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PRIVATE EQUITY: THE RISE & RISE OF
nipper
post Posted: Feb 1 2019, 12:28 PM
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QUOTE
Pengana Capital is aiming for an Australian first with the launch of a $250 million-$1 billion retail fund investing in a globally diversified portfolio of private equity assets.

The fund aims to give retail investors an exposure to an asset class that his historically been accessed only by institutions and ultra high-net worth investors who have the large sums required to participate in private equity funds.

Pengana (PCG) noted that the Federal Government’s Future Fund, with $149bn under management, had upped its exposure to private equity to 14.8 per cent or $2Bn from 11.8 per cent a year earlier.

The fund will be managed by Pengana but with Chicago-based Grosvenor Capital Management, L.P. selecting the investments for the trust and constructing the portfolio. GCM has in excess of US$52bn in assets under management in private equity, hedge fund strategies, infrastructure and real estate with commitments to more than 800 underlying funds

The initial public offering is slated to open on February 26 with a priority offer for investors in all of PCG’s funds as well as shareholders in the listed investment company Pengana International Equities Limited, Pengana Capital Group and its major shareholders Washington H. Soul Pattinson.

“We believe private equity markets offer compelling investment opportunities and such investments should play a role in many investors’ portfolios,” Jon Levin, President of GCM, said.

“Private equity investments benefit from the lack of short term public pressure, are less dependent on the market cycle and have historically often generated superior returns to their listed equivalents.”

Private equity assets have typically been avoided by small investors because of the lack of liquidity, with large investments locked up for a number of years until they are sold and an investment profit realised.

Pengana will pay all of the costs associated with the offer and issue alignment shares to the trust that will lift the value of the shares from the $1.25 offer price to $1.315. Those shares will be distributed to investors after two years.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Aug 5 2018, 02:04 PM
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This is not a story about the "rise and rise" - rather a spectacular fall of a private equity firm, who at one point managed almost $14 billion of assets for investors like Bill & Melinda Gates Foundation and the retirement fund for teaches in the state of Texas
extract
Behind the Spectacular Collapse of a Private Equity Titan
Arif Naqvi rode Dubai’s rise to build Abraaj Group with an unusual business model. Was it a house of cards?

July 30, 2018, 11:00 AM GMT+10
QUOTE
Days before rubbing elbows with global business titans in Davos in January, Arif Naqvi set out to charm another circle of friends—Gulf Arab tycoons—in a last-ditch attempt to save his Dubai private equity firm.

But things were already on the cusp of spiraling out of control. Dogged by allegations Abraaj had mismanaged investors’ money, Dubai’s star financier soon couldn’t pay the rent.

After Naqvi, 58, surrendered control of Abraaj in June, it was revealed that for years, its main revenues didn’t cover operating costs. Abraaj borrowed to fill the gaps and now owes creditors over $1 billion. Once lenders turned off the taps, the firm collapsed, leaving losses, lawsuits and shattered reputations in its wake.

https://www.bloomberg.com/news/features/201...te-equity-titan



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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alonso
post Posted: Jun 23 2007, 11:14 AM
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Another perspective. It's as well to be tuned in to likely developments of whatever kind.

AFP Business News
http://au.biz.yahoo.com//070622/33/1abow.html
Saturday June 23, 4:07 AM

Private equity hostile to labor and should be regulated: union body


An international trade union body on Friday urged governments to clamp down on the activities of private equity funds, describing them as "shameless" and hostile to workers.

"Private equity is basically a business model that is antagonistic to labour," the International Trade Union Confederation (ITUC), which represents 168 million workers in 153 countries, charged in a report.

"The management culture of private equity and hedge funds is shameless in its effort to cut all possible costs," the report said, citing instances where companies taken over by private equity funds have eliminated thousands of jobs.

But it added that management by private equity also "includes pressure on wages, benefits and working conditions, refusal to engage in collective bargaining and outright harassment of workers who organise in trade unions."

Under such circumstances, the ITUC insisted, "political action can and must regulate this industry, halt its excesses and ensure that it only operates where it benefits average investors, workers and their societies."

With money raised on private markets, private equity funds invest in and take control of underperforming publically traded companies companies that they then restructure, often under new management, in order to make them more profitable -- and saleable.

The ITUC report said that after the Automobile Association, a British group offering services to stranded motorists, was taken over by the investment funds CVC and Permir in 2004, the workforce was reduced from 10,000 to 7,000.

Gate Gourmet, a caterer, saw its workforce cut back to 22,000 from 26,000 following its acqusition by Texas Pacific Group, according to the report.

The ITUC maintained that since private equity and hedge funds cannot be expected to discipline themselves, "only government regulation will be able to curb the externalities of these investment activities."

It said governments should:

-- enforce minimum financial reporting standards on the funds,

-- impose stricter taxation practices,

-- ensure that corporate governance preserve the long-term interests of companies under private equity regimes and

-- take steps to protect workers' rights to collective bargaining.






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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith
 
alonso
post Posted: Jun 12 2007, 08:19 PM
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AFP Business News

http://au.biz.yahoo.com//070612/33/19ufs.html
Tuesday June 12, 7:44 PM

Private equity groups raised record funds in 2006: industry

Photo : FAFP
Private equity companies in Europe raised a record 112 billion euros (150 billion dollars) in 2006, an increase of 56.4 percent compared with 2005, industry association EVCA said Tuesday.

The figure represents a substantial upwards revision of a previous estimate of 89.8 billion euros, published by the European Private Equity and Venture Capital Association in March.

Of the total, 84 billion euros was used for buy-out operations and 17 billion euros for venture capital, EVCA said.

"Buyouts and in particular mega-buyouts are doing extremely well," said the chairman of EVCA and chief executive of Mercapital, Javier Loizaga, who stressed, however, that private equity was more commonly used to fund smaller businesses.

"Ninety percent of the companies financed by private equity employ fewer than 500 people," he said.

Private equity companies have grown into a formidable power in international financial markets and have launched numerous giant takeovers for established companies.

With their success has come controversy, however, and they are accused of destroying jobs and being a danger to the stability of the financial system.

They raise money from private investors and then invest the cash either in underperforming publically listed companies, which they take private, restructure and then re-sell, or in promising new businesses.

The United States was the biggest source of capital in 2006, supplying over a quarter, with British investors providing 21.3 percent and France 7.9 percent, the EVCA said.

Britain was the biggest destination of capital, with 33 percent of investments made in British companies. Britain was followed by France with 15.2 percent and Germany with 10.2 percent.

The data used by EVCA was supplied by financial data group Thomson Financial and accountancy firm PricewaterhouseCoopers.






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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith
 
alonso
post Posted: May 27 2007, 03:15 PM
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In reply to: wolverine on Saturday 26/05/07 06:23pm

Hey wolverine, thanks for your response

on debt: the $11b for qantas probaly won't be the last huge deal, this is a worldwide phenomenon as you know. Isn't there an issue about the implications for our interest rates and currency level? Maybe there's an economist out there who can shed some light on that.

on "maintain(ing) exposure to target company": that's one of my worries, you can't have exposure if its not there anymore to invest in. If Qantas had gone through and if you wanted to put some money in aust. airline industry, you're stuffed!

on disclosure: if you had (big if) Qantas, BHP & Woodside privatised, that's an awful lot of Aust industry not open for inspection. Or if you have 10 times that smaller top 200 companies privatised?



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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith
 
wolverine
post Posted: May 26 2007, 06:23 PM
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In reply to: alonso on Saturday 26/05/07 01:58pm

hi alonso

i'll have a crack.

1. disclosure is to ensure shareholders/market is informed. there are many well known privately owned companies that do not bear the cost and burden of public disclosure eg. Visy.
once private why disclose anything publicly? they should only report to their owners. private companies still have to meet corporate laws.

2. the debt levels are a level of risk the financial institutions take on so it is their risk to bear (and the company borrowing it). if someone borrows money to invest and makes a positive return it should be providing a positive economic return generally.

3. scrip or cash or scrip/cash has been going on since forever. given the current tax implications in australia, a scrip deal with roll over relief can be excellent value if you are trying to defer capital gains or want to maintain exposure to the target company.



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TOO MANY CHIEFS

NOT ENOUGH INDIANS
 


alonso
post Posted: May 26 2007, 01:58 PM
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I don’t really know if there is cause for concern about the increasing number and size of
private equity deals. I do know that some investment choices are taken off the table, but
that’s probably a minor issue. Mainly I just have vague ideas and questions.
Here are a few of them:
1. The general idea of a private equity takeover, so they say, is to remove the target from
public listing, and therefore scrutiny and oversight, so as to be free to restructure and run
the business more efficiently.
But haven’t we spent a couple of hundred years building up a body of corporate laws and
reporting/disclosure rules etc to make it a better market place? It’s not ideal by any
measure but does it make sense if this is increasingly thrown away? Should there be
continuing disclosure/reporting rules for public companies going private?
On the other hand, sometimes there are cases when, if this doesn’t happen, a company
could fold.
2. We know that private equity deals typically involve huge amounts of debt, mainly
foreign debt. What economic effects does this have? Is it liquidated when and if the
companies are relisted? Is there or should there be a national interest issue?
3. We’ve probably all had losses and gains out of takeovers. But is there a difference
between an old-fashioned scrip/part scrip for scrip deal and the present day take it or take
it cash deal?

What do you think?




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"The optimist proclaims that we live in the best of all possible worlds. The pessimist fears this is true"

"What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom." Adam Smith
 
 



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