Private equity is in the middle of America's penny problem

• Her verdict was that pennies not only cost more to produce than they're worth (literally), but that they're more likely to be found in couch cushions than in active circulation — causing the U.S. Mint to accelerate production of something no one actually wants.
• Econ 102: Excess supply because of low demand. And inertia.

Zoom in: Private equity controls both sides of ... well, the coin.

Artazn: This is the maker of zinc "blanks" that the U.S. Mint stamps into pennies, and has been for over four decades. It has been owned by One Rock Capital Partners since 2019, via a carveout of the "process solutions business" of Newell Brands. One Rock renamed Artazn's parent company as Jadex.

• As Weaver notes, Artazn appears to fund the only D.C. lobbyist devoted to maintaining new penny production.

Coinstar: This is the kiosk company that's become a linchpin to America's currency logistics. One source tells me that Coinstar last year recycled 14.6 billion pennies — around 4x what the U.S. Mint produced — with those coins then packaged and shipped to banks.

• It used to be part of a company called Outerwall, which also owned kiosk businesses RedBox and EcoATM. Apollo Global Management took Outerwall private in 2016 for $1.6 billion, and then split the company up.

• Coinstar was the deal's crown jewel, and is still owned by Apollo. There's been some talk of an IPO, but it's more a cashflow business than a growth business, so selling to another private equity firm is the more likely exit strategy. Either way, Coinstar is indispensable to the U.S. Mint, at least so long as pennies are being used.

The bottom line: Private equity usually operates in millions or billions of dollars, but it also matters to much smaller denominations.