City of London May Tighten Reins on Pension Fund

LONDON (Reuters) - The pension scheme of the City of London is considering tightening the reins on its fund managers to get more control over investment decisions after a tough 2008.

The scheme is also mulling whether to invest more in alternatives like private equity to broaden its assets and help weather market changes.

The City’s defined benefit (DB) pension scheme and two charity funds, which look after parks and maintain bridges in the square mile financial district, have combined assets of about 1.4 billion pounds ($2.31 billion).

The DB scheme currently sets broad allocation targets with about 80 percent in equities and allows fund managers to make unconstrained investment decisions to exploit market movements while some have scope to switch in and out of the asset classes.

“At the moment we give them (fund managers) quite a degree of discretion,” said Paul Mathews, corporate treasurer at the City of London Corporation.

“This is one area the committee wants to look at: whether or not they should be setting their asset allocation,” he told Reuters.

The move is an effort to introduce “best practice” and does not reflect any performance issues, he said, although he conceded 2008 was tough.

Unconstrained mandates contrast with the passive, benchmark-tracking mandates which in the past have dominated pension scheme investments. The rise of unconstrained investment during the boom years was designed to give fund managers more power to make swift investment decisions rather than relying on the notoriously slow allocation decisions of pension trustees.

However, such mandates make it difficult for trustees to control exposures and can leave a scheme at risk from market shocks should fund managers target similar sectors or regions.

The City of London scheme expects to appoint in February 2010 a consultant to advise on the asset allocation move as well as giving strategic advice on alternative investments such as private equity, in which the three funds have about 3 percent of assets.

By spreading investments across a number of asset classes, pension schemes hope to limit volatility and diversify income streams to weather market changes.

“We never got to invest as much as we wanted to (in private equity). That is an area we want some more strategic advice as to whether we should be increasing allocation to private equity and other alternatives,” Mathews said.

The schemes’ assets are managed by seven UK and foreign asset managers and for the last five years the trustees have been advised by John Woods and Associates Ltd. (Reporting by Cecilia Valente, Editing by Erica Billingham) ($1=.6071 Pound)

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PAI Offers To Cut Buyout Fund In Half

PARIS (Reuters) - French private equity firm PAI Partners has made a formal proposal to investors to cut its 5.4 billion euro ($7.90 billion) Fifth buyout fund in half, and to change its governance in favor of investors, a source close to the matter said on Tuesday.

“PAI sent its offer to investors this evening,” the source told Reuters, adding that a response was expected on Dec. 3.

Any shrinking of the fund, which bought stakes in IT services company Atos Origin (ATOS.PA) and building materials firm Xella last year, would echo similar moves by peers TPG [TPG.UL] and Permira [PERM.UL], who have faced pressure from investors keen to reduce their exposure to private equity.

“We need 66.67 percent of the votes to approve or reject the proposal. This is not a done deal but it’s feasible,” the source added.

In September, sources familiar with the situation said that the fund was ready to cut the fund by half following a recent management bust-up.

The move follows the shock early retirement of Dominique Megret as chief executive in August, twinned with the departure of his right-hand man, Bertrand Meunier, after a boardroom battle with other partners.

Megret’s exit triggered a so-called “key-man” clause, allowing investors to renegotiate their commitments to the PAI’s fifth European buyout fund.

PAI is notably offering investors not to take fees for setting up some transactions and to lower management fees. It is also offering to lower the threshold of investors votes required to open or close a fund to 60 percent from 80 percent, the source said. ($1=.6835 Euro)

(Reporting by Julien Ponthus, Writing by Dominique Vidalon, Editing by Marcel Michelson and Gerald E. McCormick)

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Sankaty DIP Fund Beats Target

Sankaty Advisors, the credit affiliate of Bain Capital, has closed on $672 million from 740 investors for its DIP Opportunities Fund, according to regulatory filings. That includes $388.4 million in commitments from 446 U.S. investors and $284.58 million in commitments from 294 offshore investors.

Since our last update on this fund (yes, slow news day), we’ve learned that the reason Sankaty has so many investors to dollars is that the firm is marketing this fund to high-net-worth individuals rather than the traditional investors in private equity funds (pensions and endowments) or usual sources of DIP lending (banks).

Specifically, a J.P. Morgan Securities feeder fund is obtaining many of the commitments. It’s obviously been a successful fundraise, considering we had pegged the fund’s original target at $400 million. According to an investor, the fund has a two-year investment period with fees of 1.75% on commitments, and Sankaty anticipates returns of between 12% and 15% for the entity.

The firm also is looking to raise $750 million for Sankaty Middle Market Opportunities Fund, and $400 million for Sankaty DIP Opportunities Fund.

Previously: Sankaty Raising Funds for DIP and Mid-Market Lending

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New PE Fund Alert: Gotham Private Equity Partners

Gotham Private Equity Partners has launched as a New York-based private equity firm focused on the middle and lower middle-markets. Equity checks of between $10 million and $50 million per investment, in exchange for a control position (with some growth equity exceptions).

The core quartet is one we last discussed in early 2007, when they bolted Trimaran Capital Partners to work for Columbus Nova. Before that, they had worked together in the leveraged finance group of CIBC.

I spoke yesterday with managing principal Steven Flyer, who didn’t really explain the departure from Columbus Nova, except to say that it was to take advantage of the opportunity to hang their own shingle in the midst of a market dislocation. The Gotham team will not continue to manage investments made while with Columbus Nova.

Gotham does not plan to raise a traditional fund. Instead, its deals will be financed by a group of high-net-worth individuals and families who helped launch Gotham by acquiring a minority ownership position. The firm is already looking hard at a couple of deals, and expects its first transaction to close in Q1 or Q2 of next year.

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CVC Infrastructure Fund Not Yet Raised

AMSTERDAM (Reuters) - More than a year after private equity firm CVC Capital Partners launched its first infrastructure fund, it has yet to reach a close in its fundraising, two sources close to the process said.

The Luxembourg-headquartered buyout firm launched its debut $2 billion infrastructure fund in September 2008 but has not secured enough commitments to date for a close in what is a challenging fundraising environment, sources said.

One of the sources said the fund’s existing commitments were very far from its target while the second source said CVC was still working toward a close and was engaged in advanced discussions with “key investors”.

CVC did not respond to a request for comment.

Asset managers have piled into the infrastructure asset class in the last three years, but in the aftermath of the financing downturn they have come across sceptical institutional investors with a tight budget and high expectations.

Private equity players in particular have struggled to reconcile their traditional fees model with what many established investors in infrastructure consider as reasonable remuneration for running an infrastructure fund.

Another hurdle that new entrants to the infrastructure market like CVC face is establishing relationships with institutional investors to ensure a top spot in their list of allocations.

Rivals Kohlberg Kravis & Roberts and Blackstone (BX.N), which are also in the process of fundraising for multibillion dollar infrastructure funds, have for this reason poached veterans of the infrastructure investment world to spearhead their efforts.

CVC’s infrastructure fund is led by Stephen Vineburg, who previously led the infrastructure investment team at Colonial First State Global Asset Management, the investment arm of Commonwealth Bank of Australia (CBA.AX).

The fund has a returns target of 12 to 15 percent, one of the sources said. It has been attempting to line up a pipeline of infrastructure investments in Europe, including Gas Natural’s (GAS.MC) gas distribution assets in Madrid. 

By Greg Roumeliotis

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Tiger Infrastructure Partners Launches

Tiger Infrastructure Partners has launched as a new infrastructure private equity firm, with a focus on mid-market opportunities in North America and in Europe. It will be led by Emil Henry, former Assistant Secretary of the U.S. Treasury who most recently ran Lehman Brothers’ infrastructure private equity business.

PRESS RELEASE

Tiger Management, Julian Robertson and Emil W. Henry, Jr. announced today the formation of Tiger Infrastructure Partners LP, an infrastructure private equity firm. The firm will focus on managing investments in North American and European middle-market infrastructure.

The firm will be headed by Mr. Henry, previously global head of Lehman Brothers infrastructure private equity business, and prior to that, Assistant Secretary of the U.S. Treasury.

Tiger Infrastructure Partners will focus primarily on private sector infrastructure businesses in the energy and power, water, waste, transportation, and communications sectors.

Mr. Henry explained, “There are many small and medium-sized infrastructure businesses that are outside the focus of larger infrastructure investors and strategic buyers. With the credit market dislocation and diminished role of debt capital providers, we believe many of these businesses’ growth prospects are constrained by their capital needs. We seek to fill that gap.”

Since returning capital to Tiger fund investors in 2000, Mr. Robertson has used his investment expertise to evaluate and back other firms, including those that invest in alternative assets.

Mr. Robertson said, “We see a long-term opportunity for investing in infrastructure projects on a global basis and believe the middle market is underserved and less competitive. ”

The members of Tiger Infrastructure Partners previously worked together under Mr. Henry’s leadership as members of Lehman Brothers’ infrastructure private equity business. The investment team includes Leanne Bell, previously of GE Energy Financial Services; Marc Blair, previously of Lehman Brothers Private Equity and Natural Resources Group; Alessandro Boninsegna, previously of Lehman Brothers Private Equity; Pascal Casavecchia, previously of Lehman Brothers Private Equity and the Carlyle Group; and Adam Emmert, previously of Highstar Capital. The firm has offices in New York and London.

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CIT’s Borrowers

When CIT’s potential bankruptcy was pushed into the spotlight earlier this year, we ran a list of 133 LBO-backed companies which CIT has lent to in the past five years. In the spirit of sharing, we’ve posted it again!

CIT has served as a lead lender to 30-some middle market portfolio companies, but the firm’s reach as part of the lending club extends to mega-buyout deals like HCA, Dollar General and Dunkin Brands as well.

You can access and download the full list of CIT-led deals at Scribd: LBO-Backed Companies With CIT As the lead arranger

And I’ve pasted the entire list of 133 companies with CIT in its capital structure below.

LBO-Backed Companies CIT Has Lent To (Any Part of Capital Structure)
pehub.com
Company Name Date Deal Amount (m) Deal Amount (US$m) Purpose
AHM Holdings 1 Inc 2-Feb-07 US$ 41 41 LBO
AccentHealth LLC 4-Sep-08 US$ 56 56 LBO
Accutest Corp 25-May-07 US$ 50 50 LBO
Ace Cash Express Inc 5-Oct-06 US$ 430 430 LBO
Activant Solutions Inc 2-May-06 US$ 430 430 LBO
Advanced Homecare Management 3-Aug-07 US$ 161 161 LBO
Advanced Homecare Management 25-Oct-06 US$ 8 8 LBO
Advantage Sales & Marketing 28-Mar-06 US$ 585 585 LBO
Alere Medical Inc 31-Mar-07 US$ 80 80 LBO
Ambulatory Services of America Inc 12-Dec-07 US$ 124 124 LBO
Anchor Drilling Fluids USA Inc 16-Apr-08 US$ 120 120 LBO
Anchor Hocking 1-Jun-07 US$ 69 69 LBO
Au Bon Pain 5-Mar-08 US$ 108 108 LBO
Audio Visual Services Corp 28-Feb-07 US$ 315 315 LBO
Blue Water Automotive Systems 17-May-06 US$ 68 68 Acquis. line
BondDesk 16-Aug-06 US$ 86 86 LBO
Booz-Allen & Hamilton 1-Jul-08 US$ 810 810 LBO
Bosque Power Co 20-Dec-07 US$ 413 413 LBO
Brickman Group 23-Jan-07 US$ 425 425 LBO
Business Records Management LLC 22-Feb-08 US$ 28 28 LBO
CCC Information Services Inc 10-Feb-06 US$ 300 300 LBO
CRC Health Corp 6-Feb-06 US$ 640 640 LBO
Cajun Operating Co 29-Jun-09 US$ 155 155 LBO
Catapult Learning LLC 20-Mar-08 US$ 47 47 LBO
Centra Industries Inc 31-Oct-07 US$ 72 72 LBO
Citadel Plastics LLC 8-Mar-07 US$ 43 43 LBO
CoTo Acquisition LLC 10-Jan-08 US$ 35 35 LBO
Community Hospice (CHA) 29-Jan-07 US$ 63 63 LBO
Concorde Career Colleges 30-Aug-06 US$ 65 65 LBO
Consolidated Precision Products 17-Apr-08 US$ 157 157 LBO
Contec 28-Jul-08 US$ 205 205 LBO
Contec 11-Jul-06 US$ 145 145 LBO
DAE Aviation 1-Oct-07 US$ 937 937 LBO
David’s Bridal Inc 31-Jan-07 US$ 450 450 LBO
Delta Rigging & Tools Inc 4-Aug-08 US$ 50 50 LBO
Dollar General 6-Jul-07 US$ 5,525 5,525 LBO
Dunkin Brands 20-Feb-06 US$ 1,800 1,800 LBO
Ellman International Inc 8-Feb-08 US$ 20 20 LBO
Entertainment Cruises Inc 22-Aug-06 US$ 61 61 LBO
Fenwal Inc 28-Feb-07 US$ 475 475 LBO
FiberMark Inc 8-Feb-08 US$ 168 168 LBO
General Electric Commercial Aviation Training [GECAT] 5-Jun-07 US$ 254 254 LBO
HC Cable OPCO LLC 21-Apr-08 US$ 50 50 LBO
HCA Inc 16-Feb-07 US$ 12,864 12,864 LBO
HMT Inc 21-Jun-07 US$ 137 137 LBO
Hargray Communications Group Inc 18-Jun-07 US$ 325 325 LBO
Harris Connect 15-Sep-08 US$ 26 26 LBO
Haven Hospitals 1-Dec-06 US$ 7 7 LBO
Hawkeye Renewables LLC 30-Jun-06 US$ 600 600 LBO
Hearthside Food Solutions 9-Apr-09 US$ 115 115 LBO
Hudson Group 29-Mar-08 US$ 295 295 LBO
Hudson Products Corp 25-Aug-08 US$ 375 375 LBO
IPS Corp 13-Jul-06 US$ 102 102 LBO
ITN 25-Sep-06 US$ 90 90 LBO
Identity Group 7-Dec-07 US$ 42 42 LBO
InfrastruX Group Inc 19-Apr-06 US$ 275 275 LBO
Inmar Inc 30-Apr-07 US$ 175 175 LBO
Interim Health Services 19-May-06 US$ 62 62 LBO
JHP Pharmaceuticals LLC 28-Sep-07 US$ 57 57 LBO
Jacuzzi Brands [Ex- US Industries Inc] 7-Feb-07 US$ 1,155 1,155 LBO
Jones Stephens 7-Sep-06 US$ 56 56 LBO
K2 Advisors LLC 30-Apr-07 US$ 129 129 LBO
Knape & Vogt 28-Jul-06 US$ 97 97 LBO
Lewis Goetz & Co Inc 6-Jun-07 US$ 98 98 LBO
Liberty Dialysis 18-Jan-06 US$ 30 30 LBO
Liberty Tire Services of Ohio LLC 5-Nov-08 US$ 110 110 LBO
Lord & Taylor 2-Oct-06 US$ 350 350 LBO
MECS Inc 31-Jan-08 US$ 190 190 LBO
Maritime Telecommunications Network 5-May-06 US$ 110 110 LBO
MedPlast Inc 18-Apr-08 US$ 39 39 LBO
Medtech Products Inc 15-Jul-08 US$ 38 38 LBO
Metals USA 17-May-07 US$ 450 450 LBO
Michael’s Finer Meats LLC 25-Feb-08 US$ 35 35 LBO
Michaels Stores Inc 31-Oct-06 US$ 2,400 2,400 LBO
Michaels Stores Inc 31-Oct-06 US$ 2,400 2,400 LBO
Mobile Storage Group 1-Aug-06 US$ 300 300 LBO
Modern Luxury Publishing 22-Jun-07 US$ 125 125 LBO
NCO Group Inc 15-Nov-06 US$ 1,069 1,069 LBO
National Envelope 4-Apr-06 US$ 220 220 LBO
National MENTOR 29-Jun-06 US$ 480 480 LBO
National Renal Institutes 7-Apr-06 US$ 300 300 LBO
Neff Corp 31-May-07 US$ 290 290 LBO
Neff Corp 31-May-07 US$ 350 350 LBO
New Acton Mobile Industries Inc 2-Feb-07 US$ 90 90 LBO
New Century Transportation 14-Aug-06 US$ 120 120 LBO
New World Gaming 1-Jul-07 US$ 1,065 1,065 LBO
Nutrition Physiology Corp 31-Jul-08 US$ 31 31 LBO
Nuveen Investments Inc 13-Nov-07 US$ 2,915 2,915 LBO
Obcorp LLC 30-Jan-09 US$ 36 36 LBO
PRACS Institute Ltd 14-Mar-07 US$ 189 189 LBO
Permian Tank & Manufacturing 6-Dec-07 US$ 77 77 LBO
Philosophy Inc 7-Mar-07 US$ 310 310 LBO
Primrose School Franchising Co 31-Mar-06 US$ 31 31 LBO
Primus International 7-Jun-06 US$ 190 190 LBO
RGIS Holdings 26-Apr-07 US$ 900 900 LBO
RanPak Inc 29-Feb-08 US$ 430 430 LBO
Randall-Reilly Publishing Co LLC 29-Feb-08 US$ 94 94 LBO
Renfro Corp 5-Oct-06 US$ 205 205 LBO
RollEase 31-Jul-07 US$ 41 41 LBO
Ryt-Way Industries 11-Aug-08 US$ 70 70 LBO
SJI LLC 6-Dec-07 US$ 83 83 LBO
Seaboard International Inc 18-Apr-07 US$ 55 55 LBO
Sequa Corp 3-Dec-07 US$ 2,050 2,050 LBO
Seven Media Pty Ltd 28-Dec-06 A$ 3,050 2,409 LBO
Sheplers Inc 30-Jul-07 US$ 35 35 LBO
Sleep Innovations 30-Mar-07 US$ 320 320 LBO
SourceCorp Inc 8-Jun-06 US$ 400 400 LBO
Southern California Pizza Co LLC 18-Aug-08 US$ 29 29 LBO
Sports Authority Inc 13-Apr-06 US$ 1,025 1,025 LBO
Sprint Industrial Holdings LLC 31-Oct-07 US$ 128 128 LBO
Stampede Meats 22-Mar-07 US$ 90 90 LBO
Star Tribune 1-Mar-07 US$ 486 486 LBO
Sterling Foods LLC 31-Dec-08 US$ 42 42 LBO
Sun Products Corp [ex-Huish Detergents Inc] 26-Apr-07 US$ 1,150 1,150 LBO
Surgical Care Affiliates 29-Jun-07 US$ 490 490 LBO
Surveymonkey.com 21-Apr-09 US$ 39 39 LBO
TMW Systems Inc 12-Sep-07 US$ 43 43 LBO
TRANZACT 31-Oct-07 US$ 80 80 LBO
Taylor Wharton International LLC 7-Dec-07 US$ 163 163 LBO
Team Health Inc 16-Mar-07 US$ 425 425 LBO
Thomas Nelson Inc 12-Jun-06 US$ 235 235 LBO
Transilwrap Co 4-Sep-07 US$ 95 95 LBO
TravelCLICK Holdings Inc 20-Dec-07 US$ 105 105 LBO
Tri-Star Electronics International Inc 2-Feb-07 US$ 123 123 LBO
Tribune Co 17-May-07 US$ 10,133 10,133 LBO
Tube City IMS Corp [ex-International Mill Service] 17-Jan-07 US$ 350 350 LBO
UP Acquisition Sub Inc 8-Feb-08 US$ 225 225 LBO
US HealthWorks Holding Co 20-Dec-06 US$ 135 135 LBO
Unifrax Corp 28-Apr-06 US$ 230 230 LBO
United Central Industrial Supply Co 28-Apr-06 US$ 142 142 LBO
Vistar Corp [Ex- Multifoods Distribution Group] 20-Jul-07 US$ 450 450 LBO
Webex Inc 10-Aug-07 US$ 40 40 LBO
Wesco Aircraft Hardware Corp 25-Sep-06 US$ 775 775 LBO
Yankee Candle Co 6-Feb-07 US$ 775 775 LBO
Source: Thomson Reuters and peHUB.com

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Greylock Raises Fund, Hires Reid Hoffman

Greylock Partners has closed its thirteenth fund with $575 million in capital commitments. The bi-coastal VC firm had raised $500 million for its twelfth fund in 2006. peHUB had previously reported that Greylock planned to raise a new fund in Q4 of this year.

Greylock also announced that it has LinkedIn co-founder Reid Hoffman as a partner. Hoffman will retain his role as executive chairman of LinkedIn, which is a Greylock portfolio company.

In other firm news, Greylock will move its Waltham office to Harvard Square.

PRESS RELEASE
Greylock Partners, a Silicon Valley venture capital firm, today announced the closing of Greylock XIII, a $575 million fund. The firm also announced the addition of a new investing partner, LinkedIn Co-Founder and Executive Chairman Reid Hoffman.

Greylock will use the funds to invest in and support promising enterprise and consumer software, services and infrastructure ventures.

“We are thankful to count among our investors some of the most sophisticated and respected university endowments and family foundations, many of which have been enthusiastic supporters of Greylock since our founding in 1965,” says Greylock Partner Bill Helman.

“In this difficult environment, all investors need to be particularly selective about the funds in which they invest,” says Andrew K. Golden, President, Princeton University Investment Co. “We are enthusiastic about Greylock and pleased that the firm allows us to be such a close partner. Our investment in Greylock XIII represents the lion’s share of the commitments we plan to make to venture capital funds this year.”

“Over the past forty-four years we have partnered with entrepreneurs to build hundreds of successful businesses, 150 of which have gone on to IPOs and another 100 of which have gone on to profitable M&A events,” says Greylock Partner Aneel Bhusri. “We look forward to partnering with the next generation of entrepreneurs to help them create strong, significant businesses.”

Recent and current consumer companies Greylock has supported include Digg, Facebook, Farecast (Microsoft), LinkedIn, Pandora, and ZipCar. Recent and current enterprise companies Greylock has supported include Cloudera, Constant Contact (CTCT), Data Domain (EMC), Data Robotics, Imperva, OutlookSoft (SAP), Palo Alto Networks, Polyserve (HP), Red Hat (RHT), Success Factors (SFSF), Wily Technology (CA), and Workday.

Reid Hoffman joins Greylock as a partner. He will remain active day-to-day at LinkedIn as Executive Chairman. In his role at Greylock Partners, Hoffman will invest in promising early-stage consumer Internet and software ventures, as well as coach and advise entrepreneurs of Greylock portfolio companies.

“I have worked closely with Reid as a board director at LinkedIn for the past five years and am thrilled to welcome him to the partnership,” says David Sze, a partner at Greylock. Sze leads the firm’s investments in LinkedIn as well as Digg, Facebook, Pandora and others. “At Greylock we place a high value on hiring partners with deep operating experience at companies with explosive growth. Reid also possesses a unique understanding of consumer behavior and the dynamics of viral businesses, and that has made him one of the most sought after advisors to start-ups.”

“As a Greylock entrepreneur I witnessed firsthand the firm’s ability to help entrepreneurs become successful by focusing on company building and staying true to the firm’s values. I look forward to continuing that legacy,” says Hoffman. “I am deeply passionate about partnering with entrepreneurs to build companies that make a lasting impact.”

An accomplished entrepreneur, executive and investor, Hoffman has played an integral part in building many of today’s leading consumer technology businesses. Hoffman co-founded LinkedIn, the world’s largest professional networking service, in 2003. Today LinkedIn counts 50 million members in 200 countries. Reid led LinkedIn through its first four years and has held multiple positions there, including chief executive, president and chairman.

Prior to LinkedIn Hoffman served as executive vice president at PayPal, where he was a founding board member. Previously he co-founded Socialnet.com and worked at Fujitsu Software Corp. and Apple Computer. Hoffman is a Director at Kiva.org, Mozilla Corp., Six Apart and Zynga. He has been an angel investor in numerous influential Internet companies, including Digg, Facebook, Flickr, Last.fm, Ning, Six Apart and Zynga.

Hoffman earned a Master’s degree in Philosophy from Oxford University, where he was a Marshall Scholar, and a Bachelor’s degree in Symbolic Systems from Stanford University, where he graduated with distinction.

About Greylock
Greylock has partnered with entrepreneurs for 44 years to help them build market-leading businesses. Among the companies Greylock has supported are Ascend Communications, CheckFree, CipherTrust, Cloudera, Constant Contact, Continental Cable, Decru, Data Domain, digg, DoubleClick, Facebook, Farecast, Imperva, Internet Security Systems, Ikanos, Legato, LinkedIn, Media Metrix, Millennium Pharmaceuticals, Openwave, Open Market, Pandora, Red Hat, RightNow Technologies, Success Factors, Tellabs, Trilogy, Wily Technology, Workday and Zipcar.

Greylock operates in a number of global centers of innovation, including Boston, China (Beijing), India (Bangalore), Israel (Herzliya) and Silicon Valley. For more information about Greylock Partners, please visit www.greylock.com or http://www.facebook.com/greylock.

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BNY Mellon Buys 20% Stake in Siguler Guff

BNY Mellon Asset Management has acquired a 20% stake in Siguler Guff & Company, a multi-strategy private equity firm with over $8 billion in assets under management. No financial terms were disclosed.

PRESS RELEASE

Siguler Guff & Company, LLC announced that BNY Mellon Asset Management has acquired a 20% minority interest in the firm, and certain related entities. Siguler Guff is a multi-strategy private equity firm with over $8 billion in assets under management and committed capital from a blue-chip roster of approximately 400 institutional investors including endowments, foundations and corporate & public pensions.

Siguler Guff’s focused investment offerings include fund-of-funds targeting distressed security investing, emerging markets including Brazil, Russia, India and China (BRIC), distressed real estate and small cap buyout opportunities. Siguler Guff focuses its investments across three different business lines: Fund-of-Funds, Advisory Activities and Direct Investment Funds.

The firm was founded in 1995 and employs a team of highly experienced individuals with deep expertise in distressed investing and other specialized areas in private equity. George Siguler, one of the founding partners, was also a founding employee of the Harvard Management Company, which oversees the management of Harvard University’s endowment and related financial assets. Drew Guff has a long, successful history in investing in Emerging Markets Private Equity. The firm has a value-oriented opportunistic focus dedicated exclusively to private equity investing.

The two companies formed a strategic alliance in January 2009, when Siguler Guff engaged BNY Mellon to distribute the products and services of Siguler Guff globally. In May 2009, Siguler Guff Advisers, LLC, Siguler Guff’s registered investment advisor subsidiary, became the investment advisor of the private equity fund-of-funds previously advised by WestLB Mellon Asset Management.

“We are pleased to build on our relationship with BNY Mellon, which has served both firms well since we formed our initial strategic alliance at the beginning of this year,” said George W. Siguler, Managing Director and Chief Investment Officer of Siguler Guff. “The global reach of BNY Mellon will help us expand our footprint and work closely with key institutions around the world.”

“This transaction formalizes our ties with Siguler Guff and significantly adds to our ‘alpha’ capabilities,” said Ronald P. O’Hanley, President and Chief Executive Officer of BNY Mellon Asset Management. “Current market conditions have led to extraordinary demand for distressed opportunity managers, and Siguler Guff is particularly well positioned to take advantage of distressed situations and the emerging markets, which are among the most promising areas for private equity investors.”

Terms of the transaction were not disclosed.

Siguler Guff & Company LLC is a multi-strategy private equity investment firm with over $8.0 billion of assets under management across three lines of business: fund-of-funds, advisory activities and direct investment funds. Siguler Guff serves approximately 400 institutional clients and 400 high-net-worth individuals, and the funds it manages have invested in over 200 private equity funds. The firm is headquartered in New York and has offices in Boston, Chicago, Los Angeles, Moscow, Shanghai and a local affiliate office in Mumbai. To learn more about Siguler Guff, please visit www.sigulerguff.com.

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Law Firm SJ Berwin Opens Shanghai Office

SJ Berwin has opened an office in Shanghai. This is the law firm’s 12th office overall, and second in East Asia.

PRESS RELEASE

Leading international law firm SJ Berwin has opened an office in Shanghai.

The office is the firm’s third opening this year, its second in East Asia and its 12th office worldwide. It follows the opening of the regional office of SJ Berwin for East Asia in Hong Kong in April 2009 and the formal opening of its Dubai office last month.

SJ Berwin’s application for a license to operate a Representative Office in Shanghai was granted on 28 August 2009 at an official ceremony at the Ministry of Justice in Beijing. The new office for SJ Berwin in Shanghai, China opened in October 2009, coinciding with the 60th anniversary of the People’s Republic of China.

The business of the office will start by focusing on Fund Formation, Mergers and Acquisitions, Private Equity and Real Estate, reflecting the traditional key strengths of SJ Berwin.

Jonathan Blake, Senior Partner of SJ Berwin, said: “This is a further step in our strategy of international development in our core areas, and reinforces our confidence in the expansion and growth of our firm worldwide.”

Daniel Liew, Asia Managing Partner of SJ Berwin, said: “China’s impressive economic growth continues despite the global economic challenges, and client demand is high for dedicated, capable and experienced legal resources able to assist with both inbound and outbound cross-border legal work involving China.”

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Ballast Point Ventures Secures $140 Million

Ballast Point Ventures has secured $140 million in limited partner commitments for its second fund, according to a regulatory filing. It has a total target of $150 million. The St. Petersburg, Fla.-based firm raised around $53 million for its debut fund in 2003, with Raymond James as its lead investor. www.ballastpointventures.com

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Oklahoma Teachers Picks Franklin Park

The Teachers’ Retirement System of Oklahoma has hired Franklin Park to manage a $400 million discretionary private equity account. Franklin Park replaces Aldus Equity, which was fired after its founder Saul Meyer was indicted as part of the New York pay-to-play investigation. Myer has since pled guilty. www.ok.gov/TRS

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CIT Expected To File for Bankruptcy Within Days

NEW YORK (Reuters) - CIT Group (CIT.N) is likely to file for bankruptcy in the coming days, analysts and experts said.

The lender to small and medium-sized businesses is trying to restructure its debt, and is offering investors two options.

One path would be getting its unsecured debt holders — who hold a total of about $30 billion — to voluntarily exchange their bonds for new securities and equity. That path would avoid a bankruptcy filing.

The other and more likely option would be approving a reorganization plan before the company files for bankruptcy. CIT had about $70 billion of assets and $65 billion of total debt in the middle of this year, according to the latest publicly available figures.

CIT investors are entitled to vote for the exchange or the prepackaged bankruptcy by the end of Thursday. CIT spokesman Curt Ritter declined to comment.

The company has $800 million of debt due on November 1 and 3, and total liabilities as of mid-June of $64.9 billion.

Sources familiar with the matter have told Reuters that the voluntary debt exchange is unlikely to happen, and bankruptcy is much more likely.

Analysts have argued that the debt exchange was doomed from the start, because it required too many different kinds of investors with too many competing interests to comply.

“The market is by and large sending signals that a prepackaged is the most likely outcome, and it makes sense given the exchange offer,” said Kevin Starke, senior analyst at boutique brokerage CRT Capital Group.

If the company files for bankruptcy, it will likely try to complete the restructuring process as quickly as possible, experts said. In general, borrowers prefer to borrow money from lenders they are confident will be around for the life of the loan.

“A business like this has to get in and out of bankruptcy fast, because if they’re lingering, I would think competitors would start poaching customers,” said Stephen Lubben, a law professor at Seton Hall’s School of Law who focuses on corporate finance and financial distress issues.

The plan needs to win approval from investors holding two-thirds of the company’s debt, and half of the number of investors.

Activist investor Carl Icahn is encouraging individual investors to vote against CIT’s prepackaged bankruptcy plan. The company hopes its plan will eventually help it fund more new business out of its bank but Icahn wants the company to stop planning to make new loans and use its maturing assets to pay off its debt.

A prepackaged bankruptcy requires the approval of investors holding two-thirds of the dollar amount of every type of debt. Of the voting investors, one half by number must also approve.

Icahn has tried to rally retail investors to vote against the plan, in an effort to ensure that CIT does not get half of voting noteholders to approve the deal.

(Reporting by Dan Wilchins; Editing by Gary Hill)

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China Sets Up State-Backed VC Funds

BEIJING (Reuters) - China’s top economic planner said on Friday that it has launched 20 venture capital funds jointly with 7 provincial governments to invest in the country’s growing high-tech sector.

The National Development and Reform Commission, the powerful planning agency, did not say how much money would be allocated to the funds.

Investments will focus on electronic and information industries, the biological and pharmaceutical sector and environmental and energy-related projects, the statement said.

The 7 provincial-level governments included in the venture capital scheme are Beijing, Jilin, Shanghai, Anhui, Hunan, Chongqing and Shenzhen.

“The purpose of setting up the funds is to direct capital to invest in competitive high-tech enterprises and to improve their capacity for innovation,” the NDRC said in a statement on its website (www.ndrc.gov.cn). (Reporting by Aileen Wang and Simon Rabinovitch; Editing by Jacqueline Wong)

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Blackstone Shares Experience Pre-Earnings Surge

CHICAGO/NEW YORK (Reuters) - Shares of private equity firm Blackstone Group (BX.N) rose 7.5 percent on Thursday, which options analysts attributed to expectation of positive earnings when the firm reports on Friday, Nov. 6.

Shares rose to $13.87. Still, that is less than recent highs above $17 and the price remains far below the summer 2007 IPO price of $31 a share.

“There are couple of reasons for the Blackstone rally today,” said Joe Kinahan, chief derivatives strategist at TD Ameritrade. “Number one, next week’s earnings are expected to be very good and number two, some positive spillover from Citadel.”

Hedge fund Citadel said earlier on Thursday that it is lifting a ban on redemptions at two of its funds, Wellington and Kensington Global Strategies.

Blackstone manages a variety of funds of hedge funds.

In the options market, traders favored Blackstone call options, contracts granting them the right to buy the shares at a fixed price within a specified time period.

A total of 14,000 calls traded, above its average daily volume of 7,829 contracts and five times the number of puts, according to option analytics firm Trade Alert.

The most active option was the March $16 call strike, which traded 7,225 times and exceeded the number of its contracts outstanding, indicating new positions were initiated, Reuters data showed.

“Investors are looking for companies that have a chance to move up going into their earnings and Blackstone may be one of them,” said William Lefkowitz, options strategist at brokerage firm vFinance Investments.

The company said earlier on Thursday that it will report earnings on Friday, Nov. 6. (Reporting by Doris Frankel in Chicago and Megan Davies in New York; Editing by Gary Hill)

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GrowthWorks Merging with Seamark

WINNIPEG, Manitoba (Reuters) - Seamark Asset Management Ltd (SM.TO) and Growthworks Ltd have agreed to merge and form a mid-sized diversified asset management company, Seamark Chief Executive Brent Barrie said on Thursday.

 

The new company will be called Matrix Asset Management Inc, headed by current Growthworks President and CEO David Levi. Under the agreement, Halifax, Nova Scotia-based Seamark and Growthworks will be subsidiaries of Matrix.

 

The new company will combine Seamark’s investment management services to institutions and high net worth individuals with Growthworks record in venture capital and managing retail mutual funds.

 

The combination will improve profitability for Seamark shareholders and allow for long-term growth, said Stephen Rankin, Seamark’s chairman.

 

Seamark’s lightly traded stock was down 1 Canadian cent at C$1.34 on the Toronto Stock Exchange at midday.

 

($1=$1.07 Canadian) (Reporting by Rod Nickel)

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Not All Apollo Fees Were Created Equal

In 2007, CalPERS invested $600 million for around a 9% stake in Apollo Global Management. Per usual, it got help from then-unregistered placement agent ARVCO, which is run by former CalPERS board member Alfred Villalobos.

But this wasn’t a typical Apollo-ARVCO arrangement, in which Apollo would pay ARVCO 1% of the pension system’s capital commitment (above a certain threshold), according to documents released earlier this month by CalPERS. Instead, Apollo paid ARVCO $13.2 million over two installments, which worked out to approximately 2.2 percent.

Not only is this fee unusually high vis-a-vis industry standards, but it also breaks with a tradition of placement agents lowering their commissions for follow-on business with the same investor. Then again, Apollo also kept paying ARVCO to get cash from CalPERS, even after the pension system owned part of Apollo’s management company. There was nothing usual about this business…

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Black Opal Equity Launches

Black Opal Equity has launched as a Jersey City, N.J.-based private equity firm focused on U.S. middle-market businesses in the infrastructure, essential service and government sectors. Managing partner Matthew Day previously focused on infrastructure and essential services investments with Macquarie.

PRESS RELEASE

Black Opal Equity LLC launches today. Black Opal Equity is a unique, privately held investment firm that specializes in acquiring and actively managing established middle-market businesses in the United States.

Black Opal Equity will invest in companies that service, or partner with, the infrastructure, essential service and government sectors in the United States.

Black Opal Equity looks to acquire well-established companies with strong potential for organic growth, typically with annual EBITDA of between $2.5 million and $20 million.

Black Opal Equity is lead by Matthew Day, who has spent much of his career at The Macquarie Group, making private equity acquisitions in the infrastructure service and essential service sectors.

Black Opal Equity’s strategy is to make controlling investments in private companies and to assume an active, day-to-day operational role. As owner-operators Black Opal Equity is able to provide additional management resources as well as growth capital to help develop market-leading enterprises.

Black Opal Equity’s active participation strategy provides a unique liquidity opportunity for business owners looking to remove, or partially remove, themselves from day-to-day operations, as well as for larger businesses looking to divest of non-core divisions.

Black Opal Equity represents the capital and expertise of an accomplished group of institutional and individual investors, entrepreneurs and operators. The team has acquired and grown numerous profitable middle-market businesses, and understands the financial and operational issues faced by owners and managers of growth companies. Black Opal Equity’s active management strategy demonstrates its high level of commitment to driving its investments to success.

Mr. Stephen Clearman, Managing Partner and Founder of Kinderhook Partners, said: “We are strong believers in the value of the infrastructure service and essential service sectors. We look forward to working with Black Opal to unearth these opportunities and invest into sectors which provide the foundation of US enterprise.”

Matthew Day, Managing Partner of Black Opal Equity, said: “This venture provides a very unique access to infrastructure service and essential service investment opportunities — at a time when the future vision for the infrastructure backbone of America is experiencing a great deal of re-evaluation and re-investment from both the government and private sectors.”

About Black Opal Equity
Black Opal Equity is a unique, privately held investment firm that specializes in acquiring and actively managing established middle-market businesses in the United States. Black Opal Equity represents the capital and expertise of an accomplished group of institutional and individual investors, entrepreneurs and operators.

For more information visit http://www.blackopalequity.com

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Endowments Pulling the Purse Strings

Endowments have always been the mother’s milk of venture capital and private equity funds, typically allocating 11.8% of their portfolio to these assets, as compared with the 8.8% of all institutional investors.

Yet only 33% of endowments have made new PE commitments this year according to a recent survey by Preqin and 35% won’t be making another commitment until 2011.

And if you’re getting revved up about pitching one of the big boy endowments on your latest fund, you may be disappointed.

The study found that 42% of endowments with over $750 million under management were over-allocated to private equity. That’s nearly three times as many over-allocated funds than the endowments with $350 million or less under management.

What’s worse is that expectations for private equity fund performance is surprisingly low: 48% of fund managers expect PE funds to return within four percentage points of a portfolio of public market equities. That’s not exactly a particularly high bar.

You can download the study here.

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