By Keenan Skelly
Of DOW JONES NEWSLETTERS
Though year-end valuations haven't been released yet,
private-equity firm Madison Dearborn Partners Inc. is expected to
write down 25% of the value of its investments in Madison Dearborn
Capital Partners V LP, according to people familiar with the
matter.
A spokesman for the firm declined to comment.
(This story also appears in LBO Wire, a daily email newsletter
published by Dow Jones & Co. that covers buyouts.)
The $6.5 billion fund, which has thus far invested in nine
companies, was held at cost as of Sept. 30, 2008, these people
said. At that time, only two companies had been written down:
Spanish-language broadcaster Univision Communications Inc. and
financial services provider Nuveen Investments Inc.
But market turmoil since has had an impact, with two additional
companies being written down, these people said. The names of the
other two companies couldn't be determined.
Year-end valuations will also show that the other five companies
in the fund will be valued at cost or better. These companies will
have the same valuations as they had on Sept. 30. Among them is
Asurion Corp., a provider of subscriber services to the wireless
industry. Madison Dearborn led a $4.2 billion buyout of the company
in 2007.
While investors have expressed concerns about how fast MDCP V
was invested, they say they remain confident that Madison Dearborn
bought fundamentally attractive businesses.
In the case of Univision, they take solace in its market
position and in Madison Dearborn's former ownership of the company
in the 1980s. The firm co-led a $12.3 billion buyout of the company
in early 2007, investing $625 million of equity.
With Nuveen, investors said the firm knew the company likely
would face some headwinds even before the buyout, and stood by its
purchase price. Madison Dearborn led the acquisition of Nuveen in
June 2007 for $6.4 billion, investing equity of $975 million.
The other Fund V portfolio companies are CDW Corp., LA Fitness
International LLC, Sorenson Communications Inc., Topps Co., VWR
International Inc. and Yankee Candle Co.
-By Keenan Skelly, Dow Jones Newsletters; 201-938-4314;
keenan.skelly@dowjones.com