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.

PETAL: NO TRAINING WHEELS REQUIRED

Petal, a ‘beginners’ credit card company’ secured another round of funding of $34 million in October from Jefferies and Silicon Valley Bank. This comes several months after raising $13 million from Valar Ventures. Located in New York, one of the main hubs of financial technology (also known as, “Fintech”), Petal is a more developed startup poised to disrupt the credit card industry.

KKR ACQUIRES GEOSTABILIZATION INTERNATIONAL

On November 19th, private equity mega fund KKR & Co. (NYSE:KKR) announced an agreement to acquire GeoStabilization International (GSI) from Canadian private equity firm CAI Capital Partners. GSI is an infrastructure services company that specializes in geohazard mitigation. Their services include landslide repair, bluff stabilization, and rockfall mitigation.

INVESTING IN MARIJUANA STARTUPS WITHOUT TOUCHING THE CANNABIS

In 2017, sales of medical and recreational cannabis in the United States were nearly nine times higher than Oreo cookies and almost on par with Americans’ collective spending on Netflix subscriptions. Annual cannabis retail sales continue to grow year-over-year as new markets emerge and more states legalize medical and recreational marijuana.

The Implications of Saudi Money in Silicon Valley

Headed by CEO Masayoshi Son, the SoftBank Vision Fund continues to soar, as they recently capped a $93 billion-dollar fund. 45% of this fund is backed by Saudi Arabia’s Public Investment Fund (PIF), thus making them the largest investor. For the sake of comparison, Sequoia Capital, one of the largest and most reputable American venture firms, is set to raise an $8 billion-dollar fund, which is considered monstrous for venture capital firms in the US.

The Rise of Private Equity Advisory Firms

While the growth of the private equity industry is phenomenal, the introduction of differentiated private equity advisory firms has slowly been developing. One such example of this type of firm is Franklin Park, located in West Philadelphia. Franklin Park has been around for over 15 years, currently has over $13.3 billion under management, and has global representation in both Dublin and Hong Kong. 

ByteDance: The Road to Becoming the World’s Most Valuable Internet Startup

The Chinese unicorn ByteDance has become the world’s largest internet startup after recently closing a $3 billion round of funding on October 25th. Backed by the Softbank Group, KKR, General Atlantic and China-based investment firm Primavera, the company is now valued at $75 billion — surpassing Uber’s current valuation at $72 billion, according to CB Insights. Launched in 2012, ByteDance is a Chinese internet technology company that owns a number of machine learning based-social media apps such as Toutiao, a news aggregator app, and Duoyin, a platform that allows users to record and share short videos. 

Apple Considers Stake in Bankrupt iHeartMedia

iHeartMedia is a mass media company that owns iHeartRadio, which is a free broadcast and internet radio platform. iHeartMedia aggregates 850 local iHeart radio stations across the United States and it is the biggest US radio station owner. In 2008, iHeartMedia was taken private by Bain Capital and Thomas H. Lee Partners through an $18bn leveraged buyout.