Private Equity
Amazing response to our peHUB Shindig in New York City, which is now sold out with approximately 500 of you slated to attend. I'm hoping that we can open a few more spots in the next week or so, and have begun to compile a waiting list. There already are a couple of dozen of people on it, so add your name today at the event website. Also, a big thanks to the folks at Eventbrite, who have agreed to waive their per ticket transaction fee. This means more money for Doctors Without Borders, which is on the ground in Haiti. I wired over $4,000 on Friday, and will send more today. Finally, none of this is possible without our wonderful sponsors: First Round Capital, NYPPEX Private Markets, PCG Asset Management and RCP Advisors. I look forward to seeing you on February 3...
1 min read · 19 January 2010
Venture capitalist Fred Wilson today wrote about "DST deals," or later-stage VC investments for companies that have rejected corporate takeover offers. Think Facebook, Twitter and Yelp. Fred positions this as a new phenomenon, and an indication that "VCs are starting to compete directly with the M&A market." I'm not sure I agree on either count. First, we've seen this show before. Russia's DST is certainly a new player, but Advanced Equities has been doing this sort of thing for years. So was Tudor Ventures for a while. And remember that explosion of big-dollar corporate venturing in 1999-2001, in which ROI was considered more important than strategic alignment? Or big buyout firms dipping into the VC market?
2 min read · 19 January 2010
One year ago next week, I wrote about how Atlas Venture had slimmed its personnel roster after a disappointing fund-raising drive. Now, the firm is making additional changes. Atlas has opted to consolidate its deal-making and operational activities within its Waltham, Mass. office (which could soon relocate closer to, or within, Boston). That means no more deals coming out of London, even though Atlas will maintain a few staffers on the ground there for portfolio management and investor relations purposes. London-based partner Fred Destin will relocate to the U.S. (he’s already bought a house in Brookline), while fellow London-based partners Graham O’Keefe and Regina Hodits will become venture partners (i.e., continue to work with their existing portfolio companies). Chris Spray will continue to serve as a partner focused on LP relations and portfolio management, but is not expected to make new deals nor stay on when Atlas eventually raises its next fund. There also are a few junior/backend layoffs in London, while Waltham-based venture partner Jeff Andrews is leaving to become head of strategy for an Atlas portfolio company.
2 min read · 19 January 2010
On Monday, I wrote briefly about the late December acquisition of failed bank First Federal by OneWest, the bank formerly known as Indymac. Specifically, I wanted to know if the deal would require OneWest and/or its First Federal unit to meet new FDIC guidelines for PE-backed bank ownership. For the uninitiated: OneWest was purchased by private equity investors shortly before the guidelines were enacted, thus allowing it to be grandfathered in. One result is that OneWest is required to keep a Tier One leverage ratio of at least 8%, as opposed to the more onerous 10% minimum required by the six-month-old guidelines. What’s been amazing, so far, is that no one at FDIC has been able to answer the question. In fact, the FDIC first tried sending me over to the Office of Thrift Supervision (which oversees OneWest), but they sent me back to the FDIC (which actually picked the First Federal buyer). This is a very simple yes/no question, and FDIC is acting as if I asked them to translate the Dead Sea Scrolls.
2 min read · 15 January 2010
My weekly small business video spot for Reuters, this time about whether 2009 VC fundraising troubles will create troubles for startups in search of funding this year:
1 min read · 14 January 2010
My weekly video spot with Reuters, this time discussing the mountain of placement agent documents that CalPERS released this morning. Per usual, I'm filming just a few doors down from the home office:
1 min read · 14 January 2010
CalPERS today released more than 5,000 pages worth of documents related to placement agents used to secure investments from the pension system. These are based on a recent CalPERS board request that each of its general partners provide information on who, if anyone, helped place the funds and how much was paid in fees. The submissions were voluntary, with approximately 90% of CalPERS investees replying. We're awaiting a list of the 10% that declined (a CalPERS spokeswoman said that she'd rustle one up). We have posted almost all of the disclosure forms from VC and private equity firms, although not the ones from real estate funds and certain special purpose vehicles (there's simply too much stuff). If there's a headline, it's probably that ARVCO -- the placement agency run by former CalPERS board member Alfred Villalobos -- received far more in fees (we're talking multiples) than did any other placement agent. Also the continuing story about how CalPERS has been a huge proponent of investment transparency and quality corporate governance over the years, but apparently neglected to do some fundamental recordkeeping for its own activities. Find tons of documents after the jump. Part II can be found here.
2 min read · 14 January 2010
The Blackstone Group has been the tortoise of private equity fundraising -- slow, steady and winning. Now, however, the last part of that fiscal trinity is in question. Blackstone yesterday sent a letter to its limited partners, saying that it would hold a final close on its sixth global buyout fund at, or around, the end of Q2. The firm also said the vehicle had secured approximately $9 billion in commitments to date. News of the letter was first reported by Private Equity Insider, and has since been confirmed by peHUB. Why is the letter notable? Because it basically confirms that Blackstone won't get anywhere close to the $20 billion it wanted when it began fundraising in October 2007 (a predecessor fund closed a few months earlier on $21.7 billion). Blackstone also is unlikely to hit its downwardly-revised $15 billion target, considering that it's only raised around $1.1 billion over the past 17 months (and virtually nothing over the past two quarters).
3 min read · 13 January 2010
I am pleased to announce that the next peHUB Shindig will be in New York City on February 3. We'll be doing it again at Connolly's on West 45th Street, and tickets are on sale now. Get yours by going here. Per usual, no content – just cocktails & conversation with other members of New York's venture capital and private equity communities. Investors, entrepreneurs, bankers, lawyers and other assorted hangers-on. Tickets cost just $10 each, with proceeds being donated to a local charity that will be selected by event attendees (you can nominate a charity when you register). I urge you to get yours soon, since the last peHUB Shindig in New York sold out. A very special thanks to our sponsors: First Round Capital, NYPPEX Private Markets, PCG Asset Management and RCP Advisors.
1 min read · 13 January 2010
Preqin released new data this morning showing that the PE universe’s worst-performing funds over the one-year, three-year and five-year horizons are mega-LBO funds ($4.5b+). Not too surprising, and is in line with past studies showing that the best percentage returns come from smaller funds (true of venture, too). It's worth noting that percentages are only one return metric that LPs must consider. The other is cash-on-cash returns. Would you rather have a 25% ROI on a $100 million commitment to a $5 billion fund, or a 50% ROI on a $10 million commitment to a $150 million fund? The obvious answer is the former, unless you were able to replicate the latter ten times over. At the same time, however, the same logic applies to cash-on-cash losses. In the end, however, the only number that will really matter is the amount of fund capital that mega-fund wannabes are able to raise. If KKR hits the $10 billion mark with its new vehicle -- coming soon to a public pension board meeting near you -- then mega-fund death has been greatly exaggerated.
2 min read · 12 January 2010
