Originally founded by the State of New York Comptroller’s office in 1999, New York’s In-State Private Equity Program has certainly made an impact on the state’s best and brightest new businesses.1 Since its creation, the program has intended to support native New York businesses while also generating hopefully solid returns for the state.2 Historically, and…
Tag: Private Equity
REITs v. Private Equity Real Estate
For institutional investors such as public pensions or insurance companies, real estate can play an important part of an investment portfolio. As an asset class, real estate has several qualities that make it an attractive alternative to more traditional investments like stocks or bonds. Real estate can generate attractive current income yields, and as a…
Conflict of Interests in Private Equity Funds
Until recently, the SEC’s Division of Enforcement focused its enforcement efforts on hedge fund managers who breached their fiduciary duties to clients or engaged in other types of fraudulent conduct. However, the growth of the private equity industry has not gone unnoticed by the SEC, and there have been a wave of enforcement actions against…
Strategic Deregulation: Potential Impacts of Allowing Foreign Private Equity Fundraising in China
How the Chinese government chooses to open up sectors of its financial industry will dictate the returns that investors may receive. Recent deregulation is beneficial because it affords Chinese investors an alternative avenue to invest savings, but significant hurdles remain before domestic private equity (PE) funds will be able to reinvest in domestic startups. The…
PE Firms Managing Tax Rates: Is the Management Fee Waiver Legal?
Private equity firms are no strangers to controversy when it comes to their compensation arrangements. In the most recent presidential election, Mitt Romney and the entire private equity industry came under intense scrutiny from both the electorate and politicians for the tax rate paid on carried interest. Carried interest is taxed at the capital gains…
Zombies of the Private Equity Industry Pt. I
Private equity funds have begun to slowly show the positive results of fundraising efforts – the capital raised in 2013 is up 20% compared to what was raised in the same period in 2012.1 Although the results of industry fundraising are improving, the amount of time needed to raise those funds is continuing to grow….
Potential Change in Private Equity Manager’s Compensation Structure
Carried interest: “a share of any profits that the general partners of private equity and hedge funds receive as compensation, despite not contributing any initial funds. This method of compensation seeks to motivate the general partner (fund manager) to work toward improving the fund’s performance.”1 For private equity managers, this profit is usually taxed as…
Trends in Healthcare Investment
Historically, healthcare has been an attractive area for private equity investment due to strong returns and low default rates.1 In the future, it should remain attractive and continue to be a stable sector for investment. It is unlikely there will be any decrease in the demand for healthcare in the near future, especially with America’s…
A Flash of Light in a Dark Holding Environment? Apollo’s Resuscitation of the Quick Flip
The peak purchase prices private equity firms secured immediately prior to the financial crisis have left many firms stuck with poor exit options after portfolio valuations plunged in the aftermath of the crisis. The decrease in portfolio valuations resulted in increased holding times across the private equity industry as profitable exit options disappeared.1 For example,…
Private Equity Funds and the Use of Group Annuity Contracts to De-Risk the Pension Obligations of Portfolio Companies
Private equity firms acquiring portfolio companies with defined benefit pension schemes often overlook the financial risks associated with these funds.1 For private equity firms, the opportunity to realize additional value through efficient risk management of the pension fund by de-risking is an important consideration facilitated by the passage of the Pension Protection Act of 2006…