THE ANNUAL REVIEW 2010 - PEI Media
THE ANNUAL REVIEW 2010 - PEI Media
THE ANNUAL REVIEW 2010 - PEI Media
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private equity annual review <strong>2010</strong> pa g e 123<br />
l p r a d a r : y e a r i n re v i e w<br />
Showing their strength<br />
Limited partners have been flexing their muscles and<br />
making demands, according to extracts from <strong>PEI</strong>’s<br />
‘LP Radar’ column. By Christopher Witkosky<br />
c h r i s to p h e r w i t ko s k y<br />
The industry will continue to<br />
see institutions, especially<br />
those with the resources to<br />
build strong in-house teams,<br />
looking for more unique<br />
investment structures<br />
FEBRUARY<br />
US public pensions scale back their commitments<br />
“For the first time ever, the California Public Employees’ Retirement System recently committed<br />
less to a new Blackstone fund than to its predecessor: it committed $500 million compared<br />
to $750 million in 2006. While $500 million is still a huge amount, Blackstone has most likely<br />
received similar treatment from other long-standing LPs. The firm has accordingly lowered<br />
the target for its sixth fund from $20 billion when it first launched to $15 billion in early 2009.<br />
<strong>Media</strong> reports in the last month suggest that Blackstone will cap the fund at $9 billion. Blackstone’s<br />
experience may not spell the end of the ‘big ticket’, but it does suggest that in the new<br />
fundraising reality LP commitments will be smaller and harder to get.”<br />
MARCH<br />
The South American fundraising opportunity<br />
“Brazil has become increasingly friendly to private equity over the last decade. The country’s<br />
huge pension system is authorised to invest in private equity, but the pensions demand more<br />
control than many GPs are comfortable with, including having veto rights over deal decisions.<br />
This has kept foreign GPs from targeting Brazil for capital. GPs have expressed concerns that<br />
the major Brazilian pensions may end up suffering from backing under-qualified managers, the<br />
only managers willing to consent to LP controls.”<br />
APRIL<br />
OPERS wades in over Hugo Boss<br />
“The Ohio Public Employees’ Retirement System, which has about €110 million invested with<br />
London-based private equity heavyweight Permira, has threatened to re-think its relationship<br />
with the firm if its portfolio company Hugo Boss doesn’t reconsider closing a production plant<br />
in the city of Brooklyn, Ohio. This is a startling show of force on the part of the pension and,<br />
in an era when LPs are increasingly becoming more aggressive in their interactions with fund<br />
managers, should be of concern to GPs. Like many other businesses, private equity-backed<br />
companies have needed to cut costs through the downturn, but the Ohio situation shows the<br />
decision may not be an easy one when it involves killing jobs in the backyards of important LPs.”<br />
MAY<br />
The LPs’ desire for directs<br />
“GPs are structuring these accounts at just the right time, as more and more LPs are looking for<br />
opportunities to co-invest alongside trusted GPs. The industry will continue to see institutions,<br />
especially those with the resources to build strong in-house teams, looking for more unique<br />
investment structures where they can have more control over investment decisions and pay