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.
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.
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:
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).
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.
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.