The Spiral – Part VI: Crescendo Partners

Here’s the latest installment of Equity Private’s the Spiral series:

Abénex Capital and Ixen Purchase Buffalo Grill

While I was on holiday Abénex Capital and Ixen completed a secondary transaction for that most “chic” of French brasseries…that’s right, the Buffalo Grill!

The two firms acquired the restaurant chain from Colony Capital and Eurazeo who had acquired the business in October 2005 in a €340M public-to-private transaction.

Jon Moulton on the BBC

Jon Moulton of Alchemy Partners appeared on the BBC the other day. The interview is now on YouTube in a two-part interview. Here are both clips: Jon Moulton 1 and Jon Moulton 2. The embedding function has been disabled otherwise I would have put them on here directly. He’s always worth listening to!

“Santiago Principles” – International Working Group of Sovereign Wealth Funds Reaches Preliminary Agreement on GAPP

Yesterday, the International Working Group of Sovereign Wealth Funds announced a preliminary agreement on a draft set of principles and practices that the various participants will recommend to their respective governments. The IWG intends to publish the GAPP after it presents the report to the IMFC at its October 11th meeting in Washington DC.

It’s a step towards greater transparency to ease public and legislative concerns. Now about their performances…

Crédit Agricole Private Equity Launches Co-Investment Activity

Crédit Agricole Private Equity has just announced that they are launching a co-investment activity that will take minority equity stakes alongside European and North American investment funds.

An initial allocation of €100M is to be invested in mid to large-cap LBOs and expansion capital deals across all sectors, with an investment capacity of €15M per deal.

Private Equity Compensation Soars in 2008

The 2008 edition of the Private Equity Analyst-Holt Compensation Study has been released and it was a damn fine year.

Salaries for North American private equity professionals (I’m going to try and find some figures for Europe) rose 5.3% to $200,000 from $190,000 year-over-year. When bonuses are included, compensation rose by 25% to $375,000 from $300,000. Throw in carried interest and total compensation packages rose by 27.3% to $401,000 from $315,000. All these lovely greenbacks add up to an even faster rate of growth than seen at the time of the last survey.

Buyout professionals posted compensation including carry distributions of $426,500, up 32.3%, and ahead of the $408,000 pulled in by venture professionals, a 16.6% increase. It’s important to note that there are more junior professionals in the buyout sample than in the venture sample, which drags the median among buyout firms down.

For those of us who will be graduating soon only 5% of those firms responding to the survey indicated that they’d cut staff, while far more said that they would continue to hire. Hot spots for private equity hiring include those firms in mezzanine, distressed debt, energy, infrastructure and those expanding internationally. Administrative positions such as investor relations professionals are very much in need as firms look to cope with recent increases in fund size.

Small and Lower Mid-Market Private Equity Report for Q2 2008

The folks at GF Data Resources have released their quarterly report analyzing deals valued between $10M and $250M.  Overall the firms they contacted reported 23 such transactions fitting their criteria, up from 14 in the first quarter.  However that total of 37 for the first half of 2008 is off from 65 in the first half of 2007, and 48 in the second half of last year.

• GFDR Small and Lower Mid-Market Report for Q2 2008 – August 2008

The report shows a drop in average valuation multiples from 6.3x to 5.7x which is evident by the debt to EBITDA ratio declining from 4.0x in the first half of 2007 to an average of 3.5x since then.  Equity is now taking up a greater share of capital coming in at 41.6% compared with 39.3% a year ago (which is actually not as big a bump as I had anticipated reading).  Additionally, there’s proof that the oft spoken of “Flight to Quality” is actually happening.