Private equity firms invite fewer to the clubs

By Jeffrey Goldfarb

FRANKFURT, Feb 28 (Reuters) - The less the merrier for private equity deals now.

While as many as eight buyout firms have teamed up in recent years to acquire a single company, the firms say those days are numbered as they raise bigger funds on their own and aim to shrink the number of partners on a given deal.

"I think we'll see fewer, bigger clubs because people can write larger checks on their own now," Sanjay Patel, European co-head of Goldman Sachs' investment arm, said on Wednesday on the sidelines of the Super Return private equity conference.

The biggest buyout firms have been raising funds in the range of $10 billion to $20 billion, more than double the size of their previous efforts, giving each of them more cash to put to work and reducing the need for partners.

But there is also a creeping fear that one of the big club deal acquisitions of the past few years could hit operational roadbumps and plunge the multiple firms involved into bitter in-fighting that could make it harder to reach consensus on how management should proceed.

It was about three years ago when eight firms collaborated to buy a controlling stake in German broadcaster ProSiebenSat.1 Media (PSMG_p.DE: Quote, Profile, Research, Stock Buzz) for about $1.3 billion.

By contrast, only two private equity firms are working together on the $32 billion acquisition of energy giant TXU Corp. TXU.N in what would be the largest ever leveraged buyout.

Four banks plan to contribute equity to the TXU deal, but will not be involved in overseeing the investment the same way the private equity firms typically are.