Private equity makes a comeback as Solomon Lew snares Just

Just when you thought private equity had died from credit crunch-inflicted wounds, a bidding consortium led by private equity giant Texas Pacific Group (TPG) has lobbed a $2.9 billion takeover bid for ports and infrastructure company Asciano.

Just when you thought private equity had died from credit crunch-inflicted wounds, a bidding consortium led by private equity giant Texas Pacific Group (TPG) has lobbed a $2.9 billion takeover bid for ports and infrastructure company Asciano.

Asciano, which is majority owned and run by former Toll executive Mark Rowsthorn, quickly dismissed the bid as opportunistic and undervalued.

Certainly, it looks like a bit of classic downturn bargain hunting. Asciano was spun out of Toll last June and its shares quickly hit a high of $10.80. But since then the company has been sold off over concerns about its debt levels. The bid is pitched at $4.40 a share, a small premium to Asciano’s pre-bid price of $4.15.

The bid looks unlikely to succeed, by the return of big private equity players to the market has surprised many commentators.

The proposed deal also shows how private equity has been forced to change its model, from bidding using huge parcels of debt to bidding using big whacks of cash that investors have pumped into private equity funds over the last few years.

Meanwhile, Solomon Lew has won his battle for control of retail company Just Group, owner of the Just Jeans chain.

Just chairman Ian Pollard says the board will recommend shareholders accept the hostile takeover bid from Lew’s company Premier Investments, if Premier gets acceptances of at least 50% and declares its offer unconditional. Premier already has more than 47% of acceptances.

But as Alan Kohler writes today, don’t think that all this bargain hunting means we’ve hit the bottom of the bear market – there’s still plenty of pain to come.

Related stories:

• Private equity deals looking shaky in slowing economy: Kohler
• Investing in a bear market