Green is more than the color of money

Imagine if Hagar the Horrible (ok, fine – reality then) Leif Ericsson invaded a coastal town in the tenth century, and instead of razing it to the ground, he said, "Woops – sorry there wench, our muddy boots have stained your dirt floor – let us clean it up for you." before heading off to take his booty.

That's what I thought of when I heard about the largest private equity transaction ever, the $45 billion LBO of TXU by KKR and TPG.

The thing is — the idea is that private companies have a better chance for faster growth when they're not beholden to public shareholders.  In this case, by taking the company private, the business barons can actually make the company more environmentally friendly by not building coal-fired plants.  A good deal for the company, for the state of Texas and for the the greens.  Advocates say that a private company with infused capital can better invest in green-clean alternative fuels, and ironically, costs will be reduced and energy can be more efficiently shepherded to the good folks of Texas during the blazing summer.

But is this a good deal?  The buyout firms are betting on changing political and social landscapes.

I'm not so sure. I don't know the economics, but usually my past experience in leveraged finance have indicated that buyouts are often followed by cost-cutting and workforce reduction.  Ok. So the immediate impact may be bad for TXU workers and and their family.

What about this green-revolution?

With the increased cost in R&D and alternative energy investments, that means the consumer will bear the brunt of these measures.  In the near term, Texas residents will feel the heat on their pocketbooks whenever they want to cool down.  Will the price be worth it?

For future generations, possibly.  But in the end, this gamble is less about being socially conscious and more about a smart play to get the public behind what could be a very profitable return for the Masters of the Universe.

It's a watershed moment – so I'll be keeping an eye out on the progress.