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How to funnel capital to the American heartland
April 15, 2019 | Financial Times | by Bruce Katz.
* The Innovation Blind Spot, by Ross Baird.
* Ways must be found to rewire money flows in order to reverse the export of wealth
* A federal tax incentive intended to entice coastal capital into the heartland may end up helping to keep local capital local.

Over the past year, economically distressed communities across the US have been engaged in an intense discussion about mobilising private capital. Why? As mayors, governors, real estate developers, entrepreneurs and investors have learnt, buried in the 2017 Tax Cuts and Jobs Act was a provision that created a significant tax incentive to invest in low-income “opportunity zones” across the country......the law’s greatest effect, ironically, has been to unveil a treasure trove of wealth in communities throughout the nation. Some of the country’s largest investors are high-net-worth families in Kansas City, Missouri, and Philadelphia; insurance companies in Erie, Pennsylvania, and Milwaukee; universities in Birmingham, Alabama, and South Bend, Indiana; philanthropists in Cleveland and Detroit; and community foundations and pension funds in every state.

These pillars of wealth mostly invest their market-oriented equity capital outside their own communities, even though their own locales often possess globally significant research institutions, advanced industry companies, grand historic city centres and distinctive ecosystems of entrepreneurs. The wealth-export industry is not a natural phenomenon; it has been led and facilitated by a sophisticated network of wealth management companies, private equity firms, family offices and financial institutions that have narrow definitions of where and in what to invest.

The US, in other words, doesn’t have a capital problem; it has an organisational problem. So how can capital flows be rewired to reverse the export of wealth?

Three things stand out:

(1) Information matters. The opportunity zones incentive has encouraged US cities to create investment prospectuses to promote the competitive assets of their low-income communities and highlight projects that are investor-ready and promise competitive returns.

(2) norms and networks matter. The opportunity zone market will be enhanced by the creation of “capital stacks” that enable the financing of community products such as workforce housing, commercial real estate, small businesses (and minority-owned businesses in particular) and clean energy, to name just a few. Initial opportunity zone projects are already showing creative blends of public, private and civic capital that mix debt, subsidy and equity.

(3) institutions matter. Opportunity zones require cities to create and capitalise new institutions that can deploy capital at scale in sustained ways. Some models already exist. The Cincinnati Center City Development Corporation, backed by patient capital from Procter & Gamble, has driven the regeneration of the Over-the-Rhine neighbourhood during the past 15 years.

More institutional innovation, however, is needed. As Ross Baird, author of The Innovation Blind Spot, has argued, the US must create a new generation of community quarterbacks to provide budding entrepreneurs with business planning and mentoring, matching them with risk-tolerant equity. These efforts will succeed if they unleash the synergies that flow naturally from urban density. New institutions will not have to work alone, but hand-in-glove with the trusted financial firms that manage this locally-generated wealth.
books  capital_flows  cities  coastal_elites  community  economic_development  economically_disadvantaged  high_net_worth  howto  industrial_policies  industrial_midwest  industrial_zones  institutions  investors  match-making  midwest  municipalities  networks  network_density  P&G  PPP  packaging  private_equity  property_development  prospectuses  Red_States  rescue_investing  rust-belt  tax_codes  venture_capital 
4 weeks ago by jerryking
JAB’s Peter Harf: hire ambitious talent and give them a mission
February 16, 2019 | | Financial Times | by Leila Abboud and Arash Massoudi.

JAB oversees its portfolio of coffee, beverages, and casual dining companies. .....When everything was going wrong last year at Coty, the cosmetics company backed by investment group JAB Holdings, Peter Harf reacted with characteristic ruthlessness, replacing Coty’s chief financial officer and chief executive, and taking back the Coty chairmanship from his longtime associate, Bart Becht. Describing last year’s share price decline of more than 60% as “unacceptable” for JAB and its co-investors, Mr Harf says the situation “had to have serious consequences” even for his inner circle......Harf believes that identifying talented people — and incentivising them through performance-based pay — have been key to his success over his nearly 40-year career..... just as important to Harf is knowing when to jettison those who are no longer serving the mission he has overseen since he was 35: growing the wealth of Germany’s reclusive Reimann family who are behind JAB....Harf's vision was for JAB to be modelled on Berkshire Hathaway, the investment conglomerate built by his idol, Warren Buffett. Success would come not only from backing the right leaders but by patiently building brands, embarking on deals and taking companies public to cash in on bets....Harf felt he had assembled a dream team: “My mantra has always been that I need to hire people who are better than me. Lions hire lions and sheep hire other sheep.”

Three questions for Peter Harf
(1) Who is your leadership hero?

“Warren Buffett. Hands down. All this stuff that I intend to do to make JAB into a long-term investment vehicle, he does it to perfection. He’s the greatest investor in the world, and I want to be like him. If we invest as well as Warren, we’ve won. Very simple.”

(3) What was your first leadership lesson?

One of my biggest role models was Bruce Henderson, the founder of Boston Consulting Group. When I worked for him, I prepared a three-page analysis about a problem. It had 10 bullet points as the conclusion. He dismissed it as way too complicated and said: “Don’t try to field every ball.” He meant that if you wanted to be a good leader, you have to be able to focus on the important stuff first.
+++++++++++++++++++++++++++++++++++++++++++++++++++
The trouble often starts when leaders start listing five or seven or 11 priorities. As Jim Collins, the author of the best-selling management books “Good to Great” and “Built to Last,” is fond of saying: “If you have more than three priorities, you don’t have any.”
BCG  Berkshire_Hathaway  beverages  casual_dining  coffee  commitment  CPG  dealmakers  deal-making  departures  exits  family_office  family-owned_businesses  HBS  hiring  investors  JAB  Keurig  lifelong  mission-driven  private_equity  portfolio_management  ruthlessness  talent  troubleshooting  Warren_Buffett 
february 2019 by jerryking
JAB chair Bart Becht quits in split with partners
January 14, 2019 | Financial Times | Leila Abboud in Paris and Arash Massoudi.

Bart Becht's departure is the first outward display of tensions within JAB, created to manage the wealth of Germany’s billionaire Reimann family. The chairman of JAB Holdings, the acquisition-hungry owner of Pret A Manger and Keurig Dr Pepper, has quit after a five-year $50bn takeover spree led to a split with his two partners over the scale of the investment group’s dealmaking.

According to two people with direct knowledge of his decision, Bart Becht, a hard-charging 62-year-old consumer industry executive, stepped down after failing to convince JAB to scale back its takeover ambitions to focus on improving operations at its sprawling portfolio of companies.....The once-obscure investment vehicle has vaulted itself into the top tier of consumer products groups through acquisitions of high-profile US brands like Krispy Kreme, Peet’s Coffee and Covergirl owner Coty, competing directly with industry giants including Nestlé and Coca-Cola in coffee and L’Oreal in make-up......One person who has worked closely with JAB described Mr Becht’s decision as “undoubtedly a surprise”, especially since the trio of executives had only recently been raising money from outside investors and pitching themselves as long-term investors.

JAB operates in a similar way to a private equity investor, but with much longer time horizons. It is often willing to own portfolio companies for decades, often engineering an expansion via acquisitions.....The fundraising also coincided with a strategy shift as JAB exited investments in luxury and fashion to focus on what it calls premium food and beverage, casual dining, and coffee.
CPG  dealmakers  departures  exits  family_office  family-owned_businesses  investors  JAB  Keurig  private_equity  portfolio_management 
january 2019 by jerryking
How Canada's Serruya Family Made Some $300 Million Off A Bunch Of Faded Food-Service Brands
Jun 19, 2016, 07:15pm
How Canada's Serruya Family Made Some $300 Million Off A Bunch Of Faded Food-Service Brands

Amy Feldman
Forbes Staff
ice_cream  private_equity  Toronto  franchising  cold_storage  brands  foodservice  Serruya 
october 2018 by jerryking
3 Investments That May Have Hit Their Peak - The New York Times
By Paul Sullivan
Sept. 14, 2018

Dan Rasmussen, a contrarian investor and the founding partner of Verdad Capital in Boston, has written an article and two reports that make a case against investments in three of the most popular asset classes for high-net-worth investors: private equity, venture capital and private real estate. He has piles of data to back up his argument.
asset_classes  high_net_worth  investors  Michael_Sonnenfeldt  private_equity  real_estate  Tiger21  venture_capital  wealth_management 
september 2018 by jerryking
Investment fund makes $1-billion bet on owners who control their companies - The Globe and Mail
The Canadian Business Growth Fund

“Canadian entrepreneurs find it difficult to secure the funding they need to grow, while maintaining control of their business,” said Mr. Rossolatos, who started his own career as a private-equity investor at TorQuest Partners Inc., then ran tech company Avante Logixx Inc. for seven years. He said the new fund, created by the federal Liberal government but backed by the country’s largest financial institutions, will offer an alternative to traditional venture-capital and private-equity funds, which typically demand control of a company in exchange for their money.

“Our goal is to help entrepreneurs scale up their mid-market businesses as a patient, minority capital partner,” Mr. Rossolatos said. The growth fund formally opens its doors on Tuesday with a $545-million capital commitment from 13 Canadian banks and insurers, which have the option of increasing that backing to $1-billion if the concept proves to be a money maker. Mr. Rossolatos joined the fund in January and has spent the past five months setting up the business and hiring a team of a dozen investment professionals.

Backers expect the new fund will help solve what’s perceived to be a chronic problem for small to medium-sized Canadian companies: Owners sell control relatively early in the businesses’ development, and miss out on the opportunity to build regional or even global champions.
Andrew_Willis  owners  private_equity  privately_held_companies  mid-market  mid-sized  global_champions  CEOs 
june 2018 by jerryking
An unusual family approach to investing
May 30, 2018 | FT | John Gapper.

JAB’s acquisition of Pret A Manger resembles private equity but with a long-term twist.

Warren Buffett’s definition of Berkshire Hathaway’s ideal investment holding period as forever. ....Luxembourg-based JAB, owned by four heirs to a German chemical fortune, takes a family approach to investing. It is unusual in that this holding company seeks to retain its portfolio companies for at least a decade. These include Panera Bread, Krispy Kreme and Keurig Green Mountain coffee, which it merged with Dr Pepper Snapple in an $18.7bn deal in January 2018. This week JAB acquired the UK sandwich chain Pret A Manger for £1.5bn, continuing its buying spree of cafés and coffee, mounting a challenge to public companies such as Nestlé.

**These companies are acquired not to be traded but to be invested in and expanded.**

JAB is an innovative combination of ownership and investment in a world that needs challengers to stock market ownership and private equity. It is family controlled, but run by veteran professional executives. When it invests in companies such as Pret A Manger, it deploys not only the Reimann family’s wealth but that of other entrepreneurs and family investors.......Some of the equity for its recent deals, including Panera and Dr Pepper, came from funds raised by Byron Trott, the former Goldman Sachs investment banker best known for being trusted by the banker-averse Mr Buffett. Mr Trott’s BDT banking boutique specialises in advising founders and heirs to corporate fortunes, including the Waltons of Walmart, and the Mars and Pritzker families.

This is investment, but not as most of us know it. By definition, the world’s companies are mostly controlled by founders and their families — only a minority become big enough to be floated on stock markets and need to disclose much of their workings to outsiders. Family fortunes also tend to remain as private as possible: there is little incentive to advertise how much wealth one has inherited......As [families'] fortunes grow in size and sophistication, more of the cash is invested in other companies rather than in shares and bonds. That is where JAB and Mr Trott come in.

Entrepreneurs and their families tend to be fascinated by their own enterprises and bored by managing their wealth. But they want to preserve it, and they often like the idea of investing it in companies similar to their own — industrial and consumer groups that need more capital to expand. It is not only more interesting but a form of self-affirmation for the successful....Being acquired by JAB is appealing. The group turns up, says it will not take part in an auction but offers a good price (it bought Pret for more than its former owner Bridgepoint could get by floating it). It often keeps the existing executives, telling them they have to plough their own money into the company, and invests in long-term growth provided the business is efficiently run.

This is more congenial than heading a public company and contending with a huge variety of shareholders, including short-term and activist investors. It is also less risky than being bought by 3G Capital, the cost-cutting private equity group with which Mr Buffett teamed up to acquire Kraft Heinz. While 3G is expert at eliminating expenses it is less so at encouraging growth.
coffee  dynasties  high_net_worth  holding_periods  investing  investors  JAB  long-term  Nestlé  Pritzker  private_equity  privately_held_companies  Unilever  unusual  Warren_Buffett  family  cafés  Pret_A_Manger  3G_Capital  discretion  entrepreneur  boring  family_business 
may 2018 by jerryking
How One Investor Made a Fortune Picking Over the Retail Apocalypse - WSJ
By Khadeeja Safdar and Miriam Gottfried
March 21, 2018

While private-equity firms and public investors have been shying away from traditional retail, Sycamore has made bigger bets on the sector. It bought Staples Inc. in September for $6.8 billion—the largest U.S. leveraged buyout of 2017.... strong demand from pension funds and other institutions to co-invest to tap Sycamore’s retail wizardry.

With Sycamore’s strategy, it isn’t necessary to spruce up a purchased company. The firm often buys struggling retailers and sells off their most valuable pieces. It cuts costs at whatever remains, sometimes using the savings to extract dividends.

The firm tells investors its returns “need not depend” on successfully identifying growth opportunities for its retail targets, according to documents for its new fund.

Sycamore also extracts returns from clothing chains by acting as a middleman between them and suppliers, using a company it owns to sell inventory to the retailers, sometimes as they struggle to remain solvent, according to industry executives and court filings.....“Sycamore is the best of the bunch in the retail sector,” .....Sycamore’s team doesn’t usually get involved in day-to-day operational decisions such as selecting merchandise and designing store layouts, preferring instead to hire consultants and veteran retail executives, said former executives at some of its portfolio companies.
private_equity  retailers  cost-cutting  investors  bricks-and-mortar  apparel  Staples 
march 2018 by jerryking
Toys ‘R’ Us Case Is Test of Private Equity in Age of Amazon
MARCH 15, 2018 | The New York Times | By MICHAEL CORKERY.

The reality is that Toys “R” Us, which announced on Thursday that it would shutter or sell all of its stores in the United States, never had much chance at a turnaround.

For over a decade, Toys “R” Us had been drowning in $5 billion of debt, which its private equity backers had saddled it with. With debt payments siphoning off cash every year, Toys “R” Us could not properly invest in its worn-out suburban stores or outdated website. Sales plummeted, as Amazon captured more children’s desires — and their parents’ wallets — for Star Wars Legos and Paw Patrol recycling trucks.

Toys “R” Us is the latest failure of financial engineering, albeit one that could portend a potentially more ominous outlook for private equity in the digital era.....Most buyouts tend to work the same way. A private equity firm takes over a troubled company with the goal of sprucing up the strategy, cutting costs and overhauling the business over three or five years. But they often load up a company with debt to pay for the deal, which can prove problematic if the profits do not perk up.

In the age of Amazon, that formula can be dangerous. Consumer demands are changing so quickly that heavily indebted companies have trouble reordering their business to adapt and compete with better-funded rivals...... the deterioration of Toys “R” Us from a potential turnaround strategy to the end of an iconic brand — in a matter of months — shows just how difficult it can be for private equity to compete in a rapidly evolving industry. In retailing, Amazon is reordering everything on the store shelf. And children’s changing interest in games and toys, which now encompasses high-end electronics, adds to the complexity.....Enter Amazon. In recent years, the company had started to aggressively expand its toy business, creating a comprehensive, online showroom with low prices at the click of a button. Pressed by Amazon, Walmart also pushed hard into toys, dropping its prices to capture more market share.

Walmart could absorb the price cuts on toys because it makes up the profit on other items. But for Toys “R” Us, a price war on toys and games, its only offerings, was devastating.
private_equity  bankruptcies  toys  digital_economy  Amazon  Wal-Mart  KKR  Bain_Capital  Toys_"R"_Us  financial_engineering  LBOs  buyouts  shifting_tastes  category_killers  price_wars 
march 2018 by jerryking
Latest to Be Blamed for Retailers’ Woes: Private Equity - WSJ
By Lillian Rizzo
Updated July 30, 2017
A wave of retail bankruptcies washing through court has revived an old debate about the role of private-equity firms in accelerating the problems of companies in distress......"During that same time, Payless was also grappling with dwindling mall foot traffic, consumers shifting to spending online, changing trends and many store leases. Since the bankruptcy filing, hundreds of Payless stores have been closed, and employees have been laid off."

Vendors and landlords alleged in court papers that the dividend payouts, along with other payments to the investors, left the retailer particularly vulnerable to collapse just as technology and shifting consumer behavior upended the retail industry.

“The depletion of their coffers put the company on a dangerous path that ultimately led to this instant bankruptcy filing,” a group of Payless’s unsecured creditors said in June court papers.
retailers  bricks-and-mortar  private_equity  investors  bankruptcies  foot_traffic  creditors  store_closings 
july 2017 by jerryking
J.Crew’s Mickey Drexler Confesses: I Underestimated How Tech Would Upend Retail
By Khadeeja Safdar
Updated May 24, 2017

For decades, fashion was essentially a hit or miss business. Merchants like Mr. Drexler would make bets on what people would be wearing a year in advance, since that’s how long it took to design and produce items. Hits guaranteed handsome returns until the next season.

Now, competitors with high-tech, data-driven supply chains can copy styles faster and move them into stores in a matter of weeks. Online marketplaces drive down prices, and design details such as nicer buttons and richer colors are less apparent on the internet. Social media adds fuel to the style churn—consumers want a new outfit for every Instagram post. “The rules of the game have changed,” said Janet Kloppenburg, president of JJK Research, a retail-focused research firm. “It’s not just about product anymore. It’s also about speed and pricing.”

Mr. Drexler’s plan is to emphasize lower prices, pivot toward more digital marketing and adopt a more accessible image........Mr. Drexler didn’t appreciate how the quality of garments could easily get lost in a sea of options online, where prices drive decisions, or how social media would give rise to disposable fashion. Online, price has more impact than the sensory qualities of clothing. “You go into a store—I love this, I love this, I love this,” he said. “You go online and you just don’t get the same sense and feel of the goods because you’re looking at a picture.”.....Amazon.com and other algorithm-based websites can change prices by the hour based on demand, and the variety of options makes it easy to mix and match brands.

“The days of people wearing head-to-toe J.Crew are over,”......Today, with nearly two billion people using Facebook every month, he feels differently: “You cannot be successful without being obsessed with the product, obsessed with social media, and obsessed with digital,” he said. “Retail is now about all that.”

Mr. Drexler said he hasn’t given up on quality. Instead, he is now lowering prices on about 300 items and creating an analytics team dedicated to optimizing prices for each garment......TPG co-founder David Bonderman recently acknowledged J.Crew and its peers are struggling with declining mall traffic and the shift to online shopping. “The internet has proven much more resilient and much more important than most of us thought a decade ago,” he said at a conference earlier this month.
retailers  e-commerce  Mickey_Drexler  J.Crew  fashion  apparel  LBOs  private_equity  hits  copycats  social_media  Instagram  data_driven  supply_chains  Clayton_Christensen  disruption  brands  Old_Navy  Banana_Republic  Madewell  digital_influencers  TPG  fast-fashion  disposability 
may 2017 by jerryking
How Goldman Sachs Made More Than $1 Billion With Your Credit Score - WSJ
By LIZ HOFFMAN and ANNAMARIA ANDRIOTIS
April 9, 2017

Goldman bought TransUnion , TRU -0.21% the smallest of the three main credit-reporting firms, in 2012. By the time it went public three years later, TransUnion had become a data-mining machine, gathering billions of seemingly insignificant tidbits about ordinary Americans that it analyzed and sold to lenders, insurers and others.....As Goldman and Advent dug into TransUnion’s business, they found the fastest-growing revenue was coming from the company’s dealings with online lending startups, people familiar with the investment said.

These companies, such as LendingClub Corp. and Prosper Marketplace Inc., were using information from credit bureaus to find and vet potential borrowers. They were increasingly hungry for data that could pinpoint borrowers who traditional lenders might overlook or overcharge.....TransUnion’s new owners doubled down on these clients. They recruited Jim Peck, a big-data enthusiast who had run LexisNexis Risk Solutions, as CEO. He spent his first day in the company’s data center.

TransUnion began appearing at fintech conferences. It rebranded itself with a techy, purposeful vibe, wrapping its initials, a lowercase “tu,” in an @ sign. “We’re not just a credit bureau; we’re a force for good,” chirped a 2015 video.

The company spent heavily on technology and acquisitions. It replaced its old mainframe, a relic from the 1970s, with nimbler systems that allow it to splice information in new ways. It built a new data center and started scooping up small companies with niche data sets.....One acquisition tracks public records to help with fraud enforcement related to online shopping, among other things. Another uses utility payments, cellphone billing records and other data points to identify creditworthy borrowers who lenders might have overlooked, either because they have little or no debt history or potential red flags on their traditional credit reports. ​ ​​ ​​....By the time of its IPO in 2015, TransUnion had 30 million gigabytes of data, growing at 25% a year and ranging from voter registration in India to drivers’ accident records in the U.S. The company’s IPO documents boasted that it had anticipated the arrival of online lenders and “created solutions that catered to these emerging providers.”

Goldman itself is a customer. In 2016, the Wall Street firm launched Marcus to make online personal loans of a few thousand dollars. Its main pitch to borrowers: refinance expensive credit-card debt at lower rates.

Goldman buys the names and credit information of potential borrowers from TransUnion and sends direct-mail and other advertising to them.
Goldman_Sachs  TransUnion  Advent  private_equity  credit_reporting  credit_scoring  Equifax  Experian  data  data_driven  Marcus  subprime  solution-finders 
april 2017 by jerryking
Hyena capitalism receives a swift kick from the Unilever giraffe
25 February/26 February 2017 | FT| Robert Armstrong.

the rise in hyena capitalism — broadly, the emphasis on squeezing the maximum present return out of assets — is an effect of low economic growth. When the number of US workers was increasing and innovation was delivering faster productivity growth, there were lots of reasons to invest. Today it just makes more sense to focus on cost.....More generally, it may be that, since the financial crisis, spooked managements and, in the case of public companies, investors have become increasingly risk averse — more so than the state of the economy would justify. So money piles up on balance sheets, is paid as dividends, or goes to repurchase shares. Investment falls, despite the availability of cheap credit to fund new projects.
It also looks increasingly likely that the change in management incentive structures, in particular the increase in share-based incentives and shortening tenures for top executives, have made company leaders less inclined to invest. there is a risk that it could become self-reinforcing. Lack of investment affects not just future productivity, but also demand. At the extreme, if no one invests, no one earns and there is no growth. If companies are forgoing opportunities to invest, they are depriving the economy of customers with money to spend.
More insidiously, it could be that hyena capitalism undermines trust in the institutions and mores that makes corporate capitalism possible in the first place. If workers know they are regarded as dispensable cost centres, why should they commit to learning company-specific skills and procedures? Why not shirk instead? If the gains from corporate transformations go overwhelmingly to investors and financiers, why should voters support free market policies?
Capitalism needs both giraffes and hyenas. But in a time of modest growth, low productivity growth and rising inequality, one must keep an especially close eye on the hyenas.
CPG  Unilever  3G_Capital  private_equity  public_companies  consumer_goods  Kraft_Heinz  inefficiencies  capitalism  sweating_the_assets  undermining_of_trust  deprivations 
march 2017 by jerryking
Can 3G Capital Keep Thriving on Acquisitions and Cost Cutting? - The New York Times
By STEVEN DAVIDOFF SOLOMON MARCH 7, 2017

the larger question about 3G is whether it is possible to keep creating value by acquisition. At some point, you might think, the music stops playing.

Were that to happen, it would become clear how much long-term value is actually being created, and how much of the gains are short-term lifts from acquisitions and cost cuts. Restaurant Brands, for example, has reduced costs but revenue has remained relatively flat. Last quarter, Kraft Heinz’s revenue fell 3.7 percent.

In other words, with flat revenue, income has to come from somewhere, and you can only slash so much.

It’s a model that private equity firms don’t follow. To be sure, they also cut costs, but private equity also prides itself on revenue expansion and innovation. And the reason is simple: If the merger and acquisition pipeline dries up, so does the growth.....one has to wonder if a firm can succeed simply by cutting. To be sure there will be some gains and value made from the cuts, but eventually part of running a business means actually building something.

Like it or not, that will require spending on new products and the business itself, something 3G’s managers appear to hate above all else, as opposed to simply acquiring more companies.
3G_Capital  mergers_&_acquisitions  cost-cutting  new_products  private_equity 
march 2017 by jerryking
Inside the brutal transformation of Tim Hortons - The Globe and Mail
MARINA STRAUSS
THE GLOBE AND MAIL
LAST UPDATED: WEDNESDAY, FEB. 22, 2017

Since taking over the iconic chain in 2014, its new Brazilian owner, 3G Capital, has purged head office, slashed costs and squeezed suppliers. Shareholders are happy, but is 3G tearing the heart out of Timmy’s?.....3G is regarded as ultra-disciplined owners who are sticking to the same playbook they have followed at companies including Burger King, Anheuser-Busch, Kraft Foods and Heinz: massive layoffs, replacing legacy managers with hungry youngsters and, above all, a fanatical devotion to financial benchmarks and cost-cutting. (It remains to be seen whether this will also be the approach for RBI’s latest acquisition, Popeyes Louisiana Kitchen.)....Will 3G's analytics-driven overhaul of Tim Hortons—using the same template the private equity firm’s founders have deployed at railroads, brewers and food makers—succeed in the long run, or is it in danger of cutting the heart out of a Canadian icon? ......Suppliers are also feeling the squeeze. From the get-go, RBI made it clear it would be reviewing vendor relationships. And the company pushed for better terms, including extensions on bill payments to as much as 120 days from 30 days or less. Maple Leaf Foods, a major partner that supplied meat to Tim Hortons, declined to accept the new terms, and walked away....
Former employees also say RBI has cut back on product research and development spending at Tim Hortons, offloading some of that work to suppliers. That’s not uncommon in the fast-food world, but it can be risky. “Suppliers can do a great job with innovating and R&D, but you’re limited to what the supplier is trying to develop,” ......3G has never encountered a brand quite like Tim Hortons. It isn’t just another coffee company. It is a Canadian destination, an integral part of many Canadians’ day and a brand that defines us, to some degree, around the world.......“The risk, in looking at Tim Hortons through the lens of efficiency alone, is to miss the greatest value of the asset, and that is the Tim’s brand and its deep connection to the fabric of the country,” says Joe Jackman, founder of strategic retail consultant Jackman Reinvents, whose clients have included Old Navy, Hertz, Rexall and FreshCo. “You can’t cost-cut your way to retail nirvana.”
3G_Capital  Tim_Hortons  Marina_Strauss  cost-cutting  head_offices  iconic  brands  organizational_culture  private_equity  layoffs  data_driven  franchising  transformational  fast-food  supply_chains  R&D  Canadiana  goodwill  JWT  community_support  downsizing  efficiencies  coffee  staying_hungry  cultural_touchpoints  restructurings  supply_chain_squeeze  RBI  playbooks 
february 2017 by jerryking
The ‘Warren Buffett of Brazil’ Behind the Offer for Unilever
FEB. 17, 2017 | The New York Times | by LIZ MOYER.
Profile of Jorge Paulo Lemann.

Mr. Lemann, 77, a Harvard-educated former Brazilian tennis champion, ranks 19th on the Forbes list of world billionaires, with a fortune estimated at $29 billion. He and his partners at 3G have developed over the years what many call a playbook for extracting costs from companies by eliminating frivolities like corporate-owned aircraft and expensive office space, revamping management and slashing jobs.

They instill strict austerity that forces managers to justify expenses beyond basic operating needs. Their model makes expansion overseas crucial for increasing returns.

They have also focused on major consumer brands rather than on diversifying......Mr. Lemann and Mr. Buffett share a similar investment philosophy: patience. Instead of selling his portfolio after he has cut and remodeled companies, Mr. Lemann has used Anheuser-Busch InBev and now Kraft Heinz as base camps for further global expansion.
3G_Capital  private_equity  Brazilian  patience  Unilever  Kraft_Heinz  Harvard  moguls  high_net_worth  cost-cutting  Warren_Buffett  playbooks 
february 2017 by jerryking
Wall Street’s Insatiable Lust: Data, Data, Data
By BRADLEY HOPE
Updated Sept. 12, 2016

One of his best strategies is to attend the most seemingly mundane gatherings, such as the Association for Healthcare Resource & Materials Management conference in San Diego last year, and the National Industrial Transportation League event in New Orleans.

“I walk the floor, try to talk to companies and get a sense within an industry of who collects data that could provide a unique insight into that industry,” he said.....Data hunters scour the business world for companies that have data useful for predicting the stock prices of other companies. For instance, a company that processes transactions at stores could have market-moving information on how certain products or brands are selling or a company that provides software to hospitals could give insights into how specific medical devices are being used......A host of startups also are trying to make it easier for funds without high-powered data-science staffers to get the same insights. One, called Quandl Inc., based in Toronto, offers a platform that includes traditional market data alongside several “alternative” data....
alternative_data  conferences  data  data_hunting  hedge_funds  insights  investors  exhaust_data  market_moving  medical_devices  mundane  private_equity  Quandl  quants  sentiment_analysis  unconventional  unglamorous  Wall_Street 
september 2016 by jerryking
Airbnb and Others Set Terms for Employees to Cash Out - The New York Times
By KATIE BENNERAUG. 10, 2016
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Silicon_Valley  venture_capital  private_equity  secondary_markets  Airbnb  Pinterest  SpaceX  start_ups 
august 2016 by jerryking
This Is Your Life, Brought to You by Private Equity - The New York Times
By JENNIFER DANIEL, JOSH WILLIAMS, BEN PROTESS and DANIELLE IVORY | AUG. 1, 2016
private_equity 
august 2016 by jerryking
At Carnegie Hall, a New Leader With a Son Named Hendrix - The New York Times
By MICHAEL COOPER and DAVID GELLESJUNE 2, 2016
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Robert_Smith  private_equity  African-Americans  New_York_City  philanthropy  leaders 
august 2016 by jerryking
Inside the Growing Secondary Market for Venture Capital Assets
Millennium Technology Value Partners, L.P. | By Dan Burstein and Sam Schwerin
Managing Partners,
venture_capital  private_equity  secondary_markets 
july 2016 by jerryking
Mark Penn Is Out to Reinvent the Ad Holding Company - WSJ
By NATHALIE TADENA
May 12, 2016

Armed with $250 million in funding, Mark Penn is building what he hopes will be a new kind of advertising conglomerate, Stagwell Group, to challenge the ultra-scale-driven model of the four giant “holding companies” that dominate the marketplace.
reinvention  Madison_Avenue  advertising_agencies  Mark_Penn  private_equity 
may 2016 by jerryking
Private equity firm offers farmers relief
Joelle Faulkner may have grown up on a dairy farm, but she never thought that she would end up in the agriculture business.She studied at Oxford, Stanford and the University of Western Ontario. She
private_equity  Rhodes  farming  women  agriculture  Oxford  UWO  venture_capital  Joelle_Faulkner 
april 2016 by jerryking
5 Spectacular Marketing Insights From Cirque du Soleil On Customer Intimacy | momentology
By Lisa Lacy, 21st of April 2016 at 14:05 PM.

So how does Cirque du Soleil use get closer to its fans? Here are five marketing insights from Derricks.

1. Be Ready To Ask & Re-Ask Questions

the live entertainment brand isn’t the new kid on the block anymore....undergoing a huge transformation as a result in part of private investment firm TPG acquiring a majority stake last year.

“And what’s fascinating is this inflection point is a chance to re-ask all the questions,” Derricks said. “Everything is back on the table again. Our brand is incredibly strong on stage, but where we’re challenged is what happens beyond the lights and how to interact with you.”

2. Don’t Miss The Marketing Basics
it’s hard for a brand like Cirque du Soleil to simply deliver an app or the like, so “given the crowded market, there’s a lot of basic blocking and tackling as much as finding the next brand new thing. Sometimes it’s about being in the right place at the right time.”

That means Cirque du Soleil capitalizes on traditional out-of-home tactics like taxi toppers and marquis ads, as well as videos in taxis to create awareness and buzz.

3. Have Smaller Conversations & Tell Stories

Derricks said the brand is hearing from its fans that they want to know more about the performers and what goes on behind the scenes.

“Where we’re challenged is selling the concept of the show itself,” Derricks said. “The most radical thing we can do is to be more intimate. I don’t know if we can be louder, but we can be more intimate and [and bring you] behind the curtain, which is a fascinating new adventure for Cirque du Soleil.

4. Bring People To You

Another part of Cirque du Soleil’s marketing strategy involves breaking down the shows into their component parts and connecting with audiences from there....As a result, the brand has begun experimenting with master classes in fields like makeup and dance.

5. Conduct Team Building Activities

What’s more, noting the circus itself has changed drastically as traditional circuses included acts in which performers were related by blood and were therefore very tightly knit, Derricks said Cirque du Soleil, which includes groups of performers without family ties, had to conjure up its own unique methods of fostering trust....As a result, Cirque du Soleil created Spark Sessions, or corporate experiences for networking, business development and/or milestones, to get other companies involved and to help teach what it has since learned about trust and leadership, "
private_equity  TPG  Guy_Laliberté  entrepreneur  fascination  Cirque_du_Soleil  customer_experience  storytelling  customer_intimacy  LBMA  out-of-home  teams  trustworthiness  brands  insights  outreach  live_performances  corporate_training  inflection_points 
april 2016 by jerryking
M&M Meat Shops expands offerings, changes name in bid to lure customers - The Globe and Mail
MARINA STRAUSS - RETAILING REPORTER
The Globe and Mail
Published Tuesday, Mar. 15, 2016
Acquired about 18 months ago by private equity firm Searchlight Capital Partner LP,....
"In November, M&M upgraded its website and click-and-collect e-ordering, which it has been offering for eight years. Shoppers order online and pick up at the store of their choice. The site has enjoyed a 40-per-cent rise in e-orders since the relaunch, Mr. O'Brien said. E-commerce purchases, at $65-plus each on average, are usually more than twice the value of in-store purchases, he added."
Marina_Strauss  meat  retailers  frozen_foods  CEOs  rebranding  M&M_Food_Market  BOPIS  e-commerce  private_equity  privately_held_companies  in-store 
march 2016 by jerryking
Africa Bruised by Investor Exodus - WSJ
By MATINA STEVIS
Feb. 21, 2016 5:30 a.m. ET

Fund managers say assets in African nations are being punished because of their disproportionate reliance on resources and failure to use the commodity boom of recent years to industrialize their economies. In Angola, Nigeria and Equatorial Guinea, oil counts for more than 90% of export revenue, while copper counts for more than 70% of export revenue in Zambia.

“There’s a reaction to a year ago, to the euphoria of new investors coming into Africa,” said Stuart Culverhouse, an economist with Exotix, a London-based frontier fund and advisory firm. “They are trying to get out now, and they are being quite indiscriminate.”

The upshot is that frontier investors are moving their money from Africa to Asian countries like Pakistan, Bangladesh and Vietnam; net energy and commodity importers which have shown more commitment to industrialization.
Africa  investors  private_equity  commodities  China  Barclays  exodus  frontier_markets  natural_resources 
february 2016 by jerryking
Private Equity Firms Get Drastic to Improve Diversity - Private Equity Beat - WSJ
Jul 20, 2015 EUROPE
Private Equity Firms Get Drastic to Improve Diversity
ARTICLE
COMMENTS (2)
ALLEN & OVERY
ALTIUS ASSOCIATES
EXPONENT PRIVATE EQUITY
HEPHZI NICOL
PRIVATE EQUITY RECRUITMENT
SOVEREIGN CAPITAL
STEPSTONE GROUP
11 55
By BECKY PRITCHARD
private_equity  recruiting  women  diversity 
july 2015 by jerryking
Cirque deal needs some financial acrobatics to work - The Globe and Mail
IAN McGUGAN
Cirque deal needs some financial acrobatics to work
SUBSCRIBERS ONLY
The Globe and Mail
Published Monday, Apr. 20 2015,
private_equity  TPG  Fosun  Guy_Laliberté  entrepreneur  Cirque_du_Soleil  valuations 
april 2015 by jerryking
Cirque du Soleil nears deal with U.S. private equity giant TPG, Caisse - The Globe and Mail
JACQUIE McNISH AND NICOLAS VAN PRAET
Cirque du Soleil nears deal with U.S. private equity giant TPG, Caisse
SUBSCRIBERS ONLY
TORONTO AND MONTREAL — The Globe and Mail
Published Wednesday, Apr. 15 2015
Cirque_du_Soleil  private_equity  TPG  exits  Fosun 
april 2015 by jerryking
Former Xstrata boss Mick Davis a slimmer, trimmer predator - The Globe and Mail
Mar. 13 2015 | The Globe and Mail | by ERIC REGULY - EUROPEAN BUREAU CHIEF
LONDON.

Mick Davis runs X2 Resources, which has 10 employees and zero assets other than $4-billion of investor capital, some of it from Canadian pension funds, sitting idly in the bank.

X2 was launched a year ago and has been shopping for mining assets or operating companies, but has come up short....Mr. Davis is wealthy. He recently donated £1.1-million ($1.5-million) to David Cameron’s Conservative party to support its re-election bid in the May general election. He admits he doesn’t need to launch X2 to support his lifestyle, though he would like to donate more money to his charities. What’s really driving him is the urge to build once again....Xstrata began life in 2001 as a small lump of coal assets discarded by Glencore. Big Mick had emerged as the industry’s premier predator. “What motivates me is to be able to create and build,” he said back then. “If you’re going to be productive in your time in this world, you have to add to it. I have the capability of adding commercially.”....Commodities recovered shortly after the 2008 financial crisis, then went into a long slump that continues today – copper is down more than 15 per cent in the past year, iron ore by 50 per cent. The culprit was not waning demand, Mr. Davis explains; it’s still rising, albeit at a slower pace. Instead, it was epic miscalculation by the corporate captains and the investors who threw money at them. When prices were strong, the biggies invested fortunes in new mines and smelters and all the ports, ships and railways that went with them. These projects were vast, expensive and took many years to build.

All that new production is now hitting the market like a sledgehammer.
Xstrata  Mick_Davis  mining  Glencore  Eric_Reguly  miscalculations  Second_Acts  commodities  private_equity  mergers_&_acquisitions  natural_resources  X2  entrepreneur  privately_held_companies  overcapacity  overexpansion 
march 2015 by jerryking
CPPIB chief urges Canada to diversify, aim investments at emerging markets - The Globe and Mail
JANET MCFARLAND
The Globe and Mail
Published Monday, Jan. 26 2015

Canadian companies need to “think bigger” and aim investments at Asia and other fast-growing regions of the world to improve the country’s international business success....Canadians have to think more about “the scale of the world in which we live” and realize how “puny” the country is in terms of the global population and global markets, Mr. Wiseman said in an interview prior to his remarks. More people are entering the middle class in China and India each year than live in Canada, he noted, but many Canadian businesses still do not aspire to tap those markets.

He pointed to the example of Chinese smart-phone manufacturer Xiaomi Inc., which has become one of the world’s largest handset makers within just five years. The company designs phones, but contracts out all its manufacturing, and has aggressively taken on giants such as Samsung Electronics Co. Ltd.

“There’s no reason why a company like that couldn’t exist here in Canada, selling handsets into China and India,” Mr. Wiseman said. “But we don’t think that way. We think about our own market, and we think about defining success within a much smaller realm than the world that is around us."... all companies need to understand their competitive advantages and exploit them, and Canada’s multicultural and multilingual population is one of the country’s most under-tapped competitive advantages.
diversification  private_equity  CPPIB  CEOs  Xiaomi  Asia  emerging_markets  multilingual  multicultural  competitive_advantage  internationally_minded  beyondtheU.S.  thinking_big  Mark_Wiseman 
january 2015 by jerryking
An expert at the quick flip cooking up a whopper deal - FT.com
August 29, 2014 | FT | By Neil Munshi.

It did not take long for Mr Schwartz’s confidence to bear fruit. In 2013, when he was only 32 years old, he was put in charge of Burger King by 3G Capital of Brazil, its private equity owners. This week, only 16 days after turning 34, Mr Schwartz unveiled one of the biggest deals in fast-food history – Burger King’s $11.4bn acquisition of Tim Hortons, the Canadian coffee-and-doughnut chain...As might be expected for a young man playing in a well-established game, Mr Schwartz’s forte at Burger King has been financial engineering. A native of Long Island, he focused on finance at university before honing his number-crunching skills during stints in the mergers-and-acquisition arm of Credit Suisse First Boston and Altair Capital Management, a Connecticut hedge fund. He joined 3G as an analyst in 2005 and made partner three years later. In 2010, he led 3G’s $4bn leveraged buyout of Burger King and became its chief financial officer. Two years later, he helped 3G sell a roughly 30 per cent stake in the second-largest US burger chain for about $1.5bn. He became chief executive last year.
Burger_King  CEOs  Cornell  alumni  dealmakers  Tim_Hortons  M&A  private_equity  Daniel_Schwartz  3G_Capital  financial_engineering 
august 2014 by jerryking
The Brazilian influence behind 3G’s Tim Hortons deal - The Globe and Mail
STEPHANIE NOLEN
RIO DE JANEIRO — The Globe and Mail
Published Monday, Aug. 25 2014

Cristiane Correa, is the author of Dream Big: How the Brazilian Trio behind 3G Capital – Jorge Paulo Lemann, Marcel Telles and Beto Sicupira – acquired Anheuser-Busch, Burger King and Heinz
Stephanie_Nolen  private_equity  Brazil  Brazilian  moguls  3G_Capital  books 
august 2014 by jerryking
3G Capital, the latest private equity darling - The Globe and Mail
Aug. 25 2014 | G&M | JACQUELINE NELSON.

“It is something that’s embedded in our culture is that we are going to continuously look for areas to find efficiencies and to operate our business in a smarter way,” said Josh Kobza, Burger King’s chief financial officer, discussing costs on a recent earnings call with analysts. “That’s another area that will continue to be focused on over the next few years, in trying to be the most efficient operator in our sector. And that is really how we think about driving underlying growth in our business and those are the big focuses for our model going forward.”
3G_Capital  cost-cutting  Berkshire_Hathaway  Burger_King  efficiencies  hedge_funds  private_equity  Tim_Hortons 
august 2014 by jerryking
Ex-Onex star has big private equity plans for Altas - The Globe and Mail
TIM KILADZE
Ex-Onex star has big private equity plans for Altas Add to ...
SUBSCRIBERS ONLY
The Globe and Mail
Published Friday, Aug. 08 2014
Bay_Street  private_equity  Onex  Atlas 
august 2014 by jerryking
Toronto private equity firm hires Providence veteran - The Globe and Mail
BOYD ERMAN
Toronto private equity firm hires Providence veteran Add to ...
SUBSCRIBERS ONLY
The Globe and Mail
Published Thursday, Feb. 14 2013
Atlas  Toronto  private_equity  Boyd_Erman 
august 2014 by jerryking
White House to Begin $10 Billion Rural Investment Fund - NYTimes.com
By ALEXANDRA STEVENSON JULY 24, 2014

The White House Rural Council will announce plans on Thursday to start a $10 billion investment fund that will give pension funds and large investors the opportunity to invest in agricultural projects. Those include wastewater systems, energy projects and infrastructure development in rural America.

“We’re the eHarmony.com of infrastructure and business investment,”...The move comes as pension funds and institutional investors, faced with few investment opportunities that yield high returns in the face of low interest rates, have begun to shift large amounts of money into less traditional investments that promise bigger returns like hedge funds and private equity firms.
farmland  agriculture  agribusiness  rural  alternative_investments  private_equity  infrastructure  investing  energy  wastewater-treatment  institutional_investors  pension_funds 
july 2014 by jerryking
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