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17 Nov

Buyout firms hop to other side of Hong Kong IPOs

KKR, Warburg Pincus LLC, MBK Partners and others have committed some $550 million as investors to six Hong Kong initial public offerings in just two weeks the first time traditional buyout firms have piled into these types of deals.

The shift highlights several key trends.

Private equity, while facing economic pressure with existing investments, is sitting on mountains of cash that it needs to deploy, at a time when companies will take what they can.

The long term structure of buyout funds, which often lock in investors for 10 years, allows private equity to spend during times when other funds canada goose clearance sale are more cautious, or even restricted by their own investors.

Investing in a company just before its IPO shows the private equity industry is looking buy canada goose jacket around for new ideas in tough times, and filling a gap left by hedge funds and wealthy individuals.

what you seeing is a view that arguably valuations are more interesting in the public markets right now than in the private markets, said Michael Chae, Asia Pacific head of uk canada goose outlet private equity firm Blackstone Group LP.

Cornerstone Canada Goose sale investing is fairly unique to Hong canada goose coats on sale Kong, and is where an investor, normally a big institution or Asian tycoon, is allotted shares before the canada goose outlet mutual funds get in.

Private Canada Goose Online equity shift into cornerstone deals comes as sharp falls in the Hang Seng canada goose clearance stock index have pushed valuations of Hong Kong listed companies Canada Goose online to the lowest in Asia Pacific.

Buyout firms smell a bargain.

Warburg Pincus has committed cheap canada goose uk $210 million to the up to $1.7 canada goose uk outlet billion IPO of Haitong Securities Co Ltd.

Asia focused private equity firm MBK agreed to buy $100 million worth of New China Life near $2 canada goose factory sale billion deal.

KKR, Sequoia Capital China and a private equity fund of Everbright China will invest a combined $110 million in the offering of men casual retailer China Outfitters Holdings Ltd.

SAIF canada goose uk shop Partners agreed to buy $80 million buy canada goose jacket cheap worth of shares in clean technology company Guodian Technology Environment Group, $30 million of China Polymetallic and an undisclosed sum of Beijing canadian goose jacket Jingneng Clean Energy IPO.

IDG Capital Partners bought about $21 million worth of handbag maker Sitoy Group Holdings Ltd.

LP RESISTANCE? Private equity foray into IPO investing could ultimately reap big rewards. It could also create tension with their own investors if returns are weak, or worse.

Pension funds, sovereign wealth funds and big institutions pay fees to private equity firms to invest their money. These limited partners (LP) traditionally expect the firms to take control of a company, turn it around, canada goose uk black friday and sell it for a premium.

Putting cash canada goose into a pre IPO minority stake is hardly a Canada Goose Jackets 3 5 year corporate turnaround plan.

Private equity firms are canada goose coats normally paid what called a Canada Goose Coats On Sale 2 and 20 fee or a 2 percent management fee on the capital invested and 20 percent of the profits when companies are sold.

prefer them not to do it. They see it as private equity, I see it as PIPE (private investment in public equity), said a limited partner of private equity firms, who could not comment publicly on investments.

can argue, but many institutional investors can access these opportunities, so why pay 2/20?

A large LP investor in the United States said he generally canada goose store looks for private equity investments canada goose black friday sale to double their money, net of fees, over 5 7 years.

should really accommodate a cheap Canada Goose transformation in the company, whether through growth, restructuring, and material increases in net income, cash flow, and value, he said.

shorter period doesn do us much good. Also, we looking for private market exposure, so we don want the funds to hold too much of a concentration in public shares.

LONG TERM INVESTORS The window for new offerings in Hong Kong has cracked open Canada Goose Parka late this year after uk canada goose volatility pushed the Hang Seng down by a third between a Canada Goose Outlet 2011 high in April and early October.