The Ledger
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Bain Capital Executed $33B HCA Buyout Without Visiting Corporate Headquarters
“This might be the only time that I've ever bought a company without ever having actually visited the company's headquarters or real estate. All of this diligence Happened with the HCA management team. They were very much engaged in it, but in conference rooms …”
Merrill Lynch and Three Other Banks Underwrote HCA Buyout Debt
“Merrill Lynch first managed to get their own internal approvals, not just for the equity, but for the debt. Speaking for about a quarter of the debt deals, we decided we needed three more banks to be able to fill out the whole thing. And so then we went to the…”
Gordon: Early LBOs Succeeded Because Small Equity Accounts Magnified Growth
“Those were in the early days of LBO investing when you could Make those investments with very small equity accounts, and if you get good growth on a very small equity account, you can have a very successful investment, and so that turned out to be a very succe…”
2006 HCA Buyout Had a $33 Billion Enterprise Value
“Nobody would have really believed, and frankly, we weren't even sure in that 2005, six timeframe, could you really do a deal as big as HCA, which was a thirty-three billion dollar enterprise value transaction.”
2006 HCA Deal Was the Largest Buyout Ever at the Time
“It was the largest transaction ever at the time, and by far the largest that had happened since the late eighties during that first wave of big LBOs.”
Gordon: HCA De-Levered via IPO as Debt Matured in 2011-2012
“We did go public, so that created a de-levering event. The debt markets, you know, improve a lot between 2008 or nine, which is when we would have been having this conversation, and 2011 or 12, which is really when our debt started to mature.”
Gordon: Final HCA buyout proposal reached consortium's absolute price limit
“When we finally came back with our final proposal, it was literally our last dollar, probably even a little bit beyond what we thought our last dollar was going to be.”
Bain, KKR, Merrill Lynch, and Frist Family Backed HCA Equity
“It was Bain Capital, KKR, Merrill Lynch, and the Frist family speaking for the equity, but then we also needed to figure out how do we fill out north of twenty billion dollars worth of debt that was going to need to be underwritten for this transaction.”
Gordon: Tommy Frist Jr. Initiated HCA Buyout Outreach in Late 2005
“And actually, Tommy called us. It was the original genesis of this for us back in, it was probably late, 2005, maybe early 2006, with what almost started off as, hey, I've got a crazy idea, because the transaction was so large that no one ever really would hav…”
Gordon: HCA Entered 2008 Financial Crisis Protected by Hedged Interest Rates
“Day one, that didn't affect our balance sheets. Our balance sheet was all underwritten and put in place, and we'd, you know, swapped out our interest rates, and so we had what we had from a balance sheet perspective.”
Bain Capital exited HCA at around $75 per share after 2011 $30 IPO
“We went public at 30 dollars a share, which felt like a good valuation to us. And, but look, I don't think the Frist's have sold many of their shares over the years. And we ended up, I think, selling our last shares around 75 dollars a share or so.”
Gordon: HCA's IPO Raised Mainly Secondary Capital, Not Debt Paydown
“The IPO is actually mainly Secondary capital, because we had done a good job of growing into our capital structure and already going down the path of spreading it over time.”
Campbell: Bain Capital waited for emitter acceptance before entering carbon markets
“And again, back to our investment thesis, that's part of what we've been waiting for is seeing a point where even those entities being regulated are going, you know what, it's just the right thing for us to do.”
Campbell: Manager selection relies on the same core process as stock picking
“When I moved over from stock picking to allocating, it ended up being quite a bit more similar than I thought, in the sense of, at the end of the day, you're interviewing teams about what they do in their day job, and then conducting research to try and build …”
Campbell: Bain Capital Internal Fund Focused on Uncorrelated Non-Equity Strategies
“We were all heavily, heavily exposed to equity risk, so it was no surprise that a lot of what we were craving was investments that are diversifying from equity risk, so strategies that are more in the absolute return and uncorrelated buckets, so either explici…”
Connaughton: Bain Capital PE funds total $23B-$24B including internal capital
“Now, mind you, today, between all of our global, at least private equity funds, we're about 23, twenty-four billion, including our own capital, so, and today, we're about probably the 10th largest fund, so it was different in scale, but the concept was the sam…”
Connaughton: Doubling profits in overlooked companies is private equity's core value driver
“If you can find a company that you can double profits in, particularly if it's not perceived as one by others that, that is capable of that, that's gold. That's the gold of our industry is having a unique insight and then putting muscle behind making it happen…”
Connaughton: Bain bought Baxter carve-out at 3x versus modern 15-20x multiples
“And so we negotiated a carve out three times even though at that time. Which obviously today in the diagnostic world, things trade at 15 to 20 times, so that's a, in of itself, a big opportunity for us.”
Connaughton: Bain Turned $7M Baker Hughes Carve-Out into $40M–$50M Profit
“The sellers in this case had two hundred million dollars of preferred on a business that was losing fifty million dollars, and they asked us to put up some money at least to show that we had some risk capital, so we put up seven million dollars. For a business…”
Connaughton: Bain Capital avoids infrastructure and energy, entered real estate via Harvard
“We're not in infrastructure. We're not in energy investing. There's a lot that we're not in, and frankly, we weren't even in real estate, even though we tried for all 30 of my years up until a couple years ago when we actually took over Harvard's real estate b…”
Connaughton: Bain Capital requires junior staff to state bull and bear views
“When we're talking in an investment committee about what do we think about this company or this investment thesis, we're asking the most junior people who are closest to the work to articulate their view. We literally go around the room And have every person o…”
NZ Super Fund uses Canyon and Bain for distressed credit
“Other things like stress credit, we'll use Canyon or Bain because we're not going to be able to have that expertise in house”
Bain Capital Formed Partner Capital Group Around 2008 Financial Crisis
“And after doing that for about a decade, the firm was looking to start a new group in order to find investment opportunities for the personal capital of the partners at the firm. And I was invited to throw my hat in the ring for that opportunity. This was righ…”
Campbell: Healthcare royalty investors grew from single digits to dozens
“So over time that's included things like investing in healthcare royalties, which when we first started looking at it, there were a single digit number of investors and partners in that market. These days there's, you know, many dozens”