Spring 2018
Akash Pulluru
THE IMPACT OF TAX REFORM ON THE PE INDUSTRY

On December 19th, a Republican-controlled Congress narrowly passed a tax reform bill. This bill represents the most significant tax overhaul since 1986 and has profound implications for the private equity industry. Although this administration is often chastised for being overly friendly to private equity barons, the reality of this bill is far more complicated.

Issue 15

EXITING UBER OR GOING THE EXTRA MILE?

Benchmark Capital was one of the first investors in Uber, participating in the Series-A financing in 2011 and acquiring a 13% stake in the company for a $20 million investment. Now, after watching Uber suffer through 24 consecutive quarters of cash burn, managerial controversy, a power vacuum in the C-suite, and multiple lawsuits filed against Uber by the powerhouse venture capital fund, Benchmark Capital is considering exiting from Uber at more than 200 times its initial investment.

LOGISTICS INDUSTRY: M&A ACTIVITY TODAY, CONSOLIDATION TOMORROW

The logistics industry is significantly fragmented with a high percentage of family-owned firms, presenting numerous opportunities for acquisitions. The largest ten freight-forwarding firms account for 43.5% of the market’s $141 billion 2016 global revenues, suggesting there is plenty of room for more M&A activity. XPO Logistics has been the pioneer in this field, with eight major acquisitions in the last five years as well as ten smaller ones.

BLACKSTONE SELLS REMAINING STAKE IN SEAWORLD TO CHINESE INVESTMENT FIRMS

On March 24th, Blackstone sold its stake in SeaWorld Entertainment Inc. for $448.5 million to Zhonghong Group, a Chinese holding company that focuses on opportunities in the leisure and tourism space. Prior to the sale, Blackstone was SeaWorld’s largest shareholders with 19.5 million shares. Zhonghong Group agreed to purchase Blackstone’s stake in the theme park for $23 per share, which represents a 33% premium from the previous day’s closing price of $17.31.

HOSTESS: APOLLO’S SWEET DEAL

$59.99. That’s how much a box of Twinkies sold for in November of 2012, when the fate of Hostess Brands, the maker of the iconic snack food, seemed to be hurtling towards extinction. In 2013, along with Dean Metropoulos—a Greek businessman and investor with a track record in the food industry—Apollo bought the Hostess brand for $410 million, of which the two parties invested approximately $200 million of equity and raised debt for the remaining $210 million.