Blum Capital Partners, based in San Francisco, handles a $2 billion portfolio. Mr. Blum is the chairman of the investment firm’s board. He is also a principal executive and an owner of Fort Worth’s $45 billion private equity firm, TPG Capital, which has a history of partnering with a New York-based private equity firm called Apollo Management. (Aaah and here we have one of the ties that bind Mr. Blum to one Mr. William K. Reilly. Who is William K. Reilly, you ask? Well, Mr. Reilly is the Senior Advisor with equity holding in TPG Capital...see link to TPG Capital and Texas Public Utilities leveraged buyout fiasco link in Part 3.
And how is Mr. Reilly significant in this? Well, he sat on the Delta Vision Blue Ribbon Task Force, for starters as related to current water shenanigans...his genealogy will be up next, and his is a very interesting pedigree!! )
Mr. Wachter has disclosed multi-million dollar holdings in a range of Apollo Management funds.
During Mr. Blum and Mr. Wachter’s seven-year tenures on the regents’ investment committee, UC has invested $748 million in private equity deals involving Apollo Management, Blum Capital Partners, and TPG Capital. Several of these deals received contributions from the California Public Employees Retirement System (CalPERS), the country’s largest public pension fund, for which Blum Capital Partners is a paid investment advisor. (Reminder...Blum was the investment director during the Carpenters' Health and Welfare Trust Fund hey day...see a pattern developing?? http://www.sacbee.com/2013/12/30/6035570/from-the-notebook-what-calpers.html
Also note, the original December 28, 2013 front page feature is no longer on Sacbee's website. AND she settled.)
Below are summaries of seven private equity deals in which UC invested when Mr. Blum had concurrent business interests; one of these deals (Harrah’s Entertainment) involved Mr. Wachter.
Theses facts were ascertained from reviewing thousands of pages of SEC filings, commercial databases, UC public records, and press accounts. (Link to original live links http://www.spot.us/pitches/337-investors-club-how-the-uc-regents-spin-public-funds-into-private-profit/story )
Harrah’s Entertainment
Las Vegas, Nevada
The Company: Harrah’s Entertainment Inc. operates 52 casinos in seven countries.
The Deal: In 2008, investment firms TPG Capital, Apollo Management and Blackstone Capital Group partnered in a leveraged buyout of Harrah’s for $30.7 billion.
The Blum Connection: In 2008, Mr. Blum disclosed investments worth “over $1 million” in various TPG funds (including funds named TPG IV and TPG V). He was also a TPG Capital owner and executive.
The Wachter Connection: Since becoming a regent, Mr. Wachter has disclosed investments worth “up to $1 million” in two Apollo investment funds (Apollo VI and VII) that provided capital to the Harrah’s deal.
UC’s Investment: At the time of the Harrah’s transaction, UC had $75 million invested in the same two Apollo Management funds in which Mr. Wachter was invested and which were themselves invested in the Harrah’s deal. During that period, UC also held $4.1 million in two TPG Capital funds, including one that helped finance the Harrah’s deal (TPG V). The investments in the TPG funds were made by several UC campus endowment foundations overseen by the regents while Mr. Blum—a TPG Capital executive who was himself invested in the Harrah’s deal (via TPG V)—served on the the regents’ investment committee. UC also had $120 million invested with a private equity fund run by Blackstone Capital Partners (Blackstone Capital Partners V), which participated heavily in the Harrah’s buyout.
In total, UC’s general endowment and retirement funds committed $200 million to four private equity funds that financed the Harrah’s buyout, a deal in which Mr. Blum and Mr. Wachter each had significant financial interests.
The Fallout: Since the buyout, Harrah’s has hemorrhaged capital due to the overall decline of the gambling industry amid the global recession. Its ability to generate enough cash to pay back limited partner investors such as UC has been hampered by the $12.4 billion acquisition debt that Apollo Management, TPG Capital, and Blackstone Capital Partners placed on the books of the casino empire after acquiring it. UC’s investment in the private equity funds that participated in the Harrah’s deal had lost up to 40 percent of their value, as of March 2009.
Washington Mutual
Seattle, Washington
First American Corporation (now CoreLogic, Inc.)
Santa Ana, California
The Companies: Before its acquisition by New York’s JPMorgan Chase, Washington Mutual (WaMu) was one of the country’s largest banks. In the fall of 2007, it stunned investors by declaring a loss of several billion dollars in the sub-prime housing market. Simultaneously, the New York Attorney General sued a title company, First American Corporation, for conspiring with WaMu to inflate real estate appraisals. The price of WaMu and First American stock fell through the floor.
The Deal: In June 2008, in a major miscalculation of risk factors, TPG Capital bought a $7 billion stake in WaMu, becoming its largest shareholder. (Personally, I disagree with 'major miscalculation', I believe this went down exactly as planned. What better way to simultaneously wipe out an entire segment of society...the entire middle class?)
The Blum Connection: Mr. Blum participated in the WaMu investment through an interlocking series of TPG Capital funds (including TPG V and a related fund named Olympic Investment Partners). Blum Capital Partners also invested heavily in First American shares when the price plummeted following the allegations of appraisal collusion. (What do we have here?? What's that word? Collusion??...and y'all thought I was just making this up!!)
UC’s Investment: In 2008, the UC Berkeley campus endowment fund invested $4.1 million in two TPG Capital funds that financed the WaMu deal (TPG V and TPG VI). UC retirement fund managers made a bad bet (bad bet my butt...from where I sit, seems to me that bet was right on the money!) by increasing their stake in WaMu bonds seven-fold, from $31 million in 2006 to $215 million by the end of 2007. Through its external managers, UC also purchased First American stock when its share price fell, putting $7 million into the failing company by the end of 2009.
The Fallout: The FDIC seized WaMu in September 2008, selling its assets on the cheap to JP Morgan Chase. Stockholders were wiped out. TPG Capital is reported to have suffered a loss of $1.3 billion, which would likely negatively affect the fund that UC had invested in (TPG V), although this information is not public. By the end of 2008, the value of UC’s investment in WaMu bonds had declined by $48 million. First American continues to struggle financially and in the courts.
Univision
New York, New York
The Company: Univision is the dominant Spanish-language media company in the United States, operating 62 television stations and 69 radio stations. (Spanish or English, finally comprehend why we can Not get a fair shake or even level playing field in the MSM??? Well...here you go.)
The Deal: In March 2007, a consortium of five private equity investment companies led by a former UC Regent named Haim Saban acquired Univision Communications in a $13.7 billion leveraged buyout. The private equity investors were Saban Capital Group, TPG Capital, Madison Dearborn Capital Partners, Providence Equity Partners, and Thomas H. Lee Partners.
The Blum Connection: Mr. Blum participated in the Univision deal through his investments in two TPG Capital funds (TPG IV and TPG V). His spouse, Sen. Dianne Feinstein, disclosed Univision as an asset in 2007. Mr. Blum also maintained a financial interest in the deal by virtue of being a principal executive and owner of TPG Capital.
UC’s Investment: A member of the UC investment committee, Saban resigned as a regent in 2004. Mr. Saban then put together the Univision deal. During the acquisition, UC campus endowment funds had invested $4.1 million in two relevant TPG Capital funds (TPG IV and TPG V). Additionally, UC had invested $150 million in the two Madison Dearborn funds that financed the Univision buyout (Madison Dearborn IV and Madison Dearborn V).
The CalPERS Connection: CalPERS invested a total of $1.8 billion in private equity funds that financed the purchase of Univision: $450 million in two Madison Dearborn funds (Madison Dearborn IV and Madison Dearborn V); $125 million in a Providence Equity Partners fund; $300 million in a Thomas Lee Equity Partners fund; and $950 million in the two TPG Capital funds (TPG IV and TPG V). (That's a lot of change passing through this chump's pockets...NOW do you understand why I say when BDCP collapses, and it will...Blum and Reilly and/or their proxies, will come riding in claiming to be Knights in Shining Armour, here to save the day. To build the twin tunnels or any form of conveyance that fast-tracks our Public Trust water into the aqueduct and into Kern County Water Bank is mere child's play for these two pirates...certainly money well spent considered the water auction that just when down...)
The Fallout: Following the buyout, Univision’s new owners—including TPG Capital and Apollo Management—placed the $10 billion debt from the buyout on the company’s balance sheet, creating a financial burden. (Isn't there something called Fiduciary Responsibility?? Isn't it about time this rat-bastard is held to the same standard the rest of us are in handling any form of Other People's Money?) The value of UC’s investment in one Madison fund decreased by 17 percent as the spring of 2009, while the other showed a gain of 18 percent. Apollo Management and TPG Capital collectively charged its investors, including UC, a $200 million transaction fee for managing the deal. (And that loss was made up by withdrawals from account holders accounts to make that transaction fee payment, again...a whole lot of hard work taken by the swipe of a pen, or a keystroke. Gone. How does one replace 20-30+ years of contributions into what you believe is your retirement and old age security?? Well, you don't.)
Freescale Semiconductor
Austin, Texas
The Company: Freescale is one of the largest semiconductor manufactures in the world.
The Deal: In December 2007, Freescale announced that it had been acquired by a consortium of private equity firms consisting of the Blackstone Group, the Carlyle Group, TPG Capital, and Permira Advisors.
The Blum Connection: To purchase Freescale, a multi-billion dollar down payment was raised from investors, including two TPG Capital funds (TPG IV and TPG V), in which Mr. Blum was invested. Mr. Blum was also a TPG Capital principal.
UC’s Investment: UC was invested in both TPG Capital funds involved with the Freescale transaction (TPG IV and TPG V). It had also committed $120 million to another fund involved in the Freescale buyout (Blackstone Capital Partners V, L.P.).
The CalPERS Connection: CalPERS invested billions of dollars in funds that supported the Freescale transaction, with $1.4 billion committed to the relevant Carlyle Group funds, $347 million in a Permira fund, and $950 million in the two TPG Capital funds (TPG IV and TPG V).
The Fallout: Within months of the buyout, Freescale’s sale of cell phone semi-conductors went into a tailspin. The company began to sink, over-burdened with the $9.5 billion in debt that the private equity firms had loaded onto Freescale’s balance sheet to pay for its own acquisition. (Again, isn't this corporate piracy?? Isn't there a law against this crap??) In April 2008, Business Week called the Freescale deal “one of the ugliest buyouts in history.”
Sungard Data Systems, Inc.
Wayne, Pennsylvania
The Company: Sungard Data Systems is a software company that provides information technology services to financial companies, nonprofit organizations, and school districts.
The Deal: In 2005, a consortium of private equity firms acquired Sungard in an $11.3 billion leveraged buyout. The participating firms included TPG Capital, Silver Lake Partners, Bain Capital, and Blackstone Capital Partners.
The Blum Connection: A principal in TPG Capital at the time, Mr. Blum was also invested in two TPG Capital funds involved in the buyout (TPG III and TPG IV).
UC’s Investment: At the time of the acquisition, UC had invested $80 million in two private equity funds that helped finance the Sungard buyout (Bain Capital Fund VIII and Blackstone Capital Partners IV).
The CalPERS Connection: CalPERS committed a total of $325 million to two private equity funds involved in the Sungard buyout (Silver Lake Partners II and Blackstone Capital Partners IV). CalPERS also had $350 million invested in the TPG Capital funds that bought Sungard (TPG III and TPG IV).
The Fallout: In 2005, the Sungard deal was the second-largest buyout in history, and the largest privatization of an information technology company. (Followed by the acquisition of the largest public water bank. ) UC appears to have made a profit on the investment.
Kinetic Concepts, Inc.
Santa Rosa, California
The Company: Kinetic Concepts manufactures medical equipment to treat wounds, burns and injuries sustained in accidents and combat.
The Deal: In 1997, Richard C. Blum & Associates (the predecessor to Blum Capital Partners) entered into a leveraged buyout deal to purchase Kinetic Concepts with Fremont Partners III, a private equity fund run by the Fremont Group (an investment arm of San Francisco’s Bechtel Corporation) Welcome Bechtel to our family of financial inbreeders). The Fremont Group and Blum jointly acquired a majority stake in Kinetic Concepts, and proceeded to take the company private.
UC’s Investment: In 2003, after Mr. Blum became a regent, UC invested $8.2 million in Fremont Partners III, which was still partnered with Mr. Blum's firm on the Kinetic Concepts deal. In 2004, as the number of wounded soldiers increased from two simultaneous wars in Iraq and Afghanistan, the Fremont Group and Mr. Blum’s firm took Kinetic Concepts public for a reported gain of $800 million. As of the end of 2009, UC has purchased $46.8 million in newly-issued Kinetic Concepts stock. (Folks...I haven't even started down that road...)
The Fallout: UC kept its investment with the Fremont Partners III fund until the end of 2006, and the deal appears to have been profitable for both Mr. Blum and UC. (It ’s worth noting that in 2000, Kinetic Concepts held only $116,000 in contracts with the U.S. Department of Veterans Affairs. By 2006, as wounded soldiers rotated through veterans hospitals, the value of these contracts shot up to $12 million. During this time, Sen. Feinstein was the chairperson of the Senate Appropriations subcommittee on veteran’s affairs that vetted and approved these projects.)
Commonfund
Westport, Connecticut
The Company: Commonfund is a $26 billion nonprofit asset management company that handles investments for more than 1,400 public and private university pension and endowment funds.
The Blum Connection: From 1995 to 2004, Blum Capital Partners served as an investment advisor to Commonfund. Advisors are typically paid a percentage of the amount of capital they are able to attract to the fund.
UC’s Investment: In 2002, the same year that Mr. Blum became a regent, several UC campus endowment foundations collectively invested $3.1 million in a series of private equity and venture capital partnerships sponsored by Commonfund. This amount tripled the following year. By the middle of 2004, Commonfund no longer reported Blum Capital Partners as an advisor, but its relationship with UC expanded. By 2008, UC’s overall investment in Commonfund had grown to $41.3 million.
The Fallout: When the sub-prime mortgage meltdown hit Wall Street, Commonfund suffered. The value of UC’s Commonfund investment sank by $5 million. In 2009, UC Treasurer Marie Berggren reported to the regents that Commonfund was temporarily “shutdown,” and that UC would no longer receive its cash back upon demand.
Posted by Peter Byrne on 09/22/10Seattle, Washington
First American Corporation (now CoreLogic, Inc.)
Santa Ana, California
The Companies: Before its acquisition by New York’s JPMorgan Chase, Washington Mutual (WaMu) was one of the country’s largest banks. In the fall of 2007, it stunned investors by declaring a loss of several billion dollars in the sub-prime housing market. Simultaneously, the New York Attorney General sued a title company, First American Corporation, for conspiring with WaMu to inflate real estate appraisals. The price of WaMu and First American stock fell through the floor.
The Deal: In June 2008, in a major miscalculation of risk factors, TPG Capital bought a $7 billion stake in WaMu, becoming its largest shareholder. (Personally, I disagree with 'major miscalculation', I believe this went down exactly as planned. What better way to simultaneously wipe out an entire segment of society...the entire middle class?)
The Blum Connection: Mr. Blum participated in the WaMu investment through an interlocking series of TPG Capital funds (including TPG V and a related fund named Olympic Investment Partners). Blum Capital Partners also invested heavily in First American shares when the price plummeted following the allegations of appraisal collusion. (What do we have here?? What's that word? Collusion??...and y'all thought I was just making this up!!)
UC’s Investment: In 2008, the UC Berkeley campus endowment fund invested $4.1 million in two TPG Capital funds that financed the WaMu deal (TPG V and TPG VI). UC retirement fund managers made a bad bet (bad bet my butt...from where I sit, seems to me that bet was right on the money!) by increasing their stake in WaMu bonds seven-fold, from $31 million in 2006 to $215 million by the end of 2007. Through its external managers, UC also purchased First American stock when its share price fell, putting $7 million into the failing company by the end of 2009.
The Fallout: The FDIC seized WaMu in September 2008, selling its assets on the cheap to JP Morgan Chase. Stockholders were wiped out. TPG Capital is reported to have suffered a loss of $1.3 billion, which would likely negatively affect the fund that UC had invested in (TPG V), although this information is not public. By the end of 2008, the value of UC’s investment in WaMu bonds had declined by $48 million. First American continues to struggle financially and in the courts.
Univision
New York, New York
The Company: Univision is the dominant Spanish-language media company in the United States, operating 62 television stations and 69 radio stations. (Spanish or English, finally comprehend why we can Not get a fair shake or even level playing field in the MSM??? Well...here you go.)
The Deal: In March 2007, a consortium of five private equity investment companies led by a former UC Regent named Haim Saban acquired Univision Communications in a $13.7 billion leveraged buyout. The private equity investors were Saban Capital Group, TPG Capital, Madison Dearborn Capital Partners, Providence Equity Partners, and Thomas H. Lee Partners.
The Blum Connection: Mr. Blum participated in the Univision deal through his investments in two TPG Capital funds (TPG IV and TPG V). His spouse, Sen. Dianne Feinstein, disclosed Univision as an asset in 2007. Mr. Blum also maintained a financial interest in the deal by virtue of being a principal executive and owner of TPG Capital.
UC’s Investment: A member of the UC investment committee, Saban resigned as a regent in 2004. Mr. Saban then put together the Univision deal. During the acquisition, UC campus endowment funds had invested $4.1 million in two relevant TPG Capital funds (TPG IV and TPG V). Additionally, UC had invested $150 million in the two Madison Dearborn funds that financed the Univision buyout (Madison Dearborn IV and Madison Dearborn V).
The CalPERS Connection: CalPERS invested a total of $1.8 billion in private equity funds that financed the purchase of Univision: $450 million in two Madison Dearborn funds (Madison Dearborn IV and Madison Dearborn V); $125 million in a Providence Equity Partners fund; $300 million in a Thomas Lee Equity Partners fund; and $950 million in the two TPG Capital funds (TPG IV and TPG V). (That's a lot of change passing through this chump's pockets...NOW do you understand why I say when BDCP collapses, and it will...Blum and Reilly and/or their proxies, will come riding in claiming to be Knights in Shining Armour, here to save the day. To build the twin tunnels or any form of conveyance that fast-tracks our Public Trust water into the aqueduct and into Kern County Water Bank is mere child's play for these two pirates...certainly money well spent considered the water auction that just when down...)
The Fallout: Following the buyout, Univision’s new owners—including TPG Capital and Apollo Management—placed the $10 billion debt from the buyout on the company’s balance sheet, creating a financial burden. (Isn't there something called Fiduciary Responsibility?? Isn't it about time this rat-bastard is held to the same standard the rest of us are in handling any form of Other People's Money?) The value of UC’s investment in one Madison fund decreased by 17 percent as the spring of 2009, while the other showed a gain of 18 percent. Apollo Management and TPG Capital collectively charged its investors, including UC, a $200 million transaction fee for managing the deal. (And that loss was made up by withdrawals from account holders accounts to make that transaction fee payment, again...a whole lot of hard work taken by the swipe of a pen, or a keystroke. Gone. How does one replace 20-30+ years of contributions into what you believe is your retirement and old age security?? Well, you don't.)
Freescale Semiconductor
Austin, Texas
The Company: Freescale is one of the largest semiconductor manufactures in the world.
The Deal: In December 2007, Freescale announced that it had been acquired by a consortium of private equity firms consisting of the Blackstone Group, the Carlyle Group, TPG Capital, and Permira Advisors.
The Blum Connection: To purchase Freescale, a multi-billion dollar down payment was raised from investors, including two TPG Capital funds (TPG IV and TPG V), in which Mr. Blum was invested. Mr. Blum was also a TPG Capital principal.
UC’s Investment: UC was invested in both TPG Capital funds involved with the Freescale transaction (TPG IV and TPG V). It had also committed $120 million to another fund involved in the Freescale buyout (Blackstone Capital Partners V, L.P.).
The CalPERS Connection: CalPERS invested billions of dollars in funds that supported the Freescale transaction, with $1.4 billion committed to the relevant Carlyle Group funds, $347 million in a Permira fund, and $950 million in the two TPG Capital funds (TPG IV and TPG V).
The Fallout: Within months of the buyout, Freescale’s sale of cell phone semi-conductors went into a tailspin. The company began to sink, over-burdened with the $9.5 billion in debt that the private equity firms had loaded onto Freescale’s balance sheet to pay for its own acquisition. (Again, isn't this corporate piracy?? Isn't there a law against this crap??) In April 2008, Business Week called the Freescale deal “one of the ugliest buyouts in history.”
Sungard Data Systems, Inc.
Wayne, Pennsylvania
The Company: Sungard Data Systems is a software company that provides information technology services to financial companies, nonprofit organizations, and school districts.
The Deal: In 2005, a consortium of private equity firms acquired Sungard in an $11.3 billion leveraged buyout. The participating firms included TPG Capital, Silver Lake Partners, Bain Capital, and Blackstone Capital Partners.
The Blum Connection: A principal in TPG Capital at the time, Mr. Blum was also invested in two TPG Capital funds involved in the buyout (TPG III and TPG IV).
UC’s Investment: At the time of the acquisition, UC had invested $80 million in two private equity funds that helped finance the Sungard buyout (Bain Capital Fund VIII and Blackstone Capital Partners IV).
The CalPERS Connection: CalPERS committed a total of $325 million to two private equity funds involved in the Sungard buyout (Silver Lake Partners II and Blackstone Capital Partners IV). CalPERS also had $350 million invested in the TPG Capital funds that bought Sungard (TPG III and TPG IV).
The Fallout: In 2005, the Sungard deal was the second-largest buyout in history, and the largest privatization of an information technology company. (Followed by the acquisition of the largest public water bank. ) UC appears to have made a profit on the investment.
Kinetic Concepts, Inc.
Santa Rosa, California
The Company: Kinetic Concepts manufactures medical equipment to treat wounds, burns and injuries sustained in accidents and combat.
The Deal: In 1997, Richard C. Blum & Associates (the predecessor to Blum Capital Partners) entered into a leveraged buyout deal to purchase Kinetic Concepts with Fremont Partners III, a private equity fund run by the Fremont Group (an investment arm of San Francisco’s Bechtel Corporation) Welcome Bechtel to our family of financial inbreeders). The Fremont Group and Blum jointly acquired a majority stake in Kinetic Concepts, and proceeded to take the company private.
UC’s Investment: In 2003, after Mr. Blum became a regent, UC invested $8.2 million in Fremont Partners III, which was still partnered with Mr. Blum's firm on the Kinetic Concepts deal. In 2004, as the number of wounded soldiers increased from two simultaneous wars in Iraq and Afghanistan, the Fremont Group and Mr. Blum’s firm took Kinetic Concepts public for a reported gain of $800 million. As of the end of 2009, UC has purchased $46.8 million in newly-issued Kinetic Concepts stock. (Folks...I haven't even started down that road...)
The Fallout: UC kept its investment with the Fremont Partners III fund until the end of 2006, and the deal appears to have been profitable for both Mr. Blum and UC. (It ’s worth noting that in 2000, Kinetic Concepts held only $116,000 in contracts with the U.S. Department of Veterans Affairs. By 2006, as wounded soldiers rotated through veterans hospitals, the value of these contracts shot up to $12 million. During this time, Sen. Feinstein was the chairperson of the Senate Appropriations subcommittee on veteran’s affairs that vetted and approved these projects.)
Commonfund
Westport, Connecticut
The Company: Commonfund is a $26 billion nonprofit asset management company that handles investments for more than 1,400 public and private university pension and endowment funds.
The Blum Connection: From 1995 to 2004, Blum Capital Partners served as an investment advisor to Commonfund. Advisors are typically paid a percentage of the amount of capital they are able to attract to the fund.
UC’s Investment: In 2002, the same year that Mr. Blum became a regent, several UC campus endowment foundations collectively invested $3.1 million in a series of private equity and venture capital partnerships sponsored by Commonfund. This amount tripled the following year. By the middle of 2004, Commonfund no longer reported Blum Capital Partners as an advisor, but its relationship with UC expanded. By 2008, UC’s overall investment in Commonfund had grown to $41.3 million.
The Fallout: When the sub-prime mortgage meltdown hit Wall Street, Commonfund suffered. The value of UC’s Commonfund investment sank by $5 million. In 2009, UC Treasurer Marie Berggren reported to the regents that Commonfund was temporarily “shutdown,” and that UC would no longer receive its cash back upon demand.
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