10 Ways that Private Equity has Changed Post-Recession

The recession has sure changed the landscape of private equity.

Washington Post:

Ullman: Today, we’re going to talk about the top 10 changes to the private equity industry following the Great Recession. First up is increased regulatory and public scrutiny.

Rubenstein: Following the Great Recession, the government in the United States and governments in other countries looked at private equity and other types of financial industry management and they did toughen up regulation and toughen up oversight. For many smaller firms, that is a difficult burden. For a firm of the size of ours, we can handle [that] regulatory oversight.

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Regulators Overhaul Derivatives Market — With a Caveat

Federal regulators approved new rules on Thursday to shine a light on Wall Street trading, though with a crucial caveat

Ben Protess from NY Times reports that federal regulators approved new rules on Thursday to shine a light on Wall Street trading, but they also softened a crucial aspect of the plan in the face of lobbying pressure from the nation’s biggest banks.

In a long-awaited vote to tackle an essential cause of the 2008 financial crisis, the Commodity Futures Trading Commission voted to adopt an overhaul of the derivatives market, pushing the risky trading from the shadows of Wall Street into the light of trading platforms. For decades, such trading has eluded regulators and the public.

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PE Firms Taking Profits Off the Table

PE Firms Taking Profits Off the Table

The private-equity industry is taking its profits in this market rally.

As some top PE executives have made clear this year, it is time to sell off the fruits of their labor, including some of the biggest deals reached at the boom time.

“It’s almost biblical: there’s a time to reap and there’s a time to sow,” Apollo Global’s Leon Black said last month. “We are harvesting now.”

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Club Med to Be Taken Over by AXA and Chinese Investor

Chinese investor Fosun International and AXA Private Equity will team up with Club Med management to take over the company at $17euro per share.

Reuters reports that Club Mediterranee’s top shareholders plan to take over the French holiday firm in a bid that values it at around 541 million euros ($700 million), to accelerate its shift to fast-growing emerging markets.

Chinese investor Fosun International and AXA Private Equity said on Monday they would team up with management to offer 17 euros a share for the stock they do not already own – a 23 percent premium to Friday’s closing price.

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Can Brazil Start-Ups Succeed Despite Tough Short-Term Outlook?

The consensus among investors and entrepreneurs in Brazil is that the short term will be difficult, but that long-term prospects remain highly favorable.

Brazil’s Internet start-ups were once the darlings of emerging markets, attracting venture capitalists from around the world. But after two-plus years of growth, the sector is facing tougher times, reports Vinod Sreeharsha from NY Times.

Numerous young companies, even those with prominent investors, are struggling to show sustainable profitability despite early rapid growth in revenue. A case in point: Shoes4You, an e-commerce site selling designer footwear, decided to close down last month, despite being backed by the prominent United States investment firms Redpoint Ventures, Accel Partners and Flybridge Capital Partners.

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Paul Tudor Jones Speaks Out About Female Traders

“You will never see as many great women investors or traders as men. Period. End of story,” said billionaire Paul Tudor Jones

Maureen Farrell reports from CNN Money: Leaning in may work for women in the world of tech. But if you’re a woman who wants to balance trading and a family, one hedge fund manager says that’s not possible.

“You will never see as many great women investors or traders as men. Period. End of story,” said billionaire Paul Tudor Jones at the University of Virginia’s spring investing symposium last month.

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Be Ready for Hedge Fund Advertisements

Hedge funds soon will be allowed to advertise their wares to potential clients.

Dan Primack from CNN reports that hedge funds soon will be allowed to advertise their wares to potential clients, thanks to a provision in last year’s JOBS Act (which had no direct relation to actual jobs). As will private equity funds, venture capital funds and other alternative investment vehicles that heretofore were prohibited from general solicitation.

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Is Hedge Fund the Best Investment to Beat the Market?

Evidence suggest hedge funds may be expensive way to trail the market.

For those who take delight in the so-called “smart money” underperforming the “dumb money,” here are some enjoyable new data points that show hedge funds continue to be an overpriced, middling asset class, reports Nick Summers from Bloomberg.

Goldman Sachs’s quarterly report on the industry, which tracks 705 funds with a combined $1.5 trillion of bets on stocks, finds that hedge funds have returned an average of 5 percent in 2013, compared to a 15 percent gain in the Standard & Poor’s 500-stock index. Only 5 percent of the funds beat the S&P, while more than one in eight posted a loss. An added insult is that hedge funds charge their clients huge fees—typically, 2 percent of assets and 20 percent of any gains—for the privilege of investing their money and lagging the market.

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Rue21 Will Go Private in $1.1 Billion Deal

Rue21will sell itself to Apax Partners for about $1.1 billion, including debt, as PE firms continued their pursuit of fashion retailers.

Jennifer Booton from MSN Money reports that Rue21 inked a deal on Thursday, to be acquired by private-equity firm Apax Partners for $1.1 billion in cash — a move it says will deliver “substantial and certain value” as it looks to grow its store base and build out its e-commerce platform.

At $42 a share, the transaction represents a 23% premium to the Warrendale, Pa.-based teen-apparel retailer’s closing price on Wednesday. The deal will return Rue21 to private management.

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Kyobo Life Bids for Fifth-Largest Insurer, ING Life South Korea

South Korea’s third largest insurer, Kyobo Life Insurance, has made a bid for the country’s fifth largest insurer, ING Life South Korea. (Picture from Associated Press)

Joyce Lee from Reuters reports that Kyobo Life Insurance, South Korea’s third-largest insurer, said on Friday it had made a bid for a controlling stake in ING’s South Korean insurance unit, breathing new life into a delayed deal previously valued at roughly $2 billion.

Kyobo, whose investors include Ontario Teachers’ Pension Plan, Singapore sovereign fund GIC GIC.UL and private equity firm Affinity Equity Partners, is set to compete against the country’s second-largest insurer Hanwha Life Insurance Co Ltd, which is expected to submit its own bid, according to a source with direct knowledge of the matter.

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