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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.