Valuation concerns flagged by the SEC in a Conference earlier this month haven’t subsided as SEC gets into checking the antecedents of all internal and external valuation done by Private Equity industry among other documentation and processes it is verifying at the 12 big PE players to set up a framework for coming regulation. Concerns specifically articulated include how Valuation of a company not beng exited that year is not considered important yet considered for calculation of Payouts etc.
While the enquiry was timed with KKR’s own results announcements dominated by the valuation drops, KKR founders received 30% higher comp at $94 mln each even as profits at the PE company fell, probably the last rush before new regulations bracket the Industry’s dicey future after a splurge in High street retail and leveraged finance without exits due to the crisis sucked the sails of the global PE industry now also constrained for its favorite Leveraged finance funding. NYSE regulations do not require limited partnerships to have a compensation committee.
Many including KKR and Carlyle have since included shareholder equity as a new source of funding while wide ranging reform in the Finance Industry is forcing PE desks at the SEC to take a look and harmonise regulations. meanwhile the Silicon Valley PE deal tickets have also dropped considerably in size. Banks have increasingly started financing bigger PE deals and municipal debt and Leveraged Finance has found a few takes amon g the banks too, bringing liquidity to all High yield markets and consequently making it easy for PE to operate.
- SEC launches wide ranging PE investigation | Deal Insight (advantages.us)
- Advantage Dealbook: A giant PE firm in Energy (advantages.us)
- KKR’s Shares Gain Despite Miss (blogs.wsj.com)
- Kravis, Roberts Bag $94 Million Each Last Year (blogs.wsj.com)
- K.K.R.’s Fourth-Quarter Profit Falls 68% (dealbook.nytimes.com)
- Et Tu Brute? Germany, Sweden, And A Huge California Pension Fund Call For Raising Taxes On Private Equity Bosses (businessinsider.com)
- Private Equity costs soar for indian start ups (awardz.wordpress.com)
- Is Obama trying to kill private equity? (finance.fortune.cnn.com)
- KKR Tops Private-Equity Deal Makers in 2011 With Samson Purchase (businessweek.com)