Erin Griffith
Oak Investment Partners is confident it will close on $1.5 billion for its eighth thirteenth venture capital fund in the coming weeks, a source tells peHUB. At $1.5 billion, the fund would be a significant drop from its prior pool of capital, a $2.56 billion fund that closed in 2006.
That even an established venture firm like Oak Investment Partners would lower its fund size during the current environment is no surprise. Recently, fellow venture capital giant NEA cut its fund target from $3.5 billion to $2.5 billion because of difficulties in the market. Moreover, Oak recently took a beating from VentureBeat, which said some of its investments looked “extremely risky, if not ridiculously so.” The article named HuffingtonPost, Babystyle, Visto
Salt Lake City's vSpring Capital may be a venture firm, but its largest-ever investment looks a lot like a buyout. The firm has backed Sparxent, a comprehensive IT provider, to enact an aggressive roll-up strategy that will increase its revenue run rate to $100 million over the next six months.
This afternoon, the company announced its third acquisition, XAware, a real-time data integration open source company. Prior to that, it acquired two companies called NetworkD Corporation and Arbyte Group. The company plans to announce more deals in May and June. As the Sparxent's only source of outside cash, vSpring Capital provides the company with
Updated with comments from Ropes & Gray below.
A bill was introduced in the Senate last week that would require hedge funds to register with the SEC. On closer look, we realize it applies to more than just hedge funds, as pointed out by our friends at Ropes and Gray. If passed, the bill also would regulate and require disclosure from all PE and VC funds with $50 million or more in assets.
Of course, Schoolhouse Rock has taught us that a bill is just a bill (and not a law). This proposal, introduced by Senators Carl Levin (D – Michigan) and Chuck Grassley (R – Iowa), could go through a lot of changes before it actually gets passed. But as is, it's bad news for those of us who like our private equity private.*
It means that buyout funds will have to disclose the names and addresses of all of their investors and the value of the assets in each of their funds. Likewise, the registration would require
It's only natural to compare and contrast the dotcom bubble of the late ‘90s and the PE bubble of recent years, especially since the latter has more than officially burst.
So, with some input help from Dan, I've broken down a few of the similarities. It's anecdotal, it's unscientific, it's subjective, and it's full of sweeping generalizations, but something tells me it's not too far off the mark.
Forget everything you’ve read about secondary prices, as it is “at worst stale, at best a fantasy,” according to a study released today by secondary intermediary Cogent Partners. (Download after the jump)
The findings are disheartening for any hopeful investor with stakes in the market and very exciting for buyers of distressed LP stakes. The average high bid for buyout and VC secondary assets declined to 61% of NAV in the second half of 2008, compared with the first half, the study says.
Notably, the drop marks the lowest level for secondary prices since 2003, since it’s on the heels of an 84.7% decline in the first half of 2008.
Well, it’s over. The year two thousand eight was wrought with bummers, busts, breakdowns and bad news for private equity, yet most of you managed to survive. For our part, peHUB emerged relatively unscathed, thanks to our loyal readers. (really, thanks!)
To close out the year with a self-indulgent bang, we’ve unlocked our top ten most popular stories from the archives. Enjoy reminiscing after the jump, and have a Happy New Year!
Ever wonder what your industry peers think of their bosses, or what kinda money they expect to make? Well Semaphore, a Boston-based advisory firm, does.
The firm launched an informal survey to cover the rarely asked questions, like, how confident are you in your competitors, and do I expect to make more, less, or the same amount of money in 2009?
The firm has already provided peHUB with a few preliminary results, such as, 55% of respondents predict their personal income to rise in 2009, while only 20% believe it will fall. Meanwhile 35% of respondents lack confidence in the private equity industry. (The firm didn't specify how many out of the 3,000 asked have taken the survey thus far.)
You can take the two-minute survey here, and check back at peHUB for more results:
This is the time of year when PR machines roll out their best pundits to pontificate on The Future. I'm not sure what qualifies one to predict the unknown, but 2008 was certainly more unpredictable than years past, reminding us of just how futile those prophecies are.
In light of the Economists' recent apology for being way off on last year's economic predictions ("About 2008: sorry."), I've rounded up some other 2008 forecasts for private equity, lending, fundraising and even venture capital. I think they serve as a nice a measuring stick for how seriously to take the current predictions for 2009: With a giant grain of salt.
"The Lending and M&A Markets Will Return In The Second Half of '08"
This prediction wins the most erroneously off the mark award. I saw one report that even predicted $10 billion deals by the end of the year. To be fair, no one could have foreseen what happened in September (except, say, Peter Schiff). It could even be argued that things were starting to look positive, or at least flat, leading up to Lehman.
Surprisingly, PE pros were beat out of the biggest breadwinner title by the partners at the big VC firms. The bonuses are lower, but the base is higher. However, this study excludes the likes of Henry Kravis and Steve Schwarzman, since their firms manage more than $5 billion. Click to see the breakdown.
It doesn't feel so good to be a banker these days, but damn it feels good to run a portfolio company. CEOs in charge of companies that LBO'd in 2006 took home hefty performance-based salaries in 2007. The biggest breadwinners, including Travelport's Jeff Clarke and GMAC's Eric Feldstein, are listed below.
That trend mirrors the compensation of PE pros. Despite taking hits from the credit crunch, PE compensation managed to increase, albeit mildly. Glocap and Thomson Reuters' 2009 Private Equity Compensation Report shows that total cash compensation rose for PE partners around 1% for growth/equity firms, 3% for mega-buyout firms and declined by 2% for firms with less than $300 million AUM. The increases and decreases were echoed at VC firms and funds of funds.
But these increases are nothing compared to years past. According to the report's executive summary:
Compared to last year when there were cases of double-digit increases at mega-funds, this year there was only one instance (Associates) where compensation rose more than 5%.
The other notable change is the increased distribution of carry