Yup Kim, the Head of Investments, Private Equity at the California Public Employees' Retirement System (CalPERS), reflected on the pension fund's private equity strategy. In July of 2022, the fund was in the midst of a multi-year turnaround strategy with the goal to "consistently deploy capital at scale in order to build a diversified, cost-efficient portfolio of high-conviction investments that outperform [its] PE policy benchmark." CalPERS had also recently increased the overall allocation to private equity from 8% to 13%, making it even more critical that Kim and the private equity team achieve their goals. Moreover, CalPERS faced a global economy seemingly headed into a recession and changes within the private equity industry as a whole. Kim needed to decide if they had the right strategy in place to achieve their long-term vision. This case also explores the U.S. public pension system and private equity co-investments.

In April 2020, Scott Einsenberg, the Head of Credit at the private equity firm Francisco Partners, is deciding whether to go ahead with extending a private lending agreement to Eventbrite, Inc. (NYSE: EB), a leading global event management and online ticketing technology platform that has been severely impacted by the cancellation of events in the face of the global coronavirus pandemic. These would be one of the first investments the recently raised Francisco Partners Credit Opportunity Fund ("FP Credit") would make. The case provide students with opportunities to explore private debt markets, the structure, strategy, and management of private credit funds, the evolution of credit and private credit in recent years, the structure and pricing of private credit agreements, the risk and return of private credit as an investment, and the analysis of a specific investing opportunity in this area.

This case follows Prakash Melwani (HBS MBA '86), CIO of Blackstone's Private Equity Group, and his teams' investment in the footwear company Crocs. Instead of a traditional secondary offering, Crocs opted for a unique deal structure by taking Blackstone's cash in a private investment in public equity (PIPE) deal. During the Blackstone investment, Melwani and his team drastically reworked Crocs' strategy. The case offers insight into the operational initiatives undertaken to revitalize the Crocs brand.

In 2009, Blackstone, the New York-based alternative asset and financial services firm, committed to invest up to $750 million into Summit Materials, a new company in the aggregates sector (i.e., construction materials, such as crushed stone, sand, gravel, cement, asphalt, and ready-mix concrete). Summit intended to execute a roll-up strategy by consolidating smaller companies acquired at relatively low multiples into an integrated company that would trade at a higher exit multiple and have a greater total enterprise value (TEV) than the sum of the acquired parts. The case study is set in 2012, when, after deploying $483 million of capital toward acquisitions, Summit was not performing as well as forecast. Blackstone's investment committee gave Blackstone then-Managing Director Julia Kahr, along with Summit CEO Tom Hill and the deal team, one month to report back with a recommendation for the investment's future. In the case, Kahr is faced with the decision to recommend to: 1) continue the roll-up strategy, funding additional Summit acquisitions; 2) pause the roll-up strategy in order to invest in operations, upgrade the management team, improve due diligence and underwriting processes, and enhance finance and IT systems while waiting for the market to pick up; or 3) exit the investment.

This case focuses on the Blackstone credit arm, GSO Capital as it evaluated a proposal for an equity investment into the distressed company, Crosstex Energy L.P., an integrated midstream energy company, that was hit hard by declining natural gas prices during the 2008 global financial crisis. At the time, Crosstex was burdened by significant bank debt in the form of a secured revolving credit line. After some initial restructuring, Crosstex was forced to stop quarterly dividend payments as part of a new covenant structure. In order to resume dividend payments, Crosstex needed to reduce its leverage ratio in accordance with its existing covenants. As part of the steps undertaken toward recovery, Crosstex management decided to find a preferred equity investor, ahead of a larger plan to raise up to $700 million in market debt. This case provides a setting for discussing a so-called "rescue financing" transaction which is a strategy within "direct lending" segment of the private debt space. It can also be used as a vehicle for discussing three core debt alternatives: (i) bank debt; (ii) public bonds, and (iii) private debt

The case examines the aftermath of the March 2015 Centerbridge Partners acquisition of Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management.

The case examines the March 2015 Centerbridge Partners investment decision regarding whether to acquire Great Wolf Resorts, a North American family-oriented indoor water parks and hotel operator, from a private equity (PE) competitor, Apollo Global Management. The case allows for discussion of strategic and financing considerations by Centerbridge, a New York-based investment firm employing a flexible approach across investment disciplines: private equity (PE); credit, distressed strategies, and special situations; and real estate. Students are presented the opportunity to perform valuation analysis and compare two possible forms of financing for the potential acquisition: 1) traditional corporate debt and bond financing and 2) commercial mortgage-backed security (CMBS) financing. Strategically, the case poses the questions: Was Centerbridge valuing Great Wolf correctly? Would CMBS be the optimal financing structure, and why had no other firm contemplated this type of financing? Would the company, in partnership with Centerbridge, be able to execute on operational improvements and growth strategy? Was the purchase price multiple of 9.4x warranted in light of the opportunity set? Would an established PE firm like Apollo ever leave enough on the table for a successor private-equity owner to generate gains without necessary multiple expansion?

Keith Sherin, CEO of GE Capital, faced a decision on which hinged billions of dollars and the fate of one of America's most storied companies. On his desk sat two secret analyses: Project Beacon, a proposal to spin off most of GE Capital to GE shareholders, and Project Hubble, a proposal to sell off GE Capital in parts. A third document sketched out the implications should GE "stay the course" on its present strategy: a continued, massive build-up of regulatory and compliance personnel to meet GE Capital's obligations as a "SIFI"-systemically important financial institution-in the wake of the 2010 Dodd-Frank Act. No path forward was clear. A divestiture, either through a spin-off or sell-off, would reduce GE's size and financial connectedness and address market unease about GE's position as the seventh-largest U.S. financial institution. It would also unlock substantial value not currently reflected in the stock. Each faced major obstacles and execution risks, however. In particular, no one knew the precise cut-off for a SIFI designation or the time required to shed the designation. If the process took too long, or generated unexpected costs, a divestiture might destroy more value than it would create. Retaining GE Capital was risky, too, of course. Which set of risks was the right one to propose that the GE board accept?

Spreadsheet supplement for case 216006. In May 2013, senior managers of GSO Capital Partners, an $80 billion credit-oriented investment firm owned by The Blackstone Group, are considering what to do next with their investment in the senior secured debt of Eastman Kodak Company. Once a great company and an icon of American business, Kodak had fallen on desperately hard economic times as its traditional business of manufacturing cameras and photographic film had all but disappeared with the rise of digital photography, causing its annual revenues to plummet from $13 billion to $6 billion, and its stock price to fall by 95%, between 2003 and 2011. Having taken various positions in Kodak's debt during the previous four years, GSO is now faced with a major decision. Under the company's recently proposed plan of reorganization, secured creditors were to be given 85% of the company's common stock, but unsecured creditors objected to the plan. Now, six months later, GSO has brought an amended plan to the table, under which it would commit to backstop a $406 million equity rights offering that would be made directly to all the unsecured creditors. This offer might bring the objecting creditors on board, but could also require an additional large capital commitment by GSO, which was already heavily invested a highly troubled business that many viewed as a "melting ice cube."

Since its IPO in 2007 and following the global financial crisis, Blackstone largely outpaced its alternative investment firm peers in assets under management, new business launches, profitability, and market capitalization. Under the leadership of Stephen A. Schwarzman, chairman and CEO, and president and COO Hamilton ("Tony") James, Blackstone's growth derived from substantial horizontal expansion into new alternative asset products and services, both organically and through acquisition. These included businesses in private equity, real estate, funds of hedge funds, alternative credit, opportunistic transactions ("Tactical Opportunities"), and secondaries investments. The firm has also innovated in sourcing capital from a variety of limited partners. Blackstone's culture of centralized investment processes and risk management coupled with entrepreneurial leadership contributed to its growth in important ways, but the firm faces important external and internal challenges as it seeks to continue its growth.

In May 2013, senior managers of GSO Capital Partners, an $80 billion credit-oriented investment firm owned by The Blackstone Group, are considering what to do next with their investment in the senior secured debt of Eastman Kodak Company. Once a great company and an icon of American business, Kodak had fallen on desperately hard economic times as its traditional business of manufacturing cameras and photographic film had all but disappeared with the rise of digital photography, causing its annual revenues to plummet from $13 billion to $6 billion, and its stock price to fall by 95%, between 2003 and 2011. Having taken various positions in Kodak's debt during the previous four years, GSO is now faced with a major decision. Under the company's recently proposed plan of reorganization, secured creditors were to be given 85% of the company's common stock, but unsecured creditors objected to the plan. Now, six months later, GSO has brought an amended plan to the table, under which it would commit to backstop a $406 million equity rights offering that would be made directly to all the unsecured creditors. This offer might bring the objecting creditors on board, but could also require an additional large capital commitment by GSO, which was already heavily invested in a highly troubled business that many viewed as a "melting ice cube."

In 2011 Britt Harris, the Chief Investment Officer for the $107.4 billion Teachers Retirement System of Texas (TRS), was considering whether to pursue strategic partnerships with a group of large private equity firms. After spending four years aggressively moving the fifth largest pension fund in the United States into alternative asset classes, Harris felt that TRS shouldn't just participate in private equity funds as a typical limited partner. Rather, under his proposal TRS would offer carefully vetted firms multi-billion dollar investments through a customized fund structure that had fewer allocation mandates than traditional fund structures, and guarantees to reinvest 50% of any investment gains back into the investment vehicle. In exchange, Harris hoped to receive a highly customized compensation structure and gain greater access to investment professionals within the participating firms.