It's been said that one of the surest signs of success is emulation. In the case of the UK buyout industry, the returns achieved by the industry seem to be beckoning other types of investors to follow in GPs' wake.
A recent study by the Centre for Management Buy-out Research (CMBOR), a joint venture between Barclays Private Equity and Deloitte at Nottingham University Business School, shows that new entrants to the market are providing UK private equity firms with a new source of competition for larger deals.
?The private equity industry is attracting a number of new kids on the block who believe that they will be able to make the same returns,? said Barclays Private Equity co-head Tom Lamb in a press statement. ?These new entrants are able to gain a foothold because there are virtually no barriers to entry provided they can persuade the banks to lend them shed loads of money.?
In fact, with the help of ?shed loads? of money, private equity ?copycats? made their mark in the UK early on this year, having led 33 percent of £100 million-plus transactions taking place in the market in the first quarter of 2006, according to CMBOR. This figure is a significant increase over the 8 percent level of participation last year, although granted, it remains to be seen whether the participation of copycats in transactions in the rest of 2006 will match the pace of the first quarter.
In fact, many of the firms identified by the CMBOR as copycats would argue vociferously that they are private equity firms. However, the study confirms the trend of financial buyers with nonorthodox structures competing for deals with traditionally structured firms.
Among such transactions that have taken place since 2005 are the following:
Aberdeen finds new space in Manchester
Aberdeen Asset Managers have moved to new offices in Manchester. The new location is at St. James' House on Charlotte Street, according to an announcement. ?Manchester and the North-West remains a key centre for private equity in the UK and the new office demonstrates our continued commitment to the region,? said Hugh Little, managing director of Aberdeen Asset Managers private equity division, in a statement.
Cerberus not liable for GM pension
The Pension Benefit Guaranty Corp will not hold General Motors Acceptance Corp. (GMAC) responsible for employee benefit plans of the auto maker, removing a major hurdle for the sale of GMAC to a consortium led by Cerberus Capital Management. Cerberus, along with Kohlberg Kravis Roberts and Citigroup, is set to buy GMAC from GM for $14 billion (€11 billion). The consortium, which will buy a 51 percent stake in GMAC, received a letter from the PBCG saying the federal pension insurer will not terminate GM's pension plans or transfer any liability for the plan to the GMAC buyers. The high-profile deal includes a $6 billion contribution from New York-based Cerberus.
Korea seeks Lone Star exec extradition
Prosecutors in South Korea are seeking the extradition of US citizen Steven Lee, the former head of Lone Star Funds' Seoul office. Lee has admitted to stealing more than $12 million from Lone Star while in Seoul. The extradition request comes amid a firestorm of controversy surrounding Lone Star's 2003 acquisition of Korea Exchange Bank. Some politicians accuse Lone Star of having improperly secured a below-market price for the bank. In a series of press statements, Lone Star founder John Grayken described his firm as a victim of employee embezzlement. Grayken has also defended his firm's investment in Korea Exchange as entirely above-board.
Listed KKR vehicle launches website
KKR Private Equity Investors, an investment vehicle affiliated with Kohlberg Kravis Roberts and listed on the Euronext Amsterdam exchange, has launched an investor relations website. The site, launched in time to disseminate information about the company's debut quarterly earnings report, is located at www. kkrpei. com. It includes information on share price and trading activity, press releases and a ?frequently asked questions? section about the company's unique ?restricted depository unit? structure. The site also has a webcast functionality so interested parties can listen to conference calls related to earnings. The site lists KKR Private Equity's investor relations contact as Integrated Corporate Relations, a Los Angeles firm. The company was listed earlier this year to surging interest from private equity market participants, who noted KKR's ability to raise $5 billion. The vehicle will commit roughly $2 billion to KKR's new private equity fund, as well as invest in other KKR-affiliated vehicles.
GoldenTree hires new CFO
New York-based private equity real estate firm GoldenTree InSite Partners has hired Patrick Goulding as chief financial officer and director. Goulding previously served as director and head of portfolio finance for ING Clarion, where he also served as CFO of its flagship real estate fund, Clarion Lion Properties Fund. Goulding also spent seven years with Lend Lease, where he worked in real estate investment and development in several positions around the world. Formed last year, GoldenTree InSite is a joint venture between GoldenTree Asset Management, a New York hedge fund, and real estate veterans Tom Shapiro and Josh Pristaw. Last year, the company formed a joint venture to develop a $110 million (€88 million) condominium project near the Hudson River in Jersey City, New Jersey.