Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Reuters – U.S. hedge funds and private equity firms told Congress on Tuesday that all advisers to private pools of capital should be subjected to the same level of federal scrutiny, including those managing venture capital funds.
A draft U.S. bill would require advisers of hedge funds and private equity funds to register with the Securities and Exchange Commission, thus forcing more disclosures to regulators and investors.
However, the draft House of Representatives bill exempts venture capital funds from mandatory registration with the regulator.
The Hill – Venture capitalists breathed a collective sigh of relief Thursday when a proposal from the House Financial Services Capital Markets Subcommittee did not seek to treat them like private equity firms or hedge funds.
Venture capital investors had been lobbying against such a measure, saying that being required to register with the Securitiesand Exchange Commission like hedge funds and other private pools of money was unnecessary and expensive.
Politico – Schumer, No. 3 in the Senate Democratic leadership and the former chairman of the Democratic Senatorial Campaign Committee, has offered scads of proposals that the industry doesn’t like on issues from corporate governance to derivatives to the creation of a new consumer watchdog for the financial world.
But his top donors include insurance company New York Life Insurance, private equity firm Lightyear Capital, futures clearinghouse MBF Clearing Corp. and real estate companies Rudin Management and Related Companies.
Quite a few financial insiders express frustration with Schumer, feeling he’s thrown the industry under the bus now that it’s politically popular to do so — after having collected mountains of cash from the industry to help the Democrats build their 60-vote majority in the Senate.
The hedge funds and private equity firms included in that giving also see him as something of a champion for them. Private equity, hedge funds, and venture capital firms gave him more than $707,100 during the 2010 cycle, nearly double what the industry has donated to any other member. Their support can be traced back to a 2007 battle over the “carried interest” bill that would have more than doubled the taxes paid by investment managers.
The legislation passed the House, but momentum petered out in the Senate — a victory some financial services lobbyists attribute to Schumer.
Guardian – Britain’s efforts to soften a European directive aimed at imposing tough regulation on hedge funds and private equity firms has the support of most of the European Parliament, says Sharon Bowles, Liberal Democrat chair of the parliament’s Committee on Economic and Monetary Affairs.
The directive, inspired by proposals from Germany and France, has been opposed by Britain, where 80% of Europe’s $300bn hedge fund industry is based. Funds are threatening to move to Switzerland or the Middle East if the directive is passed in its current form, claiming it would add millions of pounds to their regulatory and compliance costs and limit their marketing and hiring possibilities.
AP – The Fed would gain power over big firms whose failures could traumatize the system. Previously unregulated hedge funds, private-equity firms and investment advisers would have to register with the Securities and Exchange Commission.
All the regulators would force banks to keep more capital in reserve to offset risk. Regulators already are doing this, but the administration wants to make it law.
The Korea Herald – China Investment Corp., the country’s sovereign wealth fund, is continuing to shift its investments away from cash and is investing billions in hedge funds and private-equity funds, chairman Lou Jiwei said.
China Investment has invested “many times” the $500 million that CIC was reported to have placed in hedge funds and private-equity firms in June, Lou said Saturday in an interview in Beijing. He said China Investment was also investing in fund-of- funds.
Lou said Beijing-based CIC’s performance this year “has not been bad” following last year’s 2.1 percent decline in its global investments. He didn’t elaborate. China Investment Corp. had $297.5 billion in assets and had 87.4 percent of its global portfolio invested in cash and cash equivalents at the end of last year, the fund reported earlier this month.
Reuters – Harvard University’s multibillion dollar endowment is adopting a strategy of selling off some holdings in hedge funds, private-equity firms and other money managers to bring more money under the control of internal investing staff over the next few years, the Wall Street Journal said.
Jane Mendillo, head of Harvard endowment, told the paper the university’s move would allow it to be more nimble, have better transparency into the portfolio and more liquidity.
Reuters – European private equity firms are keen to start bringing their best-performing portfolio companies to market, encouraged by early successes on the other side of the Atlantic.
Last week KKR successfully listed semiconductor business Avago Technologies Ltd and is considering listing a number of other companies as markets warm to new arrivals.
”It is not clear yet whether there will be an IPO window but we believe that there may be an opportunity for strong resilient businesses to float in the first half of next year,” said Kurt Bjoerklund, co-managing partner of Permira.
Now that some policymakers are shifting out of crisis mode, some of the competitive considerations that dominated regulatory discussions during the tenure of former U.S. Treasury Secretary Henry Paulson are re-emerging. Nowhere is this more apparent than in contrasting approaches to regulation of alternative investment fund managers–hedge funds and private equity firms–being considered by the E.U. and the United States.
EurActiv.com – European Commission proposals to regulate alternative investment funds discriminate against private equity and favour direct competitors like sovereign wealth funds or maverick businessmen, Javier Echarri, secretary-general of the European Private Equity and Venture Capital Association (EVCA), told EurActiv in an interview.
"We are not against regulation, but it has to be fair," Echarri said, complaining that an EU draft directive on alternative investment funds will hit private equity firms in a disproportionate manner in comparison with other financial actors, further damaging the credit market "when most European companies are in desperate need for capital".
guardian.co.uk – A minister for Sweden, which took over the EU presidency on Wednesday, said hedge funds and private equity firms needed regulation but should not be viewed as a primary cause of the global financial crisis.
Speaking after a visit by the European Commission to Stockholm to mark the Nordic country’s start in the six-month presidency, Financial Markets Minister Mats Odell cautioned against "overzealous" regulation.
What was needed, he told Reuters, was well-considered, balanced regulation that helped avoid systemic risk.
"I believe there is an exaggerated view in some countries that private equity and hedge funds helped pull us into the crisis," Odell told Reuters.
Reuters India – Hedge funds, private equity firms and other investors are scrambling to meet a looming deadline to report their offshore income, as U.S. tax collectors boost efforts to track foreign holdings.
The reports will give authorities a glimpse into just how much money U.S. citizens have tucked away in investment accounts overseas, believed to be in the tens of billions of dollars.
U.S. taxpayers have long been required to file "Report of Foreign Bank and Financial Account" forms with the government when they have holdings of more than $10,000 in foreign banks.
