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Until recently, the likelihood that an investment adviser to a private equity fund would face an examination by the Securities and Exchange Commission was low. The situation today is dramatically different. We anticipate that most advisers to private equity funds will be examined by the SEC over the next two years.
When private equity observers assessed the Year of the Dragon, which ended recently, they found it to be the “best of times and the worst of times” for private equity investment activity in China.  The year featured a number of headline grabbing buy-outs and exits and a number of notable fundraising highlights among private equity managers with strong China franchises.
Otherwise attractive businesses with significant defined benefit pension liabilities are often “off limits” for private equity firms understandably concerned about future pension payment obligations and their financial statement impact.  However, if there were techniques to reduce or even eliminate future pension payment obligations and their volatile financial statement impact without breaking promises to retirees, private equity buyers might find a number of transactions more viable.
“Controlled group” liability under ERISA— the risk that pension liabilities might spill out of one portfolio company of a private equity fund and be enforced against another portfolio company of that fund, or against the fund itself—is a risk that has long presented uncertainty for private equity professionals due to the absence of any definitive authority on the point.
The first review by the UK Panel on Takeovers and Mergers (the “Panel”) of the so-called Cadbury reforms to the UK Takeover Code concluded that the reforms had been largely successful in protecting target companies from being placed under siege by protracted bid periods.
Although FATCA (“Foreign Account Tax Compliance Act”) has a laudable goal—establishing an information reporting regime that prevents U. S. taxpayers from evading U.S. tax through offshore accounts—it will create many headaches and administrative burdens for private equity, hedge and other investment funds and their investors.
The prospect of offshore private equity funds being permitted to market their funds to deep-pocketed Chinese insurance companies is quite alluring to the global private equity community.
“Topped again” is a frustrated refrain often heard from PE firms these days when attractive targets in this competitive market slip into the hands of rival bidders.
A recent transaction between Blackstone Group LP (“Blackstone”) and Citigroup may well signal future opportunities for capital providers including private equity firms.  While that particular transaction appears most appropriate for diversified asset management firms, it may suggest ways for private equity firms to utilize committed capital to provide targeted credit support.
The Private Equity Report Editorial Board

This report is a
publication of
Debevoise & Plimpton LLP
www.debevoise.com

EDITORIAL BOARD
 

Paul S. Bird
Editor-in-Chief

Andrew M. Ahern
Jennifer L. Chu
Rafael Kariyev
Scott B. Selinger
Simon Witney

Alicia E. Lee
Associate Editor

FOUNDING EDITOR

Franci J. Blassberg

All contents @2018 Debevoise & Plimpton LLP. 
All rights reserved.




 

 

 

 

 

 

 

 


 

 


 


 

 

 

 

 

 

 

 

The Private Equity Report

Winter 2013
Vol. 13, Number 2
prior issues