Dan Primack

Another week, another survey suggesting that institutional investors plan to increase their exposure to private equity. This one comes from Russell Investments, which finds: Survey respondents in North America expect the current share of private equity in their total portfolios, currently averaging 4.3%, to increase to 6.8% in 2012. Expectations for 2012 are not as robust in either Europe (3.7% share expected) or Japan (2.5%). In Australia, private equity allocations were reported at 3.5% for 2009, with little increase expected in 2012. Respondants also reported expected increases to other forms of alternative assets, including hedge funds, real estate and infrastructure. No mention of venture capital, although it may have been included in the "private equity" category

Small piece of news out of a panel I moderated yesterday at Buyouts Chicago: GTCR co-founder and chairman Bruce Rauner said that his firm is gearing up to raise its tenth fund. I asked if there would be any term changes prompted by new taxes/regulations, and he said "no." The firm closed its ninth fund in October 2006 with $2.75 billion in capital commitments. According to the Washington State Investment Board, that fund was around 45% called down with an IRR of -16%, through the end of 2009. GTCR's seventh and eigth funds were better performers, with respective IRRs of 25.3% and 28.7 percent.

I recently accused limited partners of cognitive dissonance; refusing to invest (much) this year despite acknowledging that the best returns are borne of recessions. But perhaps I was too harsh. Too hasty. Perhaps LPs are sitting on their hands because they recognize that this post-recession is different. Private equity firms typically generate out-sized returns from post-recessionary markets because there is an abundance of bargains, which can be easily exploited. Buy low, sell high. This year, however, valuations rebounded much faster and stronger than anyone expected. So much so, in fact, that some PE pros are concerned that they're trapped inside of a mini-bubble.

My editorial theme this month seems to be the future of private equity, from the perspective of capital availability. Institutional liquidity challenges had already made it tough for firms to raise new funds, and the Volcker Rule and proposed European regulations could take permanent bites out of the limited partner pie. So let me throw one more thing at you: What if public pensions eventually switch from defined benefit plans to defined contribution plans? I know this isn’t happening tomorrow or Saturday, but it will have to happen at some point (even if it takes a state “bankruptcy” to force the issue politically). And, when it does, private equity will lose its single-largest pool of capital.

Lots of chatter today about how AOL is nearing a deal to sell social network Bebo to Criterion Capital Partners, as first disclosed in a (since-deleted) tweet by WSJ reporter Anupreeta Das. Preeta and her colleagues are on the money with this one, and we’ve got a few more nuggets to move the story forward: […]

Mike Bloomberg yesterday addressed the controversy surrounding Steven Rattner, who recently launched a new asset management firm to handle the Mayor’s money (basically the same team that managed it for Rattner’s old firm, Quadrangle Group). More specifically, he defended his “close friend” to the Washington Examiner, saying: “I don’t think he did anything wrong… I happen to think the charge against him is ridiculous.” Then he added this bon mot: “I've always stood up for anybody that works with me who gets attacked by the press.” Two thoughts for you, Mr. Mayor: First, it isn’t just the press that’s attacking your pal, unless his former partners at Quadrangle and Andrew Cuomo recently switched careers. Second, it wasn’t the press that allegedly persuaded a Quadrangle portfolio company (since defunct) to sign a DVD distribution deal for “Chooch,” over the initial objections of portfolio company management….

Ah, the cognitive dissonance of limited partners... A few months back, I moderated a Columbia University panel at which LPs said: (a) The best returns come from investments made during economic trouble; and (b) We're not going to invest much until 2011. No, it wasn't an argument in support of a double-dip recession. It was cowardice trumping intellect. Today we have a new example, courtesy of the Private Equity Barometer, a bi-annual survey of limited partners conducted by Coller Capital (download full study here). It finds that more than half of all limited partners have lifetime returns from private equity of 10% or less. At the same time, more LPs plan to increase their exposure to private equity (20%) than plan to decrease their exposure (13%).

As the Chinese VC/PE markets continue to mature, one of the emerging trends is an inability of foreign firms to hold onto their China-based talent. Among those to have lost senior Chinese dealmakers are Sequoia Capital, Kleiner Perkins and TPG Capital. The question, of course, is why? So I asked Ludvig Nilsson, managing director of […]

The Carlyle Group has lots of different private equity fund strategies, but none would be described as turnaround or special situations. That may be about to change. peHUB has learned that the firm is in talks to hire Rodney Cohen, co-managing partner of Pegasus Capital Advisors. The two sides have not yet reached a final agreement, but sources tell peHUB that they are close. Were Cohen to join, the most likely scenario would be that he'd help Carlyle launch a special situations fund later this year. The firm does have a pair of "Strategic Partners" vehicles, but both of them focus more on debt than on equity.

My weekly video spot for Reuters was about new research showing that the value of global private equity sales has topped the value of private equity purchases so far this year. I'm in New York City for the day, which means my laundry room studio got a breather and I got some make-up (asked for Starchild, but they demurred)...