Private equity funds in marketing blitz

Private equity funds in marketing blitz

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New York: Taking on a tough market situation, private equity (PE) funds are resorting to unique marketing strategies including investor presentations peppered with comparisons that are meant to differentiate themselves from their competitors, reported Business Standards.

The sharper-edged marketing strategies have been on display recently as firms including Kohlberg Kravis Roberts and Apollo have tried to reassure investors worried about the impact of credit market turmoil on the leveraged buy-out business.

Apollo's Leon Black defended his investments in an unusual letter sent to investors late last month, maintaining that he bought almost all his companies at valuations "below the market average of our LBO peers".

Black described his purchase of real estate broker Realogy a little more than nine months ago as an example of his firm's contrarian approach. Black also said that the U.S. retailer Linens ?n? Things "remains the sole challenged portfolio company" in Apollo's Fund V in spite of "significant inroads on the operational side."

His letter said the firm has spent $2.5 billion since August, including $1 billion to buy distressed securities in industries such as transport, media, financials and packaging.

On March 6, KKR held a conference call with its investors during which it made clear that its debt fund, KKR Financial, differed substantially from Carlyle Capital Corporation - another debt fund started by an LBO shop - which has collapsed.

Carlyle borrowed $31 for every $1 of its own money, which it used to buy a portfolio of highly rated residential mortgage securities. By contrast, KKR told its investors that its fund never had more than $3 of borrowings for every $1 of its equity capital.

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