News analysis
A victimless crime?
The demise of Thomas H Lee Partner’s August 2004 investment in Refco, the big American futures broker, thanks to the well-covered fraud perpetrated by Refco’s recently departed CEO Philip Bennett, has generated a lot of comment. Thomas H Lee Partners is in the midst of trying to raise a new fund and will have to go to investors with a return IRR in the mid 30s rather than mid 40s, as it would have done pre the Refco collapse. But a mid 30s IRR still puts Thomas H Lee Partners in the top quarter of private equity funds so this hardly seems something to get overly hot under the collar about. It’s the firm’s sixth fund that houses the Refco investment and the firm has strong performance of previous funds to fall back on as well. Lisa Bushrod reports.
Managers wanted
Management is the key to successful university spin-outs, says the British Venture Capital Association (BVCA) in a new report, but it is also the most challenging to deliver. Tom Allchorne looks at how spin-outs can attract and keep high-level entrepreneurs.
Pension Regulator plans
Since the summer break the pensions issue has dominated the news and comments pages of much of the media. At the end of October the Pension Regulator, Tony Hobman, decided to weigh in with the publication of a consultation document outlining proposals covering how the body will intervene in the corporate pension crisis. Tom Allchorne reports.
GIPS make French PE debut
French private equity managers AGF Private Equity and AXA Private Equity are the first firms in France to have their performance figures audited according to the Global Investment Performance Standards (GIPS.) The standards have so far had slow uptake from the private equity community across Europe. Angela Sormani reports.
Renewed interest in Euro venture
In October the French Technology Fund-of-funds (FTF) was launched with €150m and a couple of months earlier Germany’s Wellington Partners reached final close on its third fund, raising €150m compared with its original target of €120m. While not dramatic in themselves, the successful launch of these two new funds could signal the early sparks of renewed interest in European venture really for the first time since the dot.com crash.
Triple-track targets smaller businesses
The dual-track process has been around for some time designed to attain the best possible exit price for a private equity portfolio company. A triple-track offering is now being touted, which combines the traditional dual exit strategy approach of trade sale or secondary buyout with the alternative possibility of transition to IPO. Triple-track is being targeted at smaller private equity-backed companies, primarily in the lower mid-market. Angela Sormani reports.
News highlights
Noble acquires Sitka
Royal London renames
Corbett Keeling in tech advisory JV
French insurers looking to invest €6bn
EHYA joins TBMA
BoS backs Braveheart
Seed through early stage
G2i helps London start-ups
Online exchange launches
VCTs raise FSA concerns
Fund news
Russia attracts funds
The last month has seen the launch of two private equity funds targeting Russia and the Commonwealth of Independent States (CIS) region. The East Capital Explorer Financial Institutions Fund and the Russia New Growth Fund both look set to offer investors exposure to a region that traditionally carries a range of regulatory and practical hurdles for foreign investors.
Quick view
FUNDS
Alto raises €50m
Standard Life tops €1bn
Candover raises €3.5bn
Doughty real estate 1st close
North East gets funds
Close seeks £35m
Hambro closes fund 2
INCOM III seeks €100m
CapMan Buyout VIII first close
SG targets Eastern Europe
Franklin Templeton targets real estate
Platina raises €27m
East Capital fund launch
Exit news
3i sells Seventies investment
3i has made a 20x return with the £81m sale of its minority stake in William Wilson. Tom Allchorne looks at how 3i is tidying up its portfolio.
Quick view
EXITS
BancBoston Capital sells Unity Brands
Bridgepoint doubles Panreac investment
3i makes gain on William Wilson
3i makes 3x return on ERM
EQT sells Bewator to Siemens
Summit acquires CBI
ISIS EP makes gains for investors
GIMV sells Ominstor
Barclays exits Warner Howard
Funcom poised to float
RBS sells insurance houses
3i exits PL
Bridgepoint exits theatres
3i sells Interbrandpro
CGS exits Bourdon-Haenni
Nordic Capital sells Ahlsell
Bridgepoint gets out of Kaffee Partner
Imperial sells Toumaz
CombinatoRx IPO for GLSV
SGAM makes gain on Microlink
IK buys Kwintet from Axcel
Equita sells Neumayer Tekfor Group
KKR acquires Vestar’s Selenia
EI exits Orange Slovensko
AXA Private Equity sells Tokheim
Moliflor Loisirs goes to Bridgepoint
MB Funds exits A-Inspection
BancBoston sells Kongsberg shares
PPTH sale delayed
SThree floats
Dataroom
Israeli venture dips
SCM reviews PE terms and conditions
People
Lafond leaves Add
Beringea promotes
CBCM appts
O’Melveny hires
CalPERS chief to Hermes
Hitec hires
Hotbed hires
SG appts
BioMedinvest adds
Phoenix promotes
CapMan promotes
3i Italy MD
Corsair appts
BrainHeart hires
ICG new MDs
Paul Hastings hires
PwC adds
Cipio builds
Royal London renamed
Pinsent award
Fidelity appts
Palamon recruits
Platina appts
SJ Berwin adds
Benchmark hires
Partners move
FEATURES
LP Corner
Taking a view: Feri
German venture looks to the future
The years of consolidation, of poor deal flow and weak exit markets are over, according to German VCs. Now the LPs just have to realise it. Tom Allchorne reports on how Germany is trying to pull itself out of the doldrums.
Mezzanine moves East
Mezzanine demand and supply is soaring in the EU accession countries. As more private equity firms start to look east for investment opportunities, buyouts are flourishing while, with GDP rising much faster than in Western Europe, the need for growth capital is soaring. Joanna Hickey reports.
Legal & Regulatory
Inheritance tax
Handling inheritance tax when bequeathing carried interest in private equity is not always straightforward and this can be a crucial area given the potentially large sums involved. So what’s the best way to ensure that the taxman takes the minimum in such situations? Patrick McCurry reports
Real estate is hot!
When Keith Breslauer took Patron Capital Partner’s second real estate private equity fund into the market to show to institutional investors at the start of last year, he was expecting, he says, that “it would be a year of hard work.” He was wrong, six weeks into the fund raising he had all the money he needed and a whole lot more besides, two-and-a-half times more to be precise. Breslauer did the smart thing; he took the money and signed all the legal documentation that meant his investors would not see their money drawn down nor would they be charged any fees until he was ready to invest it. This began in early 2005 after Patron had committed what remained of its first fund in the remainder of 2004. Lisa Bushrod reports.
Insuring private equity
Drawing clear lines is not simple when insuring a private equity firm. In addition to the personal exposure GPs face in the capacity as a director or officer of a portfolio company, this position can also be considered a professional service to the fund’s investors and the portfolio companies. And so claims can include a variety of allegations against the fund, the manager and the individuals themselves as principles, investment professionals, directors and officers. Angela Sormani reports.
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