Private Equity EU

EU Law Adds More Regulation of Private Equity

Private equity in Europe has felt already been struggling in the economic downturn and a new draft Euriopean Union law threatens to make matters even more difficult for private equity firms.

A draft EU law that will be published next week would require any private equity group managing funds of at least €250m (£220m) total to report more information about its structure, strategy and investors. Simon Walker, head of the British Private Equity and Venture Capital Association, estimates that this law will effect 86 UK private equity firms. That’s in addition to the 16 large firms already complying with the voluntary transparency code enacted last year. Nine of the effected firms are venture capital and provide a seed capital for technology start-ups, an area which European politicians have been striving to encourage.

Another aspect of the draft EU legislation effects companies owned by private equity groups. Any private equity owned company with a turnover exceeding €50m would have to submit an annual report of its finances, strategy and outlook. Mr. Walker estimated that 500-600 UK firms would be affected by the law. According to his “quick estimate by a big four accountant” he calculates that the firms will have to pay an additional £25,000 to £30,000 cost in order to comply with the new law.

Strangely, according to Mr. Walker the law would apply to a company outside the EU if it is possessed by a EU private equity firm. On the other hand, if a UK firm is purchased by a private equity firm it does not have to adhere to the new law.

Mr. Walker criticized the new law predicting: “This will provide a profound disincentive to be owned by a private equity fund. Will it be passed on through increased costs for investors? I think so.”

Source

Tags: Private equity, private equity eu, private equity legislation, private equity law, private equity filings, private equity europe, european private equity, private equity firms in Europe

Short Hedge Fund News Video Post

Today is my birthday so I am taking the day off from blogging…sort of…Below is a short hedge fund news video. If you are viewing this article through our daily hedge fund newsletter please click here to view the embedded video now.

View over 50 additional free videos within our Hedge Fund Video Library.

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I recently moved from academia to a start up hedge fund. It is interesting to see how many folks, like me, have come from diverse backgrounds to the industry. I’m sure this is good for hedge funds: we’re bringing new ideas and attitudes to the table. But I’m also realizing that I’m at a a disadvantage sometimes because I’m not fully up to speed on many important aspects of finance relating to hedge funds.

Of course I’ve been reading books, magazines and blogs, and I find them very useful. But how can I know that I’m really getting the fundamental knowledge I need? I’m concerned, for instance, that my personal reading is directed by my own interests and the focus of the fund I work with. I’d like to be sure I have a broad exposure to the fundamentals. I don’t want to be surprised later because of a gap in my knowledge.

My top reason for seeking the CHA designation is to be sure I know what the hedge fund industry thinks is important. This will help me be more effective at my fund. I expect that the designation may also help in the future.

I also considered the CFA. Clearly the CFA is prestigious, and more comprehensive than the CHA. But, for me, it is too heavyweight right now, and maybe more than I need. I need a “tactical” education about hedge funds.

I’ll post more blog entries as I go forward with my preparation for
the exam.

- Tucker Balch

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Tags: CHA Designation, Hedge Fund Certification, Hedge Fund, Hedge Funds, Alternative Investments, Private equity, Investment Certificaiton Program

I recently moved from academia to a start up hedge fund. It is interesting to see how many folks, like me, have come from diverse backgrounds to the industry. I’m sure this is good for hedge funds: we’re bringing new ideas and attitudes to the table. But I’m also realizing that I’m at a a disadvantage sometimes because I’m not fully up to speed on many important aspects of finance relating to hedge funds.

Of course I’ve been reading books, magazines and blogs, and I find them very useful. But how can I know that I’m really getting the fundamental knowledge I need? I’m concerned, for instance, that my personal reading is directed by my own interests and the focus of the fund I work with. I’d like to be sure I have a broad exposure to the fundamentals. I don’t want to be surprised later because of a gap in my knowledge.

My top reason for seeking the CHP designation is to be sure I know what the hedge fund industry thinks is important. This will help me be more effective at my fund. I expect that the designation may also help in the future.

I also considered the CFA. Clearly the CFA is prestigious, and more comprehensive than the CHP. But, for me, it is too heavyweight right now, and maybe more than I need. I need a “tactical” education about hedge funds.

I’ll post more blog entries as I go forward with my preparation for
the exam.

- Tucker Balch

Tags: CHP Designation, Hedge Fund Certification, Hedge Fund, Hedge Funds, Alternative Investments, Private equity, Investment Certificaiton Program

New York Pension Fund

Private Equity Firms in Pension Fund Scandal

New York state and federal authorities are investigating whether several private equity firms and hedge funds–including the Carlyle Group–participated in an illicit scheme to secure investments from the New York state pension fund.

According to the Washington Post:

New York Attorney General Andrew M. Cuomo has subpoenaed several firms that got business from the $122 billion pension fund after using the services of a middleman who connected investment firms with potential investors, the sources said. Cuomo and the Securities and Exchange Commission have alleged that the middleman won business for the firms through illicit payments.

Additionally, the firms are being investigated to see whether they failed to disclose their using the middleman to the pension fund, to find if the fund was aware of the special treatment that the various firms were receiving. According to court documents, the New York state pension fund has invested the most with the Carlyle Group. The private equity firm was involved in five investments with an estimated $730 million in capital from the pension fund.

Carlyle’s spokeman offered the following statement, “Carlyle has fully cooperated with the New York Attorney General’s investigation. We understand this is an industry-wide investigation and that we are not the focus of the investigation.” And referring to Carlyle Group’s previously scrutinized relationships with consultants the spokesman said, “Our agreements with placement agents, whether large Wall Street firms or smaller broker-dealers, call for all parties to abide by all laws to ensure the integrity of the investment process. Carlyle is pleased to currently serve the pensioners of New York, Illinois and Connecticut and has achieved excellent returns in several funds on their behalf.”

This investigation follows the criminal and civil charges filed by the New York Attorney General and the SEC against the former top aide to former New York comptroller and the pension fund’s former chief investment officer. The two have been accused of receiving bribes and gifts for directing pension fund money toward investment firms. While they deny any wrongdoing, court documents claim that they received $30 million in fees and gifts.

The use of consultants is not in itself unlawful, and many investment firms see consultants as a necessary means to receiving an audience with a pension fund. The accusation is that investment firms paid bribes and fees in order to obtain investments from the pension fund. The SEC’s complain asserts that at least some of the firms were fully aware of the illicit arrangement: “Private equity firms and hedge fund managers . . . together paid millions of dollars to Morris and others in the form of sham ‘finder’ or ‘placement agent’ fees in order to obtain those investments from the Retirement Fund. These payments to Morris and others were, in fact, little more than kickbacks that were made pursuant to undisclosed quid pro quo arrangements.”

The problem of pay-to-play practices is not exclusive to New York and the Attorney General Cuomo did not rule out the possibility of the investigation expanding to other firms and funds. Recently, the Connecticut Attorney General reached a near half-million dollar settlement in a case where a broker was secretly compensated for directing pension-plan business to insurers.

The New York investigation is ongoing and has been for over two years, and just recently the SEC joined the case.

Source: WP

Tags: New York Attorney General, SEC investigation, Private Equity, Private Equity Pension Funds, Private Equity Pension Fund Scandal, New York Pension Fund, Private Equity Hedge Fund Consultant

Hedge Fund Video News

Below is a video of Houman Shadab speaking at the House Oversight Committee Hearing on Hedge Funds. He speaks about how hedge funds keep the markets in check, are not to blame for the financial crisis, and too much additional regulation on hedge funds will hurt investors. If you are reading this article through our email newsletter you will need to click here to watch the embedded videos.

Below is a video news update on recent hedge fund events:

Below is a recent video on payments made to Lawrence Summers from large banks and a single hedge fund manager:

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Tags: Hedge Fund, Hedge Funds, Hedge Fund Video News, alternative investments, private equity

Free Videos on the Hedge Fund Industry

HedgeFundBlogger.com now hosts hundreds of free-to-watch videos on the hedge fund industry. Many of these are highlighted within our Hedge Fund Video Library. Here are links to 20 of the more popular videos from this library:

• What To Know About Hedge Funds
• Hugh Hendry Eclectica Asset Management Interview
• Obama Hedge Fund Regulation 2009 2010 2011
• Hedge Fund Macro Fund Performance Video
• Mark Fuchs Interview on Hedge Funds
• How to Have a Positive Attitude
• Hedge Fund Business Model Discussion Video
• Nassim Taleb Interview on the Economy Black Swan
• Private Equity Regulation in Europe and America
• Investor Questions for Hedge Funds
• Hedge Fund Losses and Closures in 2008 2009
• Barton Biggs Traxis Partners Hedge Fund Interview
• Hedge Fund Startup and Business Development
• Jim Cramer on TARP Programs & Hedge Funds
• Regulation on Hedge Funds Regulations 2008 2009
• Hedge Fund Compensation Report
• The Hedge Fund Industry – Video Update
• Building a Hedge Fund How to Start A Hedge Fund

Tags: hedge fund, hedge funds, alternative investments, investment, stock market, video, private equity, videos, investing

Hedge Fund Tracker News Rally

The recent economic environment has produced dozens of recent headlines on top hedge fund managers. To view various news stories on specific hedge fund managers please see the links below. These are all hedge funds who have had their HedgeFundBlogger.com based Hedge Fund Tracker profiles recently updated:

• SAC Capital Advisors, LP
• Renaissance Technologies
• RAB Capital Plc
• Man Investments Group
• Millennium Partners
• Highbridge Capital Management LLC
• Bridgewater Capital
• Cerberus Capital Management LP
• GLG Partners

To view over 1,000 profiles of hedge fund managers please see our Hedge Fund Track Tool.

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• Four Elements Capital Management, LP

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Private Equity 2009 Data

2009 Q1 Report Shows Investors Still on Sidelines

The latest report from PitchBook Data covers the first quarter of 2009. It reveals that although fundraising has remained strong, private equity investors are still hesitant to invest any of that capital. PitchBook’s CEO, John Gabbert, sums up the findings best, “…despite having raised record amounts of capital over the past two years, private equity investors are still waiting on the sidelines for the current economic conditions to stabilize, the credit markets to return, and valuations to adjust before they really get back to doing new deals.”

The key statistics for private equity Q1 2009 are:

• Only 188 investments were completed in the first quarter, while 440 were in Q3 and 279 in Q4 of 2008. Compared to Q1 2008, investment activity dropped by 68%, with a 70% fall in buyouts.
• The credit crunch has cut the number of deals over $250 million to just 12% of Q1 deals. Instead, private equity investors are turning to minority investments and acquisitions of middle-market companies. This led the median deal amount to drop from $61 million in 2008 to $25 million this quarter.
• The amount that private equity firms invested during this quarter reached a new low of only $12.8 billion, compared to $52.7 billion invested during the same period last year–and the remarkable $177 billion invested in Q4 of 2007.
• Breaking it up by industry: In Q1 2009, 53 investments were completed in the Consumer Products and Services industry. The Business Products and Services industry followed at second with 46 transactions and then Healthcare with 28. The Energy industry felt the biggest drop in investment activity, with a more than 60% drop from last quarter at just 9 completed investments.

For the full report from see Pitchbook

Tags: Private equity, private equity investors, private investors, private equity news, private equity data, private equity pitchbook data, pitchbook data, private equity information

Hedge Fund Strategies During the Recession

Just came across an article which on top of the normal industry regulation and redemption talk discussed what strategies might actually do well over the next year or two. In addition to the ideas quoted below I believe that more simple, easy to understand strategies which survived both the 2001-2002 and current periods will go far with new investors.

Here is a few quotes from the article:

“Macro funds will be a big winner,” predicts Sassan Ghahramani, former chief executive Medley Global Advisers, a research firm for hedge funds and other money managers. “There is so much policy involvement that is affecting the movements of markets. And in the next two to five years, central banks will unwind their interest rate cuts, but at different speeds in different countries.” That will create trading opportunities for the macro managers.

The environment also is ripe for hedge funds that invest in distressed assets, such as real estate and securities backed by credit card and auto loans. “There is a lot of interest out there for this,” Ghahramani says. “People are trying to put together war chests.”

“Probably the best hedge-fund trade in the next year is to partner with the government in buying the securities it wants to get sold from banks,” says David Gilmore, a partner at Foreign Exchange Analytics, which advises hedge funds and others about market trends. “You get the most leverage at the lowest rates and insurance on your downside risk.” source

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Tags: Hedge Fund strategies, hedge fund, hedge funds, alternative investments, private equity, stock market, investments

Alternative Investments

Investors Turning Away From Alternative Assets

Following the banking crisis and Bernie Madoff’s large-scale fraud, investors have reason to be anxious. A survey by Quinnipiac University and Greenwich Roundtable sheds some light on investors’ attitudes.

The latest survey reveals that investors are less confident in alternative investments and the regulatory agencies. According to Steve McMenamin, executive director at the Greenwich Roundtable, “Leverage, liquidity, and lack of confidence are still keeping the sophisticated investor on the sidelines. We have never seen so many rational, cool-headed limited partners refrain from making future commitments to alternatives.”

Quinnipiac University and Greenwich Roundtable interviewed almost one hundred institutional and private investors at the beginning of 2009 to find the following results:

Asset Allocation and Market Outlook

• Over the past quarter, more than one third of participants signaled that they had lowered their allocations to alternative investments while 54 percent of participants are keeping their allocations constant.
• Close to 50 percent of respondents believed that asset prices will need to stabilize for a period of six months to a year before investors return to the markets.
• Thirty percent of managers felt it will take a year or longer for market conditions to improve.

Gates

• One third of participants said that between 10 percent and 40 percent of managers are raising gates or suspending redemptions.
• Close to one-quarter of managers indicated dissatisfaction with current fund gate structure.
• About 10 percent of investors felt that gates were being abused.

Madoff

• Approximately 45 percent of members felt that better oversight by the SEC could have prevented the fraud.
• More than 28 percent of respondents believed that any due diligence should have raised enough red flags to preclude investing.
• Twenty-two percent of investors said that verification by auditors could have prevented the Madoff scandal.

Regulatory Agencies

• More than 72 percent of members voiced a negative view of the SEC.
• Ninety-seven percent of respondents believed the rating agencies as ineffective.
• Close to 50 percent of investors had a positive view of the Federal Deposit Insurance Corporation.
• About 47 percent of participants had a positive view of the Federal Reserve Board.

Results from this Source

Tags: Private equity survey, alternative investments, private equity alternative investments, private equity surveys, private equity investors, institutional investors, private equity

Manager Profiles

Hedge Fund Manager Profiles Updated

We have recently updated several of our Hedge Fund Tracker profiles – these are collections of notes on individual hedge funds and make up a unique free-to-access resource for professionals in the industry.

Here are a list of the profiles which were updated just today:

• Pershing Square Capital Management
• Citadel Investment Group LLC
• Brevan Howard
• CQS Capital
• Fortress Investment Group LLC
• GLG Partners

View over 1,000 hedge fund manager profiles through our: Hedge Fund Tracker Tool

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Tags: Hedge Fund Manager Profiles, hedge fund, hedge funds, alternative investments, private equity, Citadel Hedge Fund, CQS Hedge Fund Manager, Pershing Square Capital Managment

Private Equity Investing in Banks

Bernanke Hopes For Private Equity Investing In Banks

Federal Reserve Chairman Ben Bernanke gave a hopeful forecast in a rare interview on “60 Minutes.” Mr. Bernanke began the conversation with a surprisingly optimistic prediction saying “I do think we will see the recession coming to an end probably this year. We’ll see recovery beginning next year, and it will pick up steam over time.”

While much of the interview covers the Federal Reserve’s actions throughout this economic crisis, Bernanke made some interesting remarks about the need for private equity to stimulate the economy. Bernanke highlighted the need for private equity firms to invest in struggling banks as a crucial step in the recovery process:

“One sign would be that a large bank would be successful in raising private equity. Right now all of the money is sitting on the sidelines saying we don’t know what these banks are worth and we don’t know if they are stable, and they are not willing to put their money into the banks.”

Skip to the end of this video for his comments on private equity or check out the full interview here:

While the Federal Reserve has made some promising motions to invite private equity firms to invest in banks, some are arguing that it has not done enough. The Federal Reserve has loosened some regulations that prevent private equity firms from investing in banks for example private equity firms may now hold bank board seats and communicate with management. (For the Federal Reserve’s changes to the banking regulation see this document.)

John Douglas, the chairman of the banking and financial institutions group at Paul Hasting’s, offers an interesting take on the loosened regulations for private equity in banks. He argues that the Federal Reserve has not gone far enough and that private equity firms should be allowed to assume a controlling interest in a bank. Douglas believes that it is a good opportunity for private equity firms and that they should be allowed to invest in the banks providing them with much needed capital. Here he is talking about private equity’s role in banks:

Tags: Private equity, private equity federal reserve, private equity recession, private equity Ben Bernanke, Private Equity banks, private equity investing in banks, private equity investment banks

Buyout Funds and Venture Capital

Private Equity Lost More Value than Venture Capital

According to Cambridge Associates new fund performance indices, private equity firms lost more value for their investors than venture capital firms did in the first three quarters of last year. Non-venture capital private equity firms fell 8.9% through the third quarter of 2008, while venture capital firms lost nearly half that, losing 4.26%. More from peHUB:

Cambridge Associates has released new fund performance data, which shows that private equity firms (buyout, growth equity, mezz) lost more value for limited partners than did VC firms, during the first three quarters of 2008. Not just actual dollars — of which buyouts simply has more — but in terms of percentage (net of fees, carried interest and other expenses). And given what we know about Q4, it’s a reversal of fortune that can be expected to accelerate.

Specifically, non-VC private equity firms were down 8.9% through Q3 2008, compared to a negative 4.26% mark for VC funds. The gap is even more pronounced for one-year performance (Q3 07-Q3 08), where buyout firms are at -5.5% compared to -0.9% for VC funds. They both suck, of course, but VC sucks less.

Things flip around once you begin looking at three-year and five-year performance. Venture has the lead on 10-year, but expect that to disappear once the tin mark signifies the dotcom bust rather than the dotcom boom.

The Cambridge Associates data is based on a sample of 748 private equity firms raised between 1986-2008, and 1,238 VC funds raised between 1981-2008. Also worth noting that Cambridge’s results are more favorable to the VC industry than are Venture Economics’ results. Not in terms of this specific issue of YTD buyouts vs. VC, but just in terms of overall VC benchmarks.

If you’d like to see the venture capital and private equity firm performance data follow this link to Cambridge Associates.

Tags: private equity, venture capital, private equity value, venture capital value, private equity funds, venture capital funds, private equity data, private equity cambridge

FamilyOfficesGroup.com Re-Launch

Our team has just re-launched FamilyOfficesGroup.com. The site now has an upgraded appearance, more free-to-access articles on family offices and many resources related to both UHNW philanthropy and alternative investments.

To learn more about family offices or to see our new site please visit http://FamilyOfficesGroup.com. Here are the most popular articles from this site:

• Family Office Jobs
• Single Family Office Investment Performance
• Philanthropic Giving
• Financial Advisor Marketing
• Family Office Services
• Family Office Wealth Management
• Single Family Office
• Family Office Resources

Tags: family offices, family office, alternative investments, private equity, philanthropy, philanthropic, wealth management, investments, hedge fund, hedge funds, real estate

FamilyOfficesGroup.com Re-Launch

Our team has just re-launched FamilyOfficesGroup.com. The site now has an upgraded appearance, more free-to-access articles on family offices and many resources related to both UHNW philanthropy and alternative investments.

To learn more about family offices or to see our new site please visit http://FamilyOfficesGroup.com. Here are the most popular articles from this site:

• Family Office Jobs
• Single Family Office Investment Performance
• Philanthropic Giving
• Financial Advisor Marketing
• Family Office Services
• Family Office Wealth Management
• Single Family Office
• Family Office Resources

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Fund Regulation Survey

99% Chance of New Fund Regulations

A recent surveyed showed that 99% of hedge fund partners believe that the industry will be more heavily regulated within the near future. This is up from just 8% in 2008. Here is an article discussing this recent survey result:

Nearly 99% of senior hedge fund partners expect increased regulation, according to a new Rothstein Kass survey, a huge increase from 8% in 2008 and 9% in the firm’s initial report on alternative investor trends in 2007.

Of the 239 senior hedge fund partners surveyed, 83.7% also expect competition for investors to dramatically increase, 82.4% believe hedge funds will become much more costly to operate, 79% think hedge funds will revert to being a niche investment class and 64% predict that marketing will become much more important. source

Read about hedge fund compliance and regulations within our Hedge Fund Regulation Corner.

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Just found a recent article on the performance of investments made of single family offices claiming that their returns were likely below those of other high net worth individuals. First off it is important to note when discussing single family offices that they need not relay their performance to anyone and often will not return the phone calls of journalists, publicists or surveys seeking information. This means that any reporting on this sector is skewed at best.

I believe the article noted below to be off-base in several ways. First, single family offices conduct more due diligence on hedge fund investments than their high net worth peers so if we are really comparing apples to apples here it would be hard to believe that those who conducted 4-10x as much research on their investments would perform worse in the markets. Second, single family office HNW individuals are more likely to have their investments more diversified and invested in less straight equity portfolios. While diversification may not have helped much over the past year it could prevent 60%+ drops in portfolio value seen within some concentrated equity portfolios. The last reason why I believe this article is off base is because it refers to alternative investments made by single family offices as a negative aspect of them. Recent performance indicators by the HFR and HedgeFund.net show that hedge funds have outperformed equities…would being in hedge funds then be an advantage?

Here is the article referenced above:

Dugan said: “In many cases the credit crunch has hit family offices harder than the high net worth.”

He said that the tendency of single family office portfolios being highly exposed to alternative investments – which in some cases last year comprised as much as 50% of investments in hedge funds, private equity and other alternatives – has hit the very wealthy harder.

Alternatives are expected to comprise a significantly smaller proportion of family office portfolios in the next few years, said Dugan, who made his comments at the release of a report by Merrill Lynch and Campden Research, a London-based publishing company, into single family offices in Europe. source

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Private Equity Owned Companies

Private Equity Manages Companies Best, Report Finds

A consistent point of contention over private equity concerns the impact that private equity investors have when controlling a company. A new report from the World Economic Forum aimed at answering this question and found that companies backed by private equity are “on average the best-managed ownership group.” The report reveals that private equity-backed firms fared considerably better in a variety of management practices than other owners including government, family or private owners.

One reason for why private equity firms tend to manage companies better than others is the reward structure. That is, most private equity firms use merit-based hiring, firing, compensation and promotions. Additionally, private equity firms tend to have uniquely rigorous evaluation metrics, which consider both short- and long-term performance, and is well understood by the PE firm’s employees. Private equity-backed companies performed especially well in operational management practices. Many private equity-owned companies employ lean manufacturing practices, “with continuous improvements and a comprehensive performance documentation process.” In this way, private equity ownership implies a broad approach to improving management practices across the board.

The report concludes that “most private equity-owned firms are well managed.” The impressive average levels of management practices within private equity firms can be explained by the relatively small number of badly managed firms. So, while the number of poorly managed firms owned privately or by a family is pretty normal, it is fairly rare to find a badly managed private equity-backed firm. This reflects that private equity-backed companies are consistently managed well.

Here is the full report, it is over 100 pages and provides interesting insight into how private equity investors owning a company effects its efficiency.

Tags: private equity, private equity management, world economic forum, private equity management practices, private equity owned companies, private equity owned companies performance

Top 20 Articles

Top 20 HedgeFundBlogger.com Pages

Here is a list of 25 of the most popular articles on HedgeFundBlogger.com based on pageviews over the last month:

1. Top 100 Hedge Funds to Watch
   
2. Hedge Fund Tracker Tool (Over 1,000 Hedge Funds)
   
3. Hedge Fund Job Listings
   
4. Letters to Hedge Fund Investors
   
5. Hedge Fund Employment
6. Hedge Fund Startup Tools
7. Hedge Fund Strategy Guide
   
8. Hedge Fund Websites
   
9. Geographical Guide to Hedge Funds
   
10. Hedge Fund Performance Articles
    
11. Hedge Funds in New York
    
12. Book Summary of Good to Great
    
13. Top Banks in the US
    
14. Renaissance Technologies Hedge Fund Profile
    
15. Blue Ridge Capital Hedge Fund Profile
    
16. Beta Formula – Finance Definition
17. Hedge Fund Marketing Tools
18. Hedge Fund Transparency Act
19. Bernard Madoff Hedge Fund Fraud Case
20. Table of Contents

Tags: hedge fund, hedge funds, private equity, hedge fund articles, hedge fund information, hedge fund news, news, investments, investment, alternative investments, alternative investment

Hedge Fund Trend

Hedge Fund Industry & The Markets

I just had a comment on a past blog post related to how the current markets have changed the current hedge fund strategies being offered right now.

Here was my response:

While many strategies have struggled in 2008 and 2009 global macro and shorting strategies have done well. I’ve also heard of many managers who are shifting their strategies to more short term vol trading instead of long term holding for obvious reasons. Managers who used to do 80% long term holding and 20% short term trading have now flipped those stats on their head. Lots of new commercial financing and distressed asset funds are coming out right now as well.

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Tags: hedge fund, hedge funds, private equity, investments, stock market, real estate, depression 2009, stock markets, investment, hedge fund trends, hedge fund strategy changes

Private Equity and Banks

Private Equity Firms Want Details Before Aiding Banks

Private equity is a likely source of capital for struggling banks, but private equity firms seem less than inspired by the new Treasury Secretary Timothy Geithner’s latest comments. If the government is interested in reaching out to private equity groups then Mr. Geithner did not convey this well, according to reactions from several members of the private equity industry.

The main criticism toward Geithner was that he failed to provide any specific details on how private equity will work with the government.

PE firms are clearly interested in partnering with the government to invest in banks. But after having been burned last year in the sector, they want certain assurances from the government on what it will and won’t do to encourage private investment. But beyond Geithner’s statement that the government needs to “mobilize and leverage private capital, not supplant or discourage it,” there were no specifics in his speech. Nor is there much information yet available at a new Web site, financialStability.gov, that Geithner unveiled during his speech.

A telling response came from a partner from a financial services-focused private equity firm, “They are still talking in concept, not in substance. I wouldn’t touch a bank stock after that speech.” Private equity firms specifically wanted details on what assets would be bought and at what price, who will bare the risk and who will reap the rewards (the government or PE investors), and an idea of how the deals would be structured. Without information like this, it is doubtful that private equity firms will be very willing to help in rebuilding the banking system.

“We don’t have every detail yet,” said Mani Sadeghi, managing partner of Equifin Capital Partners, which focuses on financial services deals. “Clearly we’re interested. But the question is whether partnering with the government allows us to be value-adding…You have to understand what you are buying, at what prices, and how they are serviced.”

Source

Tags: private equity banks, private equity, private equity and banks, private equity investing in banks, private equity bailout, buyout banks, private investment, private equity banking

Private Equity Job Market

Tips for Entering the Private Equity Job Market

Many Private Equity Blogger readers are MBA students/recent graduates or professionals hoping to make the switch from another finance career to private equity. I have made a point to update the site with as many resources as possible related to private equity careers. For other Private Equity Blogger career resources please refer to the list at the bottom of this post.

Speakers for the recent private equity and venture capital conference at the Harvard Business School cautioned that today, MBA grads need to have some patience–along with good grades and experience. Those who graduate with a Masters in Business Administration are faced with a very adverse private equity job market, perhaps only rivaled by the burst of the tech bubble. Many firms are imposing a freeze on hiring or even cutting jobs–see Carlyle cuts 10% of staff. This leads Rob Go, a senior associate with Boston-based VC firm Spark Capital, to warn, “Think about the funds that you want to join and then think out two to three or four years.”

Interestingly, the private equity industry speakers suggested that hopefuls turn to alternate routes rather than focusing only on private equity, such as with the government or within a start-up:

“If I were looking for a job, I’d work at [the Department of Energy] for a few years and then come out and [find] a clean tech firm that has to penetrate those [regulatory] networks,” said Craig Driscoll, a partner at Lexington, Mass., venture capital firm Highland Capital Partners LLC.

Another suggestion was to make an effort to separate yourself from the other job candidates with special skills: “Take an unconventional path and be okay failing,” said Josh Wolfe, co-founder of Lux Capital Management, a New York venture capital firm. “Running with the herd made sense with the vast majority of the evolutionary past, but it doesn’t make a lot of sense in an investment world.”

The moderator of the event, a partner and head of a New York-based private equity recruiter, similarly spoke of thinking outside the box by seeking positions besides an analyst or partner. Instead, he advises to look into investor relations or risk management for private equity firms because positions such as the CFO or COO for a large firm can be highly lucrative and rewarding.

Although the panelists cautioned against working at a second- and third-tier private equity firm, they concluded on an optimistic note, with one VC remarking: “In 2001 to 2003, we saw MBAs with anxiety, but that vintage of MBAs has turned out pretty well. The people that have been through a crisis come out more battle hardened.”

For other articles on private equity careers and jobs visit the following links:

• Complete Private Equity Jobs Guide
• Finding a private equity job
• Private equity job salaries
• Private Equity and Hedge Fund Jobs

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Tags: Private equity jobs, private equity, private equity careers, private equity job market, private equity job placement, private equity job, private equity career, finding a private equity job

HF and Private Equity

Hedge Funds & Private Equity in 2009

The depressed economic environment which we are now experiencing has forced more hedge funds and private equity firms to close down than within any other single 12 month period. These two industries face a marred public image, overall negative investment returns and an investor base which in many cases now prefers to hold cash equivalents rather than place money at this time in the market cycle. The industry faces many challenges, while also serving as fertile ground for those funds which can prevent losses and recruit talent.

It would seem that the next two years will be either feast or famine for most hedge funds, and as usual most will be left hungry for more capital.

Related to Hedge Funds and Private Equity in 2009 and 2010

• Fund of fund
• Private Equity for Family Offices
• Family Office Example
• Family Office Industry
• Family Office Consultants
• Family Wealth Management

Tags: hedge funds and private equity, private equity 2009, private equity 2010, hedge funds 2009, hedge funds 2010, hedge fund, private equity, hedge funds, private equity industry

HF and Private Equity

Hedge Funds & Private Equity in 2009

The depressed economic environment which we are now experiencing has forced more hedge funds and private equity firms to close down than within any other single 12 month period. These two industries face a marred public image, overall negative investment returns and an investor base which in many cases now prefers to hold cash equivalents rather than place money at this time in the market cycle. The industry faces many challenges, while also serving as fertile ground for those funds which can prevent losses and recruit talent.

It would seem that the next two years will be either feast or famine for most hedge funds, and as usual most will be left hungry for more capital.

Related to Hedge Funds and Private Equity in 2009 and 2010

• Hedge Fund Tracker Tool
• Fund Marketing and Sales Advice
• Top Hedge Fund Managers
• Geographical Guides
• Hedge Fund Startup Tool

Tags: hedge funds and private equity, private equity 2009, private equity 2010, hedge funds 2009, hedge funds 2010, hedge fund, private equity, hedge funds, private equity industry