Private Equity
Tim McAdam is stepping down as a general partner with Trinity Ventures in order to join Technology Crossover Ventures, peHUB has learned. He had joined Trinity in 2000, after spending time at both GTCR and TA Associates. "Our investment strategy has been moving more and more early-stage over the past year or so, whereas Tim's more aligned with later-stage," explains Larry Orr, a general partner with Trinity. "So we agreed earlier this year that he'd begin looking for other platforms." Orr added that the departure will not affect Trinity's general partnership structure, and that the firm so far has committed approximately $300 million of its tenth fund (closed early last year).
1 min read · 28 May 2010
The U.S. House of Representatives has just begun floor debate on the so-called “tax extenders bill" (HR 4213), which is where the carried interest tax change is housed. You can watch it live at http://houselive.gov There has been a lot of back-and-forth movement on this issue over the past 24 hours, including possible changes to that 75/25 split and possible changes to when the change would become effective. It is expected to come to a vote today, at which point the Senate can have at it (even though they aren’t expected to get to it before recess). Yesterday we published a letter sent by the NVCA to its members, which basically highlighted the legislation’s state of flux. A reader commented that “This must be killing you Dan, you really wanted to see the ‘VC carry’ get taxed as ordinary income.”
1 min read · 28 May 2010
The National Venture Capital Association just sent out an email to its members, informing them of new developments in the Congressional carried interest debate. It also said that it would hold a member call tomorrow afternoon. Full text of the notice is posted after the jump, and signed by NVCA president Mark Heesen:
3 min read · 27 May 2010
Big shakeup in the LP community, as Sheryl Schwarz is out as head of alternative investments at TIAA-CREF. Actually, alternative investments as a dedicated group is basically gone, with the insurance company opting to integrate it into the broader portfolio management and private placements divisions. My colleague Bernard Vaughan first broke the news in Buyouts Magazine. The question now is what happens going forward. TIAA-CREF reportedly had around $10 billion worth of alternative asset commitments as of 2007, and is known to invest in both venture capital and buyout funds. I spoke to a few secondary market sources who said they haven’t heard about a big portfolio coming to market, and most team members still seem to be around (based on emails/voicemails being operational -- whereas Schwartz's are not).
1 min read · 27 May 2010
The Forbes brand has always been associated with financial services, but almost always from the media bleachers. Until now. peHUB has learned that a new effort called Forbes Private Capital Group recently launched, with plans to raise third-party capital for private funds and transactions. Much of the marketing will be aimed at wealthy families and individuals -- i.e., Forbes' target market -- although it also will work to raise money from institutional investors. The man in charge is Todd Morley, who isn't new to this sort of thing. In 1999, he co-founded Guggenheim Partners, which now has $100 billion in assets under management. He more recently founded an investment management firm called G2 Investment Group, which is where Forbes Private Capital Group will be housed. "I have a social relationship with some of the Forbes family from my time with Guggenheim, so they are very familiar with what we did over there," Morley says. "I think they saw this as a natural segue from the media business into the financial services business."
2 min read · 27 May 2010
I don't usually feel sorry for Bain Capital. Then again, I'm not usually sweating in the middle of May. Guess there's a first time for everything... Private Equity Insider today reports that investors in Bain's tenth buyout fund are "grumbling" about the firm's slow pace of capital deployment. From its story: They’re especially irate about a recent lack of activity from the $10 billion vehicle, Bain Capital Fund 10. In January 2009, six months after the vehicle’s final close, Bain sent a letter to limited partners stating that it was “well-positioned to benefit from the dislocation in the credit markets.” At the time, the fund was 27% deployed and Bain’s declaration seemed to indicate that the Boston firm would increasingly draw on investor commitments. But since then, it has deployed only $800 million more — leaving the vehicle a mere 35% drawn almost two years after wrapping up marketing. First, a few factual points: (1) The fund is actually $10.8 billion, not including a related co-investment vehicle; (2) The fund closed in February 2008; (3) The fund today is around 37% committed, including for the SkillSoft (closed today) and Dow Styron ($700m equity check, closing by end of June) deals.
2 min read · 26 May 2010
State Street today released the latest results of its private equity performance index, which tracks over 1,700 partnerships with combined assets of around $1.6 trillion. These numbers are through the end of Q4 2009, and (not surprisingly) show a slight increase over the prior quarter and marked improvement over the year-ago period. The IRR (since inception) rose to 11.42% for all funds, with European funds coming in slightly higher at 14.91 percent. One-year returns came in at 15% after more than a year or negative data, while one-year returns for mezzanine and distressed came in at a staggering 35.3 percent. Download the entire release here
1 min read · 26 May 2010
Rob Glaser, founder and former CEO of RealNetworks, today announced that he has become a venture partner with Accel Partners. This is no new relationship, as Accel first backed RealNetworks more than a dozen years ago and Accel's Jim Breyer remained on the board for years after it went public. But it is Glaser's first official dip into VC waters, so we've got some questions for him: The term “venture partner” means different things to different people and firms, particularly in terms of time commitment and longevity. How do you view this position with Accel? The time commitment is half-time. I’m not a lawyer who organizes his life into 15-minute increments, but I’m going to have other things. I’m still chairman of Real, am helping some entrepreneurs start a couple of companies and still have a bunch of charity work like my family foundation. So it will be significant, but not fulltime. I do, though hope it’s a long-term relationship. We’re both entering this chapter with our eyes open. In terms of what I’ll actually be doing, my sector focus will be on social media and the social intersection of mobile with physical location and other characteristics. The second element of my focus is that I’m Seattle-based, so I hope to introduce Accel to lots of great local entrepreneurs. There are four major mobile companies here – T-Mobile is headquartered here and AT&T is about half here – and we have a great traditional of mobile entrepreneurship like McCaw and others. Plus Microsoft – of which I’m an alum – Real and Amazon.
3 min read · 26 May 2010
My weekly segment with Reuters Insider is about the recent news that Barclays Private Equity plans to spin out of its parent bank sometime this summer, and how the so-called Volcker Rule could cause other banks to shed their in-house PE units. The anchor doesn't ask me but, for the record, I generally oppose this provision (whether it be the current weak language or stronger Merkley-Levin amendment). We also don't get into how the rule could eventually impact insurance company investments in private equity (time constraints and all), but it's a feature to keep ours eyes on. Finally, I should have mentioned that all the proposed legislation has a lengthy phase-in period, so Goldman Sachs Capital Partners, Metalmark Capital, etc. will not be forced to spin out immediately. Per usual, filming just inches away from an ancient washer/dryer set:
1 min read · 25 May 2010
Gerry Langeler, a managing director of OVP Venture Partners, has garnered attention this week for a NYT op-ed and CNBC appearance arguing against proposed changes to carried interest tax law. The heart of his argument is the following analogy: “We in the industry invest a small percentage of the total dollars in our partnerships, like the house purchase, with our limited partners investing the rest. Our investments are locked up for prolonged periods of time, often five to 10 years before we see any return. There is a real, material risk of loss of capital. In fact, many venture funds in the bubble lost money, including partners’ capital. Like the house situation, our downside loss potential is ‘fixed’ by what we invested, while our upside is unbounded.” In short: GP=Homeowner and LP=Bank. I emailed – and tweeted – my primary objection to this comparison: Since when have mortgage lenders paid homeowners an annual fee?
2 min read · 25 May 2010
