Highlights included Wasserstein warning that the global financial crisis will get worse yet, noting that consumer lending and commercial real estate losses are just now beginning. Schwarzman was critical of banks not using the U.S. Treasury funds for their intended purpose of actually administering new loans. Both spoke at length about accounting standards and regulatory issues. Here’s a brief video excerpt from the talk:
Pan-European Private Equity firm Bridgepoint has closed it’s fourth fund, Bridgepoint Europe IV Fund, at more than €4.8bn, 20% higher than the €4bn they had targeted.
Bridgepoint targets businesses valued at up to €1bn across six sectors including consumer, media and financial services. This vehicle will allow them to make equity investments of up to €350m on a single transaction.
This past Friday I, along with 12 of my fellow MBA classmates, had the pleasure of participating in HEC’s kickoff to THECAMPAIGN, the school’s five-year, €100m fundraising event. This is to be coupled with the €100m that the CCIP will be spending on infrastructure improvements at the school. One aspect that I particularly like (and unsurprisingly so as it’s a highly Anglo-Saxon move) is that the school will be setting aside €50m from the campaign to develop an endowment to give it a sustainable source of income. Now if they can just work on getting their press releases out in English…
Investment in biotech and medical device companies rose 10%, while funding for clean technology startups increased 14%. Venture investment for internet-based companies fell 36%, however some of this decline can be attributed to the fact that web companies today have become more capital efficient thus burning less upfront cash (also many “me too” copycat web ideas are no longer finding funding).
Many thanks to HEC alum Bernard Tézé (H. 85) of DS Avocats for sending over this excellent presentation that he put together concerning PIPEs in France. I saw Bernard this past Friday at a school event and we discussed the fact that there’s been little research performed recently concerning French PIPEs (perhaps this could make for an excellent research topic for one of our academics?).
The index is based on the latest quarterly statistics from State Street Investment Analytics’ Private Edge Group and includes more than 1,400 private equity partnerships with a total fund size of $1.3 trillion.
Interestingly the report points out that the first-half of this year marked the first back-to-back quarters of negative returns for the Index since the downturn which occurred between October 2000 and March 2003, The results of which was an Index decline of 31.5% and took 7 quarters to reverse. This figure is comparatively strong compared to the S&P 500 downturn of 44.7% from September 2000 through September 2002 which took approximately 4 years to reverse.
The following figures are the State Street Private Equity Index composition and long-term IRR results as of the end of Q2 2008:
Speaking at the Super Return private equity conference in Dubai, Henry Kravis, co-founder of KKR, said he sees the problems in the banking sector beginning to stabilize. He also predicted consolidation in the banking industry over the course of the next year. Kravis is convinced that private equity can be a solution to the banking crisis, not just in terms of capital which so often mentioned, but also, and perhaps more importantly, in regards to strategy and operations (which as I’ve often pointed out is the true edge of private equity even after the easy credit is long gone). Kravis also suggested that PE firms should look at partnering with non-private equity groups when they choose to invest.
I think true stabilization in the banking and financial service sectors will only come when the various government initiatives actually get implemented. So far it’s been a lot of political talk and papers being signed. Most of the money has been dished out yet. Only when the cash tap begins to flow will we see how effective these “bailouts” are.
LBO France has just announced that they are looking to raise €1.2 billion for a new fund, LBO France White Knight VIII LP, to follow-up Fund VII which closed at €800 million in 2006. The fund will continue the firm’s strategy of investing in French companies that generate much of their revenues outside of France. Since 1998 funds sponsored by LBO France have generated a 57.5% gross IRR.
The new fund will have a 2% management fee for the investment period, which will be reduced to 0.2% per year thereafter. There will also be a 50-50 split of transaction-related fees between the general partner and it’s investors. LBO France will put in about €40 million of it’s own money towards the fund.
The content, views, and opinions expressed on this website/blog are mine and mine alone and do not in anyway represent those of HEC Paris, it's faculty, staff, or administration. This blog is meant to act as a means of communication and information exchange for the HEC Private Equity and Venture Capital Club and it's members. Thank you for understanding.
Posted by hecpevc 
Posted by hecpevc 
Posted by hecpevc 