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North America: August 2001

Hicks Muse Tate & Furst announced cut backs, Lucent lays off 20,000 employees Susan Woodward takes the private equity industry to task...

Merrill Lynch cancels private equity conference as part of cost-cutting
US banking giant Merrill Lynch cancelled its prestigious private equity conference and informed prospective attendees it will be rescheduled some time in the first half of next year. The move was believed to be part of a clamp-down on costs but there was also speculation that many of the bank's clients had indicated that belt-tightening at their own institutions meant they would not be able to turn up.
AltAssets 13.7.01

Lucent's troubles hit new ventures unit
New Ventures Group, the incubator set up by troubled telecom equipment company Lucent, is looking at calling a halt to all new investments to concentrate on its existing portfolio companies. This is one of a series of measures under consideration after a corporate reorganisation that has seen Lucent lay-off 19,000 people. A further 20,000 employees are set to go. Another option on the table is for New Ventures to seek outside funding to spin out of its parent company.
Venturewire 1.8.01

US buy-out giant Hicks Muse announces shake up and retreats from Latin America
US buy-out giant Hicks Muse Tate & Furst alerted investors to a major personnel shake-up and a partial retreat from Latin America. The firm is to downgrade its Buenos Aires and New York operations, with the loss of one-time heavy-hitter Michael Levitt, and to strengthen the Dallas and London offices. The moves seem to have come in response to mixed success in raising the firm's second Latin America fund, which looks set to close at around $200m, well short of a target closer to $1bn. Latin America has become a particularly difficult market in which to operate because of growing uncertainties about the region's economic prospects.
AltAssets 9.8.01

US VC fund-raising activity plunges in second quarter
US second quarter venture capital fund raising plunged 42 per cent on the previous quarter and 68 per cent on the same period a year earlier, according to figures from Venture Economics and the US National Venture Capital Association. The NVCA claimed optimistically that there is still plenty of money to be invested and that the industry is simply regrouping after an unusually strong period.
AltAssets 7.8.01

New benchmark index for private equity
Investors may soon have a new benchmarking tool for their private equity investments. Susan Woodward, the former chief economist at the Securities and Exchange Commission, is to compile the Sand Hill Index of private equity performance. Woodward explained that the main problem behind creating this index has been the private equity firms who are unwilling to part with information, and the intermittent nature of this information. To get round this problem, Woodward has created a set of coefficients that result in an index of value and data censoring adjustments. Woodward said that once the index had been completed a far more realistic picture of perfomance would emerge. She added that her index will show a decrease in annual returns of 60 per cent, compared to the slip in returns of 11 per cent that the data firms are displaying. The hope is that the new index will impose a new standard on venture capital firms and will thereby increase public interest in private equity.
Red Herring 3.8.01

Jerusalem Venture Partners continues US expansion with two new appointments
Jerusalem Venture Partners has continued its expansion into the US market with two appointments. Zeljka Matutinovic has joined as general partner and Michael Carus as new COO/CFO in New York.
AltAssets 1.8.01

Corporate venturing pulse weakens in the US
New figures from PricewaterhouseCoopers and VentureOne have shown a fall of $2.2bn in Q1 in corporate venturing. This marks the fifth straight quarter decline in a row for US investment falling 21 per cent to $8.2bn. Venture capital firms accounted for 90 per cent of US investment by global investors compared with 76 per cent in Q1 of 2000. Corporates are investing less than one-tenth of the amount they invested last year - down from $3.8bn in the first half of last year to - just $353m in the same period this year.
EFinancial News 13.8.01

US VC Q2 investments fall 12 per cent on quarter, 61 per cent on year 
US venture capital investments in the second quarter have dropped 12 per cent on Q1 and were a massive 61 per cent lower than at the same time last year.
The figures from the National Venture Capital Association showed $10.6bn of investment in 982 companies in the second quarter.
AltAssets 1.8.01

Darby Overseas Investment to receive new financing
Washington - based Darby Overseas Investments, is set to receive new financing for its investment and advisory arm. It will target Latin American technology and internet investment. The firm plans to raise three $100m funds, one fund for Mexico, Brazil and Argentina.
PrivateEquityCentral 2.8.01

ABN Amro reports ‘satisfactory' private equity performance
Dutch banking giant ABN Amro reported ‘satisfactory' results in its private equity business, escaping the embarrassment inflicted on some of its peers by the collapse of technology markets. It announced a E35m write-off on its E2bn portfolio in the second quarter. ABN Amro has attributed its modest injuries to the breadth of its portfolio, which was relatively light on some of the major investment turkeys such as telecoms.
AltAssets 17.8.01

Franklin Templeton and Auda in private equity tie-up
Mutual fund manager Franklin Templeton joined forces with Auda Group, the investment arm of Germany's Quandt family, to develop hedge fund and private equity products. Franklin Templeton, a $268bn investment manager has 240 investment products, most of which are mutual funds.
PrivateEquityCentral 8.8.01

US VC investment tumbles in Q2 but rate of decline slowing
Equity investment in venture-backed companies has plunged 21 per cent to $8.2bn in the second quarter compared with $10.4bn in the first, according to the latest PricewaterhouseCoopers Moneytree survey. The rate of decline is less dramatic than the 41 per cent of the previous quarter. However, it is the lowest level of funding by non-traditional sources, such as corporates, angels and other private equity entities, for three years.
AltAssets 14.8.01

Hicks Muse halts dot-com portfolio
Buy-out and investment firm Hicks Must Tate & Furst has decided not to provide follow-on financing to any of the dozen start-ups that it has backed. This news adds to the news of Hicks Muse scaling back its Latin American investment announced earlier this month.
VentureWire 20.8.01

Calpers commits another $385m to private equity… 
Calpers, the giant Californian public pension fund invested another $385m in private equity despite the sector's poor returns over the past year, according to internal documents. The move confirms the fund's commitment to private equity and suggests that it is unmoved by the private equity's current difficulties. Calpers is reported to be looking to invest the new money in both US and European private equity funds.
AltAssets 20.8.01

… and ups bonuses to halt staff defections
In a move to prevent its private equity experts being lured away by lucrative contracts with fund of funds managers, California Public Employees' Retirement System has offered bonuses to its alternative investment officers. Pennsylvania Public School Employees' Retirement System has made a similar move. Under the new Calpers incentive plan, as much as 75 per cent of base salary might be offered to an officer as a bonus. This would be based on the returns in the Calpers portfolio and the accomplishments of the investment officers. Calpers is also intending to raise salaries pushing the range for a senior investment manager from $143,750 to $165,000.
Private Equity Analyst August 2001
 
VCs are new target in IPO suits
Venture capitalists are watching a lawsuit surrounding Mortgage.com with interest and concern. There has been a wave of IPO-related actions by angry shareholders who have seen the value of their investments fall through the floor and by creditors who are owed vast sums of money. The Mortgage.com lawsuit is the first to target the venture capital firm that backed the company. Many observers believe this could be the first in a long line.
Wall Street Journal 30.8.01