Private Equity Directory

Directory of Private Equity Firms and Database of Investors

Private equity firms can be hard to find and even more difficult to contact. That is why our team has created a database of over 1,000 private equity firms with full contact information including the contact's website, phone number, as well as mailing and e-mail addresses.

Our team has invested our time in developing and updating a deep, constantly-improved directory of private equity firms and their contact details in Excel format. This is a valuable resource for firms, capital raisers, individuals trying to meet with private equity firms, students, internship or job-seekers and private equity service providers.

This Private Equity Firm Directory contains the private equity fund firm name, primary contact name, physical location, assets under management, phone number, fax, and email address as well. Collectively the 1,000+ private equity firms in our database control well over $200B in assets. This directory is a great way to gain access to hard-to-find contact details for private equity firms. Click here to learn more about this directory of private equity firms.

Directory of 3,800+ Private Equity Investors

If you are a private equity firm and would like to raise capital by contacting private equity investors, see our Private Equity Investor Database. Use this Private Equity Investor Database to broaden your fundraising efforts with our diverse pool of thousands private equity investors. The Directory contains the private equity investor firm name, primary contact name, physical location, strategy, phone number, fax, and email address for more than 3,800 private equity investors. Collectively, the thousands of potential private equity investors within our directory control well over $500B in assets.

Gain access to the contact details for the following private equity investors:

700 Family Office Listings
730 Wealth Management Firm Listings
265 Institutional Investment Consultant Listings
924 Endowment Fund Listings
50 Sovereign Wealth Fund Listings
600 Pension Fund Listings
600 Foundation Listings

If you would like to learn more about this Private Equity Investor Directory please follow this link.

Sri Lanka Investments

Private Equity Investments in Sri Lanka

Sri Lanka has just ended a civil war that engulfed the island nation for more than a quarter of a century. Despite the turmoil, a private equity firm is seeking to raise $150 million for a fund investing in Sri Lanka. Roman Scott, chairman of Calamander Capital Limited, believes that "the Cinderella story of Asia. Like all Cinderellas, Sri Lanka is the prettiest girl although she works in the kitchen infested with rats."

The Wall Street Journal conducted an interview with Mr. Scott about his private equity firm's decision to invest in Sri Lanka. When asked how he is adjusting to the political risk in a war-torn country he noted that over the last six years has grown faster than all the nations in the Association of Souteast Asian Nations except Vietnam (during a civil war, no less). He added that the Tamil Tiger rebels have been mostly wiped out and therefore pose no threat of reviving the civil war. He does worry about what the economic policy will be though.

Mr. Scott also said that he is trying to attract a diverse group of investors with no more than a third of the limited partners coming from the United States and Europe. He says they will be particularly targeting institutional investors and high-net worth individuals in India. Scott believes Indian investors have a unique understanding of Sri Lanka's story, as India's economy is closely connected to Sri Lanka's.

He justified the choice to invest in commodities saying:

"The demand for soft commodities in Sri Lanka is dependent on Asian demand. For example, demand for rubber is tied to Asian growth and future global growth, and is less tied to Wal-Mart. Demand for tea, for example, is more fundamental. If you have a cup of tea in the morning, the demand is resistant to recession and consumption doesn’t change much. Demand for building and construction products remains strong in Asia, especially as much of the Asian governments’ economic stimulus packages goes into construction projects."

He believes he can create value because almost every company in Sri Lanka is inefficient and poorly capitalized. According to Scott, some firms are using machinery that is a century old and even powered by steam engines. He believes that his private equity firm can bring these underdeveloped companies from the 19th to the 20th century, adding value without the need of much leverage. His exit strategy relies on trade sales to bigger companies in the Asian region.

For the whole interview see the WSJ Story

Tags: Sri Lanka investments, investing in sri lanka, private equity sri lanka, sri lanka private equity investments, sri lanka economy, sri lanka capital

Link to This Resource: Sri Lanka Investments

http://privateequityblogger.com/2009/06/sri-lanka-investments.html

Private Equity Blogger.com Archives

Tags: Private Equity, Private Equity Articles, Private Equity newsletter, Private Equity Resources

Link to This Resource: Private Equity Blogger.com Archives

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Michael Jackson Private Equity

Michael Jackson's Dealings with Private Equity Firms

When looking through the news today, I was surprised to see the headline, "The Pop Star and the Private Equity Firms" in the New York Times. While the passing of the pop legend is a loss to the music world, it is also a financial loss for a couple private equity firms.

Michael Jackson was of course known for his eccentricities and he is also known to have spent large chunks of his fortune on such extravagances as the star's private amusement park Neverland Ranch and "computerized Marvel comic-book characters bigger than life." These types of expenses added to the debt Jackson amassed over the years. Neverland Ranch would have been foreclosed, had a private equity group not stepped in to purchase the debt.

In 2003, the private equity firm Fortress Investment purchased some of Michael Jackson's loans that he had borrowed from Bank of America and which he had been failing to repay. However, Fortress had similar problems with Mr. Jackson and in the winter of 2005 the firm threatened to call the loans because of his delinquency. Despite a restructuring of his finances settling the dispute with Fortress, Jackson's financial troubles persisted and it seemed that Fortress would foreclose on Neverland Ranch. Luckily, Colony Capital, another private equity firm, decided to purchase the loan from Fortress. This action prevented an auction of Michael Jackson's property.

Up until the end of his life, Michael Jackson continued to accumulate millions of dollars in debt. Although Neverland Ranch is a valuable piece of real estate that has shifted hands as a result of his financial troubles, Jackson's greatest wealth--and therefore his best collateral--is his stake in Sony/ATV Music Publishing. He owned a massive portfolio of thousands of songs, including more than 200 by Beatles Paul McCartney and John Lennon.

Full NYT article

Tags: michael jackson neverland ranch, michael jackson investments, michael jackson foreclosure, michael jackson colony capital, michael jackson fortress

Link to This Resource: Michael Jackson Private Equity

http://privateequityblogger.com/2009/06/michael-jackson-private-equity.html

Capital Raising Strategies and Best Pracitces | MP3 Audio Download

Last week I gave a speech entitled, "Top 5 Fund Marketing Best Practices" in Boca Raton at a conference put on by Marcus Evans.

Today we are making the first 25 minutes of the speech available via MP3 Audio File Download. This file may be uploaded to your Ipod, saved to your computer or emailed to others on your team. Please always consult with expert compliance and legal advisors before putting in new marketing strategies or materials into place. To receive the download link for this resource please complete your name and email address below:

Tags: private equity fund marketing, private equity investors, capital raising for private equity funds, richard wilson speech, hedge fund marketing audio file download, alternative investment marketing

Link to This Resource: Capital Raising Strategies and Best Pracitces | MP3 Audio Download

http://privateequityblogger.com/2009/06/capital-raising-strategies-and-best.html

Top Private Equity Deals

The Top Five Private Equity Deals of 2009

The first half of 2009 was particularly disappointing for those in the private equity industry. The buyout business so far this year can be described by an extremely small number of deals executed and a minimal average deal size.

Private equity dealflow plummeted to a 17-year low from January 2009 to the end of this month. Private equity deals so far this year amount to $22.4 billion--that is an 82% drop from the first six months of last year. These deals made up only 2.6% of overall Mergers & Acquisitions activity this year, the lowest percentage since the first half of 1998.

According to Thomson Reuters, the following is the list of the top five global deals for 2009 to date:


Target                        Buyer                Price

Oriental Brewery [INTBB.UL]   KKR                  $1.8 bln
IndyMac Bancorp (IDMCQ.PK)    JCFlowers, others    $1.55 bln
Votorantim Celulose e Papel   BNDES Participacoes  $1.35 bln
New City Residence            Lone Star            $1.1 bln
Wood Mackenzie                Charterhouse Capital $903.2 mln

Tags: Private equity deals, buyout deals, top private equity deals, private equity 2009, private equity quarter 1

Link to This Resource: Top Private Equity Deals

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Limited Partner Relations

Private Equity Investor Relations

Advice for Improving Private Equity Investor Relations

It's often the case that General Partners are at one of two sides of the Investor Relations spectrum. Either the GP wishes to improve their Limited Partner relations, but doesn't know how to go about revamping this area; or the GP is damaging their limited partner relations and totally oblivious about it. So, even if you believe that your team is satisfying your limited partners, it's worth looking reviewing. Fortunately, Denise Palmieri at peHUB specializes in investor relations and offers her seven tips for improving limited partner relations. I've added my own thoughts on the advice:

1. Start Over: Reexamine the way you communicate with your Limited Partners. Ask yourself: "How do you communicate with them? Do you actually talk with them or is it simply a reporting function and you only actually speak with them when you need their renewed investment for the next fund?" Limited Partners will respect the fact that you are taking steps to improve your relationship so don't be afraid to directly ask them what you can do to strengthen their trust in you. Take that feedback and work to address it, you will do further damage to the relationship if they tell you what you can do and you ignore it.

2. Commit Your Time and Effort: If you are serious about limited partner relations then you have to incorporate this area into your routine by setting aside regular time to build the relationships. Palmieri suggest going beyond required reporting and the annual meeting, and keep up informal communication with your investors. Limited Partners know what you are required to do and by doing more than that minimum you are showing that you care about them and their input. Emphasize the idea of a partnership--after all, that is what you and your investors are--and by keeping them involved in the decisions you promote this relationship and removes some of the shroud from your operations. You can also benefit from hearing the LPs perspective, and some LPs may contribute their network of contacts and experience to the partnership.

3. Be Honest and Forthright. As Palmieri puts it, "Don’t play hide the ball or sugarcoat bad news." GPs can do irreparable damage to their Limited Partners relationships by being dishonest or covering up failures. Limited Partners may look past poor performance but lying about it can expand what would have been a minor setback. Lesson: be honest and direct with your Limited Partners.

4. Offer Sincere Appreciation. Any top performing fund can use a little humbling and nothing can take you down a peg as losing a valuable client because you put other aspects above LP relations. Even if your fund is bringing great returns, you should never lose sight of who gave you the money in the first place. Your fund may be doing great now, but that might not be the case next year and you need a strong relationship to keep those Limited Partners with you through thick and thin. So show your appreciation for their investment, loyalty and advice.

5. The Grass is not Greener. Although you may have other Limited Partners that you can turn to, it's often easier to work toward satisfying your existing investors and building that relationship. It's important to balance finding new investors for your next venture and keeping your current ones happy. Limited Partners won't appeciate you neglecting their current committment because you're working on impressing the next group of investors.

6. The Buck Stops Here. There are a lot of factors that combine to produce poor returns to investors, but inevitably a share of that responsibility falls on you. Palmieri notes, "Humility and self-reflection goes a very long way in an industry filled with uber-confidence and differentiates you from the blame-layers." Limited Partners should know that there is never a fund that will always produce high returns every quarter. Simply explain what happened, say you're sorry and try not to make excuses.

7. Flexibility is Survival. When negotiating terms with your investors, put yourself in your Limited Partners' shoes. Try imagining your reaction if a prospective portfolio company asked for those terms. Really, your role as an investor in portfolio companies is similar to your Limited Partners to your fund. "Flexible relationships with mutually aligned interests are the ones that survive in all conditions."

Going the extra mile with your clients can really make a difference in retaining your investors. Taking concrete steps to improve your Limited Partner relations is crucial in a time when investor confidence in General Partners is so weak.

To read the full article click here.

Tags: Limited partner relations, limited partnerships, private equity institutional investors, private equity investors, alternative investors

Link to This Resource: Limited Partner Relations

http://privateequityblogger.com/2009/06/limited-partner-relations.html

Private Equity Firms List

List of 1,000+ Private Equity Firms with Contact Details

Private equity firms can be hard to find and even harder to get in touch with individuals working at the firm. I am contacted every day by people wanting to know how to talk to private equity firms and without a directory of private equity firms and their contact details it can be a very difficult task.

This is why our team has created a Private Equity Firm Directory of over 1,000 private equity firms with full contact information including the contact's website, phone number, as well as mailing and e-mail addresses.

To learn more about this Private Equity Firm List including Frequently Asked Questions, Printable PDF Overview and a Sample of the Directory see this website.

Tags: Private Equity Firms List, Private Equity Firms, List of Private Equity Firms, Private Equity Directory, Private Equity Database, Directory of Private Equity Firms, Database of Private Equity Firms

Link to This Resource: Private Equity Firms List

http://privateequityblogger.com/2009/06/private-equity-firms-list.html

Private Equity Green

Environmental Sustainability in Acquisition Valuation

As companies move toward more environmentally sensitive ("green") initiatives, it stands to reason that many private equity firms are promoting these types of changes in their portfolio companies. An interesting story by the WSJ adds to this that private equity groups are even taking the environment into consideration when acquiring a company.

The increase of environmentally-conscious regulation and the uptick in environmental groups watching over companies makes a firm's green policy an essential consideration for a private equity firm examining an possible acquisition. From huge buyout firm KKR to the smaller privat equity group Riverside Company, buyout shops are adding an emphasis on the environmental policies of potential targets.

Dean Nelson, chief executive of KKR Capstone, explains “We have an investment committee process where deal teams bring ideas to the investment committee and built into that valuation process is this piece on the environment.” KKR is incorporating environmental sustainability into its 100-day program for newly acquired portfolio companies.

One anecdote that shows how a company's "greenness" factors into valuation by private equity firms is KKR's acquisition of Texas utility TXU Corp. The company was being criticized by Texas regulators and environmental groups because of its environmental practices--notably its plan to create 11 new coal-fired power plants. To address the company's environmental problems, KKR hired the Environmental Defense Fund to find ways to fix the problems. This shows how environmental policy is a big concern for buyout shops pre-acquisition. KKR led the buyout of TXU Corp. with TPG and Goldman Sachs and completed the deal in 2007.

Similarly, Riverside Company considers both operational and strategic opportunities that improving environmental sustainability may provide when evaluating a possible acquisition, says Paul Farrow, a sustainability consultant with the firm. "On the strategic side, the firm could consider new markets for a company, like energy saving devices. In operations, it looks at cost savings that moves like fuel conservation or waste reduction could have." (WSJ)

Tags: Private equity green, private equity environment, private equity environmental sustainability, buyout green, private equity investment green, portfolio company green

Link to This Resource: Private Equity Green

http://privateequityblogger.com/2009/06/private-equity-green.html

Venture Capital Forum

Audio from the Venture Capital Forum

Dan Primack of PeHUB the audio from a venture capital forum that he moderated a couple months ago. The conference is invite-only for technology entrepreneurs and investors. Panelists included: Brad Feld (Foundry Group), Josh Kopelma (First Round Capital), Jo Tango (Kepha Partners) and Eric Hjerpe (now with Kepha, but an official free agent at the time).

The panelists shared some interesting insights such as telling which firm they'd join if their's didn't exist, Josh comparing troubled portfolio companies to train fires and Brad's argument that the survival of venture capital as an asset class is mostly irrelevant to his business.

Here is link to the audio for Venture Capital Forum Audio

Tags: venture capital forum, venture capital conference, private equity forum, private equity conference, private equity

Link to This Resource: Venture Capital Forum

http://privateequityblogger.com/2009/06/venture-capital-forum.html

Private Equity Fund Investors

Barometer of Private Equity Fund Investors

Three quarters of private equity investors expect distributions in their portfolios to decline in the next year. This is the most pessimistic estimate since the Global Private Equity Barometer began surveying limited partners in 2004. Private equity investors expect to net considerably less returns on investments. The report found that 37% of limited partners now report overall net returns of 16% or more from the asset class, compared with a high of 45% of LPs in Summer 2007.

The most troubling finding, I thought, was that "for the first time in years, a significant number of private equity investors are planning to decrease their target allocation to private equity – 20% of LPs plan a reduced allocation in the coming year." That compares to about 3-6% in previous Barometers. On the flip side, private equity investors remain committed to the asset class generally. 80% plan to maintain or even increase their target allocation in the next 12 months. However, the expected flight of LP's from private equity is worrying for private equity firms fundraising.

General Partner-Limited Partner Relations

One third of limited partners expect to reduce their number of general partner relationships. Similarly, 84% of limited partners have declined to re-invest with one or more of their existing GPs over the last 12 months--almost twice the number of LPs who refused re-investing in the summer of 2005. This suggests a major decline of investor confidence in their general partners.

Many limited partners appear to be using the economic downturn to their advantage, seeing the poor performances by many private equity funds as a bargaining chip in negotiating terms. "Around four fifths of LPs believe the terms and conditions of buyout funds worldwide will become more favourable to them over the next two years. Two thirds (65%) of LPs foresee more
favourable fund terms for venture funds." Also, about a tenth of private equity limited partners are expected to default on capital commitments--with defaults concentrated mostly in North America.

For the full report click here.

Tags: Private Equity Barometer, Private Equity Fund Investors, Private Equity Limited Partners, Private Equity General Partners, Private Equity Partners, Private Equity investments

Link to This Resource: Private Equity Fund Investors

http://privateequityblogger.com/2009/06/private-equity-fund-investors.html

Private Equity Regulation

Private Equity Council Supports Obama Regulation

The Private Equity Council has issued a statement supporting the Obama administration's proposed overhaul of the American financial system. The proposed regulation requires advisers to private equity, venture capital and hedge funds whose assets are greater than a undetermined amount to register with the Security and Exchange Commission (SEC). Although the Private Equity Council does not believe that the private equity industry creates systemic risk but it does agree to further scrutiny on private equity firms.

The Private Equity Council does not necessarily represent the views of all private equity firms but with impressive industry members it signals some support for a controversial regulatory plan. Council members include such leading private equity firms as, Apollo Global Management LLC; Bain Capital Partners; The Blackstone Group; The Carlyle Group; Kohlberg Kravis Roberts & Co.; and TPG Capital. The following is the statement from the Private Equity Council:

“The goals of financial regulatory reform should be to restore confidence in financial markets generally and the credit markets in particular, and to protect our financial system from the kind of meltdown that has devastated the global economy. We believe that the Obama Administration has crafted a plan that can accomplish these objectives.

“The plan calls for private equity firms to register as investment advisers with the Securities and Exchange Commission. We support this proposal, even though it will result in new regulatory oversight for many private equity firms.

“While we and most experts agree that private equity firms do not create systemic risk, we also support the concept of data collection from market participants and we look forward to reviewing more detailed proposals as the legislative process unfolds.”

Tags: private equity regulation, private equity regulations, private equity tax, private equity obama, obama regulations, private equity industry

Link to This Resource: Private Equity Regulation

http://privateequityblogger.com/2009/06/private-equity-regulation.html

Brazil Private Equity

Citigroup Invests $500 Million in Brazil Private Equity

Citigroup Inc. is going to invest up to $500 million in Brazilian private equity. This decision comes after the New York-based firm sold stakes in several companies including Brasil Telecom Participacoes SA.

Paulo Caldeira, the managing director for the $3.4 bil Citigroup Venture Capital International fund, commented on the investments in Brazil. “It is a time that you need to watch out what is there. There are lots of investments that can be made there, valuations have been revised, but you need to watch out in terms of the preservation of the value.” Caldeira also said that Citigroup is looking at investments in Brazilian agricultural business, services, infrastructure, financial services and entertainment; but he did not name any companies.

The global credit crisis has forced Citigroup to exit its primary investments in Brazil, selling its shares in firms including: Brasilia-based Brasil Telecom Participacoes, Telemig Celular Participacoes SA and Amazonia Celular SA, Companhia Docas do Estado de Sao Paulo, known as Porto de Santos, and Metro Rio, the operator of the Rio de Janeiro subway system, according to Caldiera. Those investments were made by Citigroup's Venture Capital Investment Brazil Fund.

From Bloomberg:

“Watch out for exits also,” Caldeira said, adding that the market for initial public offerings in the country dried up after dozens of companies went public in 2007. The fund is interested in strategic sales, he said.
Citigroup is also looking at distressed companies, or those being sold at a discount, such as sugar and ethanol producers and mills. “It is tough, but it is where you can get incredible returns,” Caldeira said.

Brazil, Latin America's biggest economy, IPOs have declined significantly from the global credit crisis; with only four IPOs last year compared to 64 in 2007. No Brazilian firms have gone public this year, according to recent data.

Tags: Private equity Brazil, Brazilian Private Equity, Brazil Venture Capital, Brazil Private Capital, Citigroup venture capital, citigroup private equity, citigroup venture capital fund, private equity fund

Link to This Resource: Brazil Private Equity

http://privateequityblogger.com/2009/06/brazil-private-equity.html

Private Equity Ethics

Reevaluating Your Private Equity Firm's Ethics Policy

With an administration in office that seems keen to crack down on private equity and hedge funds and such high-profile alternative investment scandals as Bernard Madoff and the New York placement agent investigation, private equity firms may do well to reexamine (or create) an ethics policy. It seems that greater scrutiny toward the industry is less a question of whether it will happen than it is when will it occur?

Private equity has enjoyed considerable freedom until recently. Larry Beaupre, who represented private equity firm Proskauer Rose LLP at an online ethics seminar, puts it "The private equity industry, in terms of regulatory scrutiny and media scrutiny, has up to this point led a fairly charmed life." However this may be coming to an end and Mr. Beaupre suggests a strong ethics code, "that charmed life is under threat. Now is the time to get a policy in place, and learn to live by it so when that scrutiny comes, you’re ready for it."

Panelists for the ethics seminar noted the significance of having a policy on placement agents, in light of the recent probe into how private equity funds obtain funding through such intermediaries. From the WSJ:

General Partner Frank Angella of Grove Street Advisors LLC said his firm is reviewing its ethics policy and may well begin asking more questions of its general partners about their use of placement agents. “We focus on conflicts of interest and financial conflicts, but placement agents [have] not historically been something we looked at,” Angella said.

Firms were advised to reevaluate their use of placement agents now, rather than waiting for regulations. To do this, private equity firms are advised to create a diligence file that explains how and when they met the agent, what led them to select the agent and any expenses incurred with a particular fund. Although the placement agent scandal originated in New York, other states are following suit in drafting tougher rules for the use of intermediaries and private equity firms should be aware of their state's policy and required disclosure. Updating your ethics policy and staying current with new regulations are key steps in keeping pace with the changing industry.

Tags: Private equity ethics, private equity ethics code, private equity ethical, private equity pension funds, private equity placement agents, private equity tips

Link to This Resource: Private Equity Ethics

http://privateequityblogger.com/2009/06/private-equity-ethics.html

Private Equity List

List of 1,000+ Private Equity Firms Available for Purchase

Our team has invested our time in developing and updating a deep, constantly improved directory of private equity firms and their contact details in Excel format. To learn more see our Private Equity Directory.

This Private Equity Directory contains the private equity fund firm name, primary contact name, physical location, AUM, phone number, fax, and email address as well. Collectively the 750+ private equity funds in our database control well over $200B in assets. For a database of more than 1,000 private equity firms and their contact details see our Private Equity Directory.

Private Company Valuation

Private Equity Video: the Valuation Problem

The problem for many private equity firms is not financing but rather it is getting buyers and sellers to accept a price. This valuation gap is a major obstacle in executing deals especially in the lower rungs of mergers and acquisitions. This valuation problem is explained by an interview by the Deal with Joel Papernik, a partner at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC.

One way to overcome the obstacle, Papernik suggests, is for sellers to sell only assets or equity rather than the whole company in the short term, in hopes that the price will rise later. He advises having a "price reset" where the company is sold at a minimum price and then reconsider the valuation at another time later down the line compared to a set price index. Papernik concludes that it may take as long as ten years for valuation to return to normal and dealmaking to return to what it was in the boom only a couple years ago.

Tags: Private equity valuation, private equity valuation method, private equity company value, private company future, Joel Papernik, Private Equity Videos

Link to This Resource: Private Company Valuation

http://privateequityblogger.com/2009/06/private-company-valuation-private.html

Private Equity Bank

As Banks Fail, Private Equity Picks Up the Pieces

Banks have been failing at a quickening pace with already more failures this year than all of 2008, and that was a rough year too. Although private equity firms can take on a bigger stake in banks than they once were allowed by regulators, many small banks are being bought up by private equity groups. It's not just small banks either, for example the Carlyle Group and Lightyear Capital are close to finishing a deal for Silverton Bank, a $4.1 billion failed bank in Georgia.

It seems the floodgates have opened with the loosening of regulation on private equity firms buying stakes in banks and the "piles" of uninvested capital. As Josh Lerner of Harvard Business School put it, “the logjam has broken." Another factor in the uptick of private equity investment in banks is the increase in bank failures (see Economist graph below) that give private equity firms a lot of options to work with. Normally, one could expect the larger banks to rescue the small lenders from collapse but those big banks are mostly too capital-constrained to oblige. And even those who may have the equity to buy up the smaller banks, like JPMorgan Chase have taken federal money and have to use their recent returns to pay back taxpayers.

Private equity firms have jumped on the opportunity. The Economist explains the strategy, "to snap up a small bank, healthy or not, and turn it into a vehicle to scoop up failed local rivals." However, there are significant obstacles for private equity firms. One is simply the risk involved in purchasing and investing in failing banks. Many of these banks still hold toxic commercial-property loans that are going bad at a disturbing rate. "American banks’ loan-loss reserves are falling ever further behind actual losses and now cover just 70% of the total, according to Moody’s, a rating agency." But private equity firms are adapting by investing only once the bank has been seized and negotiating that the government carries most of the burden in loss-sharing agreements.

Perhaps the biggest barrier is the legal restrictions barring private equity firms (or any "non-financial" entity) from carrying out a takeover of a bank. Unless a firm wants to become a bank-holding company and assume the extra regulation it requires, a private equity group must settle for a maximum stake of 33%. But through "club" deals, private equity firms can cooperate to purchase a bank, as long as regulators see to it that the firms aren't working together after the deal.

Regulators have laxed some restrictions on private equity firms investing in banks--probably out of necessity as the number of failing banks continues to rise.

...regulators have reluctantly ceded some ground to the barbarians at the banks’ gates. They can now, for instance, appoint more directors without this being deemed to constitute control. Clubs of investors are being pre-cleared so they can pick up bank charters quickly when opportunities arise. The Office of the Comptroller of the Currency, which regulates nationally chartered banks, has even developed a “shelf charter”, which such groups can secure in advance of deals. It has already handed out two. The Federal Deposit Insurance Corporation, which handles failed banks and is expected to release new guidelines on private-equity investment soon, has also softened its stance. Sheila Bair, its chairman, believes buy-out firms should be considered eligible bidders if they show they can run a bank prudently and are “good corporate citizens”.

Whether the Federal Reserve, which holds the opinion that only firms monitored as banks should control a bank, will loosen its stance or not remains to be seen. But it is clear that private equity is gaining a larger stake in the future of banking.

Source

Tags: Private equity, private equity regulation, private equity timothy geithner, private equity monitor, private equity economy, private equity economist

Link to This Resource: Private Equity Bank

http://privateequityblogger.com/2009/06/private-equity-bank.html

Private Equity Overhang

Private Equity Firms Reach Record Capital Overhand

Private equity firms reportedly have $400 billion in capital that is not being invested. The overhang, the gap between funds raised and equity invested, has reached a record high in 2009. According to Pitchbook Data, the capital overhang increased by more than $141 billion during 2008 with the global economic crisis causing investment activity to decline by an estimated 60%.

Private equity firms have accumulated capital increasingly since the beginning of the crisis in the latter half of 2007. In 2007, buyout firms actually had a negative capital overhang of $55 billion, meaning firms were investing more equity than they had raised that year. Since then, however, the gap between funds raised and equity invested has widened significantly with the capital overhang bouncing back up to from -$55 billion in 2007 to +$141 billion in 2008.

Tags: Private equity overhang, capital overhang, definition capital overhang, private equity data, private equity report, private equity capital investment

Link to This Resource: Private Equity Overhang

http://privateequityblogger.com/2009/06/private-equity-overhang.html

UNC Kenan Flagler Private Equity Fund

UNC Kenan-Flagler Private Equity Fund

Students Manage Million Dollar Private Equity Fund

It's hard to find a silver lining in the tough economy right now, but for students at the University of North Carolina Business School, it is a learning opportunity. UNC Business School students have the unique opportunity to operate a private equity fund seeking to generate real returns to limited partners.

The UNC Kenan-Flagler Private Equity Fund is operated by a 12-member student management team. And this isn't a small responsibility, holding more than $1.3 million of committed capital under management, students have to manage all aspects of the fund. Students raise capital, source deals, perform due diligence, make investment decisions, and then present their decisions to a faculty/advisory investment committee and a board of directors. The students rely, in part, on the UNC alumni network to help source deals and already have partnered with other private equity firms across the country. The average deal size for each transaction is between $20 million to $125 million in enterprise value and the fund can invest between $100,000 to $150,000 of equity capital per investment transaction.

The students are working in an adverse environment but they have been able to capitalize on lower valuations. In fact, they have already successfully completed several investments in companies in the medical and technology fields that they hope are more recession resistant and will bring higher growth than other sectors.

“We are grappling with complex decisions amid a widened scope of risks and considerations. We have broadened our scope of due diligence and are benefiting from lower valuations and a 5-6 year investment horizon to our LPs,” said Michael Kopeikin (MBA Class of 2010), fund director. “We are committed to returning the best return given realistic values, co-investing with top quartile fund managers on leading transactions and thinking about how traditional exit strategies are changing. We are leveraging each members’ expertise and the expertise of our LPs to get our investments right.”

Kate Kitsopoulos (MBA Class of 2009), fund managing director explains the learning experience, “Lower valuations are benefiting deal variety to the fund as we capitalize on the business support from firms with UNC ties and alumni through increased information and access to companies to make the right deals. The ability to understand how to deploy our capital effectively has become even more important in the current economic climate. We continue to see solid opportunities and will take full advantage of investing through the down cycle.”

Fund I will be fully committed by the third quarter of 2009 and students will begin to raise Fund II next fall that will be open to qualified investors that are friends and family of the UNC community. To learn more about the students' fund you can visit their website.

Tags: Private Equity UNC, UNC Kenan Flagler Business School, Private Equity Students, Private Equity Funds, Private Equity Education, Private Equity Economy

Link to This Resource: UNC Kenan Flagler Private Equity Fund

http://privateequityblogger.com/2009/06/unc-kenan-flagler-private-equity-fund.html

Initial Public Offering 2009

Private Equity Firms May be Using IPO Again

Private equity firms seem to be using the Initial Public Offering as a exit strategy for their portfolio companies again. There is a reported rise in the number of companies seeking an IPO exit as private equity firms regain some faith in the market.

July 2, 2009 “There’s a slow snowball picking up,” said Richard Truesdell, co-head of the global Capital Markets Group at law firm Davis Polk & Wardwell in New York. “We are miles away from the frenetic activity of 2007 but we are also hopefully miles away from the complete absence of IPOs that we had.”

A tentative rebound in shares has given rise to speculation that IPOs will return more forcefully. Since a multiyear low in March, the Dow Jones Industrial Average .DJI has risen about 30 percent. But grave concerns remain about investor appetite, the amount of leverage on companies and whether private-equity firms will get adequate returns in the market to appease the investors in their funds.

Investors are also wary of the fragility of equity markets, meaning any significant spurt of listings is a way off. That’s borne out by the small number of private equity-backed firms in registration. Owners may also seek to float just a small portion of firms and do follow-on raisings if the market improves, bankers say.

“I expect we’ll start to see filings starting shortly (from private equity-backed firms),” said Lisa Carnoy, global head of equity capital markets for Bank of America Merrill Lynch (BAC.N).
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Tags: initial public offering 2009, initial public offering 2008, initial public offering, initial public offer, IPO 2009, IPO 2008, What is an Initial Public offering

Link to This Resource: Initial Public Offering 2009

http://privateequityblogger.com/2009/06/initial-public-offering-2009.html

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