The global economy is taking its toll on private equity. A story in DealBook today highlights Dealogic stats that show that in the first half of 2007, private equity accounted for 18 percent of takeover volume globally, while today that figure is at 7 percent. The blog warns that the sector’s future is dim. The problems are myriad:
One of the industry’s biggest problems is that it has too much money to invest. According to Preqin, private equity firms had at the end of last year about $900 billion worth of “dry powder,” or money that they raised mostly before the financial crisis and still needed to invest. At current takeover rates, this would take almost a decade.
The story continues to explain that deals today are pricier and fewer, as sellers are reluctant to unload assets in a depressed economy, and credit tends to come at a premium. Private equity’s future is questionable, as it, too, struggles to unload companies and the IPO market is shaky.
One of Symphony Financial’s hedge funds has returned 16 percent through April this year and is looking to raise $1 billion. [Bloomberg]
London-based hedge fund Winton Capital is opening a Zurich office for a new $29 billion hedge fund to lure scientists. [MarketWatch]
India approved Morgan Stanley’s plans to expand its wealth management and corporate advisory businesses there. [Economic Times]
BofA whistleblower Kyle Lagow was awarded a $14.5 million reward for calling out Countrywide’s inflating of loan appraisals. [Reuters]
Morningstar released some sobering news about the alternative mutual fund space. [On Wall Street]
Rothchild’s RIT Capital will buy a minority stake in Rockefeller Financial Services. [NY Times]
Russia’s Sberbank sold half of its holdings acquired during the crisis for more than $1 billion. [Bloomberg]
Middle East start-ups attract attention from global venture capital firms. [Businessweek]
Italy’s UniCredit is shrinking its cash equity business in Central and Eastern Europe. [Businessweek]
The $7 billion Swiss hedge fund EIM is in talks with three potential buyers. [Financial Times]