Private Equity
Dealbook is reporting that, at the current rate of hedge fund closures, 7% of the hedge fund industry will have closed by year's end. Hedge funds are supposed to make money no matter which way the market goes, but not when they don't know which way its going, according to Dealbook contributor Louise Story. Hedge fund models are failing because the markets are "too unpredictable," she wrote. This news is apparently lost on Financial Technologies Forum LLC, who recently invited me to a half-day course on "Understanding Hedge Funds." I'm not sure the conference planners understand hedge funds that well themselves, since their invite opens by saying:
1 min read · 18 September 2008
2 min read · 18 September 2008
2 min read · 17 September 2008
In fact, he was "almost too relaxed,” one of my colleagues remarked, referencing Schwarzman’s appearance today at the PEA conference in New York. The founder of Blackstone Group was interviewed by Dow Jones’ Shasha Dai. And Dai didn’t toss out softball after softball. She opened by asking him about his personal feelings on Lehman’s collapse (Schwarzman got his start at Lehman; Dick Fuld was in his partner class). His answer, by the way, was a believable “It’s very sad.” She closed by asking about Blackstone's stock price, which has traded at close to a 50% discount since its IPO last year. He said Blackstone’s stock price was initially a scapegoat for the credit crisis, but that by this point the whole financial sector has been hit. The most interesting answer I heard was regarding the way Blackstone is going to deploy all that money.
2 min read · 17 September 2008
Reporting live from Dow Jones' Private Equity Analyst Conference, I bring you, the PEA Highlight Reel. It's a list of my own overly grandiose, somewhat informative and mildly irreverent takeaways from the first day of the private equity world's Burning Man Festival. Enjoy after the jump...
3 min read · 17 September 2008
2 min read · 17 September 2008
Volkert Doeksen, CEO and Managing Partner at AlpInvest Partners, doesn’t like the word “proprietary.” When asked what he perceives to be the greatest fault of GPs at today’s Private Equity Analyst conference, Doekson said, in fundraising, too many GPs try to emphasize their proprietary deal flow. Based in London, New York and Amsterdam, AlpInvest has more than 40 billion euros under management. The question was posed in a “Five Questions” rapid-fire style. Check out the other four below: Q: What’s private equity’s theme song? VD: Kenny Rodgers - The Gambler. It's got the lyrics ‘Know when to hold and know when to fold.’ What’s the one thing you would have have done differently over the last year? I would have sold my house in the Hamptons. What is the best thing about the current deal environment? Realism is Back. In some ways, our job will be easier, because
1 min read · 16 September 2008
All the way back in 1998, AIG invested $150 million for a 7% stake in Blackstone Group. The stake was supposed to be valued at $1.35 billion over an undisclosed period of time. At the time of Blackstone’s IPO last year, that stake grew to nearly $2 billion, according to an AP report. Separately, AIG agreed to commit around $1.2 billion in various Blackstone funds. The point was to formalize AIG's relationship with the fund via former AIG CEO Hank Greenberg.* Now Greenburg has been ousted at AIG (replaced by a buyout pro no less), and anyways, the insurer may need to liquidate that stake. Ironically, the same 1998 press release that announced AIG’s investments in Blackstone also announced a termination of a longstanding LP relationship, triggered by a different financial crisis. Blackstone lost its commitment from Nikki Securities of Japan thanks to the tough market in Tokyo in the late 90s.
2 min read · 15 September 2008
The Sky Is Falling Edition The Deal Professor: One of the few rational takes on the day’s events. Deal Professor offers a bittersweet list of lessons learned. Like John McCain, he agrees that “the sky is not falling” (see #7). FT: A slightly harsher take on the reason for black Sunday from FT's Avinash Persuad. Dealbook: Don’t rule out a Neuberger sale yet, kids. Bain, KKR, CD&R and Hellman & Friedman are all still in talks for the busted bank’s investment management division. Dealbook: Why old fashioned advisory suddenly looks appealing. Worth quoting, Teitelman writes: When we have the time to look back at the last decade or so, we may well see two new trends: the slow unseating of Wall Street investment banks at the hands of institutions with bank pedigrees and regulatory oversight; and the creation of a parallel universe of firms, many private -- some of whom, particularly the hedge funds -- were active in the speculative pressures that took Bear, Lehman and Merrill off the table. Dealscape: Wall Street’s woes extend to Jersey, too.
2 min read · 15 September 2008
Dealbreaker this morning reported that Berkshire Hathaway/Warren Buffet could be interested in backstopping AIG. Then I got an unfounded tip suggesting that AIG had hired a law firm to advise it on filing for Chapter 11. (Just in case of a freak accident, Equity Private has laid out a discussion of the possibilities) But at last, the truth. At around 1pm, Governor Patterson agreed to let
2 min read · 15 September 2008
