| Weekly Round-Up |  |  |
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Weekly Summary
The New York Times published an article this week detailing the investment community's apprehension toward alternative-asset vehicles, particularly private equity. The financial crisis loudly reminded investors that they could not access the money they had put in. Difficulty in taking portfolio companies public and limited credit availability, in addition to long-term commitments, have all served as major disincentives to potential investors.
And this investor dissatisfaction with private equity will only be magnified amid reports that brother-in-laws Ronald Yee, a former chief financial officer at ValueAct Capital, and Chen Tang, a former Friedman Fleischer & Lowe employee, participated in insider trading. The SEC has already filed charges against the two relating to alleged illegal activity with Acxiom and Tempur-Pedic.
Despite the negative press, Julian Robertson and Emil Henry Jr. are betting on private equity this week. The billionaire hedge fund managers are starting a new private-equity fund, Tiger Infrastructure Partners, which will focus on small and medium-size infrastructure deals. Henry stated that his new fund "will seek to fill that gap" many infrastructure businesses face amid capital constraints.
The employees at Tiger are surely eagerly anticipating the stabilization of the credit markets. Bank of America and Goldman Sachs arranged for $2.26 billion worth of leveraged buyout financing in October alone, the highest number this year and more than eight times that of the first quarter. Although the loosening credit market is a positive indicator of things to come, the industry has consistently been leaning away from heavy borrowing: the majority of acquisitions in 2009 were backed with funds organically raised.     
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Transitions
Dominick DeChiara, Bradley Vaiana, Bryan Goldstein and Jennifer Kurtis have been brought on to Winston & Strawn to expand its private-equity practice.
Kaisa Arovaara has announced that she will resign as CapMan chief financial officer at the end of January. The company has not yet announced a replacement.
Paine & Partners has hired Franklin Myers as an operating adviser, with a focus on energy-investment opportunities. Previously, he was an adviser and senior executive with Cameron International.
Warburg Pincus has brought on Donald Layden as an adviser. Layden was previously the general counsel of Metavante and president of Metavante International Group.
Kuwait's Global Investment House has named past employee Rajiv Nakani as senior vice president and managing partner of its private-equity arm, Global Capital Management.
Jefferies has hired Luke Belcastro and Peggy Marshall as New York-based managing directors in the firm's fund-placement group. Both were previously with Mallory Capital Group as a partner and principal, respectively.
Tom Littman has been named president and senior partner at Kirtland Capital Partners.
| Trends | | |
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Insider trading plagues private equity
The SEC filed charges last week against several private-equity executives, alleging they participated in insider trading in the stock of Acxiom and Tempur-Pedic International. Ronald Yee, a former chief financial officer at ValueAct Capital, and Chen Tang, a former Friedman Fleischer & Lowe employee, have been named specifically, along with five other private-equity executives. The Wall Street Journal/Private Equity Beat blog (11/2)
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New private-equity firm targets infrastructure
Julian Robertson and Emil Henry Jr., the billionaire hedge managers famous for Tiger Management, are starting a new private-equity shop focusing on infrastructure in North America and Europe. Named Tiger Infrastructure Partners, the fund will target small- and medium-size businesses. Bloomberg (11/2)
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Still shying away from private equity
High-net-worth individuals are still wary of private equity. Difficulty in bringing portfolio companies public, limited credit availability and long-term commitments are all serving as major disincentives to potential investors. The New York Times (10/30)
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Peracs examines quality of fund performance
Peracs facilitated a study to determine the correlation between a fund manager's past performance and future performance. The data find that a prior fund's intermediate performance "offers poor predictive value when evaluating a new fund." Peracs advocates for LPs to combine qualitative due diligence with quantitative analysis for optimal results. Peracs (10/26)
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Valerus gets half billion from TPG
Taking on a majority stake, TPG has invested $500 million in Valerus Compression Services, a privately held provider of natural gas handling services. Valerus intends to use the capital to facilitate expansion and refinance existing debt. AltAssets (11/3)
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Baring buys into Singapore confectionery maker
Baring Private Equity Asia has become a 16.5% shareholder in Hsu Fu Chi International by investing $135 million in the Singapore-listed confectionery maker. The company is the No. 1 confectionery maker in China with brands such as DoDo, Chaobii, Mo Bao and Mao Qiao Bo. The Wall Street Journal/Dow Jones Newswires (10/29)
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Big names bid for Taikang Life
Temasek, Blackstone Group and KKR are expected to offer first-round bids for AXA's stake in Taikang Life. The total investment is said to be worth $1.05 billion. None of the firms has released an official statement confirming the deal. Private Equity Hub (11/2)
| Secondaries | | |
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JPMorgan dives into secondary pool
JPMorgan Private Equity is set to raise $66.3 million for its private-equity secondaries fund. The vehicle is listed on the London Stock Exchange and focuses on acquiring "secondary portfolios of direct investments and significantly invested limited partner fund interests." AltAssets (10/30)
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Investors lean toward secondaries
Private-equity investors are increasingly turning toward purchasing fund positions within the secondary market as an alternative to new investments. So-called early secondary investments are also becoming popular. Reuters (11/3)
| In the Portfolio | | |
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Falling sales force PE IPOs to slump
The postponement of an $800 million offering by AEI and the reduced sales by RailAmerica and Select Medical Holdings, which are owned by private-equity firms, are forcing investors to turn their backs on companies with large amounts of debt. This has resulted in the worst returns on initial public offerings in at least 14 years. Bloomberg (11/2)
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Australian fund invests in distressed assets
The $58 billion sovereign-wealth fund formed to cover the costs of retiring judges, public servants and lawmakers has committed $3.6 billion to distressed private-equity and debt investments. The fund increased its investments in distressed assets to potentially profit from the global financial turmoil. Bloomberg (10/29)
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Qatari Diar buys London U.S. Embassy building
Sovereign-wealth fund Qatari Diar is buying the U.S. Embassy building in London, causing its staff to vacate Grosvenor Square after 70 years of residency. Proceeds from the sale will fund the construction, to start by 2013, of a new embassy building in the Nine Elms area of London's Wandsworth district. Bloomberg (11/3)
| Fundraising | | |
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Aureos Capital taps Southeast Asia for new fund
Aureos Capital, an emerging-markets private-equity specialist, is set to raise a $250 million fund to invest in Southeast Asia, including Philippines, Indonesia, Malaysia, Brunei, Thailand, Vietnam, Cambodia and Laos. This fund is three times as large as the previous one. AltAssets (11/3)
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China group to raise PE fund
Founder Group has announced plans to create a $293 million private-equity fund focusing on the technology, media and telecom sectors. Founder Group is the No. 2 PC maker in China, and its effort is a move toward new profit streams in a difficult market competition in traditional computers. Reuters (10/29)
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