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North America: June 2001

Hicks Muse to miss target, Willis Stein oversubscribed, more go at Whitney…

Hicks Muse fund may miss target…
US buy-out firm Hicks Muse Tate & Furst may close its fifth fund at just $2bn - well short of its $4.5bn target. The firm blamed a difficult fund-raising climate, according to a report in the Financial Times (7.6.01). However, it said that many of the firm's previous investors, plus a handful of new ones, were thought to be committing to Fund V.

…while Willis Stein is oversubscribed
Chicago-based Willis Stein & Partners announced the successful closing of its latest fund - Willis Stein III - at $1.8bn. The fund was oversubscribed, exceeding its original target size of $1.25bn. Commitments were secured from existing and new investors, making it one of the largest funds to be raised this year. The fund will make investments in US-based mid-market companies, focusing on media, business and financial services, telecommunications and manufacturing sectors. Transaction values will typically be between $100m and $1bn. (15.6.01)

Wells Fargo hit by venture capital losses
US banking giant Wells Fargo announced it is to take a $1.13bn hit in the second quarter of this year - much of it because of venture capital losses. The bank blamed volatile market conditions. It said it had had to reduce gains that it had recognised on its venture capital portfolio in 1999 and 2000. It was still holding onto the stock of some of the companies it had sold, and their value had dropped in recent months. The bank has been in venture capital for 35 years. (8.6.01)

Bad month for JP Morgan Chase
Investment bank JP Morgan Chase reported private equity losses for the year so far, said a report in the Financial Times (7.6.01). Its main losses sprang from investments in the telecoms sector and it is understood that the bank made a loss on its holding in Viatel. JP Morgan was also forced to put a hold on an $800m private equity-backed bond it was planning to launch, according to PrivateEquityCentral.net (15.6.01). Marketing efforts for the Porter Global Private Equity bond were halted to make it more attractive to bond investors.

Whitney suffers more departures
Beleagered US venture firm Whitney & Co was hit by more walk-outs last month as a managing director, Mark Murphy, announced his departure and another managing director, chief operating officer and chief legal officer followed. These were the latest in a series of staff departures, said Venturewire (7.6.01 and 22.6.01). There had been at least five others this year.

SEC to permit individuals to invest in private equity
The US securities and Exchange Commission is considering changing its rules to allow increase individual investors' access to private equity, according to PrivateEquityOnline (7.6.01). It is looking at relaxing Rule 144a, which governs who can buy and sell restricted including private equity. In May, the New York Private Placement Exchange requested that the SEC broaden its definition of accredited investors to include individuals with a net worth of over $1m or an annual income of more than $200,000. The current rules state that high net worth individuals may only invest in private equity via an institution with over $100m in assets.