Global private equity and venture capital news and research

Leading Edge

23 August 2010

FASB & Fair Value: What LPs & GPs Need to Know $

Dow Jones Private Equity Analyst will host a timely virtual seminar to break down what the FASB fair value standard really means for GPs and LPs--and what they need to do to avoid complications and trouble.

9 August 2010

Private equity in 2010, a Rothstein Kass report $

In the wake of a global credit crisis, few private equity fund managers expected 2009 to be a banner year for the industry. As important sources of capital to growth companies, most private equity firms depend on the efficient functioning capital markets to generate long-term returns. Indeed, the causes for concern among industry participants were hard to enumerate, from more limited ability to identify suitable investments to unexpected murkiness surrounding proven exit strategies.

2 August 2010

EU and US private fund regulation – impact on foreign fund managers $

The private funds industry was hit hard by the global financial crisis and has in some countries been used as a scapegoat for the financial difficulties faced by the economy as a whole, being described as a malevolent and destabilising force in the market. As a result, as well as facing significant business challenges, the industry now faces greater calls for accountability and increased regulation.

2 August 2010

Private equity steps up and searches for opportunities amid volatile markets and evolving legislative landscape $

The first half of 2010 was characterised by volatile global equities markets, mixed messages about the state of the global economy and sweeping regulatory changes that are likely to have a profound impact on the world’s financial system. Against this backdrop, private equity firms have stepped up their activity, deploying capital at an increasing rate, successfully exiting investments and strengthening the positions of their portfolio companies. Leverage continues to return as banks become more comfortable with the financing of “quality” deals, and the high-yield markets appear on track for yet another record year. Deal values are increasing, and PE firms are once again teaming to execute on larger transactions.

6 July 2010

Private equity and employment, a seminal PE study $

The impact of private equity on employment arouses considerable controversy. Speaking about hedge funds and private equity groups in April 2005, Franz Müntefering, then chairman of the German Social Democratic Party (and soon to be German vice-chancellor), contended that: “Some financial investors don’t waste any thoughts on the people whose jobs they destroy”. This seminal study, sponsored by the University of Chicago Booth School of Business (pictured), looks at various data to weigh the evidence on private equity’s much debated effects on employment.

29 June 2010

Market structure is causing the IPO crisis — and more $

As Congress battles over the shape of financial reform, will it address the lack of a properly functioning market structure? The market for underwritten IPOs, given its current structure, is closed to 80 per cent of the companies that need it. In fact, since 2001 the US has averaged only 126 IPOs per year, with only 38 in 2008 and 61 in 2009 — this compared to the headiness of 1991 to 2000 with averages of 530 IPOs per year.

28 June 2010

Private equity fund level return attribution, a study from the London Business School and HEC Paris $

This report investigates components of private equity buy-out fund returns using a unique anonymised dataset provided by a major Fund of Funds, Pantheon, in collaboration with BVCA. In contrast to a number of recent studies, which examine the components of the gross returns generated by private equity funds at the deal level (e.g. Acharya and Kehoe, 2008), we focus on returns at the fund level net of fees and carry. This net-of-fee perspective tends to be more relevant to the investors in this asset class.

15 June 2010

The impact of H.R. 4213 on private equity investment and employment $

H.R. 4213, The “American Jobs and Closing Tax Loopholes Act Of 2010” would increase the tax rate on long-term capital gains income received through a carried interest in a partnership from the current rate of 15 per cent to 38.5 per cent when fully phased in. This represents a 157 per cent tax increase, or more than a doubling of the government’s share of these partnerships’ long-run investment income. Such a significant increase in the effective tax rate on long-term investment could have deleterious economic consequences.

1 June 2010

Listed private equity – back from the abyss, a Collins Stewart report $

The listed private equity sector has delivered exceptional returns over
the past year. Solid NAV returns have been materially enhanced by a
dramatic improvement in ratings from capitulation levels. Balance sheet concerns have been addressed and relatively mature portfolios have again begun to deliver healthy positive cash-flows. We expect the sector to outperform quoted equities over the long-term, fuelled by superior NAV growth and a further re-rating, while current discounts offer a margin of safety. That said, given concerns over the macro-economic backdrop, we would adopt a more cautious stance in the short term.

25 May 2010

Favourable situation for good private equity – an outlook from SEB $

The world’s financial markets are continuing to normalise. The existence of the economic recovery is also unquestionable, although its strength ? growth dynamic ? is open to discussion. This is good news for the private equity (PE) industry and is reflected, among other things, in a good index trend for listed PE companies.

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