2012年2月28日星期二
Private Equity, Finance Lawyer Melinda Rishkofski Joins Baker Botts L.L.P. as Partner in Moscow
MOSCOW, February 28, 2012 /PRNewswire/ –
Melinda Rishkofski, who has represented private equity fund managers, international financial institutions and portfolio companies in Russia, Eastern Europe, the UK and the US, has joined Baker Botts L.L.P. as a partner in the firm´s Moscow office.
(Photo: http://photos.prnewswire.com/prnh/20120228/DA58239)
(Logo: http://photos.prnewswire.com/prnh/20100503/BAKERBOTTSLOGO)
Rishkofski´s experience includes working with Russian and Eastern European privatization policies, policy advice and drafting laws for the new Russian economy, development of Russian corporate securities and regulatory structures. She also worked on regulatory and legislative matters with representatives for the U.S. and Russian governments.
“Melinda adds depth to our international transactional resources, ” said Baker Botts Managing Partner Walt Smith. “Her focus on the Russian market and her extensive private equity experience are significant additions to our client offerings.”
Prior to joining Baker Botts, Rishkofski was general counsel for Russian-based Baring Vostok Capital Partners. As principal advisor, negotiator and transaction counsel, she provided legal support to financial institutions, multilateral development banks, private equity fund managers and Russian companies with respect to debt and equity financing transactions, mergers and acquisitions, restructurings, employee incentive programs, dispute resolution and general corporate matters.
In this role, Rishkofski has worked with and served more than 35 investee companies and the legal needs of private equity investment funds with more than $2 billion in capital and assets. She has also worked extensively with the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD) and the Overseas Private Investment Corporation (OPIC) on secured credit and debt and equity financing transactions.
“Melinda´s extensive knowledge of the private equity and funds sector in Russia and the CIS, a market sector where we expect to see significant increased activity in 2012, will provide our clients working in or entering into this sector an expertise not currently available from legal consultants in the region, ” said Steven Wardlaw, Partner in Charge of Baker Botts´ Moscow office.
Rishkofski obtained a BS from the Pennsylvania State University in the U.S., a J.D. from the Dickinson School of Law (now part of the Pennsylvania State University), and an LL.M in International Business and Finance from the University of London, Kings College in the UK.
About Baker Botts L.L.P.
Baker Botts is an international law firm with over 725 lawyers and a network of 13 offices around the globe. Based on our experience and knowledge of our clients´ industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Throughout our 172-year history, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit http://www.bakerbotts.com/.
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2012年2月21日星期二
Experts split over private equity
Pension funds allocating their assets to private equity have reaped little or no rewards on average, according to a Yale study.
Martijn Cremers, associate professor of finance at the Yale School of Management, concluded in a recent paper that returns on private equity over the last 10 years were no better than the stock market. Investments in public equity were on average unlikely to yield more profit than investments in stocks or bonds, because of their high management fees. However, some experts disagreed with the findings, saying that private equity is still a good option for asset allocation.
According to the paper, private equity funds had a spectacular run in the 1990s where it returned an average net return of 21.5 percent to its investors. Impressed by this performance, institutional investors increased their investment in private equity, bringing the total funds in private equity from $200 million to $2 billion in the last 10 years. But the Midas touch of private equity disappeared at the turn of the century and the returns fell to an average of 4.5 percent in the last 10 years, the paper said.
“If I had to summarize it in a nutshell, pension funds got similar returns to what they would have gotten had they invested in passive equities,” Cremers said.
Since private equity is more volatile than stocks or bonds, a portfolio with a large asset allocation in it would have a high amount of risk. For example, the paper said, the net returns from private equity fell from a profit of 36 percent in 2000 to a loss of 21 percent the next year.
Even as the profits in private equity took a hit in the aftermath of the dot-com bubble, private equity fees continued to climb. Cremers explained that in addition to taking a cut from the share of returns, known as the performance fee, private equity managers also charge an overall management fee on the invested capital. He said the average management fee has increased from 2.4 percent in 2000 to 4.2 percent in 2010. Private equity fund managers have taken 70 percent of the gross profits made in the last decade as fees, Cremers said.
Steven Kaplan, professor of entrepreneurship and finance at the University of Chicago, disagreed with the findings. According to his research, every dollar a pension fund put into private equity earned 20 percent more than it would have in Standard & Poor’s 500 index. Accounting for management and performance fees, he said, private equity funds have outperformed public markets by an average of three percentage points over the past 20 years.
Kaplan pinned the drastic difference in results on unreliable data.
“Cremers does not have particularly good performance data [but] we do,” Kaplan said.
In the past several studies have relied on commercial data sets provided by Thomson Venture Economics, which is problematic for analysis, Kaplan said.
Ayako Yasuda, associate professor of management at the University of California, Davis, shed light on the problems of gathering definitive data. Unlike pension funds, private equity funds are not legally required to disclose their activities, so all data available is based on voluntary disclosure, which is subject to bias.
“What’s missing is not just random noise,” Yasuda said. “Even a very small percentage of the missing data could mean that it is being systematically obstructed, which could create hidden bias.”
The difficulty in collecting data about private equity makes the field’s performance uncertain, if not controversial, Kaplan said.
Yasuda contended that the 4.5 percent average return, which Cremers calculated, is no worse than the turbulent performance of the stock markets in the last decade.
“It’s a period in which the benchmark also performed poorly,” Yasuda said.
She agreed private equity funds tend to have higher fees than other investment asset classes, but said the performance fees are typically structured to avoid consuming all the net returns for investors in low-performance funds.
In an underperforming market, private equity fees may seem exorbitant, but they are within reason during economic booms, such as the 1990s, Deputy SOM Dean Andrew Metrick said. Compared to a hedge fund, private equity charges a lot less, he said.
Metrick said that private equity funds also allow its institutional investors to invest in buyouts and ventures as partners, which means that pension funds may bypass a large portion of the overall fee. Such transactions are not included in Cremers’ data because they are not available to the researchers, Metrick said.
The key for pension fund managers is to find the right private equity investments, which requires enormous skill and long-term dedication, Metrick said.
For the unsophisticated investor, making investments in private equity funds is “like throwing darts at a newspaper,” he said.
The paper was co-authored by Aleksandar Andonov and Rob Bauer of Maastricht University in the Netherlands.
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Martijn Cremers, associate professor of finance at the Yale School of Management, concluded in a recent paper that returns on private equity over the last 10 years were no better than the stock market. Investments in public equity were on average unlikely to yield more profit than investments in stocks or bonds, because of their high management fees. However, some experts disagreed with the findings, saying that private equity is still a good option for asset allocation.
According to the paper, private equity funds had a spectacular run in the 1990s where it returned an average net return of 21.5 percent to its investors. Impressed by this performance, institutional investors increased their investment in private equity, bringing the total funds in private equity from $200 million to $2 billion in the last 10 years. But the Midas touch of private equity disappeared at the turn of the century and the returns fell to an average of 4.5 percent in the last 10 years, the paper said.
“If I had to summarize it in a nutshell, pension funds got similar returns to what they would have gotten had they invested in passive equities,” Cremers said.
Since private equity is more volatile than stocks or bonds, a portfolio with a large asset allocation in it would have a high amount of risk. For example, the paper said, the net returns from private equity fell from a profit of 36 percent in 2000 to a loss of 21 percent the next year.
Even as the profits in private equity took a hit in the aftermath of the dot-com bubble, private equity fees continued to climb. Cremers explained that in addition to taking a cut from the share of returns, known as the performance fee, private equity managers also charge an overall management fee on the invested capital. He said the average management fee has increased from 2.4 percent in 2000 to 4.2 percent in 2010. Private equity fund managers have taken 70 percent of the gross profits made in the last decade as fees, Cremers said.
Steven Kaplan, professor of entrepreneurship and finance at the University of Chicago, disagreed with the findings. According to his research, every dollar a pension fund put into private equity earned 20 percent more than it would have in Standard & Poor’s 500 index. Accounting for management and performance fees, he said, private equity funds have outperformed public markets by an average of three percentage points over the past 20 years.
Kaplan pinned the drastic difference in results on unreliable data.
“Cremers does not have particularly good performance data [but] we do,” Kaplan said.
In the past several studies have relied on commercial data sets provided by Thomson Venture Economics, which is problematic for analysis, Kaplan said.
Ayako Yasuda, associate professor of management at the University of California, Davis, shed light on the problems of gathering definitive data. Unlike pension funds, private equity funds are not legally required to disclose their activities, so all data available is based on voluntary disclosure, which is subject to bias.
“What’s missing is not just random noise,” Yasuda said. “Even a very small percentage of the missing data could mean that it is being systematically obstructed, which could create hidden bias.”
The difficulty in collecting data about private equity makes the field’s performance uncertain, if not controversial, Kaplan said.
Yasuda contended that the 4.5 percent average return, which Cremers calculated, is no worse than the turbulent performance of the stock markets in the last decade.
“It’s a period in which the benchmark also performed poorly,” Yasuda said.
She agreed private equity funds tend to have higher fees than other investment asset classes, but said the performance fees are typically structured to avoid consuming all the net returns for investors in low-performance funds.
In an underperforming market, private equity fees may seem exorbitant, but they are within reason during economic booms, such as the 1990s, Deputy SOM Dean Andrew Metrick said. Compared to a hedge fund, private equity charges a lot less, he said.
Metrick said that private equity funds also allow its institutional investors to invest in buyouts and ventures as partners, which means that pension funds may bypass a large portion of the overall fee. Such transactions are not included in Cremers’ data because they are not available to the researchers, Metrick said.
The key for pension fund managers is to find the right private equity investments, which requires enormous skill and long-term dedication, Metrick said.
For the unsophisticated investor, making investments in private equity funds is “like throwing darts at a newspaper,” he said.
The paper was co-authored by Aleksandar Andonov and Rob Bauer of Maastricht University in the Netherlands.
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2012年2月20日星期一
Tags
HONG KONG, February 20 (Reuters) – News and developments in Asia private equity from Reuters News for Lunar New Year and the week ending Feb. 17.
FEBRUARY 17
CARLYLE GROUP has begun the process of selling its over $300 million stake in Taiwan’s Ta Chong Bank Ltd, sources said, as it joins other private equity firms in looking to exit the island’s low-margin financial sector.
MMI INTERNATIONAL, a technology company owned by private equity fund KKR & Co LP, will price its $300 million five-year bond at 8 percent in New York, the bottom end of price guidance, after receiving strong support from U.S. investors, according to a source familiar with the matter.
AUSTRALIAN SURFWEAR company Billabong International rebuffed a $820 million private equity bid from TPG Capital , announcing plans to sell a stake in its Nixon watch brand and close up to 150 stores, sending its shares up by more than 50 percent.
CHINA HAS launched a 50 billion yuan ($7.93 billion) fund in Shanghai to aid overseas acquisitions by Chinese companies as part of efforts to promote international use of the yuan and build the commercial hub into a global financial center.
HANA FINANCIAL Group said that it had reached a deal with the labour union of Korea Exchange Bank (KEB) which had threatened to strike over possible job losses following Hana’s acquisition of KEB.
FEBRUARY 16
WINS INVESTMENT, the fund arm of Chinese property developer Gemdale, says it plans to double funds under management to take advantage of a government clampdown on property financing that could see smaller developers starved of funds.
L CAPITAL Asia, the private equity arm of the world’s biggest luxury goods group LVMH Moët Hennessy Louis Vuitton SA , could begin raising a new fund of more than $1 billion this year, as competition from Western brands creates opportunities to invest in Chinese retailers, its top executive said.
CANADA PENSION Plan Investment Board, which manages the country’s second largest pension fund, has hired former Goldman Sachs banker Mark Machin to head its Asia-Pacific business, according to a source close to the matter.
FEBRUARY 15
L CAPITAL has bought the 8 percent stake held by Wolfensohn Capital Partners in unlisted Indian ethnic wear chain Fabindia, two sources with direct knowledge of the matter said.
SOUTH KOREA’S National Pension Service (NPS), the world’s No.4 largest pension fund, plans to invest around $300 million in a real estate opportunity fund led by Blackstone Group , an NPS official said, amid the fund’s efforts to step up its investments in real estate assets.
U.S PRIVATE equity fund Norwest Venture Partners has invested $15 million in Manthan Systems, an unlisted Indian software products company, for a minority stake, the Indian company said on Wednesday.
WANT WANT China Holdings, the buyer of private equity fund MBK Partners’ Taiwan cable TV unit, will have to give more information to the island’s broadcast regulator concerning its media operations, the latest delay in the $2.4 billion deal.
JAPANESE PRIVATE equity secondary fund Ant Capital Partners said it closed its third Japanese secondaries fund at the end of December 2011 raising $140 million, attracting commitments from 15 Japanese institutional investors.
SOUTH KOREA’S SK Group is in talks to take over U.S. oil and gas company Chaparral Energy, a company 36 percent owned by CCMP, according to a source familiar with the matter.
FEBRUARY 14
TALKS BETWEEN Yahoo Inc and China’s Alibaba Group over the U.S. Internet giant’s Asian assets have hit an impasse, throwing their plans for a $17 billion tax-free asset swap into question, according to sources briefed on the situation.
CARLYLE SAID it would sell Talaris, a provider of cash-counting equipment, to Japan’s Glory Ltd for 650 million pounds ($1 billion), twice the value of its original investment.
INDONESIA WILL not implement a planned regulation to limit ownership in domestic banks, since it does not want to scare away potential foreign investors from the sale of state-owned Bank Mutiara, the state deposit agency (LPS) said.
FIDELITY GROWTH Partners, the private equity arm of Fidelity Worldwide Investment, along with existing investors have invested 2 billion rupees ($40.6 million) in Aptuit Laurus Pvt Ltd, an unlisted Indian pharma company.
EXCLUSIVE-AN Abu Dhabi sovereign wealth fund is exploring the sale of its $1.3 billion stake in Malaysian lender RHB Capital Bhd six months after buying the shares, sources familiar with the matter told Reuters, and has engaged in early talks with Japan’s Sumitomo Mitsui Banking Corp (SMBC).
FEBRUARY 13
U.S.-BASED private asset management firm Rohatyn Group said on Monday that it has agreed to acquire 60 percent of CapAsia, the private equity arm of Malaysia’s CIMB Group Holdings Bhd .
FEBRUARY 10
INDIA’S RELIANCE Communications reported its 10th straight quarter of declining profit as interest costs soared, with investors betting on a sale of the No. 2 mobile operator’s tower business to pare its heavy debt load.http://tourism9.com/ http://vkins.com/
FEBRUARY 17
CARLYLE GROUP has begun the process of selling its over $300 million stake in Taiwan’s Ta Chong Bank Ltd, sources said, as it joins other private equity firms in looking to exit the island’s low-margin financial sector.
MMI INTERNATIONAL, a technology company owned by private equity fund KKR & Co LP, will price its $300 million five-year bond at 8 percent in New York, the bottom end of price guidance, after receiving strong support from U.S. investors, according to a source familiar with the matter.
AUSTRALIAN SURFWEAR company Billabong International rebuffed a $820 million private equity bid from TPG Capital , announcing plans to sell a stake in its Nixon watch brand and close up to 150 stores, sending its shares up by more than 50 percent.
CHINA HAS launched a 50 billion yuan ($7.93 billion) fund in Shanghai to aid overseas acquisitions by Chinese companies as part of efforts to promote international use of the yuan and build the commercial hub into a global financial center.
HANA FINANCIAL Group said that it had reached a deal with the labour union of Korea Exchange Bank (KEB) which had threatened to strike over possible job losses following Hana’s acquisition of KEB.
FEBRUARY 16
WINS INVESTMENT, the fund arm of Chinese property developer Gemdale, says it plans to double funds under management to take advantage of a government clampdown on property financing that could see smaller developers starved of funds.
L CAPITAL Asia, the private equity arm of the world’s biggest luxury goods group LVMH Moët Hennessy Louis Vuitton SA , could begin raising a new fund of more than $1 billion this year, as competition from Western brands creates opportunities to invest in Chinese retailers, its top executive said.
CANADA PENSION Plan Investment Board, which manages the country’s second largest pension fund, has hired former Goldman Sachs banker Mark Machin to head its Asia-Pacific business, according to a source close to the matter.
FEBRUARY 15
L CAPITAL has bought the 8 percent stake held by Wolfensohn Capital Partners in unlisted Indian ethnic wear chain Fabindia, two sources with direct knowledge of the matter said.
SOUTH KOREA’S National Pension Service (NPS), the world’s No.4 largest pension fund, plans to invest around $300 million in a real estate opportunity fund led by Blackstone Group , an NPS official said, amid the fund’s efforts to step up its investments in real estate assets.
U.S PRIVATE equity fund Norwest Venture Partners has invested $15 million in Manthan Systems, an unlisted Indian software products company, for a minority stake, the Indian company said on Wednesday.
WANT WANT China Holdings, the buyer of private equity fund MBK Partners’ Taiwan cable TV unit, will have to give more information to the island’s broadcast regulator concerning its media operations, the latest delay in the $2.4 billion deal.
JAPANESE PRIVATE equity secondary fund Ant Capital Partners said it closed its third Japanese secondaries fund at the end of December 2011 raising $140 million, attracting commitments from 15 Japanese institutional investors.
SOUTH KOREA’S SK Group is in talks to take over U.S. oil and gas company Chaparral Energy, a company 36 percent owned by CCMP, according to a source familiar with the matter.
FEBRUARY 14
TALKS BETWEEN Yahoo Inc and China’s Alibaba Group over the U.S. Internet giant’s Asian assets have hit an impasse, throwing their plans for a $17 billion tax-free asset swap into question, according to sources briefed on the situation.
CARLYLE SAID it would sell Talaris, a provider of cash-counting equipment, to Japan’s Glory Ltd for 650 million pounds ($1 billion), twice the value of its original investment.
INDONESIA WILL not implement a planned regulation to limit ownership in domestic banks, since it does not want to scare away potential foreign investors from the sale of state-owned Bank Mutiara, the state deposit agency (LPS) said.
FIDELITY GROWTH Partners, the private equity arm of Fidelity Worldwide Investment, along with existing investors have invested 2 billion rupees ($40.6 million) in Aptuit Laurus Pvt Ltd, an unlisted Indian pharma company.
EXCLUSIVE-AN Abu Dhabi sovereign wealth fund is exploring the sale of its $1.3 billion stake in Malaysian lender RHB Capital Bhd six months after buying the shares, sources familiar with the matter told Reuters, and has engaged in early talks with Japan’s Sumitomo Mitsui Banking Corp (SMBC).
FEBRUARY 13
U.S.-BASED private asset management firm Rohatyn Group said on Monday that it has agreed to acquire 60 percent of CapAsia, the private equity arm of Malaysia’s CIMB Group Holdings Bhd .
FEBRUARY 10
INDIA’S RELIANCE Communications reported its 10th straight quarter of declining profit as interest costs soared, with investors betting on a sale of the No. 2 mobile operator’s tower business to pare its heavy debt load.http://tourism9.com/ http://vkins.com/
2012年2月19日星期日
Blackstone to make major investments in Israel
The Blackstone Group LP (NYSE: BX) will reportedly invest hundreds of millions of dollars in Israel, through a joint venture that it will set up with Markstone Capital Partners Group LLC. Markstone, headed by managing directors Ron Lubash and Amir Kess, will apparently become Blackstone’s exclusive representative in Israel. Markstone will seek Israeli companies in which the two private equity funds will invest.
The deal will be closed in a few weeks. Markstone has declined to respond to the report.
Blackstone, with $166.2 billion in assets under management, is the world’s largest private equity fund, larger than Apax Partners, which has invested billions of shekels in Israel, including the acquisition of the controlling interests in Tnuva Food Industries Ltd. and Psagot Investment House Ltd.
New York-based Blackstone was founded by CEO Stephen Schwarzman in 1985. It has a market cap of $7.66 billion, and posted a net profit of $1.4 billion in 2011.
Markstone has had a mixed track record with its investments in Israel. It founded Prisma Investment House, which went bankrupt. Its investments in Elran (DD) Real Estate Ltd. (TASE:ELRE) and Tomcar Ltd., which developed a commercial off-road utility vehicle, both failed. Successful exits on investments include Golden Pages Ltd., improved seed varieties developer Zeraim Gedera Ltd., and Netafim Ltd.
Markstone raised $800 million in 2003-04 from institutional investors, including California Public Employees’ Retirement System (CalPERS) and New York State Pension Fund in the US, and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Israel. Markstone chairman Elliot Broidy resigned after a plea bargain for bribery in the US. In September 2010, Markstone reached a settlement with then-New York State Attorney General Andrew Cuomo, in which the Israeli private equity fund paid $18 million.
Published by Globes [online], Israel business news – www.globes-online.com – on February 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012http://tourism9.cm/ http://vkins.com/
The deal will be closed in a few weeks. Markstone has declined to respond to the report.
Blackstone, with $166.2 billion in assets under management, is the world’s largest private equity fund, larger than Apax Partners, which has invested billions of shekels in Israel, including the acquisition of the controlling interests in Tnuva Food Industries Ltd. and Psagot Investment House Ltd.
New York-based Blackstone was founded by CEO Stephen Schwarzman in 1985. It has a market cap of $7.66 billion, and posted a net profit of $1.4 billion in 2011.
Markstone has had a mixed track record with its investments in Israel. It founded Prisma Investment House, which went bankrupt. Its investments in Elran (DD) Real Estate Ltd. (TASE:ELRE) and Tomcar Ltd., which developed a commercial off-road utility vehicle, both failed. Successful exits on investments include Golden Pages Ltd., improved seed varieties developer Zeraim Gedera Ltd., and Netafim Ltd.
Markstone raised $800 million in 2003-04 from institutional investors, including California Public Employees’ Retirement System (CalPERS) and New York State Pension Fund in the US, and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Menorah Mivtachim Holdings Ltd. (TASE: MORA) in Israel. Markstone chairman Elliot Broidy resigned after a plea bargain for bribery in the US. In September 2010, Markstone reached a settlement with then-New York State Attorney General Andrew Cuomo, in which the Israeli private equity fund paid $18 million.
Published by Globes [online], Israel business news – www.globes-online.com – on February 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012http://tourism9.cm/ http://vkins.com/
2012年2月17日星期五
UK Private Equity Sector Will Be Unhappy With Pre-Budget Report
08 December 2006
Private equity funds will have good reason to feel disappointed following the Chancellor’s failure to redress the unfair retrospective legislation which will attack their fund returns, claim business and financial advisers Grant Thornton.As a result of restrictions on the deductibility of finance costs in investee companies from April 2007, funds will see a significant increase in tax costs which in many cases could not have been predicted when their investments were made.
Stephen Quest, head of tax transactions at Grant Thornton, comments: “The taxation of private equity funds has been in a state of flux for the last two years. The market needs stability to enable deals to be completed with a degree of certainty. Clarity in this area would have provided a boost to the private equity sector which has brought so much to the British
economy over the last year.”
In light of the unchanged conditions, says Grant Thornton, the major issues facing the private equity market remain the deductibility of interest, withholding tax, and the tax treatment of management teams.
For portfolio companies, the most draconian measure to impact funds is the retrospective application of the transfer pricing regulations to the financing of investee companies. From April 2007, amounts payable to private equity
funds in respect of finance deemed not to be available on an arm’s length basis may not qualify for a deduction for corporation tax relief. The effect on returns is significant and unfair; the new rules can increase the cost of finance by 3-5% for investee companies, despite the fact that at the time finance was put in place no such legislation existed.
Quest says: “We had hoped to see a Pre-Budget in which the Chancellor put this right. His failure to do so will result in private equity funds taking a hit in April. It also sets a dangerous precedent and undermines the basis upon which funds will make investment decisions in the future.”
As regards withholding tax, Grant Thornton says that significant uncertainty exists as to whether withholding tax needs to
operate on interest paid on many international fund structures. This needs to be clarified as soon as possible.
For management teams, the treatment of ratchets remains worrying. AlthoughiIn August 2006, HMRC provided welcome confirmation that the British Venture Capital Association (BVCA) safe harbour would apply to ‘ratchets’
where management teams acquire sweet equity, the Pre-Budget Report has failed to address the thorny issue of post-acquisition changes to ratchets which cause so much difficulty when private equity investments are re-financed.
Grant Thornton says that tax law remains unclear with regard to earn-outs. Quest remarks: “The tax law in this area is in a considerable mess with uncertainty as to whether future receipts are taxed on a current or deferred basis. There is urgent need for a reform in this area.”
Stephen Quest concludes, “Private equity has become a mainstream and permanent factor in capital markets and deserves a fiscal regime that is consistently applied and delivers certainty to the funds in assessing investment opportunities in the UK. It remains the case that there is significant uncertainty and this is disrupting the flow of funds into the UK market. We hope that there will be substantive changes in the next Budget and that the introduction of retrospective attack on pre-2005 investments is dropped.”
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2012年2月10日星期五
Pension Funds Get Queasy over Private Equity
By Cristina Alesci and Devin Banerjee
Mitt Romney’s campaign for the Republican Presidential nomination may be creating funding headaches for his former colleagues in the private equity industry. Romney’s opponents have characterized Bain Capital—the firm he helped found in 1984 and left in 1999—and other buyout managers as corporate looters who enrich themselves at the expense of ordinary workers. The issue is likely to remain in the news should Romney win his party’s nomination and face President Obama in the general election.
With public scrutiny focused on private equity funds, pension funds are more reluctant to invest and may ask for more details on job creation and push for lower fees, according to officials and trustees at public pensions. “Pension funds have boards. They don’t want to be giving money to an industry that has a taint,” says Tony James, president of Blackstone Group, the world’s largest private equity firm. “Similarly, boards of directors don’t want to sell their company to organizations they don’t view as respectable. So it could be very damaging for the industry.”
The debate comes as the industry is competing for a shrinking pool of investor dollars. Fundraising has fallen off sharply since the onset of the global financial crisis, staying below $100 million each quarter, according to London-based researcher Preqin. In the second quarter of 2007, at the peak of the leveraged buyout boom, private equity firms raised almost $214 billion. In the fourth quarter of 2011, they raised $52.4 billion.
Public and private pension funds in the U.S. provide 42 percent of the capital for all private equity investments, according to the Private Equity Growth Capital Council in Washington. Public employee pension funds, which must answer to ordinary workers, are sensitive to protracted debates about managers’ compensation and whether buyouts create value and jobs, says one official who asked not to be named because he wasn’t authorized to speak on the topic. “The political attacks against Romney and Bain will definitely come up when firms pitch us their new funds,” says William R. Atwood, executive director of the Illinois State Board of Investment, which oversees $10.4 billion in pension funds. “You’d be crazy not to bring it up.” The Illinois pension board had $621.3 million, or 6 percent of its assets, in private equity as of Dec. 31, according to its website.
Bad publicity has hurt private equity firms in the past. Last year, Blackstone lost out on a deal to manage hedge fund investments for New York City’s public pension funds after the company’s chief strategist suggested retiree benefits were too generous.
Bain tends to be less reliant on pension funds than its rivals. When Romney set out to raise Bain’s first fund in 1984, he steered clear of pension funds, pursuing high-net-worth individuals who contributed about $37 million, according to a person who worked with Romney at the time. Kohlberg Kravis Roberts’s co-founders, by contrast, received early capital from Oregon’s and Washington’s pensions, with the latter contributing $12 million to KKR’s first fund in 1982.
The success of Bain’s first fund, which generated a 61 percent average annual return, according to marketing documents from 2004 obtained by Bloomberg, allowed Bain to charge a premium for its investment services. Bain collects 30 percent of the profit on its investments, the highest in the industry. Pensions historically have been less willing to pay the higher performance fees. In a recent fund, Bain relied on pensions for about 9 percent of client assets. Alex Stanton, a spokesman for Bain, declined to comment.
One Bain executive expects the storm to blow over. “Our limited partners have been with us for 28 years, many of them,” Bain Managing Director Stephen Pagliuca said in an interview at the World Economic Forum in Davos on Jan. 27. “We just keep our heads down and try to build value.” Pagliuca also said that pensions will come to rely more on private equity to meet their growing obligations to workers because traditional assets like stocks and bonds won’t return enough. Still, with Romney’s candidacy keeping the spotlight on the industry, Atwood of the Illinois State Board of Investment says there’s bound to be an impact. “We all know that private equity managers make a lot of money, and we know how they do their business,” he says. “But when it’s on the front page, it causes us to think twice when making investment decisions. Private equity is more lucrative when it’s kept quiet.”
The bottom line: Pension funds, which provide 42 percent of the private equity industry’s capital, may pull back amid criticism of Romney and Bain.
Alesci is a reporter for Bloomberg News in New York. Banerjee is a reporter for Bloomberg News in New York.http://tourism9.com/ http://vkins.com/
Mitt Romney’s campaign for the Republican Presidential nomination may be creating funding headaches for his former colleagues in the private equity industry. Romney’s opponents have characterized Bain Capital—the firm he helped found in 1984 and left in 1999—and other buyout managers as corporate looters who enrich themselves at the expense of ordinary workers. The issue is likely to remain in the news should Romney win his party’s nomination and face President Obama in the general election.
With public scrutiny focused on private equity funds, pension funds are more reluctant to invest and may ask for more details on job creation and push for lower fees, according to officials and trustees at public pensions. “Pension funds have boards. They don’t want to be giving money to an industry that has a taint,” says Tony James, president of Blackstone Group, the world’s largest private equity firm. “Similarly, boards of directors don’t want to sell their company to organizations they don’t view as respectable. So it could be very damaging for the industry.”
The debate comes as the industry is competing for a shrinking pool of investor dollars. Fundraising has fallen off sharply since the onset of the global financial crisis, staying below $100 million each quarter, according to London-based researcher Preqin. In the second quarter of 2007, at the peak of the leveraged buyout boom, private equity firms raised almost $214 billion. In the fourth quarter of 2011, they raised $52.4 billion.
Public and private pension funds in the U.S. provide 42 percent of the capital for all private equity investments, according to the Private Equity Growth Capital Council in Washington. Public employee pension funds, which must answer to ordinary workers, are sensitive to protracted debates about managers’ compensation and whether buyouts create value and jobs, says one official who asked not to be named because he wasn’t authorized to speak on the topic. “The political attacks against Romney and Bain will definitely come up when firms pitch us their new funds,” says William R. Atwood, executive director of the Illinois State Board of Investment, which oversees $10.4 billion in pension funds. “You’d be crazy not to bring it up.” The Illinois pension board had $621.3 million, or 6 percent of its assets, in private equity as of Dec. 31, according to its website.
Bad publicity has hurt private equity firms in the past. Last year, Blackstone lost out on a deal to manage hedge fund investments for New York City’s public pension funds after the company’s chief strategist suggested retiree benefits were too generous.
Bain tends to be less reliant on pension funds than its rivals. When Romney set out to raise Bain’s first fund in 1984, he steered clear of pension funds, pursuing high-net-worth individuals who contributed about $37 million, according to a person who worked with Romney at the time. Kohlberg Kravis Roberts’s co-founders, by contrast, received early capital from Oregon’s and Washington’s pensions, with the latter contributing $12 million to KKR’s first fund in 1982.
The success of Bain’s first fund, which generated a 61 percent average annual return, according to marketing documents from 2004 obtained by Bloomberg, allowed Bain to charge a premium for its investment services. Bain collects 30 percent of the profit on its investments, the highest in the industry. Pensions historically have been less willing to pay the higher performance fees. In a recent fund, Bain relied on pensions for about 9 percent of client assets. Alex Stanton, a spokesman for Bain, declined to comment.
One Bain executive expects the storm to blow over. “Our limited partners have been with us for 28 years, many of them,” Bain Managing Director Stephen Pagliuca said in an interview at the World Economic Forum in Davos on Jan. 27. “We just keep our heads down and try to build value.” Pagliuca also said that pensions will come to rely more on private equity to meet their growing obligations to workers because traditional assets like stocks and bonds won’t return enough. Still, with Romney’s candidacy keeping the spotlight on the industry, Atwood of the Illinois State Board of Investment says there’s bound to be an impact. “We all know that private equity managers make a lot of money, and we know how they do their business,” he says. “But when it’s on the front page, it causes us to think twice when making investment decisions. Private equity is more lucrative when it’s kept quiet.”
The bottom line: Pension funds, which provide 42 percent of the private equity industry’s capital, may pull back amid criticism of Romney and Bain.
Alesci is a reporter for Bloomberg News in New York. Banerjee is a reporter for Bloomberg News in New York.http://tourism9.com/ http://vkins.com/
2012年2月7日星期二
Private equity fund in £8.5m aerospace deal
CARDIFF-BASED private equity fund WestBridge Fund Managers (WestBridge Capital) had made its biggest investment to date in backing a £8.5m management buy-out.
The deal has enable a management team to acquire Devon-based Aero Stanrew – one of the UK’s leading designers and manufacturers of specialist electronic components for the global aerospace industry
WestBridge, which was established in 2008, has provided £4.2m in equity finance.
Aero said it will use the growth finance to exploit emerging overseas markets to increase sales and profits at the company following a management buyout.
With a workforce of 172 the £11m turnover business supplies complex electromagnetic modules and electronic systems to blue chip customers including Rolls Royce, GE Aviation, Goodrich and Thales.
As well as its headquarters in Barnstaple it has a manufacturing site in Tunisia.
Clive Scott and his team – Chris Evans, Owen Rolfe and Peter Vaughan – led the buyout after being with the company for a combined total of 40 years
Mr Scott said: “Although Aero Stanrew is already in a very strong position with a strong order book and recession-resistant business model, this deal provides us with the opportunity to pursue ambitious plans for further growth.
“We are particularly pleased to have backing from WestBridge because the team there already has a proven track record in our sector and have a refreshing approach to investment.
“They have a network of industrial investors who deliver practical, hands-on advice and guidance that is borne out of experience. It’s truly an added-value service that provides much more than just money.”
A member of WestBridge Capital’s co-investment club, Phil Crawford-Smith, has been appointed independent chairman of Aero Stanrew.
He said: “I’m delighted to have been invited to take up this role. Clive and the team are strong operators who’ve built an exceptionally well positioned business.
“I’m looking forward to working with them to develop Aero Stanrew even further over the next few years and take full advantage of the comprehensive market opportunities available to the company.”
Guy Davies, chief executive of WestBridge, said: “We are pleased to support the entrepreneurial vision of Clive and his management team by providing funding that enables them to pursue ambitious and realistic plans for continued growth.
“This is a very robust business and its value will be considerably enhanced as the team builds on its strategic approach to business development. The directors have strong knowledge and experience of the sector. Working closely with them, we have already identified and agreed a number of key strategies for growing the business over the next few years.
“Emerging markets, particularly in the Far East, are expected to drive future growth in the global civil aerospace market and we fully intend to exploit all the opportunities this presents.”
Mr Davies added: “Aero Stanrew will also extend its product range, enter new markets and the team will continue adopting a proactive approach to marketing and new business development. In fact, we’ve already got a number of exciting opportunities in our sights.
“Add to this, the fact that conservative estimates predict the production of 26,000 new passenger aircraft by 2029, and we see a very bright future indeed.”
WestBridge is in the process of raising finance for up to a £50m SME fund. Fundraising will close next month. At first close it had secured more than £10m in backing. WestBridge has an investment range of between £1m to £5m in high-growth potential SMEs.
Guy Davies, chief executive of WestBridge Capitalhttp://tourism9.com/ http://vkins.com/
The deal has enable a management team to acquire Devon-based Aero Stanrew – one of the UK’s leading designers and manufacturers of specialist electronic components for the global aerospace industry
WestBridge, which was established in 2008, has provided £4.2m in equity finance.
With a workforce of 172 the £11m turnover business supplies complex electromagnetic modules and electronic systems to blue chip customers including Rolls Royce, GE Aviation, Goodrich and Thales.
As well as its headquarters in Barnstaple it has a manufacturing site in Tunisia.
Clive Scott and his team – Chris Evans, Owen Rolfe and Peter Vaughan – led the buyout after being with the company for a combined total of 40 years
Mr Scott said: “Although Aero Stanrew is already in a very strong position with a strong order book and recession-resistant business model, this deal provides us with the opportunity to pursue ambitious plans for further growth.
“We are particularly pleased to have backing from WestBridge because the team there already has a proven track record in our sector and have a refreshing approach to investment.
“They have a network of industrial investors who deliver practical, hands-on advice and guidance that is borne out of experience. It’s truly an added-value service that provides much more than just money.”
A member of WestBridge Capital’s co-investment club, Phil Crawford-Smith, has been appointed independent chairman of Aero Stanrew.
He said: “I’m delighted to have been invited to take up this role. Clive and the team are strong operators who’ve built an exceptionally well positioned business.
“I’m looking forward to working with them to develop Aero Stanrew even further over the next few years and take full advantage of the comprehensive market opportunities available to the company.”
Guy Davies, chief executive of WestBridge, said: “We are pleased to support the entrepreneurial vision of Clive and his management team by providing funding that enables them to pursue ambitious and realistic plans for continued growth.
“This is a very robust business and its value will be considerably enhanced as the team builds on its strategic approach to business development. The directors have strong knowledge and experience of the sector. Working closely with them, we have already identified and agreed a number of key strategies for growing the business over the next few years.
“Emerging markets, particularly in the Far East, are expected to drive future growth in the global civil aerospace market and we fully intend to exploit all the opportunities this presents.”
Mr Davies added: “Aero Stanrew will also extend its product range, enter new markets and the team will continue adopting a proactive approach to marketing and new business development. In fact, we’ve already got a number of exciting opportunities in our sights.
“Add to this, the fact that conservative estimates predict the production of 26,000 new passenger aircraft by 2029, and we see a very bright future indeed.”
WestBridge is in the process of raising finance for up to a £50m SME fund. Fundraising will close next month. At first close it had secured more than £10m in backing. WestBridge has an investment range of between £1m to £5m in high-growth potential SMEs.
Guy Davies, chief executive of WestBridge Capitalhttp://tourism9.com/ http://vkins.com/
2012年2月6日星期一
Hollywood to Be Wooed by $800 Million Chinese Media Fund
Paramount Pictures/Album/Newscom
LONDON — The Hollywood majors and tentpole productions are among the future investment partner targets for a heavyweight Chinese media fund created by China’s Harvest Alternative Investment group and Sun Redrock Investment Group.
The $800 million-fueled private equity fund, the Harvest Seven Stars Media Fund, aims to invest in studio projects with an eye to bringing them to the wider Asian market and mainland China.
Redrock Investment Group, founded by Chinese media entrepreneur Bruno Wu, and Harvest are currently ironing out deals with “major filmmakers and filmed entertainment providers” to invest in English and Chinese language content both for Asia and with the global box office potential.
Wu, speaking on a video conference call with Hong Kong and London, said he expects to be able to detail deals with Hollywood producers and filmmakers “within the next 30 days or so.”
The fund, currently “within sight” of raising the $800 million, aims to invest in Hollywood and beyond, according to Wu. One of the main factors in investing in Hollywood output will be that the projects are “roundly acceptable to Asian audiences,” Wu said.
He cited current movies such as Paramount’s Mission: Impossible – Ghost Protocol and the Sherlock Holmes franchise from Warner Bros. as being the sort of tentpole the fund would be interested in investing in.
The fund will operate in three distinct areas – mergers and acquitisions, distribution in Asia and movie content either through equity investment in companies or operating capital investment — and aims to make its first investments in May this year.
Harvest Seven Stars Media is being advised by Creative Artists Agency’s Beijing office.
Harvest Alternative Investment Group and Sun Redrock Investment Group boast over 70 years of experience in the Chinese media and finance sectors.
Wu said the new partnership emphasizes “our confidence in the strength and potential of the Chinese media industry and the wealth of talent within it. We look forward to cultivating this new joint venture and seeing it grow into one of the world’s leading media funds.”
Harvest Alternative Investment Group’s Lindsay Wright added: “The addition of this partnership to the Harvest Alternative Investment Group further supports our goal of developing a leading alternative product platform in China and globally.”
Hollywood players are being targeted with the promise of established Chinese media players at the fund offering them a way in to China and Asia at large and help with developing product for the market.
“The overwhelming majority of the titles released by Hollywood works in China,” Wu said. “But it doesn’t work in reverse. By that I mean big Chinese movies and stars aren’t seen as widely outside China.”
Wu said one of the ambitions would be to develop globally outward looking projects with Hollywood partners also.
Harvest Alternative Investment Group is the alternative investment arm of Harvest Fund Management founded in 1999 marking it out as one of the first 10 fund management institutions authorized by the Chinese government as part of its strategy to open up and develop its financial sector.
Sun Redrock Investment is part of Sun Media Group founded by Wu and Yang Lan operating five major divisions including Redrock Capital, Sun Enterprises Group, Sun Publishing Group and Sun Culture Foundation, a charitable foundation which promotes philanthropy and corporate social responsibility in China.
The $800 million-fueled private equity fund, the Harvest Seven Stars Media Fund, aims to invest in studio projects with an eye to bringing them to the wider Asian market and mainland China.
Redrock Investment Group, founded by Chinese media entrepreneur Bruno Wu, and Harvest are currently ironing out deals with “major filmmakers and filmed entertainment providers” to invest in English and Chinese language content both for Asia and with the global box office potential.
Wu, speaking on a video conference call with Hong Kong and London, said he expects to be able to detail deals with Hollywood producers and filmmakers “within the next 30 days or so.”
The fund, currently “within sight” of raising the $800 million, aims to invest in Hollywood and beyond, according to Wu. One of the main factors in investing in Hollywood output will be that the projects are “roundly acceptable to Asian audiences,” Wu said.
He cited current movies such as Paramount’s Mission: Impossible – Ghost Protocol and the Sherlock Holmes franchise from Warner Bros. as being the sort of tentpole the fund would be interested in investing in.
The fund will operate in three distinct areas – mergers and acquitisions, distribution in Asia and movie content either through equity investment in companies or operating capital investment — and aims to make its first investments in May this year.
Harvest Seven Stars Media is being advised by Creative Artists Agency’s Beijing office.
Harvest Alternative Investment Group and Sun Redrock Investment Group boast over 70 years of experience in the Chinese media and finance sectors.
Wu said the new partnership emphasizes “our confidence in the strength and potential of the Chinese media industry and the wealth of talent within it. We look forward to cultivating this new joint venture and seeing it grow into one of the world’s leading media funds.”
Harvest Alternative Investment Group’s Lindsay Wright added: “The addition of this partnership to the Harvest Alternative Investment Group further supports our goal of developing a leading alternative product platform in China and globally.”
Hollywood players are being targeted with the promise of established Chinese media players at the fund offering them a way in to China and Asia at large and help with developing product for the market.
“The overwhelming majority of the titles released by Hollywood works in China,” Wu said. “But it doesn’t work in reverse. By that I mean big Chinese movies and stars aren’t seen as widely outside China.”
Wu said one of the ambitions would be to develop globally outward looking projects with Hollywood partners also.
Harvest Alternative Investment Group is the alternative investment arm of Harvest Fund Management founded in 1999 marking it out as one of the first 10 fund management institutions authorized by the Chinese government as part of its strategy to open up and develop its financial sector.
Sun Redrock Investment is part of Sun Media Group founded by Wu and Yang Lan operating five major divisions including Redrock Capital, Sun Enterprises Group, Sun Publishing Group and Sun Culture Foundation, a charitable foundation which promotes philanthropy and corporate social responsibility in China.
http://tourism9.cm/ http://vkins.com/
2012年1月30日星期一
Asia Private Equity Weekly News, January 30, 2011
HONG KONG, Jan 30 (Reuters) – News and developments in
Asia private equity from Reuters News for Lunar New Year and the
week ending January 27.
JANUARY 27
INDIAN CONSUMER products maker Jyothy Laboratories
has raised 5.5 billion rupees ($110 million) through a 5-year
loan from Axis Bank to refinance part of the debt it
incurred to acquire a controlling stake in the Indian unit of
Henkel AG, Managing Director Ullas Kamath said.
SOUTH KOREAN regulators endorsed Hana Financial Group Inc’s
3.9 trillion won ($3.48 billion) acquisition of
Korea Exchange Bank, paving the way for U.S. private
equity firm Lone Star’s sale of the local lender and closing the
final chapter of a drawn out and acrimonious saga.
JANUARY 26
SHARES IN solar wafer maker Comtec Solar fell over
5 percent after the Shanghai-based company agreed to buy back
convertible bonds issued to TPG Capital, in a sign that
a glut in the industry is putting expansion plans on hold.
JANUARY 25
PT BANK Himpunan Saudara 1906, a small Indonesian
lender, plans to expand in Southeast Asia’s biggest economy by
bringing in a strategic investor through a rights issue next
year.
JANUARY 24
MOUNT KELLETT Capital Management has agreed to invest $225
million in Australia’s Lynas Corp through a convertible
bond, giving the rare earths miner a cheaper source of funding
to finish building its flagship plant in Malaysia, which is
awaiting a licence to open.
BC PARTNERS-owned health club operator Fitness First is set
to meet lenders to discuss a potentially looming covenant breach
as well as its debt maturities, Thomson Reuters LPC reported,
citing sources close to the company.
JANUARY 23
INDIA’S RED Fort Capital has raised $500 million for its
real estate private equity fund, aimed at tapping increasing
demand for housing and commercial spaces in Asia’s third largest
economy, its top official said.
JANUARY 20
BARING PRIVATE Equity Asia acquired 15 percent of Magic
Holdings, a unit of listed Huan Han Bio-Pharmaceutical Holdings
Ltd, for around HK$451 million ($58 million), Hua Han
said in a statement.
TPG and Singapore sovereign fund GIC will invest
around $115 million in China sportwear maker Li Ning Co Ltd
through a convertible bond, giving much needed capital
to a company whose stock fell more than 60 percent last year.
CARLYLE GROUP has sold 18 million shares in China
Pacific Insurance (Group) Co Ltd, taking its holding
below 5 percent, CPIC said.
PT ANCORA Indonesia Resources, a resources-focused
investment firm, aims to take advantage of the nation’s coal
boom by tripling its ammonium nitrate production, said the
firm’s chief executive.
ASIAN INVESTORS will account for over 20 percent of central
London office property deals this year, attracted by the British
capital’s safe-haven allure, transparency and high returns,
property consultancy Jones Lang LaSalle said.
JANUARY 19
JAPAN’S UNISON Capital cut the size of one of the largest
private equity funds in Japan by around a quarter to 107 billion
yen ($1.4 billion) in October due to limited opportunities for
new deals, two sources familiar with the matter said.
BLACKSTONE GROUP LP said that it is actively pursuing
further property investments in China, after a fund it controls
turned a profit on the sale of its stake in a real-estate joint
venture with Evergrande Real Estate Group Ltd.
INDIA’S KINGFISHER Airlines is in talks with Hong
Kong-based distressed debt firm SC Lowy Financial for a possible
investment, a sign the cash-strapped carrier may be running out
of more attractive traditional funding options.
JANUARY 18
OLYMPUS CAPITAL said it has invested 5 billion rupees (about
$98.7 million) for a significant minority stake in Indian
healthcare firm, DM Healthcare Pvt Ltd.
JANUARY 17
HEDGE FUNDS owning a large chunk of the $2.8 billion debt in
Australia’s Nine Entertainment, owned by buyout firm CVC
, have prepared a proposal to convert their debt into
equity in the TV network, a source told Reuters, in a plan that
would wipe out most of CVC’s equity.
NEW SILK Route Partners, an Asia-focused private equity
fund, said it picked a significant minority stake in educational
support services provider Varsity Education Management Pvt Ltd
for an undisclosed sum.
ANALYSIS-OLYMPUS Corp should be the easiest of
takeover targets: a profitable business with its share price in
tatters, its management in utter disgrace and its balance sheet
in need of fresh capital. But not in Japan.
http://tourism9.com/ http://vkins.com/
Asia private equity from Reuters News for Lunar New Year and the
week ending January 27.
JANUARY 27
INDIAN CONSUMER products maker Jyothy Laboratories
has raised 5.5 billion rupees ($110 million) through a 5-year
loan from Axis Bank to refinance part of the debt it
incurred to acquire a controlling stake in the Indian unit of
Henkel AG, Managing Director Ullas Kamath said.
SOUTH KOREAN regulators endorsed Hana Financial Group Inc’s
3.9 trillion won ($3.48 billion) acquisition of
Korea Exchange Bank, paving the way for U.S. private
equity firm Lone Star’s sale of the local lender and closing the
final chapter of a drawn out and acrimonious saga.
JANUARY 26
SHARES IN solar wafer maker Comtec Solar fell over
5 percent after the Shanghai-based company agreed to buy back
convertible bonds issued to TPG Capital, in a sign that
a glut in the industry is putting expansion plans on hold.
JANUARY 25
PT BANK Himpunan Saudara 1906, a small Indonesian
lender, plans to expand in Southeast Asia’s biggest economy by
bringing in a strategic investor through a rights issue next
year.
JANUARY 24
MOUNT KELLETT Capital Management has agreed to invest $225
million in Australia’s Lynas Corp through a convertible
bond, giving the rare earths miner a cheaper source of funding
to finish building its flagship plant in Malaysia, which is
awaiting a licence to open.
BC PARTNERS-owned health club operator Fitness First is set
to meet lenders to discuss a potentially looming covenant breach
as well as its debt maturities, Thomson Reuters LPC reported,
citing sources close to the company.
JANUARY 23
INDIA’S RED Fort Capital has raised $500 million for its
real estate private equity fund, aimed at tapping increasing
demand for housing and commercial spaces in Asia’s third largest
economy, its top official said.
JANUARY 20
BARING PRIVATE Equity Asia acquired 15 percent of Magic
Holdings, a unit of listed Huan Han Bio-Pharmaceutical Holdings
Ltd, for around HK$451 million ($58 million), Hua Han
said in a statement.
TPG and Singapore sovereign fund GIC will invest
around $115 million in China sportwear maker Li Ning Co Ltd
through a convertible bond, giving much needed capital
to a company whose stock fell more than 60 percent last year.
CARLYLE GROUP has sold 18 million shares in China
Pacific Insurance (Group) Co Ltd, taking its holding
below 5 percent, CPIC said.
PT ANCORA Indonesia Resources, a resources-focused
investment firm, aims to take advantage of the nation’s coal
boom by tripling its ammonium nitrate production, said the
firm’s chief executive.
ASIAN INVESTORS will account for over 20 percent of central
London office property deals this year, attracted by the British
capital’s safe-haven allure, transparency and high returns,
property consultancy Jones Lang LaSalle said.
JANUARY 19
JAPAN’S UNISON Capital cut the size of one of the largest
private equity funds in Japan by around a quarter to 107 billion
yen ($1.4 billion) in October due to limited opportunities for
new deals, two sources familiar with the matter said.
BLACKSTONE GROUP LP said that it is actively pursuing
further property investments in China, after a fund it controls
turned a profit on the sale of its stake in a real-estate joint
venture with Evergrande Real Estate Group Ltd.
INDIA’S KINGFISHER Airlines is in talks with Hong
Kong-based distressed debt firm SC Lowy Financial for a possible
investment, a sign the cash-strapped carrier may be running out
of more attractive traditional funding options.
JANUARY 18
OLYMPUS CAPITAL said it has invested 5 billion rupees (about
$98.7 million) for a significant minority stake in Indian
healthcare firm, DM Healthcare Pvt Ltd.
JANUARY 17
HEDGE FUNDS owning a large chunk of the $2.8 billion debt in
Australia’s Nine Entertainment, owned by buyout firm CVC
, have prepared a proposal to convert their debt into
equity in the TV network, a source told Reuters, in a plan that
would wipe out most of CVC’s equity.
NEW SILK Route Partners, an Asia-focused private equity
fund, said it picked a significant minority stake in educational
support services provider Varsity Education Management Pvt Ltd
for an undisclosed sum.
ANALYSIS-OLYMPUS Corp should be the easiest of
takeover targets: a profitable business with its share price in
tatters, its management in utter disgrace and its balance sheet
in need of fresh capital. But not in Japan.
http://tourism9.com/ http://vkins.com/
2012年1月19日星期四
Outside the Box: Private equity, carried interest and Mitt Romney
By Jack O. Nutter
WASHINGTON (MarketWatch) — The term “private equity” is being demonized in political circles these days. The White House and some Republicans have equated private equity with some sort of evil, a disease, and a scourge. I want to believe these politicians do not really understand the concept and if they do, then I fear the country is in a whole lot more trouble than we think.
Private equity consists of investors and funds that provide private companies with direct investments or conduct buyouts of public companies. These investments can be used to fund new start-up companies, expand working capital, make acquisitions, or improve a balance sheet. Private equity is one of the foundations of the capitalist system.
The majority of private equity consists of institutional and accredited investors who commit large sums of money for long periods of time. Private-equity investments often demand long holding periods to allow a turnaround of a distressed company or a liquidity event such as an initial public offering or sale to a public company. Indirectly, almost every American has a stake in the concept and results of private equity.
Mitt Romney owned and managed a private-equity firm called Bain Capital until retiring and being bought out in 1999. Listen to the political rhetoric; you would have thought he presided over the proceedings of the Spanish Inquisition.
This is not the place to debate or critique the dealings or role of private equity funds or Bain Capital.
For that, the New York Times gives a good look.
Instead, I want to discuss the tax treatment of such enterprises and to ask how such treatment may have affected Romney.
Most private-equity funds are organized as limited partnerships with the investors (pension funds, endowments, foundations and wealthy individuals) contributing capital and becoming limited partners with a general partner — such as Bain Capital — that provides the entrepreneurial management of the partnership. The general partner is paid a management fee.
The general partner may also contribute its own capital and, as an incentive, receives an additional interest in the overall eventual profits. This additional interest is known as the “promote,” “profits interest,” or “carried interest.” The carried interest is typically 20% of the profits and is generated from appreciation in the value of the partnership’s property realized when the enterprise is sold or taken public.
The tax treatment of carried interest under current law allows managers of hedge funds, private-equity funds, venture-capital funds and others to pay a lower 15% maximum income tax rate applied to investment income as capital gains, rather than higher income tax rates for ordinary income which exceed 35%. This is a huge difference.
How do they do that? It is complicated but starts with the taxation of partnerships. If you have an interest in a partnership, you are allocated a share of that partnership’s income. The income to the partner takes on the same character, such as capital gains, that it does in the partnership’s hands, and the partner is taxed on it accordingly. The partnership itself does not pay taxes.
Some investment partnerships, particularly in the private-equity industry, earn mostly capital gains by buying and selling shares in other companies. The managers of these companies thus receive their carried interest in the form of capital gains and pay capital-gains tax rather than ordinary income tax. Nifty trick!
Carried interest is a business and financial arrangement that has formed an essential structural element to almost every sector of the U.S. economy, including real-estate development, private equity, hedge funds, health care, mining, and oil and gas. Changes in the tax rules would have a profound impact on how these businesses operate and their structure.
Many policy makers believe the carried interest paid to partnership managers is really compensation for their management services, which should be taxed at the higher ordinary income rate. On the other side, supporters of the current tax treatment say the carried interest is only a potential share of partnership profits and should not be considered compensation for services.
Changes in the taxation of carried interest have passed a Democratic-controlled House of Representative three times since 2007 and the Obama administration has included a carried-interest tax increase in each of its annual federal budgets and even more recently in the American Jobs Act introduced last September, where the current law on carried interests was described as “an unfair and inefficient tax preference.”
So how does Mitt Romney fit in to all of this?
There is no question he has benefited and perhaps continues to benefit from the favorable tax treatment of the carried-interest provisions. As he retained a share of the “profits interest” after he left Bain Capital, Romney would have gotten favorable tax treatment on certain income received even though his service labor did not contribute to the profits of new investments by the firm. To what magnitude this lessens his tax burdens is not known, as Romney has not released his tax returns
Romney is a wealthy man. Of that there is no doubt. He made it the hard way — he earned it. To some, being too wealthy is somehow wrong. I do not begrudge his success. However, it is a legitimate question to ask how he stands on this particular issue. Would he support changes in the carried-interest provisions for tax policy, economic or social reasons?
It is hard to have crocodile tears for the hedge-fund and equity-fund managers and the like. They have made and continue to make enormous money, partially fueled by favorable tax treatment. “Enormous” may be even too small a word. Even the word “undeserving” comes to mind. I can say the same thing about entertainers, professional athletes, football coaches and lobbyists who do not share in the same tax breaks. However, that is part of the used-to-be-freer market system we have.
There are industries other than the financial sector where the carried-interest concept is ingrained and useful. Changes in tax policy and treatment is worth examining and a good place to start is asking Romney what he thinks.
http://tourism9.com/ http://vkins.com/
WASHINGTON (MarketWatch) — The term “private equity” is being demonized in political circles these days. The White House and some Republicans have equated private equity with some sort of evil, a disease, and a scourge. I want to believe these politicians do not really understand the concept and if they do, then I fear the country is in a whole lot more trouble than we think.
Private equity consists of investors and funds that provide private companies with direct investments or conduct buyouts of public companies. These investments can be used to fund new start-up companies, expand working capital, make acquisitions, or improve a balance sheet. Private equity is one of the foundations of the capitalist system.
Romney: Highlights from South Carolina debate
Republican presidential candidate Mitt Romney on his business experience, releasing his income tax records and illegal immigration at the Fox News Channel and Wall Street Journal GOP Debate in South Carolina. Courtesy Fox News Channel.Mitt Romney owned and managed a private-equity firm called Bain Capital until retiring and being bought out in 1999. Listen to the political rhetoric; you would have thought he presided over the proceedings of the Spanish Inquisition.
This is not the place to debate or critique the dealings or role of private equity funds or Bain Capital.
For that, the New York Times gives a good look.
Instead, I want to discuss the tax treatment of such enterprises and to ask how such treatment may have affected Romney.
Most private-equity funds are organized as limited partnerships with the investors (pension funds, endowments, foundations and wealthy individuals) contributing capital and becoming limited partners with a general partner — such as Bain Capital — that provides the entrepreneurial management of the partnership. The general partner is paid a management fee.
The general partner may also contribute its own capital and, as an incentive, receives an additional interest in the overall eventual profits. This additional interest is known as the “promote,” “profits interest,” or “carried interest.” The carried interest is typically 20% of the profits and is generated from appreciation in the value of the partnership’s property realized when the enterprise is sold or taken public.
The tax treatment of carried interest under current law allows managers of hedge funds, private-equity funds, venture-capital funds and others to pay a lower 15% maximum income tax rate applied to investment income as capital gains, rather than higher income tax rates for ordinary income which exceed 35%. This is a huge difference.
How do they do that? It is complicated but starts with the taxation of partnerships. If you have an interest in a partnership, you are allocated a share of that partnership’s income. The income to the partner takes on the same character, such as capital gains, that it does in the partnership’s hands, and the partner is taxed on it accordingly. The partnership itself does not pay taxes.
Some investment partnerships, particularly in the private-equity industry, earn mostly capital gains by buying and selling shares in other companies. The managers of these companies thus receive their carried interest in the form of capital gains and pay capital-gains tax rather than ordinary income tax. Nifty trick!
Carried interest is a business and financial arrangement that has formed an essential structural element to almost every sector of the U.S. economy, including real-estate development, private equity, hedge funds, health care, mining, and oil and gas. Changes in the tax rules would have a profound impact on how these businesses operate and their structure.
Many policy makers believe the carried interest paid to partnership managers is really compensation for their management services, which should be taxed at the higher ordinary income rate. On the other side, supporters of the current tax treatment say the carried interest is only a potential share of partnership profits and should not be considered compensation for services.
Changes in the taxation of carried interest have passed a Democratic-controlled House of Representative three times since 2007 and the Obama administration has included a carried-interest tax increase in each of its annual federal budgets and even more recently in the American Jobs Act introduced last September, where the current law on carried interests was described as “an unfair and inefficient tax preference.”
So how does Mitt Romney fit in to all of this?
There is no question he has benefited and perhaps continues to benefit from the favorable tax treatment of the carried-interest provisions. As he retained a share of the “profits interest” after he left Bain Capital, Romney would have gotten favorable tax treatment on certain income received even though his service labor did not contribute to the profits of new investments by the firm. To what magnitude this lessens his tax burdens is not known, as Romney has not released his tax returns
Romney is a wealthy man. Of that there is no doubt. He made it the hard way — he earned it. To some, being too wealthy is somehow wrong. I do not begrudge his success. However, it is a legitimate question to ask how he stands on this particular issue. Would he support changes in the carried-interest provisions for tax policy, economic or social reasons?
It is hard to have crocodile tears for the hedge-fund and equity-fund managers and the like. They have made and continue to make enormous money, partially fueled by favorable tax treatment. “Enormous” may be even too small a word. Even the word “undeserving” comes to mind. I can say the same thing about entertainers, professional athletes, football coaches and lobbyists who do not share in the same tax breaks. However, that is part of the used-to-be-freer market system we have.
There are industries other than the financial sector where the carried-interest concept is ingrained and useful. Changes in tax policy and treatment is worth examining and a good place to start is asking Romney what he thinks.
http://tourism9.com/ http://vkins.com/
Smarsh Helps Hedge Funds and Private Equity Firms Prepare for SEC Registration
PORTLAND, Ore.–(BUSINESS WIRE)– Smarsh®, the managed service leader in secure, innovative and reliable email archiving and compliance solutions, is expanding its hedge fund and private equity client roster, as firms prepare for the upcoming SEC registration deadline. Many of the industry’s leading firms are tapping into Smarsh’s experience helping thousands of registered investment advisors meet SEC electronic recordkeeping obligations and navigate SEC registration and oversight. By partnering with Smarsh, these firms can design efficient, cost-effective and secure/maintainable email and electronic messaging compliance policies and processes in advance of SEC registration.
“Beyond just having the measures in place to meet the specific requirements of SEC registration, firms are looking to build a true culture of compliance across their organizations,” said Stephen Marsh, CEO and founder of Smarsh. “They recognize that compliance isn’t just a checkbox, and a robust program will not only minimize the impact of SEC oversight, but also help save time and money in e-discovery, litigation and internal investigations.”
Proactive Approach to Registration Readiness
The Private Fund Investment Advisers Registration Act, Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, eliminated the private adviser exemption afforded by Section 203(b)(3) of the Advisers Act, requiring many hedge fund and private equity fund managers to register as advisers with either the SEC or state regulatory authorities. With registration, firms will be obliged to meet specific recordkeeping requirements for email, instant messaging, social media and all other forms of electronic business communications, as detailed in SEC 204-2, Investment Advisers Act of 1940: Books & Record Maintenance. The deadline to register is March 30, 2012 and firms must apply for registration by February 14.
With the deadline quickly approaching and many firms putting a formal compliance function in place for the first time, Smarsh has compiled a series of educational resources to help firms understand the specific requirements for electronic communications recordkeeping and best practices for implementing new policies, procedures and technology to fulfill these obligations.
“Many firms don’t know what to expect from SEC oversight, so our goal is to not only provide a service designed specifically to meet electronic recordkeeping, supervision and data protection obligations, but also share insights from our experience helping clients through thousands of successful regulatory examinations and e-discovery requests,” added Marsh.
Support for Firms Registering for the First Time
As part of Smarsh’s efforts to ensure a smooth transition to SEC registration, Steve Marsh will moderate a panel discussion with industry representatives on the topic: Creating a Culture of Compliance: Your SEC Registration Checklist. The event will be held in New York City at the Four Seasons Hotel on Thursday, January 26th. For additional information or to register, contact Jessica Heath at jheath@smarsh.com or 503-946-5970.
Additional Smarsh resources for hedge funds and private equity funds are available at www.smarsh.com/privatefunds.
About Smarsh
Smarsh® provides hosted solutions for archiving electronic communications, including email, instant messaging and social media platforms such as Facebook, LinkedIn and Twitter. Founded in 2001, Smarsh helps organizations manage and enforce flexible, secure and cost-effective compliance and records retention strategies. For more information, visit www.smarsh.com or follow Smarsh at www.twitter.com/SmarshInc.
http://tourism9.com/ http://vkins.com/
“Beyond just having the measures in place to meet the specific requirements of SEC registration, firms are looking to build a true culture of compliance across their organizations,” said Stephen Marsh, CEO and founder of Smarsh. “They recognize that compliance isn’t just a checkbox, and a robust program will not only minimize the impact of SEC oversight, but also help save time and money in e-discovery, litigation and internal investigations.”
Proactive Approach to Registration Readiness
The Private Fund Investment Advisers Registration Act, Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, eliminated the private adviser exemption afforded by Section 203(b)(3) of the Advisers Act, requiring many hedge fund and private equity fund managers to register as advisers with either the SEC or state regulatory authorities. With registration, firms will be obliged to meet specific recordkeeping requirements for email, instant messaging, social media and all other forms of electronic business communications, as detailed in SEC 204-2, Investment Advisers Act of 1940: Books & Record Maintenance. The deadline to register is March 30, 2012 and firms must apply for registration by February 14.
With the deadline quickly approaching and many firms putting a formal compliance function in place for the first time, Smarsh has compiled a series of educational resources to help firms understand the specific requirements for electronic communications recordkeeping and best practices for implementing new policies, procedures and technology to fulfill these obligations.
“Many firms don’t know what to expect from SEC oversight, so our goal is to not only provide a service designed specifically to meet electronic recordkeeping, supervision and data protection obligations, but also share insights from our experience helping clients through thousands of successful regulatory examinations and e-discovery requests,” added Marsh.
Support for Firms Registering for the First Time
As part of Smarsh’s efforts to ensure a smooth transition to SEC registration, Steve Marsh will moderate a panel discussion with industry representatives on the topic: Creating a Culture of Compliance: Your SEC Registration Checklist. The event will be held in New York City at the Four Seasons Hotel on Thursday, January 26th. For additional information or to register, contact Jessica Heath at jheath@smarsh.com or 503-946-5970.
Additional Smarsh resources for hedge funds and private equity funds are available at www.smarsh.com/privatefunds.
About Smarsh
Smarsh® provides hosted solutions for archiving electronic communications, including email, instant messaging and social media platforms such as Facebook, LinkedIn and Twitter. Founded in 2001, Smarsh helps organizations manage and enforce flexible, secure and cost-effective compliance and records retention strategies. For more information, visit www.smarsh.com or follow Smarsh at www.twitter.com/SmarshInc.
http://tourism9.com/ http://vkins.com/
Private equity, carried interest and Mitt Romney
WASHINGTON (MarketWatch) — The term “private equity” is being demonized in political circles these days. The White House and some Republicans have equated private equity with some sort of evil, a disease, and a scourge. I want to believe these politicians do not really understand the concept and if they do, then I fear the country is in a whole lot more trouble than we think.
Private equity consists of investors and funds that provide private companies with direct investments or conduct buyouts of public companies. These investments can be used to fund new start-up companies, expand working capital, make acquisitions, or improve a balance sheet. Private equity is one of the foundations of the capitalist system.
The majority of private equity consists of institutional and accredited investors who commit large sums of money for long periods of time. Private-equity investments often demand long holding periods to allow a turnaround of a distressed company or a liquidity event such as an initial public offering or sale to a public company. Indirectly, almost every American has a stake in the concept and results of private equity.
Mitt Romney owned and managed a private-equity firm called Bain Capital until retiring and being bought out in 1999. Listen to the political rhetoric; you would have thought he presided over the proceedings of the Spanish Inquisition.
This is not the place to debate or critique the dealings or role of private equity funds or Bain Capital. For that, the New York Times gives a good look. Instead, I want to discuss the tax treatment of such enterprises and to ask how such treatment may have affected Romney.
Most private-equity funds are organized as limited partnerships with the investors (pension funds, endowments, foundations and wealthy individuals) contributing capital and becoming limited partners with a general partner — such as Bain Capital — that provides the entrepreneurial management of the partnership. The general partner is paid a management fee.
The general partner may also contribute its own capital and, as an incentive, receives an additional interest in the overall eventual profits. This additional interest is known as the “promote,” “profits interest,” or “carried interest.” The carried interest is typically 20% of the profits and is generated from appreciation in the value of the partnership’s property realized when the enterprise is sold or taken public.
The tax treatment of carried interest under current law allows managers of hedge funds, private-equity funds, venture-capital funds and others to pay a lower 15% maximum income tax rate applied to investment income as capital gains, rather than higher income tax rates for ordinary income which exceed 35%. This is a huge difference.
How do they do that? It is complicated but starts with the taxation of partnerships. If you have an interest in a partnership, you are allocated a share of that partnership’s income. The income to the partner takes on the same character, such as capital gains, that it does in the partnership’s hands, and the partner is taxed on it accordingly. The partnership itself does not pay taxes.
Some investment partnerships, particularly in the private-equity industry, earn mostly capital gains by buying and selling shares in other companies. The managers of these companies thus receive their carried interest in the form of capital gains and pay capital-gains tax rather than ordinary income tax. Nifty trick!
Carried interest is a business and financial arrangement that has formed an essential structural element to almost every sector of the U.S. economy, including real-estate development, private equity, hedge funds, health care, mining, and oil and gas. Changes in the tax rules would have a profound impact on how these businesses operate and their structure.
Many policy makers believe the carried interest paid to partnership managers is really compensation for their management services, which should be taxed at the higher ordinary income rate. On the other side, supporters of the current tax treatment say the carried interest is only a potential share of partnership profits and should not be considered compensation for services.
Changes in the taxation of carried interest have passed a Democratic-controlled House of Representative three times since 2007 and the Obama administration has included a carried-interest tax increase in each of its annual federal budgets and even more recently in the American Jobs Act introduced last September, where the current law on carried interests was described as “an unfair and inefficient tax preference.”
So how does Mitt Romney fit in to all of this?
There is no question he has benefited and perhaps continues to benefit from the favorable tax treatment of the carried-interest provisions. As he retained a share of the “profits interest” after he left Bain Capital, Romney would have gotten favorable tax treatment on certain income received even though his service labor did not contribute to the profits of new investments by the firm. To what magnitude this lessens his tax burdens is not known, as Romney has not released his tax returns
Romney is a wealthy man. Of that there is no doubt. He made it the hard way — he earned it. To some, being too wealthy is somehow wrong. I do not begrudge his success. However, it is a legitimate question to ask how he stands on this particular issue. Would he support changes in the carried-interest provisions for tax policy, economic or social reasons?
It is hard to have crocodile tears for the hedge-fund and equity-fund managers and the like. They have made and continue to make enormous money, partially fueled by favorable tax treatment. “Enormous” may be even too small a word. Even the word “undeserving” comes to mind. I can say the same thing about entertainers, professional athletes, football coaches and lobbyists who do not share in the same tax breaks. However, that is part of the used-to-be-freer market system we have.
There are industries other than the financial sector where the carried-interest concept is ingrained and useful. Changes in tax policy and treatment is worth examining and a good place to start is asking Romney what he thinks.
Jack O. Nutter is a partner in the Washington, D.C., firm of Nutter & Harris. He is former tax counsel to the U.S. Senate Finance Committee. His further comments on tax, economic and political issues can be found at jacknutter.com.
More From MarketWatch
http://tourism9.com/ http://vkins.com/
Private equity consists of investors and funds that provide private companies with direct investments or conduct buyouts of public companies. These investments can be used to fund new start-up companies, expand working capital, make acquisitions, or improve a balance sheet. Private equity is one of the foundations of the capitalist system.
The majority of private equity consists of institutional and accredited investors who commit large sums of money for long periods of time. Private-equity investments often demand long holding periods to allow a turnaround of a distressed company or a liquidity event such as an initial public offering or sale to a public company. Indirectly, almost every American has a stake in the concept and results of private equity.
Mitt Romney owned and managed a private-equity firm called Bain Capital until retiring and being bought out in 1999. Listen to the political rhetoric; you would have thought he presided over the proceedings of the Spanish Inquisition.
This is not the place to debate or critique the dealings or role of private equity funds or Bain Capital. For that, the New York Times gives a good look. Instead, I want to discuss the tax treatment of such enterprises and to ask how such treatment may have affected Romney.
Most private-equity funds are organized as limited partnerships with the investors (pension funds, endowments, foundations and wealthy individuals) contributing capital and becoming limited partners with a general partner — such as Bain Capital — that provides the entrepreneurial management of the partnership. The general partner is paid a management fee.
The general partner may also contribute its own capital and, as an incentive, receives an additional interest in the overall eventual profits. This additional interest is known as the “promote,” “profits interest,” or “carried interest.” The carried interest is typically 20% of the profits and is generated from appreciation in the value of the partnership’s property realized when the enterprise is sold or taken public.
The tax treatment of carried interest under current law allows managers of hedge funds, private-equity funds, venture-capital funds and others to pay a lower 15% maximum income tax rate applied to investment income as capital gains, rather than higher income tax rates for ordinary income which exceed 35%. This is a huge difference.
How do they do that? It is complicated but starts with the taxation of partnerships. If you have an interest in a partnership, you are allocated a share of that partnership’s income. The income to the partner takes on the same character, such as capital gains, that it does in the partnership’s hands, and the partner is taxed on it accordingly. The partnership itself does not pay taxes.
Some investment partnerships, particularly in the private-equity industry, earn mostly capital gains by buying and selling shares in other companies. The managers of these companies thus receive their carried interest in the form of capital gains and pay capital-gains tax rather than ordinary income tax. Nifty trick!
Carried interest is a business and financial arrangement that has formed an essential structural element to almost every sector of the U.S. economy, including real-estate development, private equity, hedge funds, health care, mining, and oil and gas. Changes in the tax rules would have a profound impact on how these businesses operate and their structure.
Many policy makers believe the carried interest paid to partnership managers is really compensation for their management services, which should be taxed at the higher ordinary income rate. On the other side, supporters of the current tax treatment say the carried interest is only a potential share of partnership profits and should not be considered compensation for services.
Changes in the taxation of carried interest have passed a Democratic-controlled House of Representative three times since 2007 and the Obama administration has included a carried-interest tax increase in each of its annual federal budgets and even more recently in the American Jobs Act introduced last September, where the current law on carried interests was described as “an unfair and inefficient tax preference.”
So how does Mitt Romney fit in to all of this?
There is no question he has benefited and perhaps continues to benefit from the favorable tax treatment of the carried-interest provisions. As he retained a share of the “profits interest” after he left Bain Capital, Romney would have gotten favorable tax treatment on certain income received even though his service labor did not contribute to the profits of new investments by the firm. To what magnitude this lessens his tax burdens is not known, as Romney has not released his tax returns
Romney is a wealthy man. Of that there is no doubt. He made it the hard way — he earned it. To some, being too wealthy is somehow wrong. I do not begrudge his success. However, it is a legitimate question to ask how he stands on this particular issue. Would he support changes in the carried-interest provisions for tax policy, economic or social reasons?
It is hard to have crocodile tears for the hedge-fund and equity-fund managers and the like. They have made and continue to make enormous money, partially fueled by favorable tax treatment. “Enormous” may be even too small a word. Even the word “undeserving” comes to mind. I can say the same thing about entertainers, professional athletes, football coaches and lobbyists who do not share in the same tax breaks. However, that is part of the used-to-be-freer market system we have.
There are industries other than the financial sector where the carried-interest concept is ingrained and useful. Changes in tax policy and treatment is worth examining and a good place to start is asking Romney what he thinks.
Jack O. Nutter is a partner in the Washington, D.C., firm of Nutter & Harris. He is former tax counsel to the U.S. Senate Finance Committee. His further comments on tax, economic and political issues can be found at jacknutter.com.
More From MarketWatch
http://tourism9.com/ http://vkins.com/
2012年1月17日星期二
New Silk Route invests in Varsity Education Management
MUMBAI (Reuters) – New Silk Route Partners, an Asia-focused private equity fund, said on Tuesday it picked a significant minority stake in educational support services provider Varsity Education Management Pvt Ltd for an undisclosed sum.
The Hyderabad-based Varsity Education provides operational and support services to educational institutes across Karnataka, Andhra Pradesh, Maharashtra and Tamil Nadu, the fund said in a statement.
“Education is another great sector, if you are an investor and intending to capture India’s growing consumer story,” said Jacob Kurian, one of the partners of the fund.
Private equity funds invested have invested $10.58 billion of capital across 501 deals in 2011, up more than a fifth compared to $8.47 billion across 416 deals in 2010, according to data from industry tracker VCCircle.com.
The investment in Varsity would be New Silk Route’s second investment in the educational sector. The fund, which manages more than $1.4 billion, has invested in the Lahore-headquartered Pakistani firm, Beaconhouse, one of the world’s largest primary and secondary education chains, it said.
(Reporting by Indulal PM; Editing by Harish Nambiar)
http://tourism9.cm/ http://vkins.com/
The Hyderabad-based Varsity Education provides operational and support services to educational institutes across Karnataka, Andhra Pradesh, Maharashtra and Tamil Nadu, the fund said in a statement.
“Education is another great sector, if you are an investor and intending to capture India’s growing consumer story,” said Jacob Kurian, one of the partners of the fund.
Private equity funds invested have invested $10.58 billion of capital across 501 deals in 2011, up more than a fifth compared to $8.47 billion across 416 deals in 2010, according to data from industry tracker VCCircle.com.
The investment in Varsity would be New Silk Route’s second investment in the educational sector. The fund, which manages more than $1.4 billion, has invested in the Lahore-headquartered Pakistani firm, Beaconhouse, one of the world’s largest primary and secondary education chains, it said.
(Reporting by Indulal PM; Editing by Harish Nambiar)
http://tourism9.cm/ http://vkins.com/
2012年1月16日星期一
Asia Private Equity Weekly News, January 16, 2011
HONG KONG, December 26 (Reuters) – News and
developments in Asia private equity from Reuters News for the
holiday period, and the week ending Jan. 13.
JANUARY 13
TPG Capital LP is willing to invest about $1
billion in Japan’s Olympus Corp in a joint deal with
Sony Corp or another suitor circling the scandal-hit
company, a person familiar with TPG’s thinking said.
INVESTORS HAVE approved a year-long extension of a $4.7
billion property megafund from Morgan Stanley, a company
spokesman told Reuters on Friday.
JANUARY 12
HONY CAPITAL, one of China’s most successful private equity
funds, said on Thursday that it had raised nearly $4 billion
from investors, defying the increasingly tight fundraising
climate.
THE SALE of Indian developer DLF Ltd’s luxury hotel
chain, Amanresorts International, has stalled due to
lower-than-expected bids by shortlisted companies, two sources
with direct knowledge of the matter said.
JANUARY 11
ALIBABA GROUP has reduced the size of its debut
loan to $3 billion, three sources told Reuters.
LUNAR CAPITAL, a China-focused private equity fund, will pay
close to $100 million to buy a controlling stake in China’s
Yeehoo Group Ltd, a baby products maker, a source familiar with
the matter told Reuters.
AUSTRALIA’S BRAMBLES Ltd, the world’s top pallet
supplier, received first offers from private equity groups for
its U.S. document management business valued at more than $2
billion, three sources said.
JANUARY 10
JAPANESE STATE-sponsored fund, Innovation Network of Japan,
said its investment in overseas acquisitions by Japanese
companies is likely to increase this year, helped by a stronger
yen and an increase in asset sales abroad.
MALAYSIA-BASED private equity firm Navis Capital Partners
said it has completed the sale of its Dunkin’ Donuts and Au Bon
Pain businesses in Thailand to Sub Sri TPC Pcl for 1.32
billion baht ($41.56 million).
AUSTRALIAN PRIVATE equity firm Pacific Equity Partners
baulked at sweetening its A$711 million ($730 million) offer for
cleaning services company Spotless Group Ltd, raising
the prospect it could walk away from the bid.
KKR & Co has made a buyout approach to Australian
underwear manufacturer Pacific Brands Ltd that a
newspaper said could be worth $614 million, boosting its shares
20 percent and sparking talk other firms could attract similar
offers.
INDIA’S ASK Property Investment Advisors is close to raising
10 billion rupees ($192 million) for a fund that will invest in
property projects in five Indian cities, Chief Executive Amit
Bhagat said.
AMSTERDAM-BASED law firm Loyens & Loeff said it is opening a
Hong Kong office to capitalise on increased Asian interest in
investing in Benelux countries.
JANUARY 5
BLACKSTONE GROUP LP will conclude fundraising for its
latest buyout fund in January, raising just over $16 billion,
three people familiar with the matter said.
NEWQUEST CAPITAL Partners said it plans to invest up to $200
million in the next 12-18 months to acquire private equity
portfolios in Asia.
JANUARY 4
JAPAN’S RECRUIT Co has paid $410 million to buy two
temporary staffing agencies in the U.S. and Europe from buyout
firm Cerberus Capital Management, the human resources
company said, as it seeks to expand overseas.
JANUARY 3
TEMASEK HOLDINGS Pte Ltd said it has set up a new
subsidiary called Pavilion Capital Pte Ltd that will invest
primarily in privately owned firms in North Asia.
RED FORT Capital, an India-focussed real estate private
equity firm, is set to raise a $500 million fund that will
invest in commercial and residential assets, two sources told
Reuters.
DECEMBER 30
NATURAL GAS fuel firm Clean Energy Fuels Corp,
whose investors include Chesapeake Energy Corp,
Temasek’s Seatown Holdings and Asia private equity fund RRJ
Capital, said it has received $150 million from investors
including Boone Pickens.
DECEMBER 29
CHINESE WIRE maker Fushi Copperweld Inc said it
received a revised proposal from co-chief executive Li Fu, Abax
Global Capital and TPG Growth Asia Inc to take the company
private for $9.50 per share in cash.
DEALTALK – TOUGH IPO conditions in India are driving
secondary deals between private equity investors.
CHINA NO longer wants foreign-funded automobile factories or
polysilicon plants, but would welcome overseas investment in
hospitals and financial leasing firms, according to updated
inward investment guidelines.
ALIBABA has hired a Washington lobbying firm in a sign that
the Chinese e-commerce company would be willing to make a bid
for all of Yahoo Inc in the event that talks to unwind
their Asian partnership fail.
DECEMBER 28
AN AFFILIATE of U.S. private equity giant Blackstone has
bought a company that owns a special economic zone in India from
the country’s top listed developer DLF Ltd and its partner for
8.1 billion rupees ($153 million).
JAPANESE PRIVATE equity firm Unison Capital said it will buy
Asahi Tec, a maker of iron castings used in automobiles
that is majority owned by Belgian private equity investor RHJ
International SA, for $310 million excluding debt.
BANKRUPT JAPANESE consumer lender Takefuji Corp
gained a new lifeline when financial group J Trust Co Ltd
said it would invest $325 million after a previous
agreement with struggling A&P Financial of South Korea fell
through.
NOMURA HOLDINGS Inc said it would become the first
Japanese financial group to be allowed to make private equity
investments in China and would invest in a private equity fund
managed by Jiu You Equity Investment Management LLP.
DECEMBER 26
CARLYLE GROUP said it has named Kazuhiro Yamada as
co-head of its Japanese operations, replacing Masao Hirano, who
will resign from the private equity firm.
DECEMBER 23
DEALTALK-ASIA’S private equity firms face a shrinking pool
of bank loans as European lenders pull back from the region,
crimping both investments and re-financings for buyout-backed
companies and adding to the list of challenges the industry will
meet in 2012.
AUSTRALIAN PAPER manufacturer PaperlinX Ltd said it
has received an incomplete and conditional proposal from an
unnamed private equity firm for its business, while it predicted
a loss for the first half as European markets weakened.
http://tourism9.com/ http://vkins.com/
developments in Asia private equity from Reuters News for the
holiday period, and the week ending Jan. 13.
JANUARY 13
TPG Capital LP is willing to invest about $1
billion in Japan’s Olympus Corp in a joint deal with
Sony Corp or another suitor circling the scandal-hit
company, a person familiar with TPG’s thinking said.
INVESTORS HAVE approved a year-long extension of a $4.7
billion property megafund from Morgan Stanley, a company
spokesman told Reuters on Friday.
JANUARY 12
HONY CAPITAL, one of China’s most successful private equity
funds, said on Thursday that it had raised nearly $4 billion
from investors, defying the increasingly tight fundraising
climate.
THE SALE of Indian developer DLF Ltd’s luxury hotel
chain, Amanresorts International, has stalled due to
lower-than-expected bids by shortlisted companies, two sources
with direct knowledge of the matter said.
JANUARY 11
ALIBABA GROUP has reduced the size of its debut
loan to $3 billion, three sources told Reuters.
LUNAR CAPITAL, a China-focused private equity fund, will pay
close to $100 million to buy a controlling stake in China’s
Yeehoo Group Ltd, a baby products maker, a source familiar with
the matter told Reuters.
AUSTRALIA’S BRAMBLES Ltd, the world’s top pallet
supplier, received first offers from private equity groups for
its U.S. document management business valued at more than $2
billion, three sources said.
JANUARY 10
JAPANESE STATE-sponsored fund, Innovation Network of Japan,
said its investment in overseas acquisitions by Japanese
companies is likely to increase this year, helped by a stronger
yen and an increase in asset sales abroad.
MALAYSIA-BASED private equity firm Navis Capital Partners
said it has completed the sale of its Dunkin’ Donuts and Au Bon
Pain businesses in Thailand to Sub Sri TPC Pcl for 1.32
billion baht ($41.56 million).
AUSTRALIAN PRIVATE equity firm Pacific Equity Partners
baulked at sweetening its A$711 million ($730 million) offer for
cleaning services company Spotless Group Ltd, raising
the prospect it could walk away from the bid.
KKR & Co has made a buyout approach to Australian
underwear manufacturer Pacific Brands Ltd that a
newspaper said could be worth $614 million, boosting its shares
20 percent and sparking talk other firms could attract similar
offers.
INDIA’S ASK Property Investment Advisors is close to raising
10 billion rupees ($192 million) for a fund that will invest in
property projects in five Indian cities, Chief Executive Amit
Bhagat said.
AMSTERDAM-BASED law firm Loyens & Loeff said it is opening a
Hong Kong office to capitalise on increased Asian interest in
investing in Benelux countries.
JANUARY 5
BLACKSTONE GROUP LP will conclude fundraising for its
latest buyout fund in January, raising just over $16 billion,
three people familiar with the matter said.
NEWQUEST CAPITAL Partners said it plans to invest up to $200
million in the next 12-18 months to acquire private equity
portfolios in Asia.
JANUARY 4
JAPAN’S RECRUIT Co has paid $410 million to buy two
temporary staffing agencies in the U.S. and Europe from buyout
firm Cerberus Capital Management, the human resources
company said, as it seeks to expand overseas.
JANUARY 3
TEMASEK HOLDINGS Pte Ltd said it has set up a new
subsidiary called Pavilion Capital Pte Ltd that will invest
primarily in privately owned firms in North Asia.
RED FORT Capital, an India-focussed real estate private
equity firm, is set to raise a $500 million fund that will
invest in commercial and residential assets, two sources told
Reuters.
DECEMBER 30
NATURAL GAS fuel firm Clean Energy Fuels Corp,
whose investors include Chesapeake Energy Corp,
Temasek’s Seatown Holdings and Asia private equity fund RRJ
Capital, said it has received $150 million from investors
including Boone Pickens.
DECEMBER 29
CHINESE WIRE maker Fushi Copperweld Inc said it
received a revised proposal from co-chief executive Li Fu, Abax
Global Capital and TPG Growth Asia Inc to take the company
private for $9.50 per share in cash.
DEALTALK – TOUGH IPO conditions in India are driving
secondary deals between private equity investors.
CHINA NO longer wants foreign-funded automobile factories or
polysilicon plants, but would welcome overseas investment in
hospitals and financial leasing firms, according to updated
inward investment guidelines.
ALIBABA has hired a Washington lobbying firm in a sign that
the Chinese e-commerce company would be willing to make a bid
for all of Yahoo Inc in the event that talks to unwind
their Asian partnership fail.
DECEMBER 28
AN AFFILIATE of U.S. private equity giant Blackstone has
bought a company that owns a special economic zone in India from
the country’s top listed developer DLF Ltd and its partner for
8.1 billion rupees ($153 million).
JAPANESE PRIVATE equity firm Unison Capital said it will buy
Asahi Tec, a maker of iron castings used in automobiles
that is majority owned by Belgian private equity investor RHJ
International SA, for $310 million excluding debt.
BANKRUPT JAPANESE consumer lender Takefuji Corp
gained a new lifeline when financial group J Trust Co Ltd
said it would invest $325 million after a previous
agreement with struggling A&P Financial of South Korea fell
through.
NOMURA HOLDINGS Inc said it would become the first
Japanese financial group to be allowed to make private equity
investments in China and would invest in a private equity fund
managed by Jiu You Equity Investment Management LLP.
DECEMBER 26
CARLYLE GROUP said it has named Kazuhiro Yamada as
co-head of its Japanese operations, replacing Masao Hirano, who
will resign from the private equity firm.
DECEMBER 23
DEALTALK-ASIA’S private equity firms face a shrinking pool
of bank loans as European lenders pull back from the region,
crimping both investments and re-financings for buyout-backed
companies and adding to the list of challenges the industry will
meet in 2012.
AUSTRALIAN PAPER manufacturer PaperlinX Ltd said it
has received an incomplete and conditional proposal from an
unnamed private equity firm for its business, while it predicted
a loss for the first half as European markets weakened.
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2012年1月6日星期五
2012年1月3日星期二
Intervale Capital Raises $63M for Private Equity Fund – cbl
More Topics:
Posted January 3, 2012
Charles CheringtonBy Bill Murphy
CAMBRIDGE, Mass. – Intervale Capital has raised $63 million, or about 18 percent of a $350 million private equity fund, from seven investors, according to an SEC filing.
Principals named in the filing by the Cambridge-based fund that focuses on investments in energy firms are:
· Managing partner Charles Cherington; and
· Partner Erich Horsley.
The company said it would pay an affiliate up to $2 million from the proceeds towards annual management fee. It also expects to pay a sales commission of up to $157,500.
Currently, Intervale Capital manages a $280 million private equity fund that invests in oilfield service and manufacturing companies. It has investments in 10 companies.
Reg D filing: http://tinyurl.com/6vvzyje
Also, at citybizlist see:
Intervale Capital Signs Office Lease in Cambridge, MA
Intervale Capital Promotes Erich Horsley to Partner
Bios from Intervale Capital site:
Charles Cherington
Managing Partner
Charles co-founded Intervale Capital to build on the success of Cherington Capital, a private equity firm focused on investments in middle market energy companies. Prior to founding Cherington Capital, Charles co-founded a smaller fund which also focused on middle market buyouts. Charles has over fifteen years of private equity experience.
Before launching his first fund, Charles spent several years as a vice president at the Vietnam Fund, a British private equity fund. Charles also worked for CS First Boston in New York and Vietnam.
Charles earned an M.B.A., with honors, from the University of Chicago and a B.A. in History from Wesleyan University.
Erich Horsley
Partner
Erich started his private equity career in 1998, and has focused exclusively on buyouts of middle-market companies. Erich served as a Principal at Watermill Ventures, a private equity group based in Waltham, MA. He also served as a Vice President at a Boston-based private equity firm with $1.4 billion under management. Erich has spent most of his private equity career executing transactions and overseeing growth in industrial and energy-related businesses.
Erich was a Financial Analyst in the Corporate Finance Department of Morgan Stanley in New York and in Frankfurt, Germany from 1994 to 1996.
Erich received his B.A. in Psychology and English, with honors, from Harvard College and his M.B.A. from Harvard Business School.
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Posted January 3, 2012
Charles CheringtonCAMBRIDGE, Mass. – Intervale Capital has raised $63 million, or about 18 percent of a $350 million private equity fund, from seven investors, according to an SEC filing.
Principals named in the filing by the Cambridge-based fund that focuses on investments in energy firms are:
· Managing partner Charles Cherington; and
· Partner Erich Horsley.
The company said it would pay an affiliate up to $2 million from the proceeds towards annual management fee. It also expects to pay a sales commission of up to $157,500.
Currently, Intervale Capital manages a $280 million private equity fund that invests in oilfield service and manufacturing companies. It has investments in 10 companies.
Reg D filing: http://tinyurl.com/6vvzyje
Also, at citybizlist see:
Intervale Capital Signs Office Lease in Cambridge, MA
Intervale Capital Promotes Erich Horsley to Partner
Bios from Intervale Capital site:
Charles Cherington
Managing Partner
Charles co-founded Intervale Capital to build on the success of Cherington Capital, a private equity firm focused on investments in middle market energy companies. Prior to founding Cherington Capital, Charles co-founded a smaller fund which also focused on middle market buyouts. Charles has over fifteen years of private equity experience.
Before launching his first fund, Charles spent several years as a vice president at the Vietnam Fund, a British private equity fund. Charles also worked for CS First Boston in New York and Vietnam.
Charles earned an M.B.A., with honors, from the University of Chicago and a B.A. in History from Wesleyan University.
Erich Horsley
Partner
Erich started his private equity career in 1998, and has focused exclusively on buyouts of middle-market companies. Erich served as a Principal at Watermill Ventures, a private equity group based in Waltham, MA. He also served as a Vice President at a Boston-based private equity firm with $1.4 billion under management. Erich has spent most of his private equity career executing transactions and overseeing growth in industrial and energy-related businesses.
Erich was a Financial Analyst in the Corporate Finance Department of Morgan Stanley in New York and in Frankfurt, Germany from 1994 to 1996.
Erich received his B.A. in Psychology and English, with honors, from Harvard College and his M.B.A. from Harvard Business School.
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2012年1月2日星期一
PTC India in talks with sovereign wealth fund for PE venture
New Delhi, Jan 1:
Power trading firm PTC India is in talks with a sovereign wealth fund for setting up a private equity fund, which is likely to have an initial capital of about $100 million.
Sources said PTC India is looking to float a private equity fund and is in advanced talks with a sovereign wealth fund. To begin with, the PE fund would at least have $100 million as capital, they said. However, they did not disclose further details. The new fund is likely to be floated sometime next fiscal, sources added.
The firm already has a subsidiary PTC India Financial Services (PFS), which lends to power sector including renewable energy projects.
In May 2010, PTC India had announced the launch of an infrastructure fund in a joint venture with specialist emerging markets asset manager Ashmore.
‘PTC Ashmore India Energy Infrastructure Fund’, which was to provide equity financing to power projects, did not take off due to various reasons.
PTC India has entered into Power Purchase Agreements (PPAs) for over 15,000 MW, including 1,416 MW of cross border projects.
In November, PTC India said that around 1,500 MW capacity is expected to be commissioned in FY 13 while about 4,500 MW is to be ready in FY 14.
PTC India’s profit after tax surged over 19 per cent to Rs 80.80 crore in the six months ended September 30.
The entity’s trading volumes had surged 34 per cent to 24,481 million units in the last fiscal.
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Power trading firm PTC India is in talks with a sovereign wealth fund for setting up a private equity fund, which is likely to have an initial capital of about $100 million.
Sources said PTC India is looking to float a private equity fund and is in advanced talks with a sovereign wealth fund. To begin with, the PE fund would at least have $100 million as capital, they said. However, they did not disclose further details. The new fund is likely to be floated sometime next fiscal, sources added.
The firm already has a subsidiary PTC India Financial Services (PFS), which lends to power sector including renewable energy projects.
In May 2010, PTC India had announced the launch of an infrastructure fund in a joint venture with specialist emerging markets asset manager Ashmore.
‘PTC Ashmore India Energy Infrastructure Fund’, which was to provide equity financing to power projects, did not take off due to various reasons.
PTC India has entered into Power Purchase Agreements (PPAs) for over 15,000 MW, including 1,416 MW of cross border projects.
In November, PTC India said that around 1,500 MW capacity is expected to be commissioned in FY 13 while about 4,500 MW is to be ready in FY 14.
PTC India’s profit after tax surged over 19 per cent to Rs 80.80 crore in the six months ended September 30.
The entity’s trading volumes had surged 34 per cent to 24,481 million units in the last fiscal.
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Tough India IPO market drives deals between private equity funds
MUMBAI (Reuters) – When Ind-Barath Power Infra Ltd dropped plans for a $200 million IPO earlier this year, it not only thwarted the fundraising plans of its controlling shareholder, but blocked an exit route for a clutch of private equity investors.
Those funds, including Sequoia Capital, Citigroup’sventure capital arm and 3i , invested a combined $223 million in Ind-Barath and may get a breather as the firm is in talks to sell a big chunk to buyout giants such as TPG Capital and Apollo Global Management .
So-called secondary deals, when a private equity investor sells its holding to another such investor, have traditionally been less favored by buyout firms than an exit through an IPO or the sale of a company to an industry rival.
But with weak capital markets shutting off the IPO option for now and mergers between domestic corporate rivals still rare, owners of Indian companies and their private equity investors eyeing the exits will be forced to look at alternatives, including secondary market deals.
KPMG figures roughly $95 billion in maturing Indian private equity investments made during the bull market years of 2006-2008 will come up for sale over the next three years.
“Logic suggests that a good time for exits is not a good time for investing and vice versa,” said Raja Parthasarathy, managing director at IDFC Private Equity, one of India‘s largest private equity funds.
“But the current environment appears to be challenging on both fronts, largely on account of continuing uncertainties around the macro outlook,” he said.
In India, companies tend to want to go public, ready or not.
But India‘s benchmark stock index <.bsesn> is down more than a fifth this year, and 13 rate interest increases since early 2010 by the central bank have pushed up borrowing costs, slowed economic growth and made investors wary.
Private equity exits through the Indian IPO market dropped 66 percent this year to $85 million in 15 deals, according to data from VCCircle.
Overall, some $7 billion worth of public offers were either scrapped or deferred in 2011, of which $1.8 billion was backed by private equity investors, SMC Global said in a recent study.
However, secondary market private equity transactions are up 9 percent this year to $704 million in 29 deals, from $646 million in 14 deals last year, according to VCCircle data, and industry players expect that figure to grow.
SECOND-HAND SHOPPING
While private equity investors in India have generally been reluctant to sell to another buyout firm, as a partial exit through a secondary sale does not provide the liquidity that an IPO does, the current environment and pressure to exit are forcing a re-think.
“A secondary sale should not be viewed as a forbidden option, as it sometimes is,” KPMG said in a recent report on Indian private equity.
“Secondary transactions offer relatively high returns…As the industry matures, more and more PE-funded companies will come up for sale,” it said.
Recent deals include the partial exit in November by UK-based Aureos Capital, when it sold part of its $15 million investment in Continental Warehousing Corp to U.S. fund Warburg Pincus, which invested about $100 million in the company.
Earlier this year, Kotak Realty Fund, a unit of India’s Kotak Mahindra Banksold its holding in Peepul Tree Properties to local rival Tata Realty Fund for $115 million.
The KPMG study said about one-third of private equity investments in India are in the red.
“In an exit environment driven by IPOs, such underperformers would indeed be hard to exit,” it said.
GHOSTS OF INVESTMENTS PAST
Private equity funds invested more than $31.5 billion in India between 2006 and 2008, according to KPMG.
Assuming a five-year holding period and funds’ expectations for returns of roughly three times, Indian exits valued at roughly $95 billion are poised to take place over the next three years, or $28 billion of exits per year, the study found.
By comparison, private equity funds spent a total of just $14 billion in Indian in their most active year of 2007, KPMG said.
Investors in private equity funds, known as limited partners, typically commit their money for 10 years, but fund managers generally like to turn over specific investments after roughly five years.
“Fund managers are definitely under pressure…as their average holding period is increasing,” said Ajit Kumar, India head of Dubai-based fund Evolvence Capital, who expects a growing number of secondary exits as the industry matures.
Evolvence has invested about $400 million in India and is raising a $400 million India-dedicated fund.
“We may see improvement in secondary deal volumes in the second half of 2012. The public markets are also likely to turn better,” he said.
Meanwhile, worries about the fate of boom-era investments have dampened sentiment in the fundraising market, as some 60 India-focused funds attempt to raise about $15 billion.
Investors whose previous investments in Indian private equity deals have not yet borne fruit may be reluctant to write checks to fund managers this time around.
“Ironically, those investments made then are proving to be one of the most vital roadblocks confronting the industry today,” said Subbu Subramaniam, who was a founding partner at Baring India before setting up his own private equity firm, M-Cap fund advisors.
(Editing by Tony Munroe and Matt Driskill)
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Those funds, including Sequoia Capital, Citigroup’s
So-called secondary deals, when a private equity investor sells its holding to another such investor, have traditionally been less favored by buyout firms than an exit through an IPO or the sale of a company to an industry rival.
But with weak capital markets shutting off the IPO option for now and mergers between domestic corporate rivals still rare, owners of Indian companies and their private equity investors eyeing the exits will be forced to look at alternatives, including secondary market deals.
KPMG figures roughly $95 billion in maturing Indian private equity investments made during the bull market years of 2006-2008 will come up for sale over the next three years.
“Logic suggests that a good time for exits is not a good time for investing and vice versa,” said Raja Parthasarathy, managing director at IDFC Private Equity, one of India‘s largest private equity funds.
“But the current environment appears to be challenging on both fronts, largely on account of continuing uncertainties around the macro outlook,” he said.
In India, companies tend to want to go public, ready or not.
But India‘s benchmark stock index <.bsesn> is down more than a fifth this year, and 13 rate interest increases since early 2010 by the central bank have pushed up borrowing costs, slowed economic growth and made investors wary.
Private equity exits through the Indian IPO market dropped 66 percent this year to $85 million in 15 deals, according to data from VCCircle.
Overall, some $7 billion worth of public offers were either scrapped or deferred in 2011, of which $1.8 billion was backed by private equity investors, SMC Global said in a recent study.
However, secondary market private equity transactions are up 9 percent this year to $704 million in 29 deals, from $646 million in 14 deals last year, according to VCCircle data, and industry players expect that figure to grow.
SECOND-HAND SHOPPING
While private equity investors in India have generally been reluctant to sell to another buyout firm, as a partial exit through a secondary sale does not provide the liquidity that an IPO does, the current environment and pressure to exit are forcing a re-think.
“A secondary sale should not be viewed as a forbidden option, as it sometimes is,” KPMG said in a recent report on Indian private equity.
“Secondary transactions offer relatively high returns…As the industry matures, more and more PE-funded companies will come up for sale,” it said.
Recent deals include the partial exit in November by UK-based Aureos Capital, when it sold part of its $15 million investment in Continental Warehousing Corp to U.S. fund Warburg Pincus, which invested about $100 million in the company.
Earlier this year, Kotak Realty Fund, a unit of India’s Kotak Mahindra Bank
The KPMG study said about one-third of private equity investments in India are in the red.
“In an exit environment driven by IPOs, such underperformers would indeed be hard to exit,” it said.
GHOSTS OF INVESTMENTS PAST
Private equity funds invested more than $31.5 billion in India between 2006 and 2008, according to KPMG.
Assuming a five-year holding period and funds’ expectations for returns of roughly three times, Indian exits valued at roughly $95 billion are poised to take place over the next three years, or $28 billion of exits per year, the study found.
By comparison, private equity funds spent a total of just $14 billion in Indian in their most active year of 2007, KPMG said.
Investors in private equity funds, known as limited partners, typically commit their money for 10 years, but fund managers generally like to turn over specific investments after roughly five years.
“Fund managers are definitely under pressure…as their average holding period is increasing,” said Ajit Kumar, India head of Dubai-based fund Evolvence Capital, who expects a growing number of secondary exits as the industry matures.
Evolvence has invested about $400 million in India and is raising a $400 million India-dedicated fund.
“We may see improvement in secondary deal volumes in the second half of 2012. The public markets are also likely to turn better,” he said.
Meanwhile, worries about the fate of boom-era investments have dampened sentiment in the fundraising market, as some 60 India-focused funds attempt to raise about $15 billion.
Investors whose previous investments in Indian private equity deals have not yet borne fruit may be reluctant to write checks to fund managers this time around.
“Ironically, those investments made then are proving to be one of the most vital roadblocks confronting the industry today,” said Subbu Subramaniam, who was a founding partner at Baring India before setting up his own private equity firm, M-Cap fund advisors.
(Editing by Tony Munroe and Matt Driskill)
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PE fund Suffolk (Mauritius) raises stake in Patni
Mumbai, Dec 28:
Private equity fund Suffolk (Mauritius) has raised its stake in Patni Computer Services to 5.03 per cent after acquiring shares of the company worth Rs 5.04 crore through open market transactions.
Suffolk (Mauritius) has acquired a total of over 1.13 lakh shares of IT firm Patni Computer Systems, totalling Rs 5.04 crore, Patni Computer said in a filing to the BSE.
Suffolk purchased 31,068 shares of the IT firm for Rs 1.37 crore and 82,464 shares for Rs 3.67 crore, the filing added.
Prior to the acquisition, Suffolk held a 4.95 per cent stake in Patni, but now it holds a 5.03 per cent stake in the IT firm.
Yesterday, foreign fund house Morgan Stanley & Co International Plc sold nearly 21 lakh shares of IT firm Patni Computer Systems for over Rs 92 crore in the stock market.
Shares of Patni Computer were trading at Rs 444.40, up 0.08 per cent from their previous close.
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Private equity fund Suffolk (Mauritius) has raised its stake in Patni Computer Services to 5.03 per cent after acquiring shares of the company worth Rs 5.04 crore through open market transactions.
Suffolk (Mauritius) has acquired a total of over 1.13 lakh shares of IT firm Patni Computer Systems, totalling Rs 5.04 crore, Patni Computer said in a filing to the BSE.
Suffolk purchased 31,068 shares of the IT firm for Rs 1.37 crore and 82,464 shares for Rs 3.67 crore, the filing added.
Prior to the acquisition, Suffolk held a 4.95 per cent stake in Patni, but now it holds a 5.03 per cent stake in the IT firm.
Yesterday, foreign fund house Morgan Stanley & Co International Plc sold nearly 21 lakh shares of IT firm Patni Computer Systems for over Rs 92 crore in the stock market.
Shares of Patni Computer were trading at Rs 444.40, up 0.08 per cent from their previous close.
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Nomura to invest in Shanghai private-equity fund
By Atsuko Fukase
TOKYO (MarketWatch) — Nomura Holdings Inc. said Wednesday it has agreed to invest in Shanghai-based private equity fund as part of efforts to enhance its local business platform in China.
Japan’s largest brokerage firm will invest in a fund managed by Jiu You Equity Investment Management LLP, a fund management firm that invests in the high tech and biopharmaceutical industries, Nomura said.
Nomura didn’t say how much it would
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TOKYO (MarketWatch) — Nomura Holdings Inc. said Wednesday it has agreed to invest in Shanghai-based private equity fund as part of efforts to enhance its local business platform in China.
Japan’s largest brokerage firm will invest in a fund managed by Jiu You Equity Investment Management LLP, a fund management firm that invests in the high tech and biopharmaceutical industries, Nomura said.
Nomura didn’t say how much it would
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