EquityFC Blog

Global PE: mixed blessings, but hope for new deals | 7 June 2010

The global private equity (PE) industry seems to be coming out of hibernation, according to a number of recent reports. That's not to say if you're looking for a PE-backing position you shouldn't remain realistic - about terms, business plans and finances. But there is definitely good news around if you know where to look.

Take this article on fund raising. LPs (limited partners are the people who commit money to PE funds) are back on the trail for investment opportunities in PE - and although they still have "concerns about capital overhang [that] may keep the flow of new money to modest levels," there's clearly a view that there are returns to be made in new deals. The pressure is on GPs (general partners, who manage the investments) to prove they've got a use for the cash.

Meanwhile, emerging markets PE is doing really well. In India, for example, Ernst & Young is reporting conditions set fair for a boom in deals. And Iraq is also an unlikely source of joy for PE investors. (Compare and contrast Spain, where the picture is less rosy.)

It's worth adding that as well as tickles for new deals and new funds, the industry is re-shaping in other ways. We blogged last week about Barclays selling its PE arm - now HSBC is flogging its own PE divisions (and, like Barclays, it's letting management have the businesses for next to no money... read into that what you will). And, if you're looking for a much more obviously troubled example, Dubai International Capital looks like it might fold.

All change then - keep your eyes peeled and make sure you know what your backers are going through before you commit.

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Social media - first steps | 4 June 2010

Do you tweet? Are you on LinkedIn? How about blogs - which ones do you read (apart from this one)? I ask partly because an interim FD I know has recently started using twitter - you can find him at twitter.com/PHooperKeeley.

This got me thinking about how finance execs can use social media, partly to stay in touch with their industries and their colleagues - and partly to project themselves into the "interwebs". For an interim like Paul, that's probably more important than for FCs and FDs looking for, on working in, perm positions. But it's still an interesting way to be connected to a wider community.

The "staying in touch" part is important, too. It's well worth setting up Google News Alerts for topics that are relevant to your business - and to businesses you'd like to be in. And why not set one up to feed through coverage of "private equity" or "MBO" to your inbox each day or weekly? It's a great way of staying informed so that when opportunities do arise, you've got plenty of background knowledge to throw into the conversation.

I'll do a link list in a few days of sites that I find useful for staying on top of the PE scene. In the meantime, check out Mashable's advice for VCs on using social media.

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Physician - heal thyself! | 3 June 2010

The private equity industry continues to focus on good portfolio management, the profitability of fund investee companies and growth. But it's interesting to note any shifts in the industry ahead of a potential upswing in deal activity. Which leads us to a very interesting MBO announcement.

It seems Barclays Private Equity is buying itself out from its parent bank. Naturally, this is in part due to a new conservatism in banking (although Barclays was far from being the worst-hit in the financial crisis in 2008). But it also hints at a readiness to get daling again. Reuters reports sources claiming: "Barclays PE will target between 1.5 billion and 2 billion euros for its first independent fund." That's its first new money since a fund launched in 2007 and suggests there's going to be some acquisitions towards the end of the year.

It also suggests the guys at Barclays PE will have a new-found understanding of the pressures of being an MBO team. We'll see (and if anyone does an MBO with them after their own buyout in the summer, let us know how it goes!).

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