Dan Primack

The Senate today takes up the carried interest taxation issue, which means it's time for another industry study about how increasing taxes on PE partnerships will cost the nation fortune and jobs (last part emphasized, since the relevant legislative language is part of a jobs bill). This one comes from the Private Equity Council, which argues that each "one percentage point increase in the effective tax rate on private equity investment is associated with a $1.8 billion decline in annual private equity investment." The study (download here) claims to have "detrended" macro-economic changes, in order to make tax rate changes the most significant variable. It also emphasizes that those $1.8 billion decreases are relative to expected private equity ebbs and flows (i.e., it does not necessarily mean that a 1% change today results in a $1.8b decrease from current levels -- but rather a $1.8b decrease from what the level otherwise would be).

Yesterday I spent some time on the phone with Alex Bangash and Jonathan LaCrosse, who recently launched a new online private equity marketplace called Trusted Insight. The idea is to serve as a sort of LinkedIn for institutional investors, in which they can anonymously offer to buy or sell alternative investment funds and portfolio companies. Here’s how it might work: Imagine I’m an endowment manager looking for some exposure to an early-stage VC fund focused on Brazil. I become a member (after being verified), and type in my parameters. If any such funds are being offered in the system, they will pop up with as much information as the seller wants to disclose. I then “contact” the seller (whose identity I still do not know), who then chooses whether or not to reply (if the seller replies, it would identify itself).

The value of global private equity sales has topped the value of private equity purchases so far this year, according to data compiled by our Thomson Reuters colleagues. It's the first time that sellside volume ($67.2b) has topped buyside volume ($64.1b) since 1994, and was aided by today's announced $4 billion sale of Talecris Biotherapeutics to Spain-based Grifols. The number of purchases, however, continues to outweigh the number of exits. Overall, both buyside and sellside activity is up in 2010 over last year -- by 132% and 174%, respectively.

Big news from the LP world, as we’ve learned that the $74 billion Washington State Investment Board has chosen Hamilton Lane as its new private equity consultant. The pension system has around $13.5 billion in private equity assets, and had spent the past five years using Capital Dynamics (which, in turn, had taken over for Pacific Corporate Group).

* Brad Feld: Venture capital as a produce supplier * Clay Shirkey: Does the Internet make you smarter? * The New York Times fights back against Foursquare and Yelp * Morning Call: U.S. futures point lower, London falls early, European shares retreat and the Nikkei loses nearly 4%. * How pension funds exploit credit default swaps * Today in carried interest: James Robinson says populist blather is approaching high-water mark (remember Jim, I was blathering at the low-water mark) and the Economix blog weighs in. * 10 states with the highest % of residents who work for the government (much more red than blue...) * On Thursday, a Stifel Nicolaus analyst said that American Capital was risking bankruptcy. On Friday, it looked like his note may have changed the company's fortunes.

Raising a new fund over the past two years has been hard. Raising a first-time fund has been even harder. And raising a first-time fund formed just before the Lehman Brothers meltdown has been harder still. That's the uphill battle faced by Staley Capital, a Boston-area firm formed in August 2008 to focus on the business services space. Staley put its formal fundraising plans on hold, and used a special purpose vehicle to invest an undisclosed amount in Chicago-based marketing agency Aspen Marketing Services.

I don’t have any official responsibilities here at SuperReturn, but did agree to “anchor” a handful of video interviews that will be posted at the conference website (and probably on YouTube). Just completed one with Brooks Zug, senior managing director of HarbourVest Partners, who gave this morning’s keynote address. A few takeaways from the interview: […]

For every private equity firm running low on uncommitted capital, there apparently are dozens that have dry powder pouring out of their pockets. That was the message yesterday from Andrea Auerbach, a managing director with Cambridge Associates, in a presentation at the SuperReturn US conference. She said that Cambridge puts the current private equity overhang at approximately $425 billion, which is 3.5x higher than the overhang at this time in 2000. Moreover, that mammoth figure represents 54% of all capital commitments made between 2004 and 2009. Over 85% of the $425 billion is in funds larger than $1 billion, including 48% in funds larger than $5 billion.

The NY Times today reports that the SEC is seeking to bar Steve Rattner from the securities biz for up to three years, based on his connection to the New York pay-to-play scandal. It also says Rattner is “fiercely” resisting the suspension, as is his M.O. What’s fascinating (to me) here is that Rattner still hasn’t been charged with anything. Not by the SEC nor by New York AG Andrew Cuomo. Both the SEC and Cuomo previously sued Rattner’s former firm – Quadrangle Group – for actions taken while he was still a partner, effectively alleging that Rattner was the bad actor (Quadrangle has since settled). Isn’t the next logical step a suit against Rattner himself? If not, why not? Cuomo may have given Rattner immunity from criminal prosecution (as reported), but not from civil prosecution. Is Rattner simply tougher to scare than Quadrangle, Carlyle Group, etc?

Three years after first threatening to do so, the House of Representatives today voted to change the tax treatment of carried interest. But before you despair or celebrate — depending on your ideological persuasion — please realize that this vote is kind of like the first goal of a hockey game. It matters, but there’s […]