US Tops Equity Issuance

From Reuters comes an equity issuance story.  Given all the tension in the world, I am amazed at the markets appetite for new risk,

The United States drove global equity issuance in the first three months of the year, stealing Asia's crown, after a spate of blockbuster U.S. IPOs backed by private equity firms.

Despite a tumultuous final few weeks which saw unrest in the Middle East and a nuclear crisis in Japan rock worldwide stock markets, global equity issuance rose 12 percent to $189 billion in the first quarter, compared with the same period in 2010.

U.S. issuance accounted for $66.5 billion, or 35 percent, of the capital raised, according to Thomson Reuters data.

Asia in recent years has dominated equity fundraising. In the first quarter,China, excluding Hong Kong, was only the second most-active issuer, making up 15 percent of activity.

"What we are seeing is a decoupling, whereby the U.S. seems to be breaking out and surging ahead, leaving Europe in its wake," said Viswas Raghavan, head of international capital markets at JPMorgan Chase & Co in London.

"There seems to be greater confidence in the U.S. amid an emerging belief that the worst is behind them whereas in EMEA there are a lot of macro issues ... weighing on the market."

Four of the top 10 IPOs globally were the buyout-backed U.S. share floats of measurement firm Nielsen Holdings, Florida lender BankUnited Inc, pipeline company Kinder Morgan Inc and hospital operator HCA Holdings Inc. The U.S. also had large follow-on share sales by MetLife Inc and Fifth Third Bancorp

Private equity is monetizing their investments while the getting is good.  This should shorten the runway for exit strategies as long as the market remains accommodative. 

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Seagate Deal Falls Apart - Implications

Reuters:

A potential takeover of Seagate Technology Plc, which could have been worth about $9 billion, fell apart on Monday and the hard drive disk maker will instead pursue a share buyback plan.

Buyout firm TPG Capital had been pursuing Seagate, and was seeking other private equity firms to partner with, several sources familiar with the matter previously said.

However, other firms which may have partnered with TPG in a deal lost interest, those sources familiar with the matter previously told Reuters. Bain Capital lost interest in the last two weeks, sources previously told Reuters, which followed cooling interest from rival Kolberg Kravis Roberts & Co.

Seagate said on Monday it had ended talks because "the indications of the valuation range were not in the best interest of the company and its shareholders." Its shares, briefly halted after the close, slid 5.5 percent after-hours.

The company instead has won board approval to buy back $2 billion of its own shares.

 Why do I post this, you ask?  Is it because I am interested in Seagate?  Nope.  While the company is interesting to me, I am more interested in another PE deal falling apart.  Think Dynegy.  This is the downside of a PE deal falling apart:  big share repurchases.  Couple implications:  as a debt holder, you cheer when the levered buyout doesn't happen, then immediately get whacked with a big share repurchase - usually funded by debt.As an equity holder, this will not get you to the same valuation as the buyout.  Lose, lose, lose.