There's a lot that's happening in the PE markets around the world. These markets, and the PE deals, are not the same anymore. Deal structures, traditional methods of making money (read: leverage), fundraising, returns, end-markets - everything is changing. I recently read two news articles, which made me think if the PE model is fundamentally evolving. Although its too early to conclude anything right now, a lot of interesting things are happening - things that may be important to keep in mind for future.
Blackstone recently made an all-equity 106M GBP deal to get minority stake in Leica, a German camera manufacturer. The fund is betting on the expected rapid growth and the potential to increase Leica's scale by 2 times over the next 3 years. Majority of this growth is expected to come from Asian markets. Wait a second - did we hear that it's an all-equity deal, and has something to do with the Asian (read: emerging) markets?
On another (a relatively sad) note, Bain Capital and its portfolio company - Lilliput - in India are not having a good time together. Apparently, they recently had a bitter legal spat. Bain Capital doesn't seem to have approved recent accounting statements of Lilliput. This has significant side-effects - such as casting doubts on Lilliput's proposed IPO, and postponing capital raising for Lilliput's near-term plans. In response to the dispute, Lilliput is noted to have been looking out for another private equity investor to buy out Bain Capital's (and TPG's) existing share in the company.
Wierd isn't it. Although the Asian markets are attractive, and private equity funds are ready to take uncommon (and even riskier) paths to explore those markets, operating in the Asian markets comes with its own set of challenges.
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