Editor's letter

Given the large amounts of capital that have flooded into secondaries funds in recent years, it seems something of an anachronism these days to label private equity an illiquid asset class. Indeed, from the point of view of dedicated secondary buyers in developed markets, it might seem there's rather too much liquidity around given the intense competition for assets that now prevails. See our cover story starting on p. 45, where we consider whether emerging markets can offer a refuge for secondary investors prepared to swap greater risk for less efficiency.

Liquidity, it seems, is ubiquitous – even increasingly in a movie industry that has bankrupted many well-intentioned but ill-advised financial backers through the years. One might reasonably ask what on earth has prompted apparently sophisticated private equity firms and hedge funds to start courting Hollywood moguls? The answer, as our feature on p. 64 illustrates, is to be found in emerging forms of digital entertainment. No longer are box office takings the key determinant of financial success or failure. Savvy investors are busy striking deals based on the new reality that “content is king”.

The fact that private equity and hedge funds are both in the vanguard of the entertainment IP revolution speaks volumes of the growing convergence between the two forms of alternative investment. Arguably the most pertinent illustration of the trend is Cerberus Capital Management, the multi-strategy hybrid that has been making waves recently with a string of high-profile deals. All the more remarkable, then, that the firm has managed to throw a veil of secrecy over its operations. Starting on p. 77, we question whether such aloofness is sustainable given its expanding influence.

Talking of influence, few in the European buyout arena can match the status accorded to CVC Capital Partners. In this month's Privately Speaking (p. 38), we talk to CVC chairman Michael Smith about the future of LBOs, as well as the future of his firm.

Enjoy the issue,

Andy Thomson

Commissioning Editor