Back to top

Analyst Blog

Last week, The Blackstone Group LP (BX - Analyst Report) announced an agreement to divest its entire stake in Alliant Insurance Services, Inc – a specialty insurance brokerage firm – to Kohlberg Kravis Roberts & Co. (KKR - Snapshot Report) – a private equity firm. In 2007, Blackstone acquired Alliant Insurance from New York-based Lindsay Goldberg & Co. LLC for an estimated $1.1 billion.

Either of the parties has not disclosed the terms of the deal, which is expected to culminate by the end of this year. Further, upon acquisition, it is assumed that the management team and employees of Alliant, who own about 45% of the company, will rollover a significant portion of their investment to Kohlberg Kravis. In addition, Alliant is seeking a $680 million term loan to finance the purchase, as per a Bloomberg report.

This year has witnessed a very strong trend of private asset companies selling assets to each other in deals popularly known as the secondary buyouts. However, Kohlberg Kravis’ buyout of Alliant from Blackstone marks a somewhat rare buyout in nature.

According to Dealogic, secondary deals worth nearly $28 billion have been announced so far in this year in the U.S itself. The rise in these types of deals is attributed to sellers willing to exit the deals made in the boom era and buyers looking to put available cash to work. In addition, expectations of higher capital gains taxes in the upcoming year are fueling the desire to sell.

Earlier this week, Goldman Sachs Capital Partners VI, a private equity fund of The Goldman Sachs Group Inc. (GS - Analyst Report), agreed to divest USI Insurance Services LLC to Canadian private equity firm - Onex Corporation (OCX.TO) for $2.3 billion. The deal is anticipated to be completed by the end of this year.

Further, in August this year, The Carlyle Group LP (CG - Snapshot Report) announced a $3.3 billion deal to acquire controlling stake in Getty Images Inc. from Hellman & Friedman LLC for $2.4 billion.

It is a known fact that private equity firms do not hold on to companies for long. These firms generate profit from the investment within a certain period and return money to investors by liquidating the investment. Blackstone’s divestment of its stake in Alliant reflects this very strategy. .

Currently, Blackstone retains a Zacks #2 Rank, which translates into short-term Buy rating. However, considering fundamentals, we maintain a long-tern Neutral recommendation on the shares.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%