Trending on peHUB this week: carried interest, photos from PartnerConnect, PE job openings, corporate interest in cleantech, fundraising by Insight Equity and Marlin Equity Partners and a Reuters exclusive on Yankee Candle.
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President Obama brought new attention to the carried interest debate on Wednesday by unveiling a budget with a proposed change in how venture capitalists and private equity managers are taxed on investment income. Don’t expect a quick tax hike.
For those who weren’t able to attend our PartnerConnect 2012 conference in the spring, we have a real treat for you: an interview with buyouts legend Henry Kravis. This is the only conference Kravis has spoken at this year.
Bain Capital LLC is considering raising $6 billion to $8 billion for a new global buyout fund — far less than the $10.7 billion it raised for its 10th fund in 2007 — and it may offer LPs up to three options on fees, according to an exclusive Reuters report.
With November fast approaching, it should come as no surprise that President Obama’s proposal for “business tax reform” includes some elements sure to play well in Peoria.
Time to catch up on the stories your colleagues found most compelling on peHUB this week. Here are the top 10 posts that garnered the most pageviews from regular readers from Sept. 19 to Sept. 23.
One: Trouble Making Ends Meet: Top 10 Cash Returning Funds In Cal Regents’ Venture Portfolio (Slideshow) — by Mark Boslet
Two: Slideshow: Face Scrubbers, Balloon Trips: 16 at CalPERS Face Fines for Alleged Gift Violations (subscribers only) — by Gregory Roth
Three: Slideshow: Q3’s Most Active Buyers — by Bernard Vaughan
Four: Slideshow: Top-Performing PE/VC Funds for State of Florida — by David Toll
Five: Wringing Money from a Flagging Venture Fund — for a Price — by Connie Loizos
Six: Blackstone Looks to Advise Startups — by Luisa Beltran
Seven: Pressure on Solyndra Backers Intensifies — by Roberta Rampton, Reuters
Eight: Soros, Schwarzman Move Up On Forbes 400 Richest List — by Luisa Beltran
Nine: Obama Pitches Changes to Carried Interest; PEGCC Rebuts “Buffett Rule” — by Luisa Beltran
Ten: MassPRIM Loses Second PE Manager — by Gregory Roth
(Reuters) – President Barack Obama is proposing cutting $467 billion in tax breaks for wealthier Americans and some companies to offset the cost of his job-creation plan, White House Budget Director Jack Lew said on Monday. Included is a plan to treat carried interest as ordinary income. “In order to invest in jobs and growth, [...]
Recently, the debate has been re-ignited over whether Congress should (or could) tax carried interest as capital gains instead of as regular income. VCs and private equity professionals said in a peHUB poll that they don’t believe President Obama will succeed in more than doubling the rate on carried interest from 15% to 35 percent. [...]
President Obama’s efforts to change rules on carried interest are misguided, said Steve Klinsky, founder and chief executive of New Mountain Capital, in a wide-ranging video interview with Reuters Insider and sister magazine Buyouts. The entire 4-minute video can be viewed here.
Carried interest, said Klinsky, is “something very different from salary, something very different from bonus. You take a business, you spend years building value, and if you do in fact sell it at capital gain, you get charged at capital gains rates. That’s what carried interest means.” He said “hopefully people will look at it more fairly and level-headedly.”
Reflecting on the financial crisis, he said private equity got caught up in the rage directed at Wall Street, even though private equity itself had little to do with the crisis itself. “We got caught up in that spirit of revenge,” he said.
The carried interest taxation debate is fast becoming as irrelevant as “The Decision.” Only a few die-hards still believe that persuasive arguments could revive meaningful legislation, while the rest of us despair at Democratic spinelessness and Republican obstruction.
But God bless ‘em for trying.
Today, the Kauffman Foundation’s Paul Kedrosky and Harold Bradley penned a Bloomberg Op-Ed, arguing that the IRS should treat carried interest as ordinary income. Not as some sort of ordinary income/capital gains hybrid, but as the same tax that the rest of us pay (or at least those of us without active lobbies in DC). They included the following rebuttal to those who claim carried interest is comparable to homeowner equity: