The Institutional Limited Partners Association, the main group advocating for best practices between institutional investors and private equity firms, named Michael Mazzola, the head of alternative investments at MetLife, as its new board chairman. The appointment was effective on Nov. 7th.
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A return to private equity following a five vintage-year break in the mid-2000s has given the Kansas Public Employees Retirement System portfolio a shot in the arm, thanks in part to well-timed investments in non-control distressed and opportunistic credit funds.
Alternative investments such as infrastructure and private equity aren’t for the shallow-pocketed. Data provided by the Maine Public Employees Retirement System reveals just how big a bite fees and expenses can take in the early years of limited partnerships. Take Carlyle Infrastructure Partners, a fund to which MainePERS committed $50 million in November 2007. Of that sum [...]
First came word from the Wall Street Journal earlier this month that New York buyout shop Vestar Capital Partners is beating a complete retreat from its European operations.
And then yesterday the Financial Times reported that Fort Worth, Texas-based TPG Capital is rearranging priorities in Europe, placing less emphasis on buyouts and more on non-performing loans and restructuring. (Sources confirmed the main thrust of both stories to me; Vestar Capital, which has had offices in Europe since 1999, has decided to focus laser-like on the United States, its primary market over its last several funds. The withdrawal has been several years in the making.)
You’d think buyout firms have had a hard time generating solid returns on their European investments. But, if so, that’s not always been the case, judging from the results of five European funds in the returns database of sister magazine Buyouts. Managed by The Carlyle Group, Kohlberg, Kravis Roberts & Co., and Hicks, Muse, Tate & Furst, the five, running from vintage years 1998 to 2005, have generated a median investment multiple of 2x and a median internal rate of return of 21.5 percent.
Perhaps tellingly, the worst performer to date is also the youngest–the 2005 KKR European Fund II, which is just slightly in the black according to backer Oregon Public Employees Retirement Fund. Click through below to see more details on the performance of this and the other four U.S.-sponsored European funds in our database.
So, let’s say you want to make more money. What do you do?
Here’s some advice: Head for the firms with the greatest assets under management.
It’s simple arithmetic. The more assets under management, the more a firm rings up in management fees and, in the case of buyout firms, deal-related fees (those not handed over to LPs). Bigger transactions also translate to bigger profits when it comes time to doling out carried interest.
Firms managing more assets tend to have more mouths to feed, but rarely do firms ramp up their payrolls at the same pace they do their fund sizes. The disparities in compensation, as the infographics below show, are dramatic—and a source of ongoing angst for LPs, who worry that partners will be tempted to raise bigger funds than they can wisely invest.
For the last 18 months, we’ve been extolling the virtues of unitranche debt. This structure has gained substantial popularity over the last few years as an ideal replacement for the cash flow senior debt that banks and CLOs no longer supplied as eagerly to the middle market following the 2008 credit crisis. With the ability [...]
(Reuters) – Large European private equity buyouts are on hold until capital markets revive, which is unlikely to happen this side of Christmas as leveraged loan and high-yield bond markets remain weak, bankers said on Thursday. Dysfunctional financing markets are threatening new buyouts such as the 1.5 billion pounds ($2.3 billion) sale of British frozen [...]
The roughly decade-old private equity programs of three New York City pension funds are off to reasonably strong starts. But a major slowdown in commitment pace in the wake of the financial crisis will have implications for returns in the years ahead. The largest of the three, the $42.7 billion Teachers’ Retirement System of the [...]