Private Equity Obama Plan
Private Equity Obama Plan
Private Equity Could Be Hurt by Obama’s Plan
Experts say that Obama’s plan to reform commercial banks could have an adverse impact on hedge funds and private equity. On Thursday, President Obama presented his plan to stop commercial banks and institutions owning banks from “owning, investing in or sponsoring” private equity and hedge funds which would remove a significant source for alternative asset funds. The President is aiming to curb risk in the banking sector but private equity firms and hedge funds may pay a penalty too.
U.S. banks in particular make a tremendous contribution to the buyout sector and have raised 60 funds since 2006, with a total value of more than $80 billion, according to London research firm Preqin. Currently, U.S. banks have 18 new private equity funds on the road seeking aggregate funds of around $18 billion, and have $50 billion worth of “dry powder” waiting to be invested.
The main players include Goldman Sachs Inc. (GS), which has $27.2 billion (EUR19.2 billion) of capital ready to deploy in private equity deals, the most of any firm globally. Other prolific banks include Credit Suisse Group (CS), Citigroup (C) and Morgan Stanley (MS).
In Europe, Lloyds Banking Group (LYG) owns Lloyds Development Capital, which manages GBP2 billion of investments. Barclays PLC (BCS) has been contributing less of its balance sheet to its private equity arm, Barclays Private Equity, for some time and is already considering a spin out. Its latest fund raised EUR2.4 billion in 2007 and it had plans to raise another fund this year.
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Tags: Hedge Funds Obama Plan, obama hedge funds, hedge fund investment, hedge funds assets, President Obama, Barack Obama, hedge funds and private equity
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