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Weekly Summary
On a global perspective, private equity had a mixed bag of news this week. According to a study done by the Emerging Markets Private Equity Association, fundraising and investments have declined more than 50% in the first six months of 2009. However, the organization remains relatively optimistic about hints at a pickup going into the second half of the year, as emerging markets' share of global private equity continues to rise on a long-term basis. EMPEA approximates that emerging markets, as a percentage of global fundraising, increased from 5% in 2004 to 20% as of June 2009, and from 7% to 24% of global investment totals during the same period.
On a similarly optimistic note, private-equity firms are increasingly finding success in sourcing Japanese deals. Historically, deals in the region have been particularly difficult because of companies' aversions to big restructuring moves. However, buyout shops targeting smaller deals may have the right idea: 94% of the 3,000 M&A transactions completed in Japan have been worth less than $100 million.
In regulation news, Democrats are inching toward increasing taxes for private-equity firms. House Ways and Means Committee spokesman Matthew Beck publicly stated that a panel was being constructed to review tax rates for "carried interest." Beck said that this portion, which is paid as compensation to private-equity executives, could be taxed as much as 35%, and he said he believed the measure had "strong support" among constituents.
That news should come as no surprise to Eric Gleacher, chairman of Broadpoint Gleacher. He described the traditional private-equity model as "severely damaged" at the 2009 International Symposium of Cross-Border Investment and M&A. Gleacher, best known for advising on the KKR's now-famous RJR Nabisco deal, cited investors' distaste for committing to long-term funds.     
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Transitions
Alex Fletcher has been appointed by KKR as head of its European Client and Partner Group. Before joining the firm, Fletcher was head of Goldman Sachs Asset Management EMEA.
Jing Zhao and Simon Yoo have been appointed as co-heads of the Asia Pacific Financial Institutions Group at Citigroup. Both will now be based in Hong Kong.
Sandeep Naik and Shashank Singh have joined Apax Partners as co-heads of the firm's India office, in Mumbai.
Elijah Kaplan has been brought on to Hudson Capital Partners as vice president of capital markets.
Kaplan will focus on originating investments by marketing the firm's services to financial sponsors, distressed investors, lenders and advisers. Before joining the firm, Kaplan was at Marathon Asset Management.
Donald Borden has joined Bunker Hill Capital as an operating partner to source deals in the water and wastewater industries. Previously, Borden was at Crane Environmental.
Standard Chartered's private-equity team has brought on Zhu Wei. Previously, Wei was a senior managing director at CVC Asia Pacific.
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Japanese PE on the up and up
Although buyout shops have historically had difficulty sourcing deals in Japan because of the region's aversion to big restructuring moves, the tide seems to be turning. Ant Capital, a private-equity firm based in Tokyo, sold five portfolio companies in the past year alone. Reuters (10/20)
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Democrats plan to up taxes for buyout shops
A spokesman for the House Ways and Means Committee has noted that efforts to increase the tax rate of "carried interest" are being considered. Democrats are pushing for such payment to be characterized as proper income, and therefore taxed regularly. The Los Angeles Times/Money & Company blog (10/14)
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Emerging markets private equity in trouble
According to the Emerging Markets Private Equity Association, fundraising and investments decreased more than 50% in the first six months of 2009, and at a slower rate than those in more mature markets. Only 84 funds focusing on emerging markets, totaling $16 billion, were raised in the first half of the year, compared with 132 funds, totaling $36 billion, in the same period a year earlier. The Wall Street Journal/Dow Jones Newswires (10/16)
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Report: Buyout shops eye IMS Health
TPG reportedly has submitted a bid to buy IMS Health, a data provider on sales of prescription drugs. Silver Lake and BC Partners also submitted a joint offer, however neither disclosed financial figures. Reuters (10/19)
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Allion Healthcare goes private for $278 million
HIG Capital has bought Allion Healthcare, a national provider of specialty-pharmacy and disease-management services for HIV and AIDS patients, for $278 million. The deal is subject to Allion shareholder approval. AltAssets (10/19)
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Apollo Management may team up with Tata-Quippo
Apollo Management has furthered its talks with Tata-Quippo to finance the purchase of Aircel, an India-based cellular operator. According to an unnamed person familiar with deal, Tata-Quippo is the favorite for the deal. Bloomberg (10/20)
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Nova Capital sells off Dynalab
Direct secondaries PE firm Nova Capital Management has leveraged a management buyout to exit the laboratory reusables importer and repackager Dynalab. This exit is the second business to be sold from the Barloworld Scientific Laboratory Group. Nova exited Spanish laboratory distributor Afora in August 2008. AltAssets (10/19)
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Permira portfolio firms queued up for IPOs
Several of Permira's portfolio companies are filing for IPOs, hoping to return some cash to the firm's investors. These companies include fashion retailer New Look, food maker Birds Eye, Danish telecoms group TDC, owner of AA roadside recovery Acromas and Saga Insurance. AltAssets (10/15)
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2 PE-backed companies plan to go public
Global Geophysical Services, which provides technology that collects seismic data for the oil and gas industry, is looking to get $150 million in an IPO. Another company, Cellu Tissue Holdings, a maker of household and industrial paper products, wants to raise up to $125 million in a NYSE-listed initial public offering. Reuters (10/16)
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PE investments within Middle East fall
Because of the global economic downturn, many Middle Eastern families and sovereign-wealth funds have cut investments and want more positive terms from private-equity firms. Many investors are still suffering from the crumble in liquidity after the crash of Lehman Brothers. It seems that SWFs would like to continue to invest in private equity, but at a lower level. AltAssets (10/19)
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U.S. pension funds invest in Blackstone
A number of high-profile U.S. pension funds have contacted Blackstone with the interest of investing in its latest fund, Blackstone Capital Partners VI, because equity and debt markets have begun to improve. Some of those pension funds include CalSTRS, CalPERS, Alaska Permanent Fund Corporation and the Canadian Pension Plan Investment Board. The (London) Telegraph (10/19)
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PE fundraising is down
Private-equity fundraising is down in the third quarter of 2009. According to a recent report by Preqin, 82 private-equity funds raised $39 billion in the third quarter compared with 217 funds that raised $118.7 billion in the third quarter of last year. Straight buyout funds raised the most capital in the third quarter, $24 billion of the $39 billion. Pensions & Investments (10/15)
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