Sunday, January 25, 2009

The State of Global PEU's

Emirates Business reported the private equity sector will enter a "survival of the fittest" phase. Money flowed to the already wealthy Gulf States for private investment. The article stated:

The Carlyle Group was one of the first to set office in the region and is actively looking at investment avenues in many of the regions own companies.

It happens a Carlyle co-founder chairs the World Economic Council effort to redesign the global financial system. Private equity underwriters (PEU's) stand to come out on top, i.e. stay off the regulatory radar. Why might they warrant some oversight? An expert said:

"Plus all those bankers from Lehman, Merrill and others being laid off will end up starting hedge funds or private equity funds, so expect to see further increases in the number of private equity funds"
Greed and leverage imploded Wall Street. Shifting that talent to unmonitored private equity or hedge funds is not assuring.

The Carlyle Group lost four investment vehicles, Carlyle Capital Corporation, Blue Wave Partners, SemGroup, and Hawaiian Telecom. Investors lost billions.

"An investor who puts money into a private equity fund commits to having that capital stay invested for the life of the fund, typically seven to 10 years. As such, private equity funds are not directly under financial pressure in times of financial turmoil. I would expect private equity funds to continue to stay and operate independently."

With or without oversight? Stay tuned.