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“Animal rights people are some of the most aggressive” of activist groups, James said on the sidelines of the PartnerConnect LP-GP Summit in New York, sponsored by peHUB and Thomson Reuters.

James, who spoke during a keynote Thursday, said his prior firm, DLJ Merchant Banking, once owned Charles River Laboratories, which breeds animals for pharmaceutical testing. “We got bomb threats all the time,” James told peHUB.

Social media recently has publicized bad acts committed by members of the PE industry. In August, Centerplate Inc CEO Desmond Hague was caught on a hotel video abusing a cowering dog. The video went viral and the ensuing backlash included calls for Hague to be fired, threatened boycotts of Centerplate, and death threats against the CEO and executives of Centerplate’s sponsor, Olympus Partners. Hague resigned on Sept. 2.

SeaWorld Entertainment, a Blackstone portfolio company, also saw its stock plunge in August. “Blackfish,” a documentary released in 2013 that highlights SeaWorld’s treatment of killer whales, has spurred a backlash against the company that has affected the company’s earnings.

When asked if Centerplate waited too long to oust Hague, James said he wasn’t that familiar with the situation. “What kind of person beats their dog?” he said. “I’m not that sympathetic either.”

James didn’t comment on the Blackfish controversy. Instead, he recalled how SeaWorld penguins visited the Blackstone offices when the portfolio company went public in 2013. Publicity from the visit, which included cuddly photos of SeaWorld penguins running around the firm’s offices, softened Blackstone’s image, James said. “It made us look friendly…[Social media] can be very useful tool for getting stuff out as well.”

James, during his keynote, said the world had changed in the last seven to eight years “when we all went public.” The PE industry used to be private and “didn’t get a lot of attention.”

Blackstone executives are now “very mindful” that they are “public figures,” he said. “We get watched…Private birthday parties become causes célèbres. We try to be careful. We make mistakes.”

By Luisa Beltran, peHUB

This story first appeared on peHUB on Sept. 19, 2014: https://www.pehub.com/2014/09/blackstones-james-we-are-public-figures/

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Family offices “like the asset class” but have run up against limited access to the best funds and other issues, said Carbone, managing partner at Chicago-based Pritzker Group Private Capital, at the PartnerConnect Midwest 2014 conference in June.

Citing a study by advisory firm Altius Associates released in March, Carbone said co-investments may contain a substantial risk of poor returns, even with a reasonably sized portfolio. While co-investments do avoid the conventional “2 and 20” fee structures of private equity funds, investors face “adverse selection” because they do not necessarily get access to the best deals. Their investment portfolios also become concentrated in too few investments, he said.

Direct investing is a superior strategy because it outperforms fund investments and significantly outperforms co-investments, he said. More than half of family offices with private equity holdings are taking part in direct investing and “more are interested,” he said.

--By Steve Gelsi, Senior Editor, Buyouts

A longer version of this story first appeared in Buyouts magazine. Subscribers can read the original version here. Not a subscriber? Click here to subscribe.

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Chicago-based Madison Dearborn will seek no more than $4 billion for its seventh fund, said Canning, who spoke [on June 24] at the Buyouts Midwest conference being held in Chicago. “We will definitely be in the market shortly,” Canning said.

The $4 billion is roughly the same amount as that raised by Madison Dearborn’s last pool, Fund VI, which collected $4.1 billion in 2010. Fund VI is generating a net IRR of 19.1 percent as of Sept. 30, according to the Regents of the University of California.

Fund VI, which is 80 percent committed, is more indicative than its predecessor of how Madison Dearborn is doing now and what the firm hopes to do with its seventh pool, a source added.

“Our investors know we are about to raise a fund,” Canning told peHUB on the sidelines of the conference.

Madison Dearborn got away from its roots of investing in mid-market companies, Canning said during the conference. The firm has returning to its “knitting” and will seek to invest $100 million to $400 million equity per deal, Canning said. The average investment will be $300 million, he said. Fundraising for the seventh pool will likely begin in the second half, he said.

The buyout shop has scored some notable exits recently. In March, Madison Dearborn agreed to sell Fieldglass, a provider of technology for procuring and managing contingent labor and services, to the big software company SAP. Madison Dearborn made 5x its money with the sale of Fieldglass, a Fund VI investment, Canning said. TIAA-CREF also inked a $6.25 billion buy of Nuveen Investments in April. The sale is expected to close by year end.

Madison Dearborn has been criticized for Fund V, which collected $6.5 billion in 2006. Fund V took part in several large transactions during the buyout boom, including the $7.3 billion buy of technology retailer CDW Corp in 2007, the $5.75 billion buy of Nuveen that same year and the $4.1 billion buy of Asurion, an insurer of tech devices, also in 2007. MDP’s fifth pool also invested in the $13.7 billion club buy of Univision Communications in 2006 and the $3.8 billion buy of VWR International LLC, a distributor of laboratory equipment, in 2007 for about $3.8 billion.

“We’ve owned up for the mistakes made with Fund V,” Canning said. He estimated that three deals—CDW, Nuveen and VWR—made up almost 45 percent of the pool. Fund V is generating a 6.79 percent net IRR as of Sept. 30, according to the Washington State Investment Board.

Madison Dearborn has been slowly exiting many of Fund V’s deals. CDW went public last year. The firm continues to own a stake but is selling shares. In May, CDW announced a secondary offering of 15 million shares. About half is coming from Madison Dearborn, which will have a roughly 25 percent stake after the sale and greenshoe overallocation option, according to regulatory filings. Univision is also reportedly in talks to be sold.

One deal Madison Dearborn isn’t interested in? Portillo’s Hot Dogs. Canning said he “likes” Portillos but is not interested in the Oak Brook, Illinois-based company.

Well known throughout Chicago for its hot dogs and Italian Beefs, Portillo’s Restaurant Group reportedly went up for sale earlier this year. The company has hired Jefferies to advise on the sale, press reports said.

News of Madison Dearborn’s fundraising was previously reported by Bloomberg News.

By Luisa Beltran, peHUB

This story first appeared on peHUB on June 24, 2014

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The post Five Questions With Brett Hickey, Founder and Chief Executive Officer, Star Mountain Capital: UPDATED WITH VIDEO appeared first on PE Hub.

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The panel is moderated by Joanna Glasner, Senior Editor for Venture Capital Journal.

Video date: March 27, 2014

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Video date: March 27, 2014

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Video date: March 27, 2014.

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Video date: March 27, 2014

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The post UTIMCO chief eyes smaller funds: UPDATED WITH VIDEO appeared first on PE Hub.

Video date: March 26, 2014

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Video date: March 26, 2014

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This video is from Thomson Reuters' Venture Alpha East 2014 conference in New York.

Video date: March 26, 2014

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Video date: March 26, 2014.

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Video date: March 26, 2014

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In this interview, Patricof gives tips for a long VC career and weighs in on bitcoin, IPOs and the startup environment.

Video date: March 26, 2014

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Video date: March 20, 2014

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Video date: March 2014

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He said he and his partners “spend a lot of time talking about success. Can this thing be 10 times better than the alternative?”

He also emphasized that venture firms cannot be afraid of failure. “Failure is actually a big big part of the process,” he said. ”We get thousands of business plans sent to us every single year. We invest in tens. Only a few of those actually blossom to become really big and successful companies.”

Read more about Greylock's fundraising here.

Video date: December 2013

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Video date: Oct. 9, 2013

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Video date: Oct. 9, 2013

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Video date: Oct. 9, 2013

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Video date: Oct. 9, 2013

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He is interviewed Jeffrey Goldfarb, U.S. editor of Reuters Breakingviews.

Video date: Oct. 9, 2013

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Video date: October 9, 2013

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Video date: Oct. 9, 2013

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Video date: Oct. 8, 2013

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Video date: Oct. 8, 2013

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Video date: Oct. 8, 2013.

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The panelists are Alex Navab, Member & Co-Head of Americas Private Equity for KKR; Bob Grady, Chairman of the New Jersey State Investment Council and Managing Director of the Cheyenne Capital Fund; Vinay Nair, Managing Partner & CEO of Ada Investments; and Mark Suster, Partner with Upfront Ventures.

Video date: Oct. 8, 2013

The post All-star panel answers the question: Why alternatives now? appeared first on PE Hub.

Read more about what Horowitz had to say about hardware, IPOs and portfolio company services here.

Video date: June 19, 2013

The post Ben Horowitz addresses the biggest question facing the U.S. appeared first on PE Hub.

Karim Faris, general partner of Google Ventures, leads the firm’s investments in enterprise software, big data and security.

Faris sat down for a video interview with Venture Capital Journal in May 2013, in which he talked more about his investment strategies.

Faris's portfolio companies include ClearStory Data, RetailMeNot and DocuSign. Faris, who used to be on Google’s M&A team, is not focused on finding companies that could be bought someday. Instead, Faris says Google Ventures enters an investment with “the mindset that we’re building a self-sustaining standalone company that has prospects of being a public company one day.” Faris says that strategy increases the odds of providing better returns for the investors and entrepreneurs.

Going forward, Faris says he is enthusiastic about enterprise software, an industry which has seen many successful IPOs as of late. Faris says enterprise software is “making things more accessible more usable and cheaper,” adding that the sector is “ripe for disruption.”

However, regardless of the investment, Faris, like other venture investors, says it ultimately comes down to backing the right team. When deciding whether an investment is worth it, he asks, “Is the problem that they’re solving an aspirin or a vitamin?” You’ll have to watch the video to find out what he means.

By Katie Roof, contributor, Venture Capital Journal

This story first appeared in Venture Capital Journal in June 2013

The post Google Ventures’ Karim Faris talks strategy appeared first on PE Hub.

For New Enterprise Associates, known for raising some of the largest funds in the venture industry, it’s all about carry. For some time, the firm has made a practice of charging unusually low fees by venture industry standards and taking a higher-than-typical share of carried interest from returns on successful investments, Barris said.

Barris says the practice is meant to align interests of general and limited partners in the fund, with the message to LPs being that GPs won’t make big returns unless they do, too. Additionally, Barris says, NEA makes an effort, where feasible, to pay back fees, which it essentially sees as a loan.

That said, Barris did not recommend dipping below the 2% management fee or upping general partners’ share of carry as advisable for the venture industry at large. For smaller funds in particular, he said, the fee is necessary to cover the operational costs of running the firm. “When you’re an early stage firm, there’s a direct correlation between fees and the cost of operating the fund,” he says. Once you’ve been around longer, however, there’s more of a disconnect.

Overall, Barris says NEA’s long-term strategy has been to take an institutionalized approach to venture investing. While many firms build their reputation around high-profile partners and their compensation strategy around rewarding top performers, NEA pays its general partners the same amount. The idea, Barris says, is to create a culture in which “if I’m a GP, I care about someone else’s deal as much as I care about my own.”

The other notion behind the strategy is to establish NEA as a firm that can outlast the comings and goings of individual partners and operate on a large scale. The thinking there, Barris says, is that NEA’s partners have long believed the venture business is likely to go the way of other industries like banking, in which there are very large, full-service establishments and smaller boutique firms. Venture fundraising data from the last couple of years seems to support that idea, with a concentration of capital in the hands of a few large, established firms.

Another way the firm tries to institutionalize its operations, says Barris, is through its advisory board, which is made up of many of its largest LPs, as well as some independent advisors. The board functions much like one at a venture-backed company, he says. Every fall, for instance, the firm presents its budget to the board, outlining plans for spending on salaries, travel and other expenses.

While Barris didn’t point to any recent major changes in fund terms or firm processes, he did indicate a shift could be in the works if carried interest becomes taxed as income, as the federal government has long been considering. The current tax treatment of carried interest as capital gains, he said, definitely affects how fund terms are structured.
 

By Joanna Glasner
 
Note: This story first appeared on peHUB on April 8, 2013

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Mendillo said she sees investment opportunities in European private equity and emerging markets.

Video date: April 11, 2013

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The Spark Capital general partner could certainly toot his own horn, but he lets his track record speak for itself. He led Spark’s investments in Twitter (valued at a reported $9.9 billion), Tumblr (valued at a reported $800 million), Stack Exchange, RunKeeper, Foursquare, Boxee, OMGPOP (acquired by Zynga last year for $180 million), and thePlatform (bought by Comcast in 2006 for a reported $80 million).

All that and he’s still just 44 years old.

In this video of his keynote at Thomson Reuters’ Venture Alpha East 2013 conference in Boston, Sabet explains why he remains bullish on consumer Internet deals, what he learned from serving on Twitter’s board, why Spark decided to go significantly bigger with its fourth fund, and the attributes that have led to success for young VC firms such as Spark, First Round Capital and Union Square Ventures.

Video date: April 4, 2013

The post Bijan Sabet shares lessons from Twitter, why he’s bullish on consumer, more appeared first on PE Hub.

Date of video: April 4, 2013.

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Laying out his macro-economic outlook for a sluggish growth in U.S. Gross Domestic Product of 2 percent for the next several years, Hutchins said the technology sector offers faster growth.

He pointed out that Apple Inc. launched the iPad during a weak economy, but the product still took off. “You have to take share of consumer dollars,” he said.

Overall, investors should focus on growing parts of the global economy by sector and “take control of them,” he said.

Hutchins, who declined to talk about his firm’s $24 billion bid to buy Dell Inc., said he remains optimistic, but he called on the business community to work to create more jobs.

“The unhappy situation is not 2 percent growth – the unhappy picture is unemployment,” he said.

Hutchins said he focuses on macroeconomic forecasts because, “you can make the best company selection but you can still get killed” if overall business conditions take a dive.

While some may be hoping for the economy to heat up, the current recovery ranks as the “worst…since World War II,” he said.

“This is the economic recovery,” Hutchins said. “This is what you’re going to get. The recovery is already middle aged. It’s time to do some of the things [you] postponed for the future.”

By Steve Gelsi, Buyouts magazine

This story first appeared in Buyouts Magazine. Steve Gelsi is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @SteveGelsi. Follow Buyouts tweets @Buyouts.

Video date: April 4, 2013

The post Silver Lake’s Glenn Hutchins: Tech will outpace GDP appeared first on PE Hub.

If you invested $10 million in U.S. Treasuries seven years ago, you could expect an annual return of $480,000, but today you see a return of just $24,000 a year, Yusko said.

“In this age of financial repression, we have to think differently about how we invest,” said Yusko, whose speach was entitled “Surving the Age of Financial Repression.”

Yusko founded Morgan Creek in 2004 to provide investment management and advisory services to institutional partners and family offices. Today, the firm has about $8 billion in assets under advisement. It invests across all asset classes and strategies, from traditional equities and fixed income to alternatives, such as hedge funds, private equity, real estate and venture capital.

Prior to founding Morgan Creek, Yusko served as chief investment officer for the University of North Carolina at Chapel Hill from 1998 to 2004. Before UNC, he was senior investment director for the University of Notre Dame Investment Office.

Video date: April 2013

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Video date: Oct. 25, 2012

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Video date: Oct. 18, 2012

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“You’re not in the stands,” he said. “You’re in the field. And when you allocate [your capital] obsessively to firms in the top quartile, it will have an impact on how things play out.”

Video date: Oct. 18, 2012

The post Benchmark’s Gurley cautions LPs about overfeeding oversized funds appeared first on PE Hub.

“It’s no secret that venture funds have received limited love over the past decade, yet I stand here telling you that we are pretty excited about the opportunity,” Maliwanag told the audience.

Maliwanag heads up due diligence and monitors existing investments in the California office of Pathway, which manages $25 billion in assets through its funds of funds. Her data-intensive presentation was entitled, “Venture Capital: We Weathered the Storm, Here Comes the Sun.”

In particular, Maliwanag addressed the controversial Kauffmann Foundation study. That 51-page report, released in May, analyzed the investments Kauffman made in nearly 100 VC funds over 20 years and concluded that “the limited partner investment model is broken,” because LPs “invest too much capital in underperforming venture capital funds on frequently mis-aligned terms.” The result, at least for Kauffman, is that 62 out of the 100 venture funds it backed “failed to exceed returns available from the public markets, after fees and carry were paid.”

Maliwanag praised Kauffman for releasing the report, but noted that Pathway’s analysis of its own portfolio of venture funds reached different conclusions in some cases. “It really is incumbent on every investor to assess their specific portfolio and their organization’s resources and not accept some of the conclusions of the Kauffman report out of hand or accept blindly anything they read in the headlines,” Maliwang told the audience.

For example, while Kauffman found that its larger funds under-performed its smaller funds, Pathway looked at a portfolio of funds similar to Kauffman’s and “couldn’t find any evidence of that,” she said. “We believe fund performance isn’t related to fund size. It’s really determined by the quality of the manager.”

Pathway, established in 1991, is one of the world’s largest private equity fund of funds managers, with about $25 billion under management. The firm maintains a database of 8,000 funds raised over the past 30 years, which Pathway says gives it “a unique perspective on the asset class.”

The post Pathway’s Maliwanag offers sunnier outlook for VC than gloomy Kauffman report appeared first on PE Hub.

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Video date: April 3, 2012

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Video date: March 19, 2011

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Andreessen spoke for about an hour, talking about everything from what A16Z would and wouldn't invest in to his favorite VCs. Enjoy!

Video date: July 2009

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