Private Equity
Venture capitalists have invested nearly $4.55 billion into 497 U.S.-based companies in the second quarter of 2010, according to preliminary Thomson Reuters data (very preliminary, since Q2 has more than a week to go). This is already above the $4.28 billion VCs invested in the second quarter of 2009, and is on pace to top the $4.81 billion invested last quarter (not only because of the time remaining, but also because the figures tend to rise as surveys are returned). It also represents a major increase the in number of dollars invested per deal: $9.13 million per round in Q2 2010, compared to an average of $6.86 million since the beginning of 2008.
1 min read · 21 June 2010
We've written a lot about LP/GP power dynamics, in which LPs have begun to flex their little-used muscles. Now we have some actual data to back up the anecdotes. Private equity research firm Preqin just sent over results from a survey of 50 institutional investors, showing that fund terms have become more LP-friendly over the past two years. Here are some examples:
1 min read · 21 June 2010
Another week, another survey suggesting that institutional investors plan to increase their exposure to private equity. This one comes from Russell Investments, which finds: Survey respondents in North America expect the current share of private equity in their total portfolios, currently averaging 4.3%, to increase to 6.8% in 2012. Expectations for 2012 are not as robust in either Europe (3.7% share expected) or Japan (2.5%). In Australia, private equity allocations were reported at 3.5% for 2009, with little increase expected in 2012. Respondants also reported expected increases to other forms of alternative assets, including hedge funds, real estate and infrastructure. No mention of venture capital, although it may have been included in the "private equity" category
1 min read · 21 June 2010
The firm was believed to be rolling toward a $500M close
1 min read · 21 June 2010
Small piece of news out of a panel I moderated yesterday at Buyouts Chicago: GTCR co-founder and chairman Bruce Rauner said that his firm is gearing up to raise its tenth fund. I asked if there would be any term changes prompted by new taxes/regulations, and he said "no." The firm closed its ninth fund in October 2006 with $2.75 billion in capital commitments. According to the Washington State Investment Board, that fund was around 45% called down with an IRR of -16%, through the end of 2009. GTCR's seventh and eigth funds were better performers, with respective IRRs of 25.3% and 28.7 percent.
1 min read · 18 June 2010
More than 200 peHUB readers took over English in Chicago this last Wednesday, for our latest peHUB Shindig. Plus, we raised nearly $2,000 for Access to Health, a local group that helps provide healthcare services for those too rich for public assistance but too poor for private insurance. Great to see so many of you there. I'm hoping to announce the location of our next peHUB Shindig within the next week (think south), and we'll be sure to return to Chicago soon. A final thanks to our sponsors: Crowe Horwath and Conversus Capital. A bunch of photos can be viewed after the jump...
1 min read · 18 June 2010
I recently accused limited partners of cognitive dissonance; refusing to invest (much) this year despite acknowledging that the best returns are borne of recessions. But perhaps I was too harsh. Too hasty. Perhaps LPs are sitting on their hands because they recognize that this post-recession is different. Private equity firms typically generate out-sized returns from post-recessionary markets because there is an abundance of bargains, which can be easily exploited. Buy low, sell high. This year, however, valuations rebounded much faster and stronger than anyone expected. So much so, in fact, that some PE pros are concerned that they're trapped inside of a mini-bubble.
2 min read · 17 June 2010
My editorial theme this month seems to be the future of private equity, from the perspective of capital availability. Institutional liquidity challenges had already made it tough for firms to raise new funds, and the Volcker Rule and proposed European regulations could take permanent bites out of the limited partner pie. So let me throw one more thing at you: What if public pensions eventually switch from defined benefit plans to defined contribution plans? I know this isn’t happening tomorrow or Saturday, but it will have to happen at some point (even if it takes a state “bankruptcy” to force the issue politically). And, when it does, private equity will lose its single-largest pool of capital.
1 min read · 17 June 2010
1 min read · 16 June 2010
Mike Bloomberg yesterday addressed the controversy surrounding Steven Rattner, who recently launched a new asset management firm to handle the Mayor’s money (basically the same team that managed it for Rattner’s old firm, Quadrangle Group). More specifically, he defended his “close friend” to the Washington Examiner, saying: “I don’t think he did anything wrong… I happen to think the charge against him is ridiculous.” Then he added this bon mot: “I've always stood up for anybody that works with me who gets attacked by the press.” Two thoughts for you, Mr. Mayor: First, it isn’t just the press that’s attacking your pal, unless his former partners at Quadrangle and Andrew Cuomo recently switched careers. Second, it wasn’t the press that allegedly persuaded a Quadrangle portfolio company (since defunct) to sign a DVD distribution deal for “Chooch,” over the initial objections of portfolio company management….
1 min read · 16 June 2010
