Private Equity: Neiman Marcus deal may be more style than substance; Some fear there's little room for profit for TPG, Warburg Pincus clients.(News)

Pensions & Investments, May, 2005

Byline: Arleen Jacobius When Texas Pacific Group and Warburg Pincus LLC came up with the winning bid of $100 a share to buy Neiman Marcus Group Inc., Dallas, industry insiders and investors wondered privately whether the glitzy deal would make headlines but not much profit. Neiman shares are trading below that, with the stock closing at $94.50 on May 12.

Now, industry professionals and investors are concerned that the deal leaves little room to generate returns, let alone upscale private equity returns. They say the only apparent ways to reap profit is by taking the firm public, which places a huge bet on the vibrancy of the initial public offering market; refinancing the company, using its real estate as leverage; or selling the real estate. "In order to...

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