April 2010 Issue

The Shanghai government is to introduce a pilot scheme allowing the conversion of up to 50% of of an RMB fund's value from foreign currency, removing one of the biggest hurdles facing foreign investors seeking access to China's private equity market.

The European mid-market private equity firm said it has discovered evidence that UK pharmaceutical company Goldshield, which HgCapital acquired in January, may have understated its profits for several years prior to the purchase.

The UK’s Financial Services Authority is introducing a new vehicle that will allow retail consumers to invest in alternative investment funds, although managers of such funds should be prepared to undertake ongoing due diligence regarding valuation policies and the use of third party custodians at the underlying funds.

While the Financial Accounting Standards Board is expected to call for bank loans to be marked to market values, the proposal would mainly impact the small and dwindling number of private equity firms looking to invest in banks.

The private equity giant, which is preparing to list on the New York Stock Exchange, has initiated a search for a permanent replacement for chief financial officer Kenneth Vecchione, who resigned his duties in January and will leave the firm by the end of this month.

A recent bill introduced by US banking committee chairman Christopher Dodd maintains previous SEC registration exemptions by the Senate for private equity and venture capital funds, but could also lead to multiple state regulator oversight for smaller firms.

While anti-bribery concerns have not historically been an major issue for private equity funds making acquisitions in the UK, a new law likely to come into effect later this year will make such due diligence a higher priority.

Debate by members of the EU Economic and Financial Affairs Council on stringent regulations for EU fund managers scheduled for 16 March has been temporarily cancelled.

In a registration filing for the NYSE, Kohlberg Kravis Roberts said its $550 million E2 annex fund is taking the unusual step of not charging a management fee and only returning carried interest to the GP after any losses, costs and expenses are taken out of the fund’s profits.

With the private equity fund of funds manager successfully undertaking the rigorous and expensive Type I and II examinations, more firms may have to follow Adveq’s lead as LPs seek greater transparency and reassurance.

The CFO of Adveq describes the process of going through an expensive and time-consuming SAS 70 audit.

The company's decision to re-start talks over the planned closure of a plant in Ohio has nothing to do with recent pressure on Permira from two LPs.

The mega-firm has added a process by which it will analyse potential investments for ways to cut costs through environmental enhancements.

Richard Hurwitz joined Sun Capital in 2005 and was integral in helping the firm raise its $6bn fifth fund. The firm shrunk the fund by $1bn last year.

The KKR-spinout is looking to sign up state pensions to raise at least $1bn for a bank holding company that will buy failed financial institutions.

Susan Healy, a veteran of Babcock & Brown and The Carlyle Group, assumed the position effective this month. In related news, First Reserve hired Chris Pieterson of CP Eaton as vice president in investor relations and co-investment in the firm’s London office.

Kohlberg Kravis Roberts has hired Abhijit Sen from Citigroup as chief financial officer and chief administrative officer for its India operations.

Michael Nobrega of the Ontario Municipal Employees’ Retirement System explains why his new “investment alliance” doesn’t need to charge carried interest to align incentives.

Representative Sander Levin, a longtime advocate of taxing carried interest as ordinary income, has been appointed chairman of an influential US House of Representatives Committee.

Scarce carry and firm evolution are prompting new approaches to compensation at private equity firms.

The two firms cited changes to the tax status of carried interest and the possibility of having to register with the SEC as investment advisors as threats to their businesses.

These days LPs want to know more about where their management fee is going. Will C-suite expense accounts and other perks come under scrutiny?

PJ Viscio of Duff & Phelps discusses the correct way to value a limited partner interest, under the latest clarifications from the Financial Standards Accounting Board.