Friday, July 20, 2007

Recommended allocation to US private equity: 0%

If, that is, the poor misunderstood undercompensated babies make good on the following threat if carried interest is taxed as income, reported in PE Week Wire:
Private equity investors – both VC and LBO pros – keep warning that they will pass on additional tax costs to their limited partners, via increases in management fees and carried interest percentages
HA! I say. Make my day. Given the number of mindless secondary fund buyers out there, and given that the expected rate of return for US LBO and VC funds in the next five years is about equal to your average low vol hedge fund of funds... I say, SELL.

Okay, just a bit of venting there... but really, if any US buyout or VC comes to my little corner of the world and says anything remotely along these lines, we will wish them well and say thanks for the memories.

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