Political capital

Private equity's biggest donors

Princess floats on Frankfurt
Partners Group has successfully restructured Princess Private Equity and floated it on the Frankfurt Stock Exchange after a resounding majority of Princess convertible bondholders approved the mandatory early conversion into shares. Princess is an investment holding company founded in 1999 that invests in private equity and private debt investments. It raised $700 million in 1999 through the issue of zero coupon convertible bonds due 2010. Since its inception, Princess has invested in over 100 private equity funds representing more than 1,800 companies. Last month, with 97 percent of the votes cast, bondholders approved a comprehensive restructuring of Princess including the mandatory early conversion of the convertible bonds into shares. A source familiar with the vote said it had been triggered by insurer Swiss Re's reluctance to sanction new investments from the capital returned by an increasingly mature portfolio. Swiss Re had originally provided an insurance wrapper for the fund offering Princess's bondholders a capital protection guarantee.

Rubenstein calls for improved communication
David Rubenstein, co-founder of The Carlyle Group, joined the chorus of buyout executives calling for better communication from the industry both in developed and in emerging private equity markets. Speaking at the packed Emerging Markets Private Equity Forum co-hosted by Private Equity International and trade association EMPEA, Rubenstein said the developed and emerging markets managers were united in their need to change the way their activity was perceived, although for different reasons. In his keynote speech Rubenstein said emerging markets managers needed to overcome prejudice and to demonstrate real commercial returns were possible. He said investors underestimated the size of the opportunity in emerging markets. They risked missing out on the kind of growth that Japan enjoyed in rising from the wreckage of World War Two to become the second largest global economy.

Investcorp lists in London
Investcorp, the Bahrain-quoted alternatives group, completed its placing last month of $420 million global depository receipts on the London Stock Exchange at an offer price of $29 per receipt. It gives Investcorp a market capitalization of approximately $2.1 billion and should help raise the firm's profile in Europe, one of its stated aims. Investcorp's common shares have a primary listing on the Bahrain Stock Exchange, albeit with limited trading, and closed at a price of $2,360 per share on 4 December 2006. The Bahrain price is expected to converge with the trading price established in London. The receipts were placed with a broad range of institutional investors across the UK, continental Europe and the US. Conditional dealings started under the trading symbol IVC.

Club deals raise disclosure issues
Private equity firms that participated in syndicated deals should be mindful that such transactions raise issues surrounding what information can be shared with potential co-investors, according to a client memo from law firm Weil Gotshal & Manges. The memo recommends that GPs make sure they are able to share information with potential co-investors under terms of the confidentiality agreement. In addition, GPs should check with due diligence advisors before providing diligence reports to co-investors. In most cases, parties to receive such information must sign ?non-reliance? letters, confirming that the report was not prepared for them and they will not rely on it. Even ?teasers? sent out to potential investment partners should be reviewed by target-company management in advance and documented so there is a record of management having signed off on sharing information if the deal does not materialize.