WEST PALM BEACH, FL (www.hedgeco.net) – Recently many hedge fund companies have moved into the realm of buy-out companies. Such competition has threatened the buy-out industry, partly due to theefficiency with which hedge funds close such deals. There is also the issue of significant cash pile of hedge funds which some buy-out industry participants see as a growing concern, which may pose aserious problem to the ways in which the industry has traditionally earned their living.
Addressing such concerns in a recent conference in Frankfurt, David Rubenstein, founder of the US private equity giant, The Carlyle Group, has warned �buy-out groups will become dinosaurs if they do not position themselves better in competition with hedge funds.� Another buy-out industry participant, Henry Kravis, the founder of KKR firm also raised his concerns about such development.
Kravis however noted that hedge fund companies do not have expertise and necessary skills to succeed in such business; he nevertheless said hedge funds were a risk. Rubenstein said his firm is taking the battle to hedge funds as well by developing and managing their own hedge funds. Rubenstein noted, �Competition from hedge funds to buy companies will continue until there are large losses.”
To this effect, Carlyle Group is launching hedge fund of funds, and may be launching new hedge funds prior to the end of 2005. Other private equity firms seem to be adopting such model as well. The Texas based Blackstone, Bain and Texas Pacific Group have already launched their own hedge fund management vehicles, as industry analysts predict a convergence of hedge funds and private equity businesses in the coming years.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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