Hedge funds and Private Equity - PES

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70 And it highlights the comparatively difficult position of venture capital managers in recent years, caused by the ‘bubble’ of 2000, and the wider downturn in the EU economy at that time. Although the top European venture capital funds have performed at a similar level to their US counterparts (where the market is more mature), a wider recovery may take some time because of the longer holding periods necessary for venture investments. Since the 2000 bubble, venture capital managers in Europe, in particular in Europe’s smaller markets, have found it more difficult to raise funds as a result of historic underperformance. This situation is likely to persist until consistent performance is delivered. Taking into consideration the enormous growth in leverage buy-outs of European companies, it is striking at the same time to see the dominance of the US funds, especially their size. They are simply the most powerful funds in the world. Looking at US funds like Texas Pacific Group, Blackstone and KKR, they have together a capacity equalling more than 30 per cent of worldwide equity. Recently, a new study made public the total LBO take-overs worldwide as shown in the table. As the pie chart above shows, buyouts account for by far the largest part of the private equity investments. The buyout markets in Europe have developed substantially and aggressively over the past 25 years. The European market seems to be experiencing its third phase of significant growth, following the waves of buyouts during the latter halves of the 1980s and 1990s. Records have been set in terms of both individual deal size and the total market value of transactions in recent years. From 1996 to 2005 the value of buyouts/buy-ins has experienced a tremendous rise of 445.4 percent points, as shown in the table. Development of LBOs – value of buyouts/buy-ins in EUR mil in Europe Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Index figure 100 156,9 193,1 391,9 326,3 285,8 294,8 287,5 353,0 545,4 Source: CMBOR/Barclays Private Equity/Deloitte, figures taken from http://greywww.uvt.nl:2080/greyfiles/center/2006/doc/70.pdf € millions Number and value of buyouts/buy-ins in Europe. 1996-2005 140000 900 120000 100000 80000 60000 400000 20000 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 850 800 750 700 650 Number of transactions Value of buyouts/buy-ins Number of buyouts/buy-ins
The illustration underlines the LBOs as the dominant financial actor. Together with the vast number of LBO take-overs of EU companies, this is the basis for our engagement in this report. The Private equity rankings below give us a sense of the major players: Private equity rankings By M&A deals (Year to Dec 20 2006) US Value $bn Number Europe Value $bn Number Blackstone 85.3 12 Texas Pacific Bain Capital Partners H. Lee Partners Goldman Sachs Kohlberg Kravis Roberts 27.5 5 81.9 11 3i 25.9 25 74.7 9 53.4 6 51.2 5 AlpInvest Partners Apax Partners Goldman Sachs International 20.8 3 Carlyle 50.0 14 Carlyle 14.9 8 Apollo Management Kohlberg Kravis Roberts Merrill Lynch Cerberus Capital Management Industry total 44.9 7 Cinven 12.4 6 44.5 3 35.9 3 28.6 4 402.6 1,157 Note: Financial Times December 27 2006 Hellman & Friedman Contracted Services Thomas H Lee Partners Industry total Asia- Pacific Texas Pacific Macquarie Bank Allco Equity Partners Value $bn Number 12.0 3 11.3 2 11.1 3 19.7 11 Onex 11.0 1 17.3 3 Carlyle 8.0 6 12.2 3 11.3 1 11.3 1 272.6 1,564 CVC. Capital Partners Kohlberg Kravis Roberts Goldman Sachs Capital Partners Allianz Capital Partners MBK Partners Industry total 7.5 4 5.2 4 4.0 2 3.9 2 1.7 3 48.0 271 Part I – Hedge funds and private equity funds – how they work 71
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HEDGE FUNDS AND PRIVATE EQUITY A CR
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FOREWORD Since the 1980s the financ
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At the same time the PES Group took
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84.57 7 447.586 4789.4785 55 7845 4
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12 The need for long-term investmen
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14 1. Hedge funds and private equit
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16 In a very low interest-rate land
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18 The ECB has highlighted this cro
Page 20 and 21: 20 in the sustainable development o
Page 22 and 23: 22 Coherence, co-responsibility and
Page 24 and 25: 24 Transparency in practise Some ar
Page 26 and 27: 26 Ensuring more and better jobs An
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Page 32 and 33: 32 The first era of capitalism took
Page 34 and 35: 34 1. Hedge funds In the following
Page 36 and 37: 36 Hedge funds have a structure sim
Page 38 and 39: 38 Hedge funds have flourished in a
Page 40 and 41: 40 The European hedge fund industry
Page 42 and 43: 42 Institutional investors Current
Page 44 and 45: 44 - Funds of hedge funds (FOHFs) i
Page 46 and 47: 46 If we assume US mutual fund indu
Page 48 and 49: 48 the hedge funds themselves would
Page 50 and 51: 50 management fees? It is a fact th
Page 52 and 53: 52 These data notwithstanding, seve
Page 54 and 55: 54 1.11. Tendency of crowding Despi
Page 56 and 57: 56 Theory of money: “In modern ec
Page 58 and 59: 58 Country France Italy Spain Subje
Page 60 and 61: 60 Considering single strategy prod
Page 62 and 63: 62 2. Private Equity Funds Private
Page 64 and 65: 64 Buy-outs are typically majority
Page 66 and 67: 66 2.3 The legal frame The investme
Page 68 and 69: 68 What could you do with 72 billio
Page 72 and 73: 72 The figures provide a substantia
Page 74 and 75: 74 2.8 When targeting a company Whe
Page 76 and 77: 76 Domicile of the fund The choice
Page 78 and 79: 78 Specific economic function of Ve
Page 80 and 81: 80 Mortgaging the future to capture
Page 82 and 83: 82 Main conclusions: The total Euro
Page 84 and 85: 84 3. The European response - curre
Page 86 and 87: 86 Article 49 Within the framework
Page 88 and 89: 88 The purpose of this Directive is
Page 90 and 91: 90 As far as the hedge fund and Pri
Page 92 and 93: 92 The following are regarded as se
Page 94 and 95: 94 3. A Member State may entrust ma
Page 96 and 97: 96 Article 93 The Council shall, ac
Page 98 and 99: 98 Primarily, however, society must
Page 101 and 102: Social Europe versus capital market
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Page 105 and 106: as a rule without any influence fro
Page 107 and 108: Here is a quite well known “flow
Page 109 and 110: 2. Decent work and workers’ parti
Page 111 and 112: The pension funds of companies bein
Page 113 and 114: usiness plan for Kion to employee r
Page 115 and 116: The combination of increased indebt
Page 117 and 118: The EU has in the past tried to com
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fulfilment of public service respon
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The importance of Europe’s transi
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4. Employees, pension fund investme
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unit of Tremont Capital Management)
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contractual issues e.g. Lock-in per
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As many jurisdictions require benef
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Expert Group claims - with striking
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The rising number of hedge funds ap
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time peak in 2005.” It is importa
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Box 2: The Amaranth case (2006) In
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gies, size and age. For instance, i
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Box 3: Complex leverage arrangement
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force a hedge fund to default on it
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Private equity - especially in the
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finance infrastructure through long
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84.57 7 447.586 4789.4785 55 7845 4
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154 But if we in Europe - and hopef
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156 2. Market transparency - a comm
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158 Considering the fact that a lar
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160 Furthermore investment banks ar
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162 3.3 Transparency and supervisio
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164 Recently in most European count
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166 The European Commission should
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168 The EC should also create a fra
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170 4. Private Equity Funds - focus
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172 to create incentives for longer
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174 policy are not being met. This
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176 Acquisitions by private equity
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178 5. Our immediate proposals In t
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180 rules on the disclosure of tota
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182 have rules here and we should p
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AA 1. Company description The Autom
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Autoteile Unger 1. Company descript
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Bulgarian Telecommunications Compan
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Deutsche Börse 1. Company descript
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DIS 1. Company description The DIS
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DT-Group 1. Company description DT
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share alternative. At that time the
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Frans Bonhomme 1. Company descripti
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Friedrich Grohe AG 1. Company descr
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their relations with TPG and CSFB a
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Gate Gourmet 1. Company description
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ISS Denmark 1. Company description
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2.2 Debt structure, alteration of c
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References Süddeutsche Zeitung 09.
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2.3 Management policies and shareho
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would have unlocked hidden reserves
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Peguform 1. Company description The
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Picard 1. Company description Picar
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Stork 1. Company description The in
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special members of the board of com
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EUR 5.1 billion private equity fund
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Telecom Italia Group 1. Company des
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2.3 Management policies and shareho
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from the tourism business, which is
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The consequences for jobs in Hambur
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2.4 Corporate governance and econom
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84.57 7 447.586 4789.4785 55 7845 4
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244 Bond A debt investment with whi
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246 Investment vehicle This term is
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248 of a security borrowed by the s
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