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Chillin' out till it needs to be funded

The changing economic landscape for PE | Advantage zyaada

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As per a recent review featured in yesterdays bloomberg, mutual funds are now moving on esp where defensives such as pensions and insurancve are concerned:

A year after the financial crisis subsided, the $2.5 trillion private-equity industry is finding the easy money may be gone.

Managers saddled with $1.6 trillion in buyouts made during a three-year boom have marked at least 6 of the era’s 10 biggest deals at or below cost, according to data compiled by Bloomberg. About $470 billion sits idle, according to London-based researcher Preqin Ltd. Announced purchases so far this year total less than a fifth of their volume at the peak in 2007.

Pensions, endowments and mutual funds cut new commitments to buyout funds by more than 50 percent, according to Preqin, questioning whether firms led by Blackstone Group LP have grown too large to generate the returns that made their founders billionaires. Blackstone, the world’s biggest private-equity company, has dropped 67 percent in New York trading since a 2007 offering, and Fortress Investment Group LLC lost 82 percent. KKR & Co. this month canceled a $500 million stock sale.

Indian Private Equity, real estate and infrastructure

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On the payout side, funds continued to chase real estate opportunities with deeper infrastructure or edcaion and entertainment players coming in a poor second likely from the interest real estate generates for funds. However exits continue to create a buzz esp in Asian circles with Elephant Capital exiting NIIT and Bangalore start up and now an all India addiction Justdial planning a nothing less than $149 million IPO for its PE partners SAIF, Tiger Global and Sequoia. The $149 million IPO will probabl let PE exit half their 52% stake in VSS Mani’s Just Dial.

New funds from Jacob Ballas( $450m, Infrastructure) and Frontline Strategy ($150m, Growth, Special Situations) underlined the continuing Asian honeymoon with PE funding based projects with $776 million in July 2010 alone after a $2.8 billion first half. China got another $3.3 billion in the first 6 months. Country dedicated vehicles are now a common entry point for global funds. While Soros entered India as an investor in the Bombay Stock exchange the distant second to NSE, In China TPG partnered Blackstone in August to enter a municipal region Chongquing with a $750 million local currency fund after another in Shanghai.

Blackstone investments

TPG Capital

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Meanwhile, Blackstone investments Alliance Medical with a $450 million valuation and Travelport with a $1.9 billion IPO tab continued to detail Blackstone’s tenacity with large PE investments.

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In fact Travelport is opting for more debt as Blackstone digs in its heels in a dozen such investments where a quick exit may become unlikely if not already given up on due to failing liquidity for PE exits. Another IPO from Travel industry major Amadeus had given Travelport some hope to exit with a successful $1.7 billion IPO now listed at a 17% premium. KKR co-listed in US in similar conditions in June-July when Blackstone had raised $13 bln for a buyout fund.


This entry was posted on August 26, 2010 by in Financial Markets, Financial Services, Global, Private Equity, Retail Lifestyle, US.


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