From record dry powder to private debt consolidation and from hedge fund volatility to large ticket deals in India, we provide a round-up of some of the news stories that have got us thinking this week. Please note, some of these sites may require a subscription to view the article.
DE Shaw: inside Manhattan’s ‘Silicon Valley’ hedge fund
DE Shaw is one of the hedge fund industry’s biggest players, managing over $50bn in assets. For the wider investment industry, which is trying to reinvent itself for the 21st century, DE Shaw has evolved dramatically from the algorithmic, computer-driven ‘quantitative’ trading it helped pioneer in the 1980s. It is now a leader in combining quantitative investing with traditional, ’fundamental’ strategies driven by humans, such as stock-picking. This symbiosis has been dubbed ‘quantamental' by asset managers now following suit.
Too close to the Son
Masayoshi Son, a Japanese tycoon, broke all the rules of investing by setting up a new vehicle to back tech firms. The Vision Fund was unusual in several ways; worth $100bn, it was enormous. On top of this, some $45bn of that capital came from Muhammad bin Salman, Saudi Arabia’s crown prince, who contributed via the kingdom’s sovereign wealth fund. The fund also took risks on trendy unicorns, unlisted firms worth over a billion dollars, such as Uber. The most unusual aspect? Mr. Son has almost complete control of the vehicle’s direction.
Source: The Economist
Private equity clients turn to co-investments to reduce costs
The majority of investors in private equity funds expect to buy a stake in companies alongside private equity firms as they look to reduce the cost of investment in funds. Some 96% of 166 LPs said they expect to increase or maintain allocations to co-investments. Institutional investors, including large pension funds and sovereign wealth funds, have been busy competing with buyout firms for direct investments or co-investment.
Source: Financial News
Opinion Wealth Management: Do alternatives deserve a place in your portfolio?
As volatility stalks world equity markets, wealth managers look to alternatives. Hedge funds, commodities and asset-backed lending can all protect portfolios from what Iain Tait, partner at London & Capital, deems not so much the Trump contradiction as “the great Powell U-turn.”
Consumer giants double down on venture capital
Big consumer companies more than doubled their bets on venture capital last year, but investors should not count on venture capital-style returns as corporate buyers tend to lay down terms that stack the odds against them. In 2018, food and beverage companies invested more than $1bn in start-ups, up from $460mn the previous year.
Source: Wall Street Journal
Private equity and venture capital investments in India at $20.5bn in 2018, says report
Private equity & venture capital investments in the country stood at $21bn across 786 transactions in 2018 on account of tech-enabled start-ups, e-commerce and information-technology-enabled services, according to a report by Grant Thornton. The funding in 2018 was the same as the investment in the preceding year, the assurance, tax and advisory firm said.
China Synergy Fund signs first buyout deal in France
China Synergy Fund, co-managed by CICC Capital and TPG, has entered into an exclusivity agreement with Impala to acquire Electropoli, a leading provider of surface-treatment services in Europe – notably for the automotive industry. Former French Prime Minister Jean-Pierre Raffarin, President of Silk Road Fund Wang Yanzhi, and CICC UK CEO Xia Xinhan attended the signing ceremony and gave speeches. China Synergy Fund has co-led this investment with Trail Capital, a Paris-based European private equity firm.
Source: Private Equity Wire
Former KKR infrastructure boss raises €500mn for debut fund
A new firm set up by the former global co-head of KKR's infrastructure team has raised more than €500mn for its debut fund. The firm, Asterion Industrial Partners, reported last week that it has hired another former KKR deal-maker as a partner. It also announced its first deal, a stake in French utility group Proxiserve. Asterion is pitching its new fund at a time of strong investor appetite for infrastructure funds. Globally, infrastructure firms raised a record $90b in 2018, up from $75bn the year before.
Source: Private Equity News
Hedge funds experience worst February for 10 years
The global hedge fund industry witnessed its first net monthly inflows in six months during February, with investors pouring an estimated $1.6bn into the asset class. However, February 2019 was the worst February for hedge fund flows in the past 10 years; February has typically been the most positive month of the year for net inflows, averaging $17bn per February over the past decade. Lacklustre hedge fund performance during 2018 has been central in explaining this loss of confidence in the sector.
Source: Funds Europe