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/
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6日星期一
$800 Million Chinese Fund to Back Film Projects
By MICHAEL CIEPLY
Published: February 6, 2012
LOS ANGELES — If Chinese versions of Rupert Murdoch and Oprah Winfrey teamed up with, say, China’s J. P. Morgan to start a film fund, this would be it.
Sun Media Group, founded by Bruno Wu, who is often compared to Mr. Murdoch, and his wife, Yang Lan, sometimes likened to Ms. Winfrey, is joining Harvest Fund Management to create an $800 million fund that will back entertainment ventures in China and around the world, company executives said Saturday. “The goal is pretty straightforward; it’s to make a maximum return, of course, for the investors,” Mr. Wu said of the enterprise, which is aimed at a booming Chinese market for global film. He and Lindsay Wright, the vice chairman of a Harvest global investment unit, spoke jointly by telephone.
The fund, called Harvest Seven Stars Media Private Equity, is expected to invest in existing entertainment companies. But it also will provide backing for individual filmmakers and build an entertainment distribution system in China and elsewhere, Mr. Wu and Ms. Wright said. Its initial pool of capital, they added, will probably be expanded in the near future.
Last year, the Motion Picture Association of America said it expected the number of cinema screens in China to increase to more than 16,000 in 2015 from about 6,200 in 2011, as Chinese box-office receipts grow to a projected $5 billion from $1.5 billion. At the same time, China has been under pressure from the entertainment industry in the United States to ease censorship, open its markets and crack down on chronic film piracy.
“The awareness, and urge, and strong desire to protect” intellectual property has never been higher in China, Mr. Wu said. He and others, he said, have been lobbying the Chinese government for tougher antipiracy measures.
Regarding markets, Mr. Wu said he and fellow investors are eager to ease the way in China for blockbuster-style films from abroad — one of the biggest hits there lately has been “Mission: Impossible — Ghost Protocol” — by joining in substantial co-productions.
Asked whether the venture might back a company as large as the current incarnation of DreamWorks Studios, which was built around a $325 million stake from Reliance Entertainment of India but is now in search of new financing, Mr. Wu said, “Yes.” Harvest Seven Stars is being advised by the Creative Artists Agency, through its Beijing office. Several deals with film producers are being completed, Ms. Wright and Mr. Wu said. Given the agency’s involvement and the producer negotiations under way, the new venture appears to be pointed toward a Hollywood alliance sooner rather than later.
Mr. Wu, one of China’s wealthier entrepreneurs, and Ms. Yang, long a television talk show hostess, already control a media empire with television, print and online components. The new film-oriented fund is backed by their Sun Redrock Investment Group. Harvest is participating in the new venture through its Harvest Alternative Investment Group, which Ms. Wright leads. She described Harvest as the second-largest asset manager in mainland China.
The new venture will operate from Hong Kong and Beijing, Ms. Wright and Mr. Wu said.
2012年2月1日星期三
Growth-Stage Technology Investor WestSummit Capital Adds Two New Partners
PALO ALTO, Calif. & BEIJING–(BUSINESS WIRE)– WestSummit Capital, a private equity fund with a core focus on growth-stage technology companies that have a substantial presence or a strategic interest in China, announced venture capital and private equity specialist David Lam has joined the firm as managing director, and Elise Huang has been promoted to partner. With over $200 million under management, WestSummit Capital is focused on fostering business growth and technology innovation as well as job and value creation in the technology, Internet/new media, telecommunications and clean technology sectors.
Founded in 2010 by four former technology executives, Raymond Yang, Datong Chen, Jay Deng and John Yu, WestSummit Capital holds a distinctive position in the market as an investor with strong Chinese roots, decades of executive and operational experience in Silicon Valley and China, and thirty-plus years of combined technology investment experience at venture capital and private equity firms in the United States and in China.
The founding partners have worked together in different ways since the mid-1900’s, graduated within three years of each other from China’s prestigious Tsinghua University, and hold over 110 years of combined executive operating experience including three NASDAQ listings and one M&A transaction.
“WestSummit Capital is one of the first China-based funds to go global and our portfolio spans China, the United States and Europe,” said Raymond Yang, a co-founder partner and Managing Director of WestSummit Capital. “We believe 2012 is a breakout year for growth-stage companies interested in moving into the Chinese market. We view ourselves as a value-add, strategic partner with regard to China-value creation for the companies we invest in. That’s where we add tremendous insight.”
Yang added, “Many executives are still wary of doing business in China because they do not know where to start or how to navigate in China’s business culture. And conversely, Chinese-based companies feel the same way about expanding into the West.
“Everyone on the WestSummit team has deep industry relationships, solid credentials, and hands-on operational and investment experience in both the U.S. and in China. Our team knows first-hand the key role that transparency plays in creating lasting shareholder value, and understands what it takes to win in the global marketplace. David’s addition and Elise’s promotion reflect our ongoing commitment to extending our team’s capabilities, reach and experience.”
The team
The WestSummit Capital partnership includes:
Two new partners with extensive private equity, technology and international investment banking experience and extensive industry connections:
Investment Portfolio
WestSummit Capital has been quietly building its portfolio over the past two years. The firm has lead or participated in investment rounds in companies based in the U.S., Europe, and China. Investments include:
WestSummit Capital is one of the first China-based technology growth-stage private equity firms in the industry. The firm invests in companies that have a substantial presence in or strategic interest in China and focuses on the technology, media, telecommunications and enabling clean tech sectors. WestSummit has offices in Beijing, China and Palo Alto, USA. More information can be found on the WestSummit Capital website at: www.westsummitcap.com
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Founded in 2010 by four former technology executives, Raymond Yang, Datong Chen, Jay Deng and John Yu, WestSummit Capital holds a distinctive position in the market as an investor with strong Chinese roots, decades of executive and operational experience in Silicon Valley and China, and thirty-plus years of combined technology investment experience at venture capital and private equity firms in the United States and in China.
The founding partners have worked together in different ways since the mid-1900’s, graduated within three years of each other from China’s prestigious Tsinghua University, and hold over 110 years of combined executive operating experience including three NASDAQ listings and one M&A transaction.
“WestSummit Capital is one of the first China-based funds to go global and our portfolio spans China, the United States and Europe,” said Raymond Yang, a co-founder partner and Managing Director of WestSummit Capital. “We believe 2012 is a breakout year for growth-stage companies interested in moving into the Chinese market. We view ourselves as a value-add, strategic partner with regard to China-value creation for the companies we invest in. That’s where we add tremendous insight.”
Yang added, “Many executives are still wary of doing business in China because they do not know where to start or how to navigate in China’s business culture. And conversely, Chinese-based companies feel the same way about expanding into the West.
“Everyone on the WestSummit team has deep industry relationships, solid credentials, and hands-on operational and investment experience in both the U.S. and in China. Our team knows first-hand the key role that transparency plays in creating lasting shareholder value, and understands what it takes to win in the global marketplace. David’s addition and Elise’s promotion reflect our ongoing commitment to extending our team’s capabilities, reach and experience.”
The team
The WestSummit Capital partnership includes:
Two new partners with extensive private equity, technology and international investment banking experience and extensive industry connections:
Investment Portfolio
WestSummit Capital has been quietly building its portfolio over the past two years. The firm has lead or participated in investment rounds in companies based in the U.S., Europe, and China. Investments include:
- Accent, supplier of a System-on-a-Chip (SoC) platform for smart meters (Italy)
- GigaDevice, provider of NOR flash memory (China)
- Inside Secure, provider of technology solutions for contactless payment and near-field communications (NFC) (France)
- SilkRoad Technologies, cloud-based human resource management software solutions (USA)
- Tilera, developer of a multi-core processors for Cloud Computing environments (USA)
- Unity Technologies, 3D gaming development software platform (USA)
- VeriSilicon, provider of custom silicon solutions and SoC turnkey services (China)
WestSummit Capital is one of the first China-based technology growth-stage private equity firms in the industry. The firm invests in companies that have a substantial presence in or strategic interest in China and focuses on the technology, media, telecommunications and enabling clean tech sectors. WestSummit has offices in Beijing, China and Palo Alto, USA. More information can be found on the WestSummit Capital website at: www.westsummitcap.com
Suggested tags/keywords:
Private Equity, Europe, Fund, Investment, Investor, Venture Capital, VC, Growth-stage, technology, new media, clean tech, semiconductor, China, business, Chinese, IT, funding
Suggested tweet:
China-focused Growth-Stage Tech Investor WestSummit Capital adds New Ptnrs #venturecapital #fund #venture
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2012年1月30日星期一
Founder family seeks 3 bln rupees in Milestone sale – report
MUMBAI (Reuters) – The family of late Ved Prakash Arya, founder of Indian private equity fund Milestone Capital, has sought 3 billion rupees from prospective buyers of the company, the Financial Express newspaper reported citing an unnamed source with direct knowledge.
Edelweiss Financial Services (EDEL.NS), Ashmore Investment Management, Arth Veda Capital, a unit of Dewan Housing Finance (DWNH.NS) and L&T Finance (LTFH.NS) are interested in the assets, the report said.
Standard Chartered Plc (STAN.L) is advising Milestone on the sale.
The family put Milestone on the block after its founder and chief executive Ved Prakash Arya died last year.
The fund currently manages about 36 billion rupees, the report said.
(Reporting by Indulal PM; Editing by Rajesh Pandathil)
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Edelweiss Financial Services (EDEL.NS), Ashmore Investment Management, Arth Veda Capital, a unit of Dewan Housing Finance (DWNH.NS) and L&T Finance (LTFH.NS) are interested in the assets, the report said.
Standard Chartered Plc (STAN.L) is advising Milestone on the sale.
The family put Milestone on the block after its founder and chief executive Ved Prakash Arya died last year.
The fund currently manages about 36 billion rupees, the report said.
(Reporting by Indulal PM; Editing by Rajesh Pandathil)
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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/
The 5-Year Return on Private-Equity Funds: 48%
What’s Happening
With Mitt Romney, former chief executive officer of Bain Capital, emerging as the leading Republican presidential candidate, private-equity firms have come under fire. At issue is whether the company restructurings in which such firms specialize are net job creators or job destroyers. What’s not in doubt is that such ventures can be lucrative. For the five years ended September 2011, private-equity funds returned 48 percent, or roughly 8 percent per year, according to research by Cambridge Associates. The S&P 500 index lost 6 percent, or roughly 1 percent annually, over the same period. That’s after fees, which typically amount to 2 percent of principal and 20 percent of profits.
Photograph by Alex Brandon/APWhy It Matters
Such returns don’t come without risk, and investors must wait years for a payoff. It’s not uncommon for a private-equity investment to run, say, for five years before it plays out. And while the top-performing 25 percent of funds that made private-equity investments in 2008 have returned nearly 12 percent per year, the bottom quarter lost 6 percent. The hurdle to get into deals is high–to join a formal partnership requires a minimum investment that’s typically in the tens of millions. If you invest through a wealth-management company, the minimum can fall to to $500,000.
Graphic by Charlos Gary/BloombergWhat It Means for Your Portfolio
For investors who don’t want to commit six figures, there are funds such as Powershares Global Listed Private Equity Portfolio and ALPS Red Rocks Listed Private Equity Fund. Publicly traded firms such as The Blackstone Group and KKR are a further option. Both stocks and index can be volatile. Over the same five-year period noted above, the S&P Listed Private Equity index lost about 10 percent of its value, largely due to the financial crisis. (The index fell by nearly 65 percent in the wake of the Lehman Brothers bankruptcy; the S&P dropped 40 percent.) On the flip side, since the stock-market bottom in March 2009, the Listed Private Equity index has gained 160 percent–double the S&P 500′s performance.
Graphic by Charlos Gary/Bloomberg2012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12日星期四
The Love Affair Between Politicians And Private Equity
Image via WikipediaAs Mitt Romney knows well, private equity and politics don’t always mix well during election season. The front runner for the Republican presidential nomination has been under attack from his Republican rivals because of his private equity roots. Newt Gingrich’s super PAC is releasing a short movie that attacks Romney for controversial private equity deals. “I am totally for capitalism,” Newt Gingrich recently said, “I do draw a distinction between [it] and looting a company.” Rick Perry has called Romney’s past private equity life a form of “vulture capitalism.”
But the fact is that politicians, both Republicans and Democrats, love the private equity industry. When Romney ran Bain Capital he was constantly searching for what private equity guys like to call an exit, which means selling a company for a big return. For a long time in Washington, the richest exit has been landing at a private equity firm, or in some cases, a hedge fund that makes private equity-like investments. Romney is only unique because he moved from the buyout business into politics and not the other way around.
The recent attacks on Romney have led to the inevitable debate about whether private equity is good for America. But there can be no debate about whether private equity is good for politicians once they leave the political arena. The New York Times recently highlighted the fact that Newt Gingrich himself was on the advisory board of Forstmann Little, a pioneering private equity firm. The truth is it is tough to find a former prominent politician who has not joined the private equity club.
In addition to Clinton, there is former Vice President Dan Quayle, who is chairman for global investments at Cerberus Capital Management, where former U.S. Treasury Secretary John Snow is chairman. Evan Bayh, the former Democratic Indiana senator and governor, is a senior advisor at Apollo Global Management. Rudy Giuliani was chairman of the advisory board of a Leeds Weld private equity fund, which was partly headed by former Massachusetts Governor William Weld. That private equity firm is now known as Leeds Equity Partners and the chair of its advisory board is Colin Powell. Two former U.S. education secretaries are also there.
David Stockman, a former congressman from Michigan and Ronald Reagan’s budget director, joined a private equity shop and eventually founded his own big-time private equity firm. Things did not work out for Stockman at Heartland Industrial Partners. He was indicted in connection with his role at a failed auto parts company, even though the federal government later dropped the charges.
Blackstone, the world’s biggest private equity firm, was co-founded by Pete Peterson, who was Secretary of Commerce during the Nixon Administration. Then there is the Carlyle Group, another massive private equity firm that has long been part of Washington mythology. Former President George H. W. Bush, former Secretary of State James Baker, former Defense Secretary Frank Carlucci, former Securities & Exchange Commission Chairman Arthur Levitt, and Bill Clinton’s White House chief of staff Mack McLarty, have all worked for Carlyle.
The private equity industry is one of the most lucrative places to work in America today. Buyout barons make huge political contributions. It is really hard to see this close relationship ending anytime soon.
http://tourism9.com/
2012年1月9日星期一
SEP and SSE Join Forces to Establish New £95 Million Green Energy Fund
LONDON and GLASGOW , January 9, 2012 /PRNewswire/ –
- New secondaries fund acquires cleantech portfolio from SSE plc
Scottish Equity Partners (SEP) has raised a new £95 million fund to invest in innovative green energy businesses in a deal involving the acquisition of a portfolio of clean energy assets from SSE Ventures, the investment arm of FTSE 100 utilities company SSE plc.
SEP raised the new secondaries fund from four institutional investors, headed by Lexington Partners, the world’s largest independent manager of secondary private equity and co-investment funds with $20 billion under management. The syndicate also comprises UK based investors, Hermes GPE and F&C Private Equity, as well as Swiss-based Partners Group.
The new Environmental Energies Fund (EEF) has acquired nine companies from the SSE Ventures portfolio and will operate as a partnership between SSE and the financial institutions, with SSE maintaining a significant interest in the portfolio through becoming an investor alongside the financial institutions. SEP has formed a separate team to manage the fund headed by SEP partner Gary Le Sueur .
The fund’s portfolio companies are market leaders from across the European clean energy spectrum, including solar energy, ground source heat pumps, energy efficiency services, electricity grid management solutions, domestic water recycling and heat recovery, wave energy, small scale hydro-electric projects and low-carbon based community heating systems (see Notes to Editor for full details of the nine companies).
EEF will have substantial fresh capital available for investment in the portfolio and also has agreement to add up to a further five SSE investments to the portfolio in future.
This marks the first move into the secondary fund market for SEP, the UK’s leading growth equity and venture capital firm. It is SEP’s second significant recent fundraising, following the successful close of its new £200m SEP IV fund announced last week, bringing the total raised in recent months to £300 million.
SEP Managing Partner, Calum Paterson said: “We are excited by the opportunity that this partnership with SSE brings and pleased to have secured such blue chip investor backing for the fund. Energy-related technology investments have always been an area of strong interest for us and there will be synergies between our involvement with the new secondary fund and SEP’s standalone primary investment activity.”
SSE’s Finance Director, Gregor Alexander , said: “SEP has a strong track record in helping innovative companies grow and mature. By moving our cleantech investments into the Environmental Energies Fund we can ensure the companies are able to benefit from the track record and expertise of SEP, draw upon the financial resources of the new partners and ultimately deliver a better return on our initial investment”.
“We continue to believe that cleantech companies have an important role to play in developing new technologies and that is why we continue to be involved as a major partner in the EEF.”
Marshall Parke , Managing Partner in Lexington Partners’ London office, said: “The clean energy sector is relatively new to the secondary market, and we expect to see more secondary activity in this space in the future.” Pål Ristvedt, Partner, added: ”Selecting the right partners is absolutely critical to the success of these deals. We believe the three way partnership between a major strategic player like SSE, the substantial energy and general investment expertise of SEP plus the secondary experience of Lexington Partners creates a very strong platform for managing these assets.”
Notes to Editors
About the Environmental Energies Fund:
The Environmental Energies Fund is a £95 million secondaries fund formed by SEP to acquire and invest in a portfolio of innovative UK based green energy businesses originally backed by SSE plc. The fund is managed by leading UK growth equity and venture capital firm SEP and will operate as a partnership between FTSE-100 listed SSE plc, one of the UK’s largest energy companies, and the fund’s blue-chip financial backers Lexington Partners, Hermes GPE, F&C Private Equity and Partners Group.
The fund’s portfolio of assets was acquired from SSE Ventures, the investment arm of SSE plc and comprise the following nine companies:
Anesco: http://anesco.co.uk
(Energy efficiency services and solutions)
Aquamarine Power: http://www.aquamarinepower.com
(Marine renewable power technology)
Cyberhawk Innovations: http://www.cyberhawkinnovations.co.uk
(Unmanned aerial inspection of energy installations)
Geothermal International: http://www.geothermalint.co.uk
(Turnkey services in ground and air source heat pumps)
Green Highland Renewables: http://www.greenhighland.co.uk
(Small and medium scale hydro-power schemes)
Smarter Grid Solutions: http://www.smartergridsolutions.com
(Electricity grid management technologies)
SolarCentury: http://www.solarcentury.co.uk
(Solar power design and installation)
Vital Energi: http://www.vitalenergi.co.uk
(Energy centre installation and services)
Waterevolution: http://www.waterevolution.co.uk
(Water recycling and heat recovery)
About Scottish Equity Partners
Scottish Equity Partners (SEP) is a leading independent, owner-managed growth equity and venture capital firm with a 20 year track record of successful investing. Operating from offices in Glasgow and London , it invests in innovative, high growth potential companies in the IT, healthcare and energy sectors. With significant funds available and an integrated investment team, SEP has the resource and experience to add value from investment through to exit and has been selected as the partner of choice by many of the UK’s leading technology companies.
Recent portfolio exits include the sale of web traffic management company Zeus Technology to Riverbed Technology Inc (NASDAQ: RVBD – News) for a total price of up to $140m , recently named Best Venture Investment of the Year. SEP also sold multimedia home networking company Gigle Networks to Broadcom Corp (NASDAQ: BRCM – News). SEP also exited from cancer therapy company BioVex which was acquired by Amgen Inc. (NASDAQ: AMGN, SEHK: 4332) in a deal worth $1bn which earned SEP won the Venture Deal of the Year award in the Unquote British Private Equity Awards 2011.
SEP’s current portfolio comprises award-winning high growth companies including oil technology business Deep Casing Tools (http://www.deepcasingtools.com); energy-related technology specialist ARKeX (http://www.arkex.com); Media Ingenuity (http://www.mediaingenuity.com) a specialist in online marketing services and technology for the financial services sector; managed IT services provider Control Circle (http://www.controlcircle.com); flight search engine Skyscanner (http://www.skyscanner.net); wireless communications leader ipaccess (http://www.ipaccess.com); IT analytics company Sumerian (http://www.sumerian.com/); Cmed (http://www.cmedgroup.com) which combines full clinical research services with advanced clinical data capture and management technology; and healthcare informatics company Aridhia (http://www.aridhia.com).
For more information visit http://www.sep.co.uk/
http://tourism9.com/
- New secondaries fund acquires cleantech portfolio from SSE plc
Scottish Equity Partners (SEP) has raised a new £95 million fund to invest in innovative green energy businesses in a deal involving the acquisition of a portfolio of clean energy assets from SSE Ventures, the investment arm of FTSE 100 utilities company SSE plc.
SEP raised the new secondaries fund from four institutional investors, headed by Lexington Partners, the world’s largest independent manager of secondary private equity and co-investment funds with $20 billion under management. The syndicate also comprises UK based investors, Hermes GPE and F&C Private Equity, as well as Swiss-based Partners Group.
The new Environmental Energies Fund (EEF) has acquired nine companies from the SSE Ventures portfolio and will operate as a partnership between SSE and the financial institutions, with SSE maintaining a significant interest in the portfolio through becoming an investor alongside the financial institutions. SEP has formed a separate team to manage the fund headed by SEP partner Gary Le Sueur .
The fund’s portfolio companies are market leaders from across the European clean energy spectrum, including solar energy, ground source heat pumps, energy efficiency services, electricity grid management solutions, domestic water recycling and heat recovery, wave energy, small scale hydro-electric projects and low-carbon based community heating systems (see Notes to Editor for full details of the nine companies).
EEF will have substantial fresh capital available for investment in the portfolio and also has agreement to add up to a further five SSE investments to the portfolio in future.
This marks the first move into the secondary fund market for SEP, the UK’s leading growth equity and venture capital firm. It is SEP’s second significant recent fundraising, following the successful close of its new £200m SEP IV fund announced last week, bringing the total raised in recent months to £300 million.
SEP Managing Partner, Calum Paterson said: “We are excited by the opportunity that this partnership with SSE brings and pleased to have secured such blue chip investor backing for the fund. Energy-related technology investments have always been an area of strong interest for us and there will be synergies between our involvement with the new secondary fund and SEP’s standalone primary investment activity.”
SSE’s Finance Director, Gregor Alexander , said: “SEP has a strong track record in helping innovative companies grow and mature. By moving our cleantech investments into the Environmental Energies Fund we can ensure the companies are able to benefit from the track record and expertise of SEP, draw upon the financial resources of the new partners and ultimately deliver a better return on our initial investment”.
“We continue to believe that cleantech companies have an important role to play in developing new technologies and that is why we continue to be involved as a major partner in the EEF.”
Marshall Parke , Managing Partner in Lexington Partners’ London office, said: “The clean energy sector is relatively new to the secondary market, and we expect to see more secondary activity in this space in the future.” Pål Ristvedt, Partner, added: ”Selecting the right partners is absolutely critical to the success of these deals. We believe the three way partnership between a major strategic player like SSE, the substantial energy and general investment expertise of SEP plus the secondary experience of Lexington Partners creates a very strong platform for managing these assets.”
Notes to Editors
About the Environmental Energies Fund:
The Environmental Energies Fund is a £95 million secondaries fund formed by SEP to acquire and invest in a portfolio of innovative UK based green energy businesses originally backed by SSE plc. The fund is managed by leading UK growth equity and venture capital firm SEP and will operate as a partnership between FTSE-100 listed SSE plc, one of the UK’s largest energy companies, and the fund’s blue-chip financial backers Lexington Partners, Hermes GPE, F&C Private Equity and Partners Group.
The fund’s portfolio of assets was acquired from SSE Ventures, the investment arm of SSE plc and comprise the following nine companies:
Anesco: http://anesco.co.uk
(Energy efficiency services and solutions)
Aquamarine Power: http://www.aquamarinepower.com
(Marine renewable power technology)
Cyberhawk Innovations: http://www.cyberhawkinnovations.co.uk
(Unmanned aerial inspection of energy installations)
Geothermal International: http://www.geothermalint.co.uk
(Turnkey services in ground and air source heat pumps)
Green Highland Renewables: http://www.greenhighland.co.uk
(Small and medium scale hydro-power schemes)
Smarter Grid Solutions: http://www.smartergridsolutions.com
(Electricity grid management technologies)
SolarCentury: http://www.solarcentury.co.uk
(Solar power design and installation)
Vital Energi: http://www.vitalenergi.co.uk
(Energy centre installation and services)
Waterevolution: http://www.waterevolution.co.uk
(Water recycling and heat recovery)
About Scottish Equity Partners
Scottish Equity Partners (SEP) is a leading independent, owner-managed growth equity and venture capital firm with a 20 year track record of successful investing. Operating from offices in Glasgow and London , it invests in innovative, high growth potential companies in the IT, healthcare and energy sectors. With significant funds available and an integrated investment team, SEP has the resource and experience to add value from investment through to exit and has been selected as the partner of choice by many of the UK’s leading technology companies.
Recent portfolio exits include the sale of web traffic management company Zeus Technology to Riverbed Technology Inc (NASDAQ: RVBD – News) for a total price of up to $140m , recently named Best Venture Investment of the Year. SEP also sold multimedia home networking company Gigle Networks to Broadcom Corp (NASDAQ: BRCM – News). SEP also exited from cancer therapy company BioVex which was acquired by Amgen Inc. (NASDAQ: AMGN, SEHK: 4332) in a deal worth $1bn which earned SEP won the Venture Deal of the Year award in the Unquote British Private Equity Awards 2011.
SEP’s current portfolio comprises award-winning high growth companies including oil technology business Deep Casing Tools (http://www.deepcasingtools.com); energy-related technology specialist ARKeX (http://www.arkex.com); Media Ingenuity (http://www.mediaingenuity.com) a specialist in online marketing services and technology for the financial services sector; managed IT services provider Control Circle (http://www.controlcircle.com); flight search engine Skyscanner (http://www.skyscanner.net); wireless communications leader ipaccess (http://www.ipaccess.com); IT analytics company Sumerian (http://www.sumerian.com/); Cmed (http://www.cmedgroup.com) which combines full clinical research services with advanced clinical data capture and management technology; and healthcare informatics company Aridhia (http://www.aridhia.com).
For more information visit http://www.sep.co.uk/
http://tourism9.com/
Local Private Equity Fund Announces Merger of 5 Air Filtration Companies
Huntington Capital Fund II LP, a San Diego private equity fund, said it arranged a syndicated mezzanine loan for an undisclosed amount to Protect Plus Air Holdings LLC, a new holding company for five entities in the residential air filter space.
Huntington co-invested in the company with Plexus Capital Fund II LP, based in North Carolina.
Protect Plus was set up for the purpose of facilitating the roll up of five air filtration companies owned and controlled by the Hickory, N.C.-based Lackey Group. Combined, the companies make up the second largest air filtration company in the nation with a diverse portfolio of products, the company said.
Huntington, founded in 2000, invests in established lower middle market businesses with annual revenue of $10 million to $75 million in a broad range of industries, the firm said.
— Mike Allen
http://tourism9.com/
Huntington co-invested in the company with Plexus Capital Fund II LP, based in North Carolina.
Protect Plus was set up for the purpose of facilitating the roll up of five air filtration companies owned and controlled by the Hickory, N.C.-based Lackey Group. Combined, the companies make up the second largest air filtration company in the nation with a diverse portfolio of products, the company said.
Huntington, founded in 2000, invests in established lower middle market businesses with annual revenue of $10 million to $75 million in a broad range of industries, the firm said.
— Mike Allen
http://tourism9.com/
2012年1月2日星期一
Private equity players, venture capitalists cautious about 2012
Private equity players and venture capitalists are cautiously optimistic about the prospects of their businesses, yet are hopeful of clinching more deals in the New Year, say industry experts.
“We are cautiously optimistic about 2012 as global uncertainty still looms large. However, the number of deals is likely to be higher as valuation looks attractive,” IDG Ventures vice-president Ranjith Menon said.
He also said global PE players may invest less in 2012 due to the risk aversion of foreign investors to emerging markets.
In 2011, there was an increase in private equity investments as companies found rise in cost of borrowing due to repeated rate hikes by the Reserve Bank. Even some sectors found debt flow drying up from commercial banks as financial institutions deliberately cut exposure to certain sectors fearing rising delinquency.
According to a KPMG India [ Images ] report on PE investments, it is estimated that PE deals marginally rose and touched USD 8.6 billion in 2011 up from USD 8.2 billion in 2010.
Similarly, according to a Grant Thorton report, the top sectors for PE investments in 2011 were realty, infrastructure, automotive, power and energy, banking and financial services and information technology, contributing to around 67 percent of the total investment during the year.
While about 22 per cent of the total private equity investments were in the real state and infrastructure sectors, 13 per cent was in the automotive, and 12 percent in the power and energy sector during 2011, the report added.
“In 2012, total investment will be similar or higher than 2011 by PE players as a number of players are likely to take pre-IPO exposure in companies, which was nearly absent last year,” Fire Capital chief executive Om Chaudhry said.
As domestic economy does better, there is a line up of good IPOs that are expected to hit the market and they will provide good investment opportunities for PEs, he added. Even industry experts said that the number of PIPE (private investment in public equities) are also likely to be higher in the new year.
“Promoters are more realistic about valuations these days after the bad performance of equity market. So, there should be higher deals in the form of PIPE in 2012,” he said.
Referring to sectors, Chaudhry said real estate, financial services, education, and private sector healthcare would see higher PE fund inflows during 2012.
© Copyright 2011 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.“We are cautiously optimistic about 2012 as global uncertainty still looms large. However, the number of deals is likely to be higher as valuation looks attractive,” IDG Ventures vice-president Ranjith Menon said.He also said global PE players may invest less in 2012 due to the risk aversion of foreign investors to emerging markets.
In 2011, there was an increase in private equity investments as companies found rise in cost of borrowing due to repeated rate hikes by the Reserve Bank. Even some sectors found debt flow drying up from commercial banks as financial institutions deliberately cut exposure to certain sectors fearing rising delinquency.
According to a KPMG India [ Images ] report on PE investments, it is estimated that PE deals marginally rose and touched USD 8.6 billion in 2011 up from USD 8.2 billion in 2010.
Similarly, according to a Grant Thorton report, the top sectors for PE investments in 2011 were realty, infrastructure, automotive, power and energy, banking and financial services and information technology, contributing to around 67 percent of the total investment during the year.
While about 22 per cent of the total private equity investments were in the real state and infrastructure sectors, 13 per cent was in the automotive, and 12 percent in the power and energy sector during 2011, the report added.
“In 2012, total investment will be similar or higher than 2011 by PE players as a number of players are likely to take pre-IPO exposure in companies, which was nearly absent last year,” Fire Capital chief executive Om Chaudhry said.
As domestic economy does better, there is a line up of good IPOs that are expected to hit the market and they will provide good investment opportunities for PEs, he added. Even industry experts said that the number of PIPE (private investment in public equities) are also likely to be higher in the new year.
“Promoters are more realistic about valuations these days after the bad performance of equity market. So, there should be higher deals in the form of PIPE in 2012,” he said.
Referring to sectors, Chaudhry said real estate, financial services, education, and private sector healthcare would see higher PE fund inflows during 2012.
http://tourism9.com/
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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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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Carlyle launches new financial firms buyout fund
(Reuters) – The Carlyle Group has started fundraising for a new global financial services buyout fund that is seeking to top its previous $1.1 billion fund, which is now almost fully invested, a person familiar with the matter said on Tuesday.
With about 90 percent of its first financials buyout fund spent, the private equity group is looking for more firepower as Europe’s financial crisis and higher capital requirements for banks offer new investment opportunities, the source said.
The new fund, Carlyle Global Financial Services Partners II, has a minimum commitment threshold for investors of $10 million and intends to fundraise for more than a year, according to a filing with the U.S. Securities and Exchange Commission.
Carlyle, which is preparing for an initial public offering in 2012, is one of the private equity industry’s most prolific fund managers, with more than $148 billion of assets under management in 89 active funds and 52 fund of fund vehicles.
Carlyle’s financial services group is headed by former UBS investment banker Olivier Sarkozy, half-brother of France’s President Nicolas Sarkozy and a flamboyant New York socialite with a masters in medieval history from St. Andrews University in Scotland.
The California Public Employees’ Retirement System, a major investor in Carlyle, had made 1.2 times its $94.1 million contribution to Carlyle Global Financial Services Partners I as of June 30, according to a performance report by the pension fund. The first fund launched in 2008.
The financial crisis which began in the summer of 2007 has weighed on private equity returns in the sector. The $7 billion financial firms fund raised in 2006 by the private equity firm founded by former Goldman Sachs banker J. Christopher Flowers is down about 60 percent, a source told Reuters in November.
However, J.C. Flowers’ latest fund, which raised $2.3 billion in 2009 and has invested about half the money, is doing much better and is currently up about 30 percent, according to the source.
Investments of Carlyle Global Financial Services Partners I include Bermuda-based Bank of N.T. Butterfield & Son, Florida bank BankUnitedand Boston-based asset manager Boston Private Financial. BankUnited shares rose as much as 9.3 percent on the day of their debut when the bank floated in January.
Earlier this year, Carlyle participated in the $1.5 billion auction of Regions Financial Corp’sMorgan Keegan brokerage and investment banking unit, sources familiar with the matter told Reuters in October.
(Reporting by Greg Roumeliotis and Paritosh Bansal in New York; Editing by Tim Dobbyn)
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With about 90 percent of its first financials buyout fund spent, the private equity group is looking for more firepower as Europe’s financial crisis and higher capital requirements for banks offer new investment opportunities, the source said.
The new fund, Carlyle Global Financial Services Partners II, has a minimum commitment threshold for investors of $10 million and intends to fundraise for more than a year, according to a filing with the U.S. Securities and Exchange Commission.
Carlyle, which is preparing for an initial public offering in 2012, is one of the private equity industry’s most prolific fund managers, with more than $148 billion of assets under management in 89 active funds and 52 fund of fund vehicles.
Carlyle’s financial services group is headed by former UBS investment banker Olivier Sarkozy, half-brother of France’s President Nicolas Sarkozy and a flamboyant New York socialite with a masters in medieval history from St. Andrews University in Scotland.
The California Public Employees’ Retirement System, a major investor in Carlyle, had made 1.2 times its $94.1 million contribution to Carlyle Global Financial Services Partners I as of June 30, according to a performance report by the pension fund. The first fund launched in 2008.
The financial crisis which began in the summer of 2007 has weighed on private equity returns in the sector. The $7 billion financial firms fund raised in 2006 by the private equity firm founded by former Goldman Sachs banker J. Christopher Flowers is down about 60 percent, a source told Reuters in November.
However, J.C. Flowers’ latest fund, which raised $2.3 billion in 2009 and has invested about half the money, is doing much better and is currently up about 30 percent, according to the source.
Investments of Carlyle Global Financial Services Partners I include Bermuda-based Bank of N.T. Butterfield & Son, Florida bank BankUnited
Earlier this year, Carlyle participated in the $1.5 billion auction of Regions Financial Corp’s
(Reporting by Greg Roumeliotis and Paritosh Bansal in New York; Editing by Tim Dobbyn)
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Wanted: Private equity high-flyers in growth areas
NEW YORK/LONDON/HONG KONG (Reuters) – Private equity firms, facing shrinking asset values and tough financing conditions, are trimming staff in mature markets, but are also looking to hire in growth areas so that they deliver the returns investors seek.
Shrinking fund sizes, crisis in the euro zone and hopes for emerging markets growth are all redrawing the global private equity map, determining the locations and sectors in which buyout firms hire and fire staff.
The industry boomed last decade as investor appetite created ever larger pools of capital, allowing firms to expand and cast their nets further and wider for deals. But in the financial turmoil, many buyout groups are now retrenching.
“This is still an active jobs market, the industry is focusing on niche businesses and smaller transactions and looking for senior advisors to succeed where the deals are,” said Todd Monti, who manages the global private equity and venture capital practice of headhunting firm Heidrick & Struggles.
The total capital garnered by private equity funds globally that have reached final close so far this year is about $240 billion, compared with $275 billion raised last year, according to market research firm Preqin.
The crunch has been most obvious in Europe, where a brief renaissance in private equity deals in the first half has stalled and the gloomy outlook is forcing some to reassess their approach.
Among the highest profile changes, TPG reshuffled its senior team in Europe, with co-head Philippe Costeletos taking a step back from daily duties and partner Matthias Calice leaving the firm by the end of the year.
But it is likely to be the satellite offices in European cities that come under the greatest pressure to close down.
“I think people are going to rein in on that if fund sizes shrink,” said one private equity managing partner.
Vestar Capital recently closed offices in Munich and Paris as part of a plan to focus back on the United States. And struggling mid-market group Cognetas has shut its office in Frankfurt and will close its London office later this year.
MOVING EAST
In line with the wider finance sector, the private equity jobs market has been more robust in Asia, where firms are actively hiring even as they shed tens of thousands of jobs in other regions, thanks to the continent’s economic resilience.
Buyouts in Asia-Pacific, excluding Japan and Central Asia, total $33 billion so far this year, up 54 percent from a year ago, compared with 9 percent growth in Europe and 36 percent in the Americas, Thomson Reuters data shows.
But there is a caveat. Language and cultural skills are key to new hires in Asia, as global and local private equity funds build teams to invest the capital flowing into the region.
“Limited partners are allocating a larger percentage of funds to Asia, and with that (private equity firms)are opening offices in the region,” said Julian Buckeridge, managing director for Strategic Executive Search based in China.
In contrast with Europe, where satellite offices are coming under pressure, the capital flowing to Asia is allowing firms to create new bases in places such as Singapore to provide a springboard into Southeast Asia.
In October, KKR appointed former Singapore government minister Lim Hwee Hua as a senior adviser [ID:nL3E7LA05L] and the firm is expected to locate a deal team of three in the region early in 2012 – KKR previously covered Southeast Asia from Hong Kong.
With firms such as TPG Capital and CVC Capital Partners already well established in the region, Blackstone Group LP is also mulling an expansion.
“We are seriously thinking of expanding our presence in the Southeast Asia region in terms of people on the ground and investment focus,” Michael Chae, Blackstone’s regional head, told the Reuters 2012 Investment Summit this week.
DIVERSIFICATION IS KING
The global shakeout will also create winners in the west. Buyout houses that have grown into private asset managers, such as Blackstone, KKR and Carlyle Group, are actively recruiting in areas such as credit investment and real estate.
This diversification, combined with the fee-based remuneration structure of private equity funds, has helped shield the pay of dealmakers from the economic headwinds battering the financial industry.
Incentive compensation in the U.S. private equity industry excluding carried interest is expected to fall between 0 and 5 percent in 2011, compared with plunges of up to 30 percent in investment banking and 45 percent in fixed income, according to compensation consulting firm Johnson Associates.
With competition for capital from institutional investors intensifying, major private equity firms are also ramping up their fundraising, increasingly bringing operations inhouse instead of relying on others for their marketing.
“Private equity firms used to raise money every five years, now they fundraise everyday. Good capital raising professionals are in strong demand,” said Joseph Healy, who co-heads the private equity recruiting operations of Korn/Ferry International Inc.
For those unfortunate enough to find themselves out of work, or just looking for more job security, there are options.
Sovereign wealth funds and pension funds, with aspirations to do more deals directly and cut out the private equity middlemen, could gain as firms shed experienced staff.
“Some of those people may well be happy to be employed by a sovereign wealth fund and have a more conventional salary, knowing that there is oodles of money to invest into deals,” said David Currie, chief executive of Standard Life Capital Partners. (Editing by Andre Grenon)
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Shrinking fund sizes, crisis in the euro zone and hopes for emerging markets growth are all redrawing the global private equity map, determining the locations and sectors in which buyout firms hire and fire staff.
The industry boomed last decade as investor appetite created ever larger pools of capital, allowing firms to expand and cast their nets further and wider for deals. But in the financial turmoil, many buyout groups are now retrenching.
“This is still an active jobs market, the industry is focusing on niche businesses and smaller transactions and looking for senior advisors to succeed where the deals are,” said Todd Monti, who manages the global private equity and venture capital practice of headhunting firm Heidrick & Struggles.
The total capital garnered by private equity funds globally that have reached final close so far this year is about $240 billion, compared with $275 billion raised last year, according to market research firm Preqin.
The crunch has been most obvious in Europe, where a brief renaissance in private equity deals in the first half has stalled and the gloomy outlook is forcing some to reassess their approach.
Among the highest profile changes, TPG reshuffled its senior team in Europe, with co-head Philippe Costeletos taking a step back from daily duties and partner Matthias Calice leaving the firm by the end of the year.
But it is likely to be the satellite offices in European cities that come under the greatest pressure to close down.
“I think people are going to rein in on that if fund sizes shrink,” said one private equity managing partner.
Vestar Capital recently closed offices in Munich and Paris as part of a plan to focus back on the United States. And struggling mid-market group Cognetas has shut its office in Frankfurt and will close its London office later this year.
MOVING EAST
In line with the wider finance sector, the private equity jobs market has been more robust in Asia, where firms are actively hiring even as they shed tens of thousands of jobs in other regions, thanks to the continent’s economic resilience.
Buyouts in Asia-Pacific, excluding Japan and Central Asia, total $33 billion so far this year, up 54 percent from a year ago, compared with 9 percent growth in Europe and 36 percent in the Americas, Thomson Reuters data shows.
But there is a caveat. Language and cultural skills are key to new hires in Asia, as global and local private equity funds build teams to invest the capital flowing into the region.
“Limited partners are allocating a larger percentage of funds to Asia, and with that (private equity firms)are opening offices in the region,” said Julian Buckeridge, managing director for Strategic Executive Search based in China.
In contrast with Europe, where satellite offices are coming under pressure, the capital flowing to Asia is allowing firms to create new bases in places such as Singapore to provide a springboard into Southeast Asia.
In October, KKR appointed former Singapore government minister Lim Hwee Hua as a senior adviser [ID:nL3E7LA05L] and the firm is expected to locate a deal team of three in the region early in 2012 – KKR previously covered Southeast Asia from Hong Kong.
With firms such as TPG Capital and CVC Capital Partners already well established in the region, Blackstone Group LP is also mulling an expansion.
“We are seriously thinking of expanding our presence in the Southeast Asia region in terms of people on the ground and investment focus,” Michael Chae, Blackstone’s regional head, told the Reuters 2012 Investment Summit this week.
DIVERSIFICATION IS KING
The global shakeout will also create winners in the west. Buyout houses that have grown into private asset managers, such as Blackstone, KKR and Carlyle Group, are actively recruiting in areas such as credit investment and real estate.
This diversification, combined with the fee-based remuneration structure of private equity funds, has helped shield the pay of dealmakers from the economic headwinds battering the financial industry.
Incentive compensation in the U.S. private equity industry excluding carried interest is expected to fall between 0 and 5 percent in 2011, compared with plunges of up to 30 percent in investment banking and 45 percent in fixed income, according to compensation consulting firm Johnson Associates.
With competition for capital from institutional investors intensifying, major private equity firms are also ramping up their fundraising, increasingly bringing operations inhouse instead of relying on others for their marketing.
“Private equity firms used to raise money every five years, now they fundraise everyday. Good capital raising professionals are in strong demand,” said Joseph Healy, who co-heads the private equity recruiting operations of Korn/Ferry International Inc.
For those unfortunate enough to find themselves out of work, or just looking for more job security, there are options.
Sovereign wealth funds and pension funds, with aspirations to do more deals directly and cut out the private equity middlemen, could gain as firms shed experienced staff.
“Some of those people may well be happy to be employed by a sovereign wealth fund and have a more conventional salary, knowing that there is oodles of money to invest into deals,” said David Currie, chief executive of Standard Life Capital Partners. (Editing by Andre Grenon)
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