Friday Letter Reading the runes for 2012

As 2011 comes to an end, we at Private Equity International would like our readers to know that we look forward to a new year full of exciting changes in the industry, and to covering those events with the same in-depth, analytical eye that we have had for the last decade.

But we also pause to look back on the year that was, and remember fondly some of the big events that helped shape private equity in 2011 – the billion dollar deals accomplished despite the volatility in the markets; the fundraisings that either moved quickly to final close, or lingered on month after month; the creation of “strategic relationships” between big LPs and GPs that appears to be a growing trend.

We’d also like to remind our readers to take some time and vote in our annual private equity awards and help us identify the very best players in the industry. Winners will be announced in our Annual Review issue that is published in March.

Do check in over the Christmas period too – we'll be posting a series of outlook pieces from a variety of industry experts who share their thoughts on the likely shape of private equity over the next twelve months.

Finally, a wish to all for a peaceful and prosperous new year, and, to properly close out 2011, here are five of our own predictions for 2012:

1)    Private equity cliques: Big GPs and LPs will continue to form special relationships to the exclusion of smaller players in the industry, creating a situation similar to a school lunch hall, where all the popular kids sit together at the same table.

2)    Attack of the zombies: Certain managers will ask for (and receive) fund life extensions for vehicles with no hope of generating carried interest, somehow convincing LPs they need those management fees to keep their kids in private school for one more year.

3)    Fundraising dance-off: It's murder on the dance floor, as GPs throw shapes in an effort to win the favour of LPs. While some managers will launch and close funds in an almost effortless manner, others will go through all sorts of contortions to convince investors that, despite the past, forecasts ae good for the future, if only they can get a little capital to spend.

4)    Going public: Another giant firm will go public, racing to catch up with its mega-brethren to create “permanent” capital and thrust itself into the limelight of quarterly earnings calls, SEC filings and analysts asking about fee revenues.

5)    Party time: Someone will party like it’s 1999 2007, throwing a ridiculously lavish birthday party. Trade unions and politicians will then use it as evidence that private equity is indeed the enfant terrible of pernicious capitalism.