KMD - Kathmandu

[steve fleming]

Romoured to be around $550 mil in Independent Liquors case but then again its most probably a limited liability vehicle partnership in which case the original "seed " money -$100mil, from the PE investors is "lost" and the real leverage investment is left with the fianancer!

http://www.smh.com.au/business/alcop...0106-ludr.html

"Independent Liquor, which was sold to the private equity firms PEP and Unitas in December 2006 for $NZ1.3 billion"

"The business is believed to be worth about $700 million, which is sharply lower than the price two private equity operators bought it for three years ago"

On those numbers you wouldn't think there would be much equity left for the PE guys....

[Balance]

I don't have the PE figures - but I have no doubt they were happy enough with this particular listing. But my point being that they would have preferred a listing at $1.90 - making another $40m on their original $78m. There probably is something to be said for " a bird in the hand...."

The Ozzies may have loved this listing - but are probably rueing the decision as they have seen their investment fall 10% in a month or so and those keen buyers in the first few days have dropped more. I can't see much advantage being an index stock if playing this one is like catching a falling knife. Good luck to buyers in the short term. Those that bought MYR after listing would probably be less unhappy.

As an aside, wouldn't the PE owners have paid off some of their debt over the past few years?

Well, anytime you can spot an investment where we can make 300% plus in 3 years, let s know, will you?

We will pay you the first 100% for your efforts.

[minimoke]

That's how PE works. Magic, huh?

The magic, according to Cycats enligtening posts, wasn't so great for Hauraki No 2 with their Bild NZ investment or Vision Senior Living. I suspect we probably hear more about the "Good News" stories rather than the reality of these investments which is that they are risky and that investors in PE need a great return to reflect that risk.

[Silverlight]

Funny thing with the $15 IPO expense, the exchanges get about $2m between them, $2 lawyers another $2m and the final $10m goes to the Lead broker... Goldman Sachs.

Oh wait who were the PE owners? Goldman Sachs, paying themselves for listing, convenient.

[Balance]

The magic, according to Cycats enligtening posts, wasn't so great for Hauraki No 2 with their Bild NZ investment or Vision Senior Living. I suspect we probably hear more about the "Good News" stories rather than the reality of these investments which is that they are risky and that investors in PE need a great return to reflect that risk.

That is ExACTLY how PE works.

[minimoke]

That is ExACTLY how PE works.

So nothing really magical about it then. Just simple ole leverage and risk management

[Balance]

So nothing really magical about it then. Just simple ole leverage and risk management

Simple? Try getting the kind of leveraged funding these guys can get, and try and sell the companies down as they can!

[minimoke]

Simple? Try getting the kind of leveraged funding these guys can get, and try and sell the companies down as they can!

Getting a tad off topic but getting the funding isn't too hard. Just look at how easy it was for Hotchin and Watson or any of the other finance companies who raised $billions. Or we could just look at is as a matter of scale your mom and pop can do this with say real estate as a very crude example.

Your mom and pop can leverage, for example 90 - 100% on real estate and could probably get 66% to purchase equites - same as the PE guys.

The PE guys spent around 4% on the sale of KMD (for legal advice and a flash brochure and a network of punters) and this excludes what they spent tarting up KMD for sale. Your mom and pop would spend less than this when it comes to selling their real estate.

My analogy obviously has weaknesses. Like real estate buyers probably aren't mugs enough to believe a seller if that seller was to say, for example, "This house has two bedrooms but we are planning on converting the back yard into sleepouts creating 6 more rooms" or saying "we're making $350 a week and project to be making 15% more next year". Nor would people, in Fendalton, for example, believe that nearly half the value of their property is in the "Fendalton" brand.

But the mugs are out there - if you produce a big flash colourful sales brochure (Pegasus Town comes to mind) focussing on the really neat things in your real estate neighbour hood, which may serve as a distraction from some important detail - like someone is going to release a load of cheap rental properties for WINZ clients in the neighbourhood.

But each to their own. PE investors know they go into a high risk environment - lets not be fooled into thinking that every PE investment returns 300% in 3 years. Some may, others will take big hits which brings your 300% return down. Good on those with the wherewithall and desire and risk profile to get into PE. If this is you, Balance, then good on you. I'm sure all here will celebrate your 300% sucess, and will no doubt comiserate when you let us know the losses your PE investements have made.

[Dr_Who]

It doesnt matter how one twist and turn or how much money PE make, it still stands that this was a crap float for the investors who took up the IPO. Who gives a hoot how much the PE make? As an investor, we are most concern about how much we make.

It will hurt much more when JC comes out with new chain of adventure clothing store that sells 50% cheaper than KMD clothing.

From the beginning it was obvious that the public investor will get nothing out of this float. A good lesson to be learnt here for the mum and dad investor. But sadly I doubt mum and dads have learnt anything from this.

[minimoke]

It doesnt matter how one twist and turn or how much money PE make, it still stands that this was a crap float for the investors who took up the IPO. Who gives a hoot how much the PE make? As an investor, we are most concern about how much we make.

Agreed. Though I'm not sure there is anyone here that has bought since listing so doubtful anyone is going to make anything.

It might be more of a case of pondering how much people who did buy and hold will loose. It will also serve as a beacon for future PE IPO's. Sure we can refer to FTX and draw conclussions but one bad deal shouldn't necessarily spoil future opportunities. That would be a bit like saying "People lost their shirts in '87 so i'm not investing in shares ever again."

I suspect this IPO will be another lesson for investors in IPO's. For the sake of current owners I'm hoping we don't see a repeat of reknown investing techniques (such as the "Belg") but thats a wee way off yet.