Spotlight Series: Richard Wilson, Senior Partner, Apax Partners, took part in an expert panel debate entitled ‘Regulation. Assessing recent and forthcoming changes to the global regulatory landscape - Examining the burden of compliance, the impact on cross-border investing and how it will affect GPs and LPs

Other experts debating the issue were Urs Wietlisbach, Partner & Executive Vice Chairman, Partners Group, Didier Millerot, Deputy Head of Unit, Asset Management, DG Internal Market & Services, European Commission and Marco Wulff, Director, Capital Dynamics.  The moderator was Josh Lerner, Jacob H Schiff Professor of Investment Banking, Harvard Business School.

In an interview with Josh Lerner, Harvard Business School, Richard discusses the approval of the AIFM and looks at the potential impact of future legislation.

Daniel H. Mudd, Chief Executive Officer, Fortress Investment Group, took part in an expert panel debate entitled ‘Is this the End of the Mega Fund? How are GPs adjusting to a post-leverage world & how will they generate value.’

Other experts involved in this debate were Steven Costabile, Managing Director, Head of Private Equity Funds Group, Pinebridge Investments, Hisham El-Khazindar, Managing Director & Co-Founder, Citadel Capital and Steve Pagliuca, Managing Director, Bain Capital.
This debate was moderated by Josh Lerner, Jacob H Schiff Professor of Investment Banking, Harvard Business School.

In an interview with Josh Lerner, Daniel discusses how the hedge fund and private equity managers at Fortress Investment Group complement each other.

Anne Glover, CEO, Amadeus Capital, took part in an expert panel debate entitled, ‘Future Money Makers. Can you rely on money-makers for the future?” The panel questioned what is the glue that binds a partnership together and which aspects will ensure the team survives to manage out the fund’

Joining Ms Glover to debate the topic were Hans Lovrek, Partner, Commenda, Guillermo Borda, Managing Director, BAML Capital Access Funds and Kaarina Suikkonen, Investment Director Private Equity, Feri Institutional Advisors.  Rhonda Ryan, Head of Private Funds Group Europe, Pinebridge Investments moderated.

In an interview with Mark O’Hare, PREQIN, Anne issues a warning to LPs that entrepreneurship is alive and well in Europe and needs to be invested in.

An article by Antonia Henbest

‘We will match international valuations very shortly.’

- Brazilian GP

The problem with discovering an unspoilt paradise is that sooner or later somebody else turns up and the tranquillity becomes compromised. This is the current worry for those investing in Latin American private equity, and specifically in Brazil. With a growth rate of 7%, a stable political environment, a young workforce that is better educated and better off than the previous generation, Brazil is having its moment in the sun. This is obviously welcome news for the country’s fund managers who have had to convince investors that the misdemeanours and turmoil of the nineties were not an accurate reflection of the country’s true potential. However, some are undoubtedly concerned that the attention of the world’s private equity industry will effectively end the attractive pricing of deals in the region. The example of the other BRIC countries, such as India & China, where valuations have been steadily rising and hotly sought after, makes some small Brazilian players feel uneasy, ‘I don’t want all this money in Brazil!’ one exasperated Brazilian GP said earlier this year. Is there a magical middle ground whereby money flows easily into the country yet deals remains plentiful and good value? And for how long will this situation continue? Brazil’s fund managers are holding their collective breath.

SuperInvestor 2010 was a great success with over 700 senior attendees taking part in industry talks, expert panel sessions, roundtables, Q&A’s and speed networking. This video looks back at the highlights of the event in Paris.

Spotlight Series: Guy Hands, Chairman & CIO, Terra Firma, spoke on ‘The New “Normal.” What is the new “Normal” in private equity and where do we go from here?’

In his only interview at SuperInvestor 2010, Guy explains why private equity needs to go back to basics and the advantages and disadvantages that this will create.

An article by Antonia Henbest

‘Latin America is overshadowed by Emerging Asia – but now I think it’s becoming more prominent as Asia becomes expensive. It’s the next big thing.’

- European LP

The story of emerging market growth is both well documented and often remarked upon. In an attempt to maximise returns, many LPs and GPs have flocked to less developed markets and profited from the wealth of opportunities that stultified western markets can no longer provide. Most impressive has been the rise of Asia, which has seemingly witnessed a blossoming of local talent as well as the inevitable surge of larger firms setting up in the region. By comparison, LPs often remark that whilst there is no doubt of the opportunities available in Latin America, the number of GPs who are of sufficient quality to accept institutional capital remains surprisingly low. There are other barriers to investment; many US endowments are still scarred by awful experiences of getting their fingers burnt in the nineties and having less capital returned than was originally invested, and occasionally, none at all. But despite these often quoted examples, Latin American private equity is an increasingly attractive destination for international capital. The recent close of the heavily oversubscribed Southern Cross Fund III proves that for those able to demonstrate the ability to deliver real risk adjusted returns on investment; the market is now more lucrative than ever. The question that many LPs want answered now is not should we access this market, but how should we to access this region?

In an interview for Daily News Egypt, Mr Karim Helal, Group CEO of CI Capital Holding, said that Egypt needs solid investors with a long-term view which is why CI Capital is looking to the East.   

“The whole world is talking about emerging markets and how they are the linchpin for the world’s recovery,” Karim Helal, group CEO of CI Capital Holding, the investment banking arm of Commercial International Bank, said. As to whether these burgeoning economies will fulfill that promise, Helal said, “Emerging markets will play a major role, but we need to manage expectations.”    

 ”I don’t think it is right for the OECD [Organization for Economic Cooperation and Development] to hang their hopes of survival on emerging markets; they need to fix their own house. They caused this disaster, and we are back to the old habits of poor banking practices,” he added.   

Asked whether the obsession with emerging markets will wane once advanced countries get their economic houses in order, Helal indicated that herein lies the problem: “We have seen that Western investors blow hot and cold.” Egypt needs solid investors with a long-term view, he affirmed. “This is part of the reason that CI Capital took the initiative of looking Eastward and reaching out to promote Egyptian opportunities to Asian investors,” he noted.   

Owing to their culture, their mindset is different: “They aren’t hit-and-run investors nor are they looking for ridiculous returns, but instead reasonable, sustainable ones,” he said. Working in Asia for many years allowed him to have a firm grasp of the culture.   

As investors, he described Asians as “information addicts, they want to understand everything about the market in which they are planning to invest, and once they do, the floodgates open.” (Continues here)   

… For his part, one of the key reasons to hold the SuperReturn Africa conference is to “deepen the level of knowledge and awareness” about the continent, which is all too often lumped under one label, much in the same way one cannot not equate France or England with Europe as a whole, for example.   

 Africa is a geographic entity with “different or opposing dynamics…and the challenges of doing business will vary from country to country.” Thus, the conference will help identify these issues for investors eyeing the continent.   

To read the article please click here.   

Karim Helal will address the SuperReturn Africa  Opportunities in Egypt Summit on Monday 29th November at 14:20 on ‘The New Silk Route. The rising importance of trade and capital links between Egypt and Asia.’ He will also moderate an expert panel debate on Tuesday 30th November at 12:30,  discussing, ‘Egypt and Beyond. Benefitting from the COMESA free trade agreement to expand Egypt-based platforms into the Nile Basin and East Africa.’

URS Wietlisbach, partner and executive vice chairman at Partners Group spoke at SuperInvestor 2010

The European Commission came under fire at the SuperInvestor 2010 conference in Paris this week over the Alternative Investment Fund Managers directive (AIFM), which was blasted as an unnecessary and complex piece of legislation.     

Speaking at a panel session on regulation, Urs Wietlisbach, partner and executive vice chairman at Partners Group, said the regulation increased the number of barriers for new entries. “For new starters, it is going to be cumbersome. I don’t think it adds any value,” he said.     

 Richard Wilson, senior partner at Apax Partners and the former chairman of the European Venture Capital Association, added that although it was good to have some clarity, the devil will be in the detail. “The details will be thrashed out over the next few years, and it is what is in the details that will be key. The directive is not perfect and it is going to increase the burden on portfolio companies.”     

 He added: “At the end of the day, alternative investment managers are getting special treatment in this directive and it is not a level playing field and smaller players in particular are going to get hit hard, as it is not a light touch directive.”     

Didier Millerot, member of the cabinet of Michel Barnier, commissioner for internal market and services, defended the directive saying it would add transparency and that the European Commission believes it has managed to get a balance. “There are costs involved and it will add operational complexity for us, but the good thing is that if we have more transparency, new classes of LPs may be  attracted to the market.”     

Apax’s Mr Wilson agreed that although transparency was a good thing and would help boost interest and understanding of the industry, he argued that it would increase costs in the private equity industry and for investors, as well as put a burden on the portfolio companies. Mr Wilson added that it was unclear if the AIFM directive increased protection for investors and said that it was not obvious how professional funds would benefit.     

One major clause within the directive that caused a stir was article 30, which will place serious restrictions on private equity firms by limiting what they can sell. Mr Wietlisbach said GPs often sell part of a business to add value in other areas, and it was unclear whether the regulation covered this. Mr Millerot said: “The idea was not to prevent private equity firms to be able reorganise a group.”    

He argued that “the good managers were the ones that complied with regulation” and that there was little room for manoeuvre once the directive was set. “Regulation will happen, but all the principles in the directive need to be discussed with the new advisory body, which is in the process of being hired. They will advise the commission as well as have a supervisory role.” He said the authority will have an obligation to consult and the private equity industry and investors should take the opportunity to get involved in consultations.

An Article by Kalpana Fitzpatrick.

Private equity can add a lot value to the economy, but a number of issues must be overcome first, according to Charles Baillie, global co-head alternative investment and manager selection at Goldman Sachs.  Speaking at the SuperInvestor 2010 conference in Paris, Mr Baillie said one of the main issues was that there was too much capital chasing too few deals.

He said there were trillions of dollars waiting to be invested in news deals and that there was a chance that large deals may come back.

“If deals stay at the same level, then there is up to six years capital available. If things pick up, then there is up to four years capital available,” he explained.  Mr Baillie said there were also concerns on whether high returns were a thing of the past.

“Although it would be difficult to argue that private equity is an absolute return asset class, it is possible to outperform public markets.  “From mid 2008 to today, private equity has decreased less in value than public markets and every strategy within private equity has outperformed public markets,” he claimed.

The search for alpha was also key, and according to Mr Baillie, there was evidence that private equity created value relative to public companies.

“Private equity creates cash flow, but it also creates revenue,” he stated.  He went on to argue that debt pay-down was faster in private equity companies than public companies and that private equity can add value during an economic downturn.

Baillie said the attitude towards private equity was becoming more positive in comparison to last year.  He said there was also a re-emergence of emerging markets and that there were new opportunities to be realised in this area.

Mr Baillie said he was positive about the future of the private equity industry, which has also received positive comments in academic literature, as long as opportunities are acted upon and key challenges are met.