NEW YORK, NY, (NAMC) - As investors run for cover and the global markets seem to be on shaky ground, one area of the financial industry that is in their element in times of turmoil may be the Private Equity Sector. Now you may think that private equity fund managers and investors would be pulling back the reigns due to the massive credit crunch but its been the opposite and for good reason.
Although there was a slight bump in the road since June of this year on the private equity acquisition front due to the collapse of the subprime mortgage sector and creditors tightening their belts which has led to the extinguishing of the likes of American Home Mortgage (NYSE: AHM) and shaking up of other mortgage companies such as Countrywide Financial Corp (NYSE: CFC), there is a ray of light in private equity despite the woes on Wall Street.
Private equity funds are regrouping and are doing what they do best, RAISE CAPITAL. This time of uncertainty in the market place is exactly when private equity firms will begin to shine their brightest, due to the deep discounts that may be presented on both the public and private sector front.
You can bet that when Blackstone Group LP raised over $21.7 billion to create only the world’s largest private equity fund, that this was no pie in the sky situation. They are getting prepared for the pillaging that may take place from Wall Street to Main Street. Of course not let forget about Goldman Sachs (NYE: GS) or Bear Stearns (NYE: BSC), but that is a story for another day.
Just today the world renowned leveraged buyout kings Kohlberg, Kravis and Roberts or KKR Financial Holdings, which was borne by the man himself Henry Kravis some time ago, .has plans on raising over $10 billion US or 7.7 Billion Euros for its third European Pool.
Now a good guess is that they will have little problem reaching that goal as the opportunities that are now becoming available thanks to the subprime mortgage disaster should prove to be very profitable down the road. Buy low Sell high is what every investor has imbedded in their minds from the first dollar they invest in the stock market, and that thought, as raw as it is, really holds true at this juncture for private equity.
Really its not just the major private equity or leveraged buyout firms that are looking to raise capital to tap into the slew of opportunities that will become available in the coming months, smaller private equity funds are looking to do the same.
Granted some of these private equity funds you’ve probably never heard because they are not in the limelight or are not headline news worthy, but they still provide an opportunity for those investors that are qualified to participate.
The smaller private equity funds in some cases may provide a greater rate of return as they do not have billions upon billions that needs to be invested to turn a profit, they may just be in the tens of millions of US dollars or Euros.
One small Private Equity Fund, by the name of United Max International, seems to be interesting enough as it is focused on small to midsized leveraged buyouts, they are in the midst of raising capital in the range of $25-$50 million for projects in Asia and in the United States, some of which may find themselves as publicly traded companies giving investors in the fund an even greater rate of return. From speaking to the fund managers, investors should see a rate of return, similar to a coupon on a debenture, of anywhere from 6 % to 7% annually, and that is the worse case scenario according to the fund.
They see the acquisitions that they are lining up and the financing situations that are in the pipeline to be the real value both short term and long term for their investors. The fund which is a subsidiary of a Hong Kong Based Group with offices in Florida plans on reaching their goal in short order.
So the bottom line is that even though investors are feeling the pinch at this juncture, those investors that are accredited and actually seek out hedge and private funds for additional growth may find a golden goose in the smaller funds that are coming out of the ashes of today’s global market place.
We will feature a few more private equity funds over the coming weeks that are still open to accredited investors, as we believe that this may prove to be a nice alternative to jumping on board a crowded train with firms such as KKR or Blackstone. Granted these are the mammoths in the private equity industry and will prove to be profitable down the road but we want to spotlight those funds that are not in the headlines or spotlight just yet.
For additional information on any of the specialty private equity funds we speak about please go to
www.namcworldwide.com NAMC Newswire Note:
NAMC Worldwide has added a new service to its line up, they are now arranging the private buying and selling of various commodities such as Gold Bullion, Crude Oil, Copper, D2, Scrap Metal and others. With relationships with Private Buyers and Sellers, NAMC has the ability to arrange Private Transactions in most quantities.
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