Firms and Funds

The Private Equity Council today released the latest iteration of a long-term academic study on private equity’s role in the financial market. Not surprisingly, it finds that the industry does not pose significant risks to the financial system at large (particularly when contrasted to investment banks). Here are its six main points, with my gut reactions: 1. Efforts to turn around or strengthen undervalued companies represent a very unlikely source of systemic problems in capital markets. I would agree, if only that’s what private equity was doing prior to the credit crunch. Instead, lots of firms (particularly in the large/mega markets) abandoned buy low/sell high strategy for buy high/sell higher. How many times did we see substantial premiums paid for public companies in the midst of a bull market? How many times did we hear: “This is already a market leader” or “This is a very strong company that we feel could be just a bit stronger?” Very few private equity firms were able to follow the sage words of Rudyard Kipling… 2. Private equity losses are unlikely to be of a cascading nature that could trigger a systemic event. This point here is that PE transactions are financed with less debt than are bank investment holdings. And it’s fair, albeit damning with faint

Kirkland & Ellis, an international commercial law firm, is in the process of setting up a funds practice in Asia.   As part of the launch, partners Justin Dolling from London and Albert Cho from New York will relocate to Hong Kong in January 2009.   “Moving these two experienced partners to Hong Kong reflects […]

EQT Partners has opened a new office in Warsaw. It will be led by new partner Piotr Czapski, who previously was on the board of Polish telecom operator Netsia SA and, before that, led McKinsey & Co.’s business tech practice in Eastern Europe.

HONG KONG/SHANGHAI (Reuters) – With signs of cracks appearing across China’s credit system, concerns are growing that the country’s banks may be ill-equipped to handle a drop in the Chinese economy. Corporate collapses and defaults in the last few weeks, together with a tightening interbank lending market, show that China’s banks are hardly in the […]

It’s unsettling to witness attacks on the image of a “Wall Street corporate fat cat” echo around the country. According to Bob McCooey of NASDAQ, The finger pointing is “a political maneuver done for show.” And even worse, after a recent meeting with members of Congress, he said, “It’s amazing that so many members of […]

Mark-to-market accounting doesn’t translate well when the the S&P and Dow are down roughly 30% for the year. If Fair Accounting Standards laws base a portfolio company’s value on public market comps, then a major stock market drop like the one last week might equal a balance sheet eyesore for PE. At a conference yesterday, […]

The Ontario Municipal Employees Retirement System (OMERS) has opened a 20-person office in London.

Riverwood Capital (f.k.a. Bigwood Capital) is seeking $1.25 billion for its first institutional fund, according to LBO Wire. The Palo Alto, Calif.-based firm focuses on growth equity opportunities in tech hardware and hardware-related companies. It is run by Michael Marks, former KKR partner and Flextronics CEO.

Biofuels Capital Partners has abandoned its inaugural fund-raising drive, according to PE Week. The San Francisco-based private equity firm was planning to “bridge the gap between early-stage cleantech venture capitalists and expansion stage project financiers in the biofuels market,” and had secured around half of its $250 million target. Firm founder Bob Johnsen is now listed as CEO of Promethegen Corp. Read more (sub req.)

Charterhouse Capital Partners has held a €3.6 billion first close for its ninth European buyout fund, according to LBO Wire. The overall target is €6 billion. Limited partners include the Massachusetts Pension Reserves Investment Management Board and the Washington State Investment Board. www.charterhouse.co.uk