The billionaires behind Koch Industries are filling a role traditionally belonging to Wall Street banks.
Charles and David Koch want to help finance private equity deals through Koch Equity (KED), the investing arm of Koch Industries, according to a story by Bloomberg’s Devin Banerjee and Sridhar Natarajan. The brothers’ investing unit has also partnered with other investors to buy companies’ shares outright in recent years.
The Koch brothers, who run the second largest private company in America, have been flexing their lending muscles as big banks are retreating. In one recent deal, they agreed to invest $750 million of preferred equity in Apollo Global Management to help it acquire security firm ADT Corporate, a $12.3 billion deal.
In the story, KED President Matt Flamini told Bloomberg that he’s looking for other large deals like ADT, and how KED drew its inspiration from billionaire Warren Buffett.
Here is Flamini, from the Bloomberg interview:
“‘We saw that Buffett was deploying capital in ways we thought were appealing and there weren’t a lot of folks doing it,’ said Matt Flamini, KED’s president, in a rare interview. ‘As regulations have evolved, affecting the credit markets, our willingness and capability to invest capital in this manner have grown. We identified what we believed to be a market need.'”
Regulators have increased pressure on big banks’ capital requirements in the wake of financial crisis, and we’ve seen how private equity firms are eager to fill in the void. KED’s financing ain’t cheap, but it’s attractive when the credit markets dry up.
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