Leadership Outlook— A Global Perspective for the Private Equity Market

While not always explicitly quantifiable in terms of successes and disappointments, the private equity industry is a critical bellwether for the financial markets and the economy as a whole. With reports suggesting there is well over a half trillion dollars of “dry powder” yet to be invested and with a time horizon for investments that typically extends from two to five years, many are watching this closely held investment community to see how it responds, and, it is hoped, catalyzes activity in the investment markets. In turn, the private equity industry must look to the limited partners who fund their investments to get a read on the supply and demand for investment dollars. In short, all sides are closely watching the others

Sudanese group to set up $1bn agri equity fund

Kenana Sugar Company, a leading Sudanese sugar company, has signed an agreement with Egypt's Beltone Financials to set up a $1 billion private equity fund management company for agriculture projects.

The joint venture will be the first of its kind in Sudan that will focus on agro industry projects in the country and the Middle East and North Africa region.

The joint venture represents a breakthrough in Kenana's efforts to secure funds to finance the grand sugar plan and is in line with Kenana's role in promoting high-potential agricultural initiatives of the National Agricultural Revival Program, said a top official.

Super Fund may put $60m into VC market

The New Zealand Super Fund is considering investing $30m to $60m in New Zealand private equity funds that provide expansion finance to young firms. The move has been heralded as a potential shot in the arm for the venture capital market and technology start-ups.

Venture capital firm Endeavour is among the fund managers that have responded to a request for proposal issued by the Super Fund. Chairman Neville Jordan hopes to find out next month whether its bid has been successful.

VC fundraising is back to 1990s

Venture capital fundraising is back to its pre-Internet boom days, but not in a good way.

According to statistics released Monday by Thomson Reuters and the National Venture Capital Association, the once booming asset class saw the fewest new funds being raised since 1994 (when AOL was fighting things out with GEnie, Prodigy and CompuServe to provide dial-up Internet services to the masses) while total new capital put under management was the lowest since 2003.

In the third quarter of 2009, only 17 new funds closed with a meager $1.54 billion, the lowest level in the last 15 years. Year-to-date, the industry has raised $8.87 billion, indicating it would take a miracle to even come close to the $28.6 billion raised for all of 2008.

Private Equity Interviews In 3,000 Words

The Format Of Private Equity Interviews

They tend to be very similar to investment banking interviews – generally a phone screen or initial in-person screening interview, followed by a “superday” where you meet with a good portion of the Associates, Principals and Partners at the firm.

The difference is that the interview process goes beyond that – you can have multiple interviews with the same people, and you usually have to do some sort of Case Study, either in advance or on the spot, which you then present to a group at the firm.

Beyond just the Case Study, you will also typically be tested on Leveraged Buyout modeling, either on the spot at your interview or as part of the Case Study.

You should also keep in mind that 99% of PE firms are smaller than investment banks and do not need nearly as many people. Thus they can afford to be much more selective about new hires. Banks, by contrast, will tend to be less disciplined with recruitment.

PE Breakdown 4Q 2009

Year to date, there have been 654 private equity deals and $33 billion in disclosed deal amounts, a figure that is roughly 60% less than the 1,532 deals closed in the first three quarters of 2008. The most recent quarter saw not only fewer deals done -- 201 were closed -- but also much smaller deals in size, totaling just $7 billion in disclosed deal amounts. These results continue
the downward trend initiated almost 2 years ago.

While investment activity continues at a significantly slower pace, the decline appears to be leveling off, indicating that the bottom may have been attained or is near. A number of other factors, including an increase in newly announced deals and a steady rise in the median deal amount over the last year, provide positive indications that a change in direction may be occurring.

Private Equity still on M&A sidelines

The recent wave of mergers and acquisition activity has seen investment-grade global corporations taking the lead while private equity groups remain on the sidelines.

In the first nine months of 2009, worldwide M&A amounted to almost $1,500bn, according to Thomson Reuters - a drop of 38 per cent from the previous year. Private equity groups made $72bn in acquisitions - a 67 per cent drop.

This reflects the reluctance of banks to supply private equity firms with cheap, flexible debt and the highly liquid state of many leading global corporations.