October 2007 Issue

After debt financing dried up and leveraged buyouts ground to a halt, more and more mega-funds have begun turning their attention to the mid-market. TPG and Silver Lake Partners have already launched dedicated mid-market funds, and other big buyout firms have started doing smaller deals from funds intended for businesses the size of TXU and First Data. How existing mid-market firms will fare in the face of this new source of competition is unclear. Steve Costabile, who heads AIG Investments' private equity funds group and manages its funds of funds vehicles, offered Private Equity International his opinion on whether mega-funds or mid-market funds are poised to succeed in the new buyout landscape.

As credit markets dry up, mezzanine lenders stand to gain. Jennifer Harris reports.

The US private equity mid-market – made up of hundreds of firms but controlling only half the capital in the market – has been somewhat insulated from the turmoil of the megafund deal market. While it faces an altered landscape, the mid-market's challenges are being offset by greater interest from foreign strategic buyers as well as returns-minded LPs. David Snow reports.

The refinancing boom may be over, but deals in Eastern Europe can still get done even now.

Germany's association of alternative investors is unimpressed with the government's effort to reform private equity legislation.

Germany's association of alternative investors is unimpressed with the government's effort to reform private equity legislation.

The economics of mega-funds are encouraging some to explore different investment models – at the expense of the GP.

The economics of mega-funds are encouraging some to explore different investment models – at the expense of the GP.

After earmarking more of its assets for alternatives than any of its peers, the US' sixth-largest public pension plan has begun searching for personnel to staff its alternatives division.

Partners who fall out of love should not continue living in the same house, as the case of Fox vs. Paine demonstrates.

Partners who fall out of love should not continue living in the same house, as the case of Fox vs. Paine demonstrates.

After earmarking more of its assets for alternatives than any of its peers, the US' sixth-largest public pension plan has begun searching for personnel to staff its alternatives division.

Ten years ago, some of the largest firms got creative when debt became scarce – with disastrous results.

After 20 years as a chief executive, nearly a decade in venture start-ups, and six years as head of Teachers' Private Capital, Jim Leech will take over as head of the Ontario Teachers' Pension Plan.

After 20 years as a chief executive, nearly a decade in venture start-ups, and six years as head of Teachers' Private Capital, Jim Leech will take over as head of the Ontario Teachers' Pension Plan.

Ten years ago, some of the largest firms got creative when debt became scarce – with disastrous results.

Two recent exits further Noson Lawen's point that small is beautiful.

Two recent exits further Noson Lawen's point that small is beautiful.

PRIVATE EQUITY PROTEST 1? 2007-10-01 Staff Writer Someone at the Service Employees International Union must have felt the need to enliven the union's continued anti-private equity crusade with some levity – or perhaps they just really needed a day at the beach. In late August, America'

?PRIVATE EQUITY PROTEST 2 2007-10-01 Staff Writer Meanwhile, Yorkshire-based climate campaigners decamped to the London office of mid-market GP Bridgepoint to make clear their objection to any expansion of Leeds-Bradford airport, which Bridgepoint acquired for £146 million (€214 million; $297 million) in May

The CIO of CalPERS praises private equity before lawmakers.

The CIO of CalPERS praises private equity before lawmakers.

PRIVATE EQUITY PROTEST 1? 2007-10-01 Staff Writer Someone at the Service Employees International Union must have felt the need to enliven the union's continued anti-private equity crusade with some levity – or perhaps they just really needed a day at the beach. In late August, America'

Editor's letter 2007-10-01 Staff Writer Amid the fevered press coverage of the credit crunch, the sentiments of an anonymous investment banker quoted by the UK's Sunday Times perhaps best sum up the mood: “People are spooked, there is a feeling that there are some surprises out t

Editor's letter 2007-10-01 Staff Writer Amid the fevered press coverage of the credit crunch, the sentiments of an anonymous investment banker quoted by the UK's Sunday Times perhaps best sum up the mood: “People are spooked, there is a feeling that there are some surprises out t

Nicholas Lockley, editor of PrivateEquityOnline.com, looks behind the headlines of the last four weeks on the web.

When the banks underwriting Cerberus' $7.4 billion ( e5.4 billion) acquisition of Chrysler and Kohlberg Kravis Roberts' £11.1 billion ( e16.3 billion; $22.3 billion) acquisition of Alliance Boots found themselves unable to syndicate several billion dollars of debt, it was a sure sign that sub-prime mortgage turmoil had begun to impact the leveraged buyout market substantially. At the end of August, analysts reported that banks were still waiting to offload $330 billion of debt from agreed deals, and some predicted there would be no more mega-buyouts struck this year, and possibly well into 2008. PEI talked with William Allen, founder of London-based leveraged debt advisor Blenheim Advisors, to get his views on the implications of the credit crunch.

Sweden's smaller deal market is hoping to stay immune from the contagion sweeping the LBO market. Andy Thomson reports.

Finland is not accustomed to concerns being raised over the performance of either its economy or its private equity market. Andy Thomson visits Helsinki amid indications that strident self-confidence may no longer be du jour.

Some lively negotiations and a major exit have added spice to the traditionally understated Swiss buyout market. Toby Lewis reports.

Switzerland's LP are not the type to panic in the face of credit market turmoil, writes James Taylor. And on p. 85, Toby Lewis reports on current trends in the Swiss buyout market.

SEIZING THE MOMENT Staff 2007-10-01 Writer For a man who describes himself as “a natural bear”, Jon Moulton is remarkably bullish about his firm's prospects for the coming months – despite the recent volatility in global debt and equity markets. Although he is unwilling to

James Taylor recently met with Alchemy Partners founder Jon Moulton in London – and found the veteran dealmaker in typically ebullient form.

After debt financing dried up and leveraged buyouts ground to a halt, more and more mega-funds have begun turning their attention to the mid-market. TPG and Silver Lake Partners have already launched dedicated mid-market funds, and other big buyout firms have started doing smaller deals from funds intended for businesses the size of TXU and First Data. How existing mid-market firms will fare in the face of this new source of competition is unclear. Steve Costabile, who heads AIG Investments' private equity funds group and manages its funds of funds vehicles, offered Private Equity International his opinion on whether mega-funds or mid-market funds are poised to succeed in the new buyout landscape.

As credit markets dry up, mezzanine lenders stand to gain. Jennifer Harris reports.

The US private equity mid-market – made up of hundreds of firms but controlling only half the capital in the market – has been somewhat insulated from the turmoil of the megafund deal market. While it faces an altered landscape, the mid-market's challenges are being offset by greater interest from foreign strategic buyers as well as returns-minded LPs. David Snow reports.

State-sponsored investments in private equity groups are nothing new, even if China's massive investment in the Blackstone Group has raised the bar. But as huge state entities look to put ever bigger sums to work, could their cheaper cost of capital end up driving down private equity returns? James Taylor reports.

An examination of the 1998 vintage year for buyout funds shows weak returns, on average. But the so-called credit crunch of that year had little to do with this underperformance. Those worried about the performance of the current vintage year should pay more attention to the economy and to the skills of individual GP groups, reports David Snow.

The California State Teachers' Retirement System's investment portfolio this year posted its best performance since 1986, thanks largely to gradually increasing allocations to private equity and real estate. Amanda Janis talks to Réal Desrochers, CalSTRS' alternatives head, about the pension giant's methodology.

Although it has no name and no business plan yet, a new joint venture between News Corp and NBC has reportedly received a $100m investment from Providence Equity Partners. Is this a new paradigm or a new bubble? Dave Keating examines the evidence.

Hedge funds are posing a competitive threat to venture capital firms by sidestepping the latter's onerous due diligence demands, finds Toby Lewis.

From its base in Barcelona, Kennet Partners' new portfolio company TMC helps address Europe's shortage of experienced radiologists. Andy Thomson reports.

Millennium Technology Value Partners aims to take the risk out of venture capital investing by applying the Blackstone approach to the ‘Wild West’ of Silicon Valley. Amanda Janis reports.

Stub equity may help push through the Clear Channel Communications take-private bid. Toby Lewis examines the pros and cons.

Just weeks after raising South America's first billion-dollar fund, GP Investimentos signed the region's largest-ever buyout agreement.

A local fund goes pan-regional in Southern Africa.

Leading Japanese private equity group Advantage Partners is making a $2bn foray into hedge fund management.

Large funds have been launched to try and exploit opportunities in Indian infrastructure. Investors in the space will hope the credit crunch that has squashed the LBO market will not stymie their activities also.

Half way through an organisational review, the BVCA says it will continue to lobby on behalf of the entire private equity industry.

Superwoman Nicola Horlick tells the industry that its public relations skills leave a lot to be desired.

The refinancing boom may be over, but deals in Eastern Europe can still get done even now.

Germany's association of alternative investors is unimpressed with the government's effort to reform private equity legislation.

The economics of mega-funds are encouraging some to explore different investment models – at the expense of the GP.

Partners who fall out of love should not continue living in the same house, as the case of Fox vs. Paine demonstrates.

After 20 years as a chief executive, nearly a decade in venture start-ups, and six years as head of Teachers' Private Capital, Jim Leech will take over as head of the Ontario Teachers' Pension Plan.

After earmarking more of its assets for alternatives than any of its peers, the US' sixth-largest public pension plan has begun searching for personnel to staff its alternatives division.

Two recent exits further Noson Lawen's point that small is beautiful.

Ten years ago, some of the largest firms got creative when debt became scarce – with disastrous results.

The CIO of CalPERS praises private equity before lawmakers.

?PRIVATE EQUITY PROTEST 2 2007-10-01 Staff Writer Meanwhile, Yorkshire-based climate campaigners decamped to the London office of mid-market GP Bridgepoint to make clear their objection to any expansion of Leeds-Bradford airport, which Bridgepoint acquired for £146 million (€214 million; $297 million) in May

PRIVATE EQUITY PROTEST 1? 2007-10-01 Staff Writer Someone at the Service Employees International Union must have felt the need to enliven the union's continued anti-private equity crusade with some levity – or perhaps they just really needed a day at the beach. In late August, America'

Editor's letter 2007-10-01 Staff Writer Amid the fevered press coverage of the credit crunch, the sentiments of an anonymous investment banker quoted by the UK's Sunday Times perhaps best sum up the mood: “People are spooked, there is a feeling that there are some surprises out t

A local fund goes pan-regional in Southern Africa.

Leading Japanese private equity group Advantage Partners is making a $2bn foray into hedge fund management.

Large funds have been launched to try and exploit opportunities in Indian infrastructure. Investors in the space will hope the credit crunch that has squashed the LBO market will not stymie their activities also.

Half way through an organisational review, the BVCA says it will continue to lobby on behalf of the entire private equity industry.

Superwoman Nicola Horlick tells the industry that its public relations skills leave a lot to be desired.

The refinancing boom may be over, but deals in Eastern Europe can still get done even now.

Germany's association of alternative investors is unimpressed with the government's effort to reform private equity legislation.

After earmarking more of its assets for alternatives than any of its peers, the US' sixth-largest public pension plan has begun searching for personnel to staff its alternatives division.

The economics of mega-funds are encouraging some to explore different investment models – at the expense of the GP.

Ten years ago, some of the largest firms got creative when debt became scarce – with disastrous results.

Partners who fall out of love should not continue living in the same house, as the case of Fox vs. Paine demonstrates.

?PRIVATE EQUITY PROTEST 2 2007-10-01 Staff Writer Meanwhile, Yorkshire-based climate campaigners decamped to the London office of mid-market GP Bridgepoint to make clear their objection to any expansion of Leeds-Bradford airport, which Bridgepoint acquired for £146 million (€214 million; $297 million) in May

After 20 years as a chief executive, nearly a decade in venture start-ups, and six years as head of Teachers' Private Capital, Jim Leech will take over as head of the Ontario Teachers' Pension Plan.

PRIVATE EQUITY PROTEST 1? 2007-10-01 Staff Writer Someone at the Service Employees International Union must have felt the need to enliven the union's continued anti-private equity crusade with some levity – or perhaps they just really needed a day at the beach. In late August, America'

Two recent exits further Noson Lawen's point that small is beautiful.

The CIO of CalPERS praises private equity before lawmakers.

Editor's letter 2007-10-01 Staff Writer Amid the fevered press coverage of the credit crunch, the sentiments of an anonymous investment banker quoted by the UK's Sunday Times perhaps best sum up the mood: “People are spooked, there is a feeling that there are some surprises out t