Private Equity
The Gekko returns, and I'm not talking about a lizard....
1 min read · 28 January 2010
The Teamsters were out in semi-force on Tuesday morning, protesting a speaking appearance by KKR partner Alex Navab at the PEA Outlook conference in New York City. A bit of jeering, but mostly just handing out one-sheets about how KKR portfolio company Dollar General shouldn't win any Employer of the Year awards. This is what they looked like (except in yellow): STRAT_KKR Private Inequities For a moment, let's leave aside the unintentional comedy of blaming KKR for giving private equity a bad name (as if PE's rep would be sterling if not for Henry Kravis and company). Instead, let's focus on the lead allegations.
3 min read · 28 January 2010
Blackstone Group boss Steve Schwarzman is in Davos, which means he's all over the telly. CNBC later this afternoon and Bloomberg this morning. Plus, a bored attendee (or perhaps a superfan?) taped him eating a banana. Bloomberg video first, including the following statement: "My biggest concern is that, as a result of either proposals or tone, that financial institutions are going to feel under siege and their going to retreat with their extension of credit." Banana video after the jump...
1 min read · 28 January 2010
Tucker Twitmyer of EnerTech Capital Partners said during yesterday’s PEA Outlook conference that LPs have successfully pressured certain VC/PE firms to abandon new cleantech investment efforts. Basically a gripe against firms that "stray from their knitting." Twitmyer declined to name specific firms (you should feel encouraged to do so in the comment section), but he did expand on his thoughts via email. I’ve posted them in full after the jump...
3 min read · 28 January 2010
New York angel investor Roger Ehrenberg is raising up to $25 million for a venture capital fund focused on "big data" startups. It will be called IA Venture Strategies, and is expected to hold a final close within the next two months. At first blush, this is a surprising development. Ehrenberg has long said that the traditional VC fund model is broken. In fact, he and I discussed that very subject during a panel discussion at Columbia Business School, nearly one year ago to the day (we were in basic agreement). So is this an about-face? No, says Ehrenberg, pointing out several structural differences between IA Venture and typical VC funds. First, and most important, he is not seeking capital from traditional VC funding sources (pensions, endowments, etc.). Instead, he's raising money from people who either are within the "big data" space, or those who could help make valuable introductions to IA Venture portfolio companies. To be very cliche about it, these would be "value-added" limited partners.
2 min read · 28 January 2010
We've spent countless hours discussing the issue of carried interest taxation, and whether such investment fund profits should be treated as capital gains (status quo) or ordinary income (status fro). It's a particularly contentious issue among venture capitalists, who believe a change away from capital gains would choke new business creation and job growth. But maybe all the VC fretting was for naught, based on the following words from President Obama during tonight's State of the Union address: "I am also proposing a new small business tax credit – one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment." Does this mean that angel investors would no longer be required to pay taxes on investment returns? Does it mean the same for venture capitalists, or at least those investing in early-stage businesses? Would there even be a holding period requirement?
2 min read · 28 January 2010
Do no women work at Apple? This is from 2006...
1 min read · 27 January 2010
The WSJ's Dennis Berman just finished interviewing Apollo Management boss Leon Black, as the closing keynote to Dow Jones' PEA Outlook Conference. Lots of talk about distressed debt and private equity's recent record, but the most notable exchange was Black's view of carried interest tax treatment. Berman asked Black to imagine he was called to testify in front of a Congressional committee. How would he succinctly argue in support of keeping carried interest taxed as capital gains? "I'm not sure I would," Black replied. "It wouldn't be the worst thing in the world to have some adjustment... I don't think it should be ordinary income, but maybe something in between." No other private equity investor of Black's stature has ever said such a thing publicly (Jon Moulton and Leo Hindery are not of Black's stature). Berman didn't
1 min read · 27 January 2010
We've written a lot about the bid-ask gap in private equity secondaries, and whether buyers or sellers will be first to blink. Buyers have said it will be sellers and sellers have said it will be buyers (save for the most distressed sellers, who already took their haircuts and moved on). But Troy Barnett of Adams Street Partners (a buyer) may have spoken truth to peers today at the PEA Outlook conference, in reference to a proposed secondary sale by Stanford University, which received bids of 80 cents on the dollar: "The Stanford transaction forced secondary buyers to reevaluate their line in the sand." In other words, buyers blinked. The pendulum may swing back if the secondary market is flooded with bank-sponsored assets -- due to the Volcker/Obama proposals -- but, for now, sellers have the
1 min read · 26 January 2010
Greetings from the Private Equity Outlook Conference, from the Grand Hyatt in New York City. Sure it's thrown by our competitors, but they kindly let us in the door. Ongoing right now is a panel on the role of government regulation in private equity. Jon Persson of Geller & Co. sounded an alarm about propsosed registration requirements for private equity firms, saying that firms might soon be "responsible for the actions of third-party soliciters" (aka placement agents). He added that disclosure rules also could let one placement agent learn that it's being paid more or less than another. Finally, Persson pointed out that a firm's "soft money" political contributions could enter the public sphere. Persson may have been trying to make a case against registration, but what I heard was a litany of welcome changes.
1 min read · 26 January 2010
