Goldman Sachs and Bain Capital Settle Antitrust Violation Suit

(June 16, 2014) — Goldman Sachs and Bain Capital Partners agreed to pay a total of $121 million settling a lawsuit alleging that they and other major private equity firms conspired to limit competition in leveraged buyout deals before the financial crisis.

The settlement, if approved by the US District Court in Boston, would end—for Goldman and Bain Capital—the seven-year litigation filed by former shareholders of the companies acquired in the buyout deals from 2003 to 2007.

Goldman will pay $67 million while Bain Capital will pay $54 million, according to papers filed on June 11. Despite these settlements, both firms have denied any wrongdoing in the antitrust case.

“The court never cited any evidence—no document, no witness, no meeting—tying our firm to any of the alleged claims,” a Bain Capital spokesperson said in a statement. “We continue to believe the case is meritless and baseless, but ultimately determined that it was best for our investors and our firm to put this matter behind us in light of the costs and distraction of six years of litigation.”

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

“We’re pleased to put the matter behind us.” a Goldman spokesperson said.

Five firms—Blackstone, Carlyle, KKR, Silver Lake Partners, and TPG—remain in the lawsuit after Goldman and Bain Capital’s settlements, as well as two dismissals last year.

“We went toe-to-toe with the defendants over the past seven years and Bain and Goldman Sachs are the first defendants to agree to settlement terms,” said K. Craig Wildfang, the plaintiffs’ lawyer. “We look forward to a trial against the remaining defendants currently scheduled for November.”

According to original civil suit filed in 2007, the accused firms violated federal antitrust laws by agreeing not to “jump” each other’s deals in a total of nine leveraged buyout transactions. Under an “overarching conspiracy,” private equity firms promised to “pay less than fair value for the target companies, which in turn deprived [their] shareholders of the true value of their shares upon sale of the target companies,” the plaintiffs said.

The lawsuit filed by shareholders, a trust, and a public retirement trust fund included leveraged buyouts that totaled more than $2.5 billion.

“The transactions at issue here were ‘club deals,’ whereby two or more private equity firms join together to conduct a leveraged buyout,” the lawsuit said. “The shareholders do not contest the legality of club deals, but instead contest what they characterize as illegal agreements between the private equity firms to allocate the leveraged buyout market on a wide scale.”

Specifically, the plaintiffs alleged that the firms submitted sham bids, agreed not to submit bids, granted management of the target companies certain incentives, and included losing bidders in the final transactions, the suit said.

The case will go to trial beginning November 3 against the remaining defendants.

(June 13, 2014) – Football’s World Cup—soccer, if you prefer—kicked off last night and financial services companies have wasted no time in finding spurious ways to link their research to the tournament.

After Goldman Sachs last week launched a lengthy report into the economic and political statuses of all 32 competing nations, the bar had been set quite high.

Research firm Preqin has arranged 11 facts about Brazilian alternative investments into a 4-3-3 formation to illustrate the host nation’s strengths—and weaknesses—in hedge funds, real estate, infrastructure, and private equity.

These nuggets of knowledge include: Brazil-based hedge fund managers are responsible for $52 billion in assets; there are 61 private equity funds focused on Brazil currently in the market; and Brazilian pension funds with an allocation to hedge funds invest on average 4.5% in this asset class.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Elsewhere UK-based consultancy Punter Southall has compared England’s chances of lifting the coveted Jules Rimet trophy to important longevity statistics.

“England have as much chance of reaching the World Cup final in the famous Maracana as a 65-year old man has of living to 100,” wrote Martin Hunter, senior consultant at Punter Southall Transaction Services. Spoken like a true actuary.

Turning to the prospect of penalty shoot-outs, Hunter said “the odds of an ‘average’ World Cup penalty taker achieving [a 100% conversion rate] are equivalent to a 65-year old man surviving until the age of 118”. As Hunter also points out, as the world’s oldest man died on Sunday aged 111 and the oldest ever male only made it to 116, “it may be wise to hang on to your cash”. aiCIO certainly won’t be betting the Christmas party money on it.

Stéphane Barthélemy, a senior portfolio manager at State Street Global Advisers, is obviously not getting in the carnival mood. Despite all the hype about new investments in Brazil’s infrastructure in anticipation of both the World Cup and the Olympic Games in Rio de Janiero in 2016, Barthélemy simply says: “With some key economic indicators already showing a decline, the event is unlikely to have anything more than a marginal economic impact on the Brazilian economy.”

Past footballing victories are no guide to future economic performance, in other words.