Annual Review 2015: Predictions for the year ahead

1 After a landslide victory in the US presidential elections, Donald Trump appoints Henry Kravis as Treasury Secretary. “What can I say?” Kravis told USA Today: “You can’t say no to The Donald.” On his second day in office Kravis declares fund managers tax exempt under Internal Revenue Code section 501(c)(8) – Fraternal Societies.

2 On the back of its successful $12 billion fundraising, Warburg Pincus decides the time is right to diversify into other asset classes. “Blackstone, KKR and Carlyle have all done it, and hey, if you can’t beat ‘em, join ‘em,” Joseph Landy wrote in a memo to staff.

3 Despite efforts to make a shared ownership structure at Terra Firma work, after a year Guy Hands and Justin King are no longer seeing eye-to-eye and King departs. Hands explains the change of tack in a post on the firm’s website entitled ‘Conscious Uncoupling’. Six months later King launches a consulting firm called High Seas aimed at private equity-backed distressed portfolio companies.

4 Following in the footsteps of the likes of Ashton Kutcher, Bono and Snoop Dog, Kanye West launches a venture capital fund to invest in his “ideas”. “I thought Mark Zuckerberg and Larry Page were the answer, but I need backers with real vision,” Kanye tweets to his 19 million Twitter followers. Yeezy Capital Partners fails to gain traction among the LP community because of “colossal key-man risk”.

5 Agent Provocateur, the luxury lingerie company owned by 3i, approaches Samantha Cameron, the wife of the British Prime Minister David Cameron, to be operations partner. Sam-Cam, a consultant to luxury stationers Smythson, immediately jumps on board, story-boarding House of Commons green-themed leather accessories.

6 Activist investor and significant shareholder in Electra Private Equity, Sherborne Investors, launches a private equity retail fund to help the “little guy” investor in his quest to enjoy the superior returns generated by the asset class. A carefully compiled prospectus, which explains in detail Sherborne’s investment thesis and expected outcomes, is presented at a series of investor meetings at which Sherborne partner Edward Bramson answers individual investor’s questions one by one.

7 UK public authority pension funds link arms and sing in unison, loudly, across the land: “Let’s pool our assets! Let’s get scale! Let’s make some returns!” They unanimously select a single investment team of top notch managers to develop an alternatives portfolio, poaching aggressively and at some cost from the best of the best of international firms. A new global PE player is born.

8 In a typical flight to quality move, the California Public Employees’ Retirement System sells its $29 billion private equity portfolio on the secondaries market (which the secondaries industry happily split up) and reinvests the cash in gold. The secondaries market has its best year ever with more than $70 billion in deal volume, but the private equity industry loses an important investor.

9 Mary Jo White is appointed as the new Supreme Court judge while Stephen Schwarzman replaces her as the new head of the Securities and Exchange Commission. Schwarzman creates a special tax credit for private equity firms funded with savings from cancelled exams of registered advisors as part of the repealing of the Dodd-Frank Act.

10 After getting back in December from the UN climate conference and arriving to a sunny and 60 degree (Fahrenheit) day in New York, Bill Gates de-commits his funding for low carbon energy. “Climate change can’t be that bad,” he says, while signing a $1 billion check to King Coal Capital. “Maybe the remaining 3 percent of scientists are on to something.” He does decide to keep his Tesla.

Picture: Ian Gampon/Flickr.com