* Financing back at attractive terms
* Deal sizes increasing; could reach $15bln
* Still room for emerging market deals
By Megan Davies
BERLIN, March 3 A leveraged buyout deal of $10
billion to $15 billion in size would be possible right now as
financing is back to being available on attractive terms, David
Bonderman, the co-founder of TPG Capital [TPG.UL] said.
Private equity deal sizes have been increasing since the
credit crisis cut off access to cheap debt; but deal size has
returned to typically the $3 billion to $5 billion range - far
lower than the double digit billion figures hit in 2006 and
"Larger deals are back," said Bonderman, one of the final
speakers on the third day of the SuperReturn private equity
conference in Berlin. "It is absolutely possible to do a $10-$15
billion deal now. It might not be the one you want to do, it
might not be what you should do, but the capital is available."
TPG was part of a consortium which struck the largest
leveraged buyout - the buyout of power company TXU, now called
Energy Future Holdings Corp, in 2007, which was $44 billion
Among recent larger deals -- TPG recently teamed up with
Leonard Green & Partners to buy retailer J Crew JCG.N for
$2.86 billion, while rival Blackstone Group (BX.N) this week
struck a $9 billion property deal to buy nearly 600 US shopping
malls from Australia's Centro Properties.
Bonderman said while there isn't as much "volume in the
halcyon days of days of 2006-7" financing is "in fact available
on attractive terms".
Public-to-private deals will increase slightly, Bonderman
said, although he stressed that they are "not the meat and
potatoes of this industry -- divestitures and mid-sized
The so-called 'wall of debt', referring to maturing debt on
boom-time deals, which firms were expected to run up against,
"is turning out to be of course no wall of debt at all",
Companies have successfully extended maturities from 2012 to
a few years further out, he said.
"Debt markets are very robust, the bond market is on fire;
amend and extend is the order of the day," he said. "It used to
be a wall of debt in 2012... now there is a wall of debt in 2014
-- trust me it's going away."
Private equity returns are also "making a comeback",
Bonderman said, and investors are not decreasing their
allocations to private equity as an asset class.
Bonderman, one of the early pioneers of the private equity
industry who speaks relatively rarely at conferences, started
his presentation with a slide to illustrate the private equity
industry's fortunes which quoted Mark Twain: "Reports of my
death are greatly exaggerated".
The presentation finished with a video of a man balancing
bricks on his head and walking over an unsteady bridge to
illustrate the difference between emerging and mature markets.
Emerging market deal volume is also expected to increase, he
said, although he warned that China, where investors have been
flocking, "may even be on the verge of a bubble".
Despite the clamour among firms to invest in emerging
markets, Bonderman still sees room for more investment. "If you
look at where have the dollars gone, there is a long way to go
for private equity in emerging markets; there's plenty of room
to grow," he said.
(Editing by Jon Loades-Carter)