THIS OLD HOUSE

Let's hope a GP's approach to home remodeling is not indicative of his approach to managing the portfolio. If so, Chrysler may be in worse shape than originally thought. According to a recent cover story in the Wall Street Journal, Stephen Feinberg, the head of Cerberus, has entered the annals of renovation debacles with an ongoing project to improve his Manhattan townhouse. An architect who worked on the project for the Feinberg family said that costs were in danger of escalating beyond the $5 million (€3.3 million) budget. A contractor was quoted as saying spending on the remodeling was “really out of control”. In the meantime, Feinberg himself has been skipping meetings with designers and contractors and failing to pay bills, or in several cases writing cheques that bounced. A Cerberus executive told the WSJ that the Feinbergs were attempting to hold back payment for shoddy or late work. Most recently, two subcontractors filed liens against the townhouse. To be fair, Feinberg isn't the only GP dealing with cost and time issues at present.

QUOTABLES
“It is still early and it varies from fund to fund. But this may be the first time that this generation of private equity managers will have to consider how to satisfy large liabilities to investors.

Monte Brem, chief executive of California-based private equity consulting firm StepStone Group, ponders the possibility of GPs returning capital to investors in light of worsened exit prospects.

“Where WaMu gets to is more important than when it gets there. This is the strength of private equity. We can be patient.”

TPG founding partner David Bonderman tells the Financial Times why investing in ailing Seattle-based consumer bank and mortgage lender Washington Mutual makes sense.

“Public opinion is demanding more transparency and ethics on management packages, so we need to be ready for this.”

Dominique Senequier, chief executive of Paris-based AXA Private Equity, calls for a voluntary code of conduct on how profits made from deals should be split among investors, managers and staff. Her views, expressed in a Financial Times interview, follow a number of highly lucrative – and controversial – payouts to French private equity-backed management teams.

“It is time to welcome carbon footprints, the commentariat, cryoablation, electrosmog, food miles, IEDs, private equity companies and, those constants of cheap media, Wags and Z-listers.”

British television presenter, journalist and author Jeremy Paxman introduces some interesting new entries to The Chambers Dictionary in a foreword to the 11th edition.