Each road capital hunting PE two level market investment bank wants to develop the game rule

A growing number of large financial predators are now reaching for the "private equity two market". On February 18, foreign media reported that China Investment Corporation (CIC) invested 1.5 billion dollars in 3 special accounts administered by Lexington Investment Corporation (Lexington), Goldman Sachs and Rock Foundation (Pantheon Ventures), Acquire second-hand investment portfolios from other hedge funds and venture capital firms, respectively. A week earlier, the world's third-largest hedge fund company D.E.　　Shaw has also formed a team in Hong Kong to buy second-hand investment portfolios held by other hedge funds.　　A spate of large institutions pouring into a once-lonely private-equity two-tier market has made the "mysterious" trading market suddenly brilliant.　　However, it is no easy job for the capital to get a slice of it.　　The disorderly trading rules are rapidly expanding in the private equity two-tier market, and the number of pie traps hidden is unknown.　　Brenlen Jinkens, managing director of Cogent, Kingens, expects the two-tier private-equity market to be trading at around $25 billion a year, a whopping more than $12 billion trillion last year. Wang, managing director of the fund, said to reporters: "The trading rules in this market are fairly loose." Basically, the buyers and sellers have negotiated their own agreement. It is difficult to work out an applicable industry operating rule.　　"In 2008, the fund's managers transferred the shares of the 4 companies to the world's largest level two market investors, the UK private equity firm, Coller Capital, and let Wang begin to understand the complex and changing rules of the game. Reporter investigation found that the main reason for the fund managers to sell their assets at a discount is that, as equity investment funds are due to be liquidated, fund managers see the short-term investment projects difficult to market, have to consider through the two-tier market transfer, and the second is some of the investors have been a lot of redemption and forced early liquidation of hedge funds　　The investment portfolio can only be sold at a full discount and quickly returned to liquidation.　　Some 11% institutional investors have decided to sell their portfolios in the two-tier private equity market, Preqin, a research firm that surveyed 568 equity investors or hedge funds last year. A large number of sellers gush, resulting in the two-tier market net worth discount rate reached 60% in the middle of last year.　　Goldman has even raised a 5.5 billion dollar fund to buy a discounted private equity share. However, in such a large market, there is not a set of agreed trading rules.　　In this market, from the bargain, the price negotiation, to the due diligence each link, the transaction both sides basically relies on the previous mutual trust to reach the agreement, slightly is not careful will encounter the morals risk. At present, the two-tier private equity market is still a buyer's market. "A familiar private equity"CIC's participation in the two-tier private-equity market is basically below the industry average, and requires investment banks to provide loans to finance staff and to have a preemptive right to some of the best projects," said the fund manager at the two level market.　　"Because the whole market is in an impossible state of regulation, the participants are also disturbed." Kohler Capital, the world's largest two-tier market investor, has decided not to accept investors ' money through bespoke accounts, Coller. Jeremy Coller, founder of Jeremy Colle, said: "Splitting the portfolio creates a transfer pricing problem, with winners and losers." Our wisdom is not enough to manage the conflict.　　"[Page] the wishful thinking of investment banks with large financial institutions in the two-tier private equity market, so that many investment banks to see new sources of money, but also let the latter heart is how to become the market rules of the game-makers.　　Despite the absence of a clear road map, investment banking efforts have not stopped. At the beginning of February, investment bank FBR Capital CMC announced plans to enter the institutional brokerage field. The company has hired a related business team from Shoreline Trading Group and used JP Morgan Clearing Corp as custodian bank and clearing broker. February 16, Stuart Gulliver, head of HSBC investment banking, said it planned to strengthen its ability to act as a broker in hedge fund institutions.　　Last summer HSBC set up a brokerage team of more than 50 people. "Investment banks provide leveraged financing to hedge funds or equity investors with a full understanding of the true financial position and portfolio of the hedge funds or equity institutions they serve, and once they need to sell some of their portfolios, they provide financial consultancy services and seek buyers through the agency's brokerage department." "At present, the transfer of hedge fund portfolios in the two tier market has been led by big investment banks," said Rui Yan, head of research at the China Hedge Fund Research Center. "The next integration direction of investment banks will be the split-stripping process of the private equity sector in the banks," he said. Wang for example, as the United States is about to implement new financial regulations to ban big banks from running high-risk businesses such as hedge funds and private equity funds, if Citigroup decides to sell or split up its $10 billion private-equity arm, investment banks can "split" their portfolios into "　　Asset packs, through the agency's brokerage department to make a deal.　　The hedge-fund manager revealed that investment banks ' commission fees for transfer of two-tier market assets were close to the financial advisers ' fees for mergers and acquisitions, including 2–5% Commission commissions. The wishful thinking of investment banks faces a real dilemma of the lack of money for buyers. After the subprime crisis, large financial institutions that suffered huge losses began to decide to stopFunds are entrusted to private equity funds and hedge funds, which are often the biggest buyers of the two-tier private equity market. On February 16, Jane Mendillo, new director of the Harvard Endowment Fund, made clear that they would take steps to manage capital and investment decisions autonomously, rather than invest them in private equity funds and hedge funds.　　Last year, the 37 billion-dollar endowment fund lost 30% per cent. They had to make some kind of concession to attract the buyers ' money. Goldman Sachs agreed to open a special account for China Investment Corporation (CIC) and charge a relatively low rate, compared with the Coller capital, which refused to accept investors ' money through bespoke accounts.