Dominique Senequier Tells Economist ‘Private Equity Should Be More Generous’

In this article from the Economist, Dominique Senequier, head of Axa Private Equity talks about the need for the industry to include all of a companies’ employees in the share of capital gained when a firm exits. Rather controversially, she’s gone as far as to suggest an amendment to France’s labour code to oblige private-equity firms to distribute 5% of the capital gains from firms they sell among all the employees.  It’s been rightly pointed out though that this could create all sorts of legal problems with LPs. Makes for a good, quick read. 

Lone Star Lesson in Taking Advantage of CDO Markets

Merrill Lynch is selling a portfolio of collateralized debt obligations (with an original face value of $30.6B) to Dallas-based private equity firm Lone Star Funds for $6.7B, i.e. 22 cents on the dollar.  What’s more is that Merrill is financing 75% of the deal so they’re only taking in $1.7B.  An excellent deal by Lonestar and a great example of how private equity firms can take advantage of the current market.

More on KKR Going Public

Yeah, it’s what everyone is talking about. Here is a quick read covering the KKR – KPE relationship from Deal Journal.

Keeping Up with the Blackstones: KKR Going Public

KKR has announced that it will go public in Q4 of this year by acquiring an affiliated fund that is traded in Amsterdam, delisting there, and then going on the NYSE.  Not exactly the conventional route, but quite clever (though there’s much debate on whether or not KKR should actually list at all, but that’s a post for another day).

For those interested there’s a conference call scheduled for 2 PM CET that’s to be broadcast on KKR’s website.  Here are two documents worth looking at:

• KKR’s “Going Public” Announcement
• KKR Transaction Announcement Presentation

More on the Transatlantic VC Model

I wrote earlier this week about Partech splitting up and how some considered this an indictment of the transatlantic venture capital model.  Considering the Partech situation as the death knell for VC firms that simultaneously operate on both sides of pond would be a vast exaggeration, although it does exemplify some of the obvious difficulties facing those in similar situations.  Granted the model may not be possible for many to execute, and many of it’s benefits could be gained from co-investing with another VC firm(s) from a given geographical area that will be attractive for the portfolio company’s future (anyone who participated in this years VCIC in London will remember how this point was mentioned multiple times with regards to the Brit company that wanted to expand in the US), it still can make sense though for some.

Here’s an interesting read from Max Bleyleben of Kennet from his Technofile Europe blog (Max went to INSEAD but we won’t hold that against him!) on how to succeed across the Atlantic.  I particularly think his first reason for why certain funds have failed is on the mark.  Having separate funds is bound to generate disagreements from teams in different locales and presents an extra difficulty in attempting to maintain any sense of unity.  I have no idea of what happened at Partech beyond what I’ve read but I would suspect that the decision to split was due to something along those lines.  That being said, it would make for an excellent case study for the club (and there’s the added bonus that partners from both sides of Partech are HEC MBA alums).

Patience is Hopefully a Virtue for Blackstone, Bridgepoint

While private equity conditions are beginning to dethaw in Europe, a couple of big names have decided to hold off planned auctions.  Blackstone was looking to sell French healthcare provider Groupe Vitalia, and Bridgepoint had hopes of unloading debt collection business 1st Credit Ltd., but neither were getting the bites they were hoping for.  Both Vitalia and 1st Credit are in interesting sectors so good things should come to those who wait.  Plus, in Europe everything from right before the August holidays gets a going over again in September, so as markets make it past the one year anniversary of the credit crunch these deals will be looked at again in the fall.

Elevation Partners and Everyman VCs

I first saw this clip when it was originally posted last year, but I recently came across it again so I figured I’d share it. The clip is Kara Swisher from All Things Digital (recommended for all you techies) interviewing Roger McNamee of Elevation Partners (yep, Bono’s Elevation Partners). I’m posting it because it makes me laugh. I always get a kick out of the whole venture capitalist versus “Master of the Universe” rivalry with the VC’s assuming their role as everyman. This clip even takes a shot at KKR for extravagance, which in all honesty isn’t very original (especially from a guy who works for freakin’ St. Bono!). Don’t get me wrong, I’m a big proponent of venture capital, it’s just I know and have worked with quite a few that come off as trying too hard to seem like regular Joe’s (cue the countless photo examples of VCs on their sites in button-down collars, no tie, smiling in the sunshine) and at that I like to laugh.

NBGI Private Equity Opens Paris Office

While the Partech development may have been interpreted as a shot against the trans-Atlantic model for venture capital firms, not many would argue against the pan-European approach that more and more private equity firms are taking. A recent example is NBGI Private Equity opening an office in Paris this month. Small and mid-cap activity has been picking up on the continent and that’s NBGI’s bread and butter. They’re looking to make investments in France between 3M and 15M euros.

The French market can be quite unique (just ask Permira who had to close their Paris office for all intents and purposes) and NBGI hired two locals which is ALWAYS the way to go when starting an office out of your home market. Interesting to see if they’ll be well integrated with the other offices (similar to Cinven) or if they’ll be more siloed (like CVC). Whatever works!

Q2 European Private Equity Up 15%

Today things look a little brighter here in Europe for all us concerned with the PE/VC markets.  Out today is the European Private Equity Barometer for Q2 2008 which was compiled by Incisive Media and sponsored by Candover.  The broad strokes: Total value of deals is up 15% versus Q1, with volume increasing by 9% over the same time frame. Hopefully for all of use who’ll be graduating relatively soon this trend continues!

I pointed out yesterday that growth capital is an exciting space in Europe right now and I feel somewhat vindicated as the figures show that the Q2 increases were largely driven by growth capital which saw a record 6B euros in deals done, which is a rise of a whopping 238% over Q1 (I’ll go out on a very short limb and predicate that record won’t fall next quarter).  Volume for growth capital was up 17% to 128 deals which is getting back to historical averages for Europe.  It’s interesting to note that there were six growth deals valued at over 100M euros, while the largest deal in Q1 topped out at 88M euros.

Admittedly the value numbers were skewed a scosh as some of the bigger players in Europe “shifted” elements of their strategy in response to the, yep you guessed it, credit crunch.  It’ll be interesting to see how these firms handle these investments in the years to come.

Here’s the report for all to read: Unquote European Private Equity Barometer Q2 2008

3i lead investor in Labco deal

Following up my comment from yesterday that minority stakes in firms are a bit more common on this side of the Atlantic, there’s another example that growth capital deals are alive and well in Europe as the firm formerly known as Investors in Industry (that’s 3i for everyone following along) is leading a 200M euro investment in pan-European medical diagnostics firm, Labco. 3i is in for 140M euros, with TCR Capital, Natixis Investment Partners, and CIC Finance picking up the remaining 60M euros. The deal furthers 3i’s emphasis on healthcare which in Europe is run by Denis Ribon (who is a 1999 graduate of HEC’s MBA program, i.e. he’s one of the good guys!), who will assume a seat on Labco’s board.

As those European businesses that have emerged as “national champions” look to expand beyond their home markets and enter the global playing field, growth capital deals will become ever more essential in enabling those firms to become capable of doing so with the proper resources and know-how. Not only do the firms that are invested in receive much-needed capital but they also gain the value added that the private equity firms bring in terms of network and experience in the era of mondialisation. Definitely a niche of the private equity spectrum to place close attention to!