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Breakingviews: Hot new buyout clubs

Tuesday, April 08, 2014 - 02:57

April 08 - Blackstone's $5.4 bln Gates deal is the latest to enlist fund investors to help pay for the deal. Breakingviews editors discuss whether these trendy collectives are a passing fad.

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Other big investors -- is invested in private equity funds. They also like the investing alongside private equity funds endowments pension funds people that. That way they get to. Miss by -- of fees that they've -- scenario to make money but -- it's not that simple yeah I mean it's sort of like the new club really in in -- rental rates are used to be the private equity firm that was during the boom. That the checks were getting so big they had the team up with each other right -- I'll feel full credit and some cases cemetery in some of these deals what happened there in the room but. They turn out to be a problem they found out that they can all agree on operational. Management. Exit timing all of these things sort of really need them a bit -- -- -- that they've gone away from this that and frightening scenario that big bonuses to -- willow -- exactly so we just had a big deal. Over the weekend with gates Blackstone buying gates. Five point six billion dollar deal pretty -- in these markets. Got to write -- one point six billion dollar check so it's gonna invite that's an equity for the equity portion senator invited some very good investors and their own funds. To join alongside them seemingly good deal right if I could. Invest in. The few good deals and invest or save eleven tips and management -- and save the the to carry on the gains and also for investors get them to redeploy money more quickly because I put enough funding could sit there for 45 years before Google for its call. And for the private equity group is great because values you know you've given him giving your investors entree into. A deal maybe give them better returns it helps them when you're raising and fund. The problem is that the returns. Overall may not be as great as the cracked up to be on this new piece of research now just now. That looked -- sort of simulated. What these might look like mr. President Bush you're not gonna get access to all of these tablets you're gonna get. Access to some of them. If the private equity companies. Happened to set select a bit for the ones that the less you know less of a slam dunk for them. Then the rest of assembly for you to plus plus human don't have enough money invested yet -- open adored all of them right not all the funds are invited in could not all of them are in position to evaluate them. Write a check back quickly says what the started it was sort of simulate what would look for let's say you were involved in ten deals. But he didn't exactly have access to all the best ones well. If you look at that your your return. We've been less than 1% and those of you writes I think if you go out equal access to everything it would be 16% you have to be on a par with the firm but if you lost the talkative deals and here in the rest. Which is the more likely scenario I mean -- out every time each individual do you never know the question really is so are these new clubs. Gonna go by the wayside once. You know when investors start to see that the returns aren't aren't these -- -- -- hoped again thanks deficit tickets up it will keep the credit he returns of course. And we'll have a breaking news tomorrow.

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Breakingviews: Hot new buyout clubs

Tuesday, April 08, 2014 - 02:57