equity. Last year were told private equity was too secretive. That it put short-term needs before the long-term. Then the credit crunch came along and all of a sudden it was the City who were the arch villains of the piece, the banks who couldn’t be trusted and put short-term needs before the long-term.
KKR is not actually looking to raise money as such via the flotation, but wants the luxury of being a listed company so that it can reward staff with shares, and use its shares when buying companies.
It is always the way. When the Visigoth invader Alaric camped his army outside Rome he too was seen as a barbarian at the gate. Yet, within a few years, his people were seen as pillars of the Roman world – albeit a Roman world that was collapsing.
In times like these, company valuations fall rapidly. This has created a huge buying opportunity.
The KKR move shows just how switched on it is to this development. Although, one assumes the asset value of KKR will also suffer from the downturn. It is a little surprising that it doesn’t attempt to raise hard cash while it is at it, and use this resultant war chest over the next year or so, a time when we are sure there will be bargains a-plenty.
PS: The word barbarian comes from the Ancient Greek and means the sound of sheep – that is, ba ba. It wasn’t that the Greeks thought that barbarians were somehow, well, barbaric, just that their language seemed incomprehensible.
These days, of course, we say: “It’s Greek to me.” It just goes to show things change. In the same way, yesterday’s barbarians become tomorrow’s heroes. Banks go from being respected pillars of society to greedy authors of the credit crunch. Private equity … , well, you finish the sentence.
