Private equity funds raised a record $59 billion for investments in emerging markets in 2007, a 78% increase over 2006, according to the Emerging Markets Private Equity Association (EMPEA).
Washington, D.C.-based EMPEA found that the private equity community has raised $118 billion for emerging-market investments over the past three years, compared to $13 billion from 2001 to 2004.
About 49%, or $28.7 billion, of the capital raised in 2007 went toward opportunities in Asia. Nevertheless, the amounts raised for Central and Eastern Europe grew more than 300% over 2006 levels, followed by a 71% increase in private equity capital for the Middle East and a 66% rise in capital for Latin America.
"2007 was a year of significant milestones for the asset class," said Sarah Alexander, EMPEA president. "What was once a primarily development finance-backed experiment is now, in many emerging markets, a credible, commercial asset class attracting sizable investments from well-known institutional investors, including public pension funds."
The average fund size for those focused on emerging markets also increased to $426 million, compared to $272 million in 2006. Funds concentrating on investments in natural resources, technology, infrastructure and agriculture also grew significantly, especially those focused on India.
"2007 seemed to be the year of infrastructure in some markets," said Alexander. "In India, investments in infrastructure will be vital to ensure that the pace of economic growth can be sustained. For investments in the industrial and agricultural sectors to bear fruit, India needs better roads, better ports and more reliable energy supplies, and private equity funds are gearing up to finance these projects."
In addition, EMPEA finds that dealmaking in emerging markets has not been affected by the credit crunch. "The markets need time to adjust to this new environment, but it's unlikely we'll see the same level of difficulties in getting deals done relative to the US and Western Europe, primarily because use of significant leverage is less prevalent in private equity deals in the emerging markets, and, when debt is used, it can often be provided by local banks that aren't affected by the credit squeeze," said Alexander.
The Only Banker Warren Buffett Likes
Is Goldman Sachs Group’s Byron Trott better than an investment banker?
Warren Buffett seems to think so. You see Buffett famously disdains investment bankers. He even boasts in his latest letter to investors of how his Berkshire Hathaway did its largest cash purchase in the company’s history—the $4.5 billion acquisition of a majority of Marmon Holdings from Chicago’s Pritzker family—while “employing no advisors” and that the price was arrived at “using only Marmon’s financial statements…no nit-picking.”
But that “no advisors” is open to interpretation, as Buffett singles out the participation in the deal of Trott, vice chairman of investment banking and the head of Goldman’s Chicago office and its Midwest banking group. While Trott technically was the Pritzker’s adviser, Buffett relies on him as well: “Byron Trott of Goldman Sachs–whose praises I sang in the 2003 report–facilitated the Marmon transaction. Byron is the rare investment banker who puts himself in his client’s shoes. Charlie and I trust him completely,” referring to Berkshire Vice Chairman Charlie Munger. In 2003, Buffett admitted that Trott “earns his fee.”
In the 2008 letter, Buffett also engaged in a little M&A mea culpa, admitting that his purchase of the Dexter shoe business in 1993–not a Trott deal–for $433 million was based on the evaporation in a few years of a competitive advantage he thought would be more durable. Compounding the error was using 25,203 of Berkshire A shares as currency. “That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business–one now valued at $220 billion–to buy a worthless business,” he writes. It was, he says, his worst deal yet, though he bets he will make more mistakes. His folksy explanation for it all: A line from a Bobby Bare country song: “I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”
Trott, a Midwesterner like Buffett, is one of Goldman’s longest-serving veterans, with more than 25 years at the firm, 14 of them at the partner level. He is one of the few pre-IPO partners still at Goldman. Buffett, 77 years old, is considering four Berkshire Hathaway candidates as successors. Will they need Trott’s deal-making acumen as well?
Warren Buffett seems to think so. You see Buffett famously disdains investment bankers. He even boasts in his latest letter to investors of how his Berkshire Hathaway did its largest cash purchase in the company’s history—the $4.5 billion acquisition of a majority of Marmon Holdings from Chicago’s Pritzker family—while “employing no advisors” and that the price was arrived at “using only Marmon’s financial statements…no nit-picking.”
But that “no advisors” is open to interpretation, as Buffett singles out the participation in the deal of Trott, vice chairman of investment banking and the head of Goldman’s Chicago office and its Midwest banking group. While Trott technically was the Pritzker’s adviser, Buffett relies on him as well: “Byron Trott of Goldman Sachs–whose praises I sang in the 2003 report–facilitated the Marmon transaction. Byron is the rare investment banker who puts himself in his client’s shoes. Charlie and I trust him completely,” referring to Berkshire Vice Chairman Charlie Munger. In 2003, Buffett admitted that Trott “earns his fee.”
In the 2008 letter, Buffett also engaged in a little M&A mea culpa, admitting that his purchase of the Dexter shoe business in 1993–not a Trott deal–for $433 million was based on the evaporation in a few years of a competitive advantage he thought would be more durable. Compounding the error was using 25,203 of Berkshire A shares as currency. “That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6% of a wonderful business–one now valued at $220 billion–to buy a worthless business,” he writes. It was, he says, his worst deal yet, though he bets he will make more mistakes. His folksy explanation for it all: A line from a Bobby Bare country song: “I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”
Trott, a Midwesterner like Buffett, is one of Goldman’s longest-serving veterans, with more than 25 years at the firm, 14 of them at the partner level. He is one of the few pre-IPO partners still at Goldman. Buffett, 77 years old, is considering four Berkshire Hathaway candidates as successors. Will they need Trott’s deal-making acumen as well?
Carlyle Hires UBS's Sarkozy to Lead Financial Unit
Carlyle Group, the Washington-based private-equity firm with $76 billion under management, hired UBS AG banker Olivier Sarkozy as co-head of financial-services investments.
Sarkozy, the half-brother of French President Nicolas Sarkozy, has been at UBS since 2003 and two years ago was named joint global head of the Zurich-based bank's financial institutions group. He will continue to work in New York, Carlyle said in an e-mailed statement today.
Carlyle, headed by David Rubenstein, started a financial- services group last year and has brought in executives including Sandy Warner, former chairman of New York-based JPMorgan Chase & Co., and David Moffett, ex-finance chief of U.S. Bancorp in Minneapolis. Sarkozy will run the group with David Zwiener, former president of Hartford Financial Services Group Inc.'s property and casualty insurance unit.
Sarkozy, 38, was at Credit Suisse Group prior to joining UBS. He worked on First Union Corp.'s 2001 purchase of Wachovia Corp., a transaction valued at $14.9 billion. He also advised ABN Amro Bank NV on its sale last year of LaSalle Bank to Bank of America Corp.
Carlyle's newly formed group has yet to complete a transaction.
Sarkozy, the half-brother of French President Nicolas Sarkozy, has been at UBS since 2003 and two years ago was named joint global head of the Zurich-based bank's financial institutions group. He will continue to work in New York, Carlyle said in an e-mailed statement today.
Carlyle, headed by David Rubenstein, started a financial- services group last year and has brought in executives including Sandy Warner, former chairman of New York-based JPMorgan Chase & Co., and David Moffett, ex-finance chief of U.S. Bancorp in Minneapolis. Sarkozy will run the group with David Zwiener, former president of Hartford Financial Services Group Inc.'s property and casualty insurance unit.
Sarkozy, 38, was at Credit Suisse Group prior to joining UBS. He worked on First Union Corp.'s 2001 purchase of Wachovia Corp., a transaction valued at $14.9 billion. He also advised ABN Amro Bank NV on its sale last year of LaSalle Bank to Bank of America Corp.
Carlyle's newly formed group has yet to complete a transaction.
Write-downs at a KKR unit
KKR Private Equity Investors, the publicly traded buyout fund of Kohlberg Kravis Roberts & Co., wrote down stakes in seven investments as a slowing economy hurt earnings and declining bond prices eroded the value of holdings, Bloomberg News reported Friday.
The fund marked down its stake in Dutch chip maker NXP by 25 percent and in ProSiebenSat.1 Media, the biggest broadcaster in Germany, by 27 percent, the company, listed in Amsterdam, said Friday. KKR also cut by more than 80 percent the value of its holding in ATU, the German car-repair company it bailed out last week.
"Capital is not nearly as plentiful as it was a year ago and the cost is much higher," Henry Kravis, a co-founder of Kohlberg Kravis, said during a conference call with investors. "It's possible to get deals done in this environment. It just takes more work and a lot of creativity."
Falling bond and loan prices indicate that private equity firms may struggle to profit from their investments, after a record $1.4 trillion of takeovers in 2006 and 2007. A slower U.S. economy is also hurting sales at the companies they own. KKR is raising €7.7 billion, or $11.7 billion, for its biggest European takeover fund.
Publicly traded private equity funds like KKR mark the value of their holdings to market each quarter and disclose the results, unlike traditional private investment partnerships.
The fund marked down its stake in Dutch chip maker NXP by 25 percent and in ProSiebenSat.1 Media, the biggest broadcaster in Germany, by 27 percent, the company, listed in Amsterdam, said Friday. KKR also cut by more than 80 percent the value of its holding in ATU, the German car-repair company it bailed out last week.
"Capital is not nearly as plentiful as it was a year ago and the cost is much higher," Henry Kravis, a co-founder of Kohlberg Kravis, said during a conference call with investors. "It's possible to get deals done in this environment. It just takes more work and a lot of creativity."
Falling bond and loan prices indicate that private equity firms may struggle to profit from their investments, after a record $1.4 trillion of takeovers in 2006 and 2007. A slower U.S. economy is also hurting sales at the companies they own. KKR is raising €7.7 billion, or $11.7 billion, for its biggest European takeover fund.
Publicly traded private equity funds like KKR mark the value of their holdings to market each quarter and disclose the results, unlike traditional private investment partnerships.
China Merchants Bank keen on buying into Visa IPO
China Merchants Bank is interested in buying into a planned U.S. initial public offering of shares by Visa Inc, the world's largest credit card network, but any deal would first need Chinese regulatory approvals, its president Ma Weihua said on Monday.
Merchants Bank, China's top credit card issuer, is also looking for major overseas acquisitions in which it could gain a controlling stake but it has no specific targets at the moment, said Qin Xiao, the bank's chairman.
"When we consider an overseas acquisition, we definitely want to buy a controlling stake or even 100 percent of the company," Qin said.
"However, we know that current U.S. regulations allow us to buy no more than a 20 percent stake (of a financial firm)," he added.
Despite U.S. restrictions, the bank is still interested in buying a portion of shares in Visa's proposed IPO, said Ma, in a move that could bolster the company's business ties with Visa and expand its card services in overseas markets.
Last month, Visa said it may raise up to $18.8 billion in the largest U.S. IPO, despite unsteady financial markets and a global credit crunch that could eat into transaction volumes.
"We are already a member of the Visa network ... We want to make a deal that can bring benefits to our bank," said Ma.
"But whether we can do this depends on Chinese regulations, so we have to seek approvals from the regulators first."
ON THE CARDS
Both executives were speaking to reporters on the sidelines of meetings of the Chinese People's Political Consultative Committee, a body that advises the National People's Congress, or parliament, whose annual session opens on Wednesday.
Merchants Bank had issued more than 20 million credit cards by the end of last year, accounting for about one-third of the domestic market.
Among Chinese lenders, Merchants Bank widely receives top marks from analysts for its retail banking services, partly due to its leading position in card services, although cash is still overwhelmingly preferred for most Chinese retail transactions.
Last month, Shanghai Pudong Development Bank a smaller rival, announced plans for a new share issue that aims to raise about 25 billion yuan ($3.52 billion) to boost its capital base and support rapid lending growth.
But Merchants Bank's Qin said: "We have no need to raise new funds unless we want to make big overseas acquisitions."
Ma said China's policy of monetary tightening would definitely have an impact on the entire banking sector, with demand for loans by Chinese enterprises still very high as Beijing seeks to use macroeconomic controls to cool down its potentially overheating economy.
Ma said his bank would have to obey guidelines and quotas for loan issuance set by China's banking regulator, which may slow its loan growth this year.
Merchants Bank, China's top credit card issuer, is also looking for major overseas acquisitions in which it could gain a controlling stake but it has no specific targets at the moment, said Qin Xiao, the bank's chairman.
"When we consider an overseas acquisition, we definitely want to buy a controlling stake or even 100 percent of the company," Qin said.
"However, we know that current U.S. regulations allow us to buy no more than a 20 percent stake (of a financial firm)," he added.
Despite U.S. restrictions, the bank is still interested in buying a portion of shares in Visa's proposed IPO, said Ma, in a move that could bolster the company's business ties with Visa and expand its card services in overseas markets.
Last month, Visa said it may raise up to $18.8 billion in the largest U.S. IPO, despite unsteady financial markets and a global credit crunch that could eat into transaction volumes.
"We are already a member of the Visa network ... We want to make a deal that can bring benefits to our bank," said Ma.
"But whether we can do this depends on Chinese regulations, so we have to seek approvals from the regulators first."
ON THE CARDS
Both executives were speaking to reporters on the sidelines of meetings of the Chinese People's Political Consultative Committee, a body that advises the National People's Congress, or parliament, whose annual session opens on Wednesday.
Merchants Bank had issued more than 20 million credit cards by the end of last year, accounting for about one-third of the domestic market.
Among Chinese lenders, Merchants Bank widely receives top marks from analysts for its retail banking services, partly due to its leading position in card services, although cash is still overwhelmingly preferred for most Chinese retail transactions.
Last month, Shanghai Pudong Development Bank a smaller rival, announced plans for a new share issue that aims to raise about 25 billion yuan ($3.52 billion) to boost its capital base and support rapid lending growth.
But Merchants Bank's Qin said: "We have no need to raise new funds unless we want to make big overseas acquisitions."
Ma said China's policy of monetary tightening would definitely have an impact on the entire banking sector, with demand for loans by Chinese enterprises still very high as Beijing seeks to use macroeconomic controls to cool down its potentially overheating economy.
Ma said his bank would have to obey guidelines and quotas for loan issuance set by China's banking regulator, which may slow its loan growth this year.
Subscribe to:
Posts (Atom)