TPG, Goldman close largest ever private equity exit

TPG and GS Capital Partners officially closed the largest private equity exit ever Friday, the $28 billion sale of wireless carrier Alltel to Verizon.

The two firms held Alltel for about a year before reaching a deal with Verizon in June. Verizon will pay about $5.9 billion of equity for the company, and assume about $22 billion of Alltel’s debt that was hoisted on the company as part of its acquisition.

GS Capital and TPG paid $27.5 billion for Alltel in June 2007, using about $21.5 billion in debt, according to The Wall Street Journal. The firms will turn a $1.3 billion profit on the exit.

The deal will make Verizon the largest wireless carrier in the nation with more than 83.7 million customers. The company used a combination of cash and debt for the purchase. Verizon borrowed $12 billion under a year-long credit facility to buy Alltel’s equity and repay some of the company’s debt.

The Alltel deal is the largest ever private equity exit, followed by Kraft’s acquisition in 2000 of Nabisco for $18.9 billion, according to data provider PitchBook Data.

An investor group led by BC Partners bought satellite operator Intelsat for $17.5 billion last February, using more than $11 billion in debt. The group bought Intelsat from private equity owners Apax Partners, Permira, Apollo Global Management and Madison Dearborn. The private equity group bought Intelsat in 2004 for about $3.1 billion and a year later merged it with PanAmSat, a rival satellite operator owned by Kohlberg Kravis Roberts.

The Blackstone Group, Hellman & Friedman, Kohlberg Kravis Roberts and TPG exited Texas Genco in 2006 for $8.3 billion to NRG Energy only a year after buying the company for $3.6 billion. The firms contributed $892 million in equity to the deal and NRG Energy used about $4 billion in cash in the purchase.