Monday, August 11, 2008

Listed Private Equity

I'm researching potential listed private equity investments. Currently I have a little under 7% of net worth allocated to private equity. My main investments are:

Leucadia National (LUK) Though people don't think of Leucadia as a private equity firm - it's usually mistakenly called an "insurance company" or a conglomerate - their model is to invest in or takeover struggling companies, turn them around and resell them, or provide venture finance - for example in helping Fortescue Metals get going - as well as invest in other funds, real estate and infrastructure development etc.

ING Private Equity (IPE.AX) This is a fund of funds, investing in Australasian private equity funds. It currently trades below book value, but recent asset sales have been at above book value.

Allco Equity Partners (AEP.AX) This company has a few large investments. Its biggest investment is in publicly listed IBA Health. But it also has smaller private equity holdings which it intends to eventually sell on. It trades at way below book value. The company hasn't tried to address this issue so far. They have no debt and are not entangled in the Allco Finance house of cards.

MVC Capital (MVC) This is a direct private equity fund with mainly US and some European investments.

MVC seems pretty unique as a US listed private equity fund. Another listed fund is Equus. Many funds and funds of funds are listed in London. The IPEIT website highlights several of them. And then there is a Lehman Brothers fund of funds listed in Amsterdam.

I'm looking to invest in a couple of them. But I can only invest $US4,000-5,000 without falling afoul of the Australian FIF regulations as I already have about $A8,000 invested in a Man managed futures fund. If a fund or stock is not exempt from FIF you must mark it to market each year for tax purposes and pay tax on the unrealised capital gain. This means you lose the long-term capital gains rate concession. While US mutual and listed funds are exempt from the FIF regulations, European ones are not. Under the FIF regulations you can invest up to 10% of your portfolio of foreign stocks and funds of funds which normally would not be exempt from the rules and still be exempt from them.

Anyway, I'll be posting soon some comparison of these European listed funds.

4 comments:

Lauren said...

Hi mOOm,

You may also want to look at the LPX Indices (www.lpx.ch) as there are over 300 listed private equity stocks on exchanges globally. The LPX 50 TR Index tracks 50 of the largest LPE stocks, so you could get some investment ideas from that (they also have a few detailed research notes on a couple of stocks).

mOOm said...

Hi Lauren

I already looked at the LPX website but couldn't find any info on which funds are actually included in the index. Do you have this information or a link?

Lauren said...

Hi mOOm,

My company subscribes to the daily content of the LPX 50 TR Index as we have an australian wholesale fund that only invests in global LPE, but LPX also publish a monthly report stating the largest positions etc. Here is a link to the July report: http://www.lpx.ch/uploads/media/50E200807_Newsletter_LPX50_July_2008.PDF

Lauren

mOOm said...

Thanks - I got the newsletter - probably will blog on that!