Thierry Baudon, MID EUROPA PARTNERS
Among GP groups focussed on Central and Eastern Europe, Mid Europa Partners has always been at the forefront of those prepared to push the boundaries. Aside from having completed the largest deals in Slovenia, Slovakia and Serbia, the firm also put to bed the region's first-ever dividend recap (Hungary's Invitel) and its first allbond LBO financing and floating rate note issuance (Bite, the Baltic mobile operator). Deals like this ensure that any strategic moves by the London-based firm headed by French national Thierry Baudon, a former IFC and EBRD executive, are carefully scrutinised. In October last year, Mid Europa raised a new €1.5 billion fund – a record for the region. Where would it look for deals, now that interest in the telecom sector appeared to be waning? Part of the answer seems to lie in the region's consumer boom and Mid Europa – true to form – is leading the charge.Witness, for example, the firm's buy-and-build play in Polish healthcare, which resulted in the largest operator in the sector. Others, perhaps less experienced, will attempt to follow.
Antonio Bonchristiano, GP INVESTMENTS
In the vanguard of Brazilian private equity, Antonio Bonchristiano is among the leading pack in Latin America's hottest private equity market and making his move on the rest of the region. The co-chief executive of GP Investments and his colleagues are so confident in the success of the firm that its latest $1.3 billion fund includes a whopping $400 million from GP's own partners. The fundraising effort matched the Latin American record previously set by Advent International. Private equity commitments have been flowing into Brazilian funds as LPs have become aware of improvements to the country's investment environment, including a robust local IPO market, and an upgrade to investment-grade rating by US rating agency Standard & Poor's. Not content to conquer its home market, GP has opened an office in Mexico City, the first stage of the Brazilian firm's pan-Latin American expansion of both deal flow and physical presence. Bonchristiano plans to follow that office with one in the Southern Cone of Latin America. As investors clamour for Latin American exposure and particularly the booming Brazilian market, Bonchristiano's bold moves appear timely.
DAVID BONDERMAN, TPG
David Bonderman doesn't just refuse to suffer fools gladly – he refuses to suffer even highly successful rivals inching ahead of his powerful private investment franchise. Gradually and without fanfare, TPG has established major businesses around the world in almost every strategy.“At the end of the day there is no reason why private equity, like financial markets, shouldn't follow GDP,” he said last year during a conference panel discussion with The Carlyle Group's David Rubenstein and other buyout titans. He quipped: “Rubenstein may be there first, his passport may have more stamps. But [we're] coming.” Bonderman's expansionary vision has clearly buffered TPG from credit dislocation. Most recently TPG sealed Russia's largest deal, an $800 million pure equity stake in the country's biggest pharmaceutical distributor, and also inked a $288 million deal for a minority stake in Israel's Strauss Coffee. In the US, the firm has been on a distressed debt and asset buying spree: TPG led a $7 billion cash infusion into US bank Washington Mutual, purchased American Airlines' asset management division, and reportedly bought a chunk of the some $12 billion in unsyndicated LBO debt Citi sold at a discount. No wonder sovereign wealth funds are clamouring for a piece of its latest distressed debt fund, targeting some $7 billion.
PALANIAPPAN CHIDAMBARAM, INDIAN FINANCE MINISTER
Around the middle of last year, Indian Government officials revealed that the extraordinary sum of $450 billion would need to be spent over five years on the country's infrastructure. If this did not happen, India's economic boom would be under threat. Cheerleader-in-chief for Indian infrastructure has been Finance Minister Palaniappan Chidambaram.“We are a trillion dollar economy.We can do it,” he told a meeting of the Commonwealth Business Council last year, referring to the ambitious fundraising plan. Ever since then, he has been loudly and repeatedly banging the drum – and has always encouraged private equity capital as part of the solution. In response to the call, a swathe of funds targeting Indian infrastructure have been raised in recent months.
SIR RONALD COHEN
The place of Cairo-born Sir Ronald Cohen in the private equity annals is already secure: as co-founder of Apax Partners, he was instrumental in building one of Europe's most admired industry participants before demonstrating what a wellcrafted succession plan might look like. Now the financier is at it again: Sir Ronald is chairman of the board of Bridges Ventures, which is using private equity-style investment methods to help channel capital and investment management knowhow into some of the most deprived regions in the UK. At a time when voluntary engagement and socially responsible investment are increasingly hot topics, Sir Ronald is doing important work in this area, which is bound to inspire his industry peers.
Jeremy Coller, COLLER CAPITAL
As tired old clichés go, the need to “think outside the box” as a prerequisite for success in business is definitely up there. However, in pondering Jeremy Coller's role in private equity, it is tempting to allow it: if there is a box in the asset class, this alternative investment pioneer almost certainly does his thinking elsewhere. Relying on an unorthodox mix of creativity, conviction, cheek and spontaneity, Coller has built his eponymous investment firm into one of the leading players in private equity secondaries. Less well known is the fact that through its activities, Coller has amassed one of the largest technology portfolios in the world. The firm has also set aside resources to invest in the monetisation of intellectual property, and that is why we put its founder on this list: IP investing could well become the next big thing in venture capital, and if it does catch on, it wouldn't be the first trail that Jeremy Coller has helped blaze.
HERMAN DAEMS, INTERNATIONAL PRIVATE EQUITY AND VENTURE CAPITAL VALUATION GUIDELINES BOARD
Grandly named and with a grand ambition, the International Private Equity and Venture Capital Valuation Guidelines Board was created in 2005 to provide guidance on how private equity firms around the world should be reporting to their investors. The IPEV guidelines seek to incorporate both IFRS and US GAAP requirements, with the core principle being that of “fair value” reporting. In the wake of the credit crunch, and the scale of losses exposed by those financial institutions forced to “mark to market”, issues surrounding reporting are very much centre stage. As IPEV chairman, esteemed industry veteran Herman Daems is at the forefront of the debate. What's more, he's guaranteed to stay in the spotlight for a while yet: later this year, IPEV will conduct a formal review of its guidelines.
ALISTAIR DARLING, UK CHANCELLOR
When he delivered his maiden pre-Budget report on 9 October 2007, softly spoken Scotsman Alistair Darling could scarcely have struck a more discordant note with the UK private equity industry if he'd taken his lead from a certain German politician and described them as locusts. In abolishing capital gains tax taper relief (10 percent at its lowest) from April 2008 and introducing in its place a flat rate of 18 percent, Darling ensured that carried interest would from that date be taxed at a higher rate in the UK than in France, Italy and the US. The effects of another measure, which saw the introduction of a £30,000 tax charge on non-resident individuals, would be felt beyond private equity – but private equity executives were specifically mentioned by Darling in this context. Some claimed that the new CGT rate in particular had missed its intended target as it would hurt owners of SMEs more than private equity pros – not that this would come as much comfort to the asset class given that such entrepreneurs are its lifeblood. In any case, one way or another Darling has forced change on the UK private equity industry: either it must stay onshore and find ways of accommodating the new tax regime, or – as some have predicted – increasingly move offshore.
JOSEPH DEAR, WASHINGTON STATE INVESTMENT BOARD
As executive director of the Washington State Investment Board, Joseph Dear commands one of the largest pension funds in the US at $84.8 billion in assets under management. That amount alone makes Dear a towering figure among institutional investors. Furthermore, his well-documented embrace of alternative assets will continue to make limited partners take a second look at their own allocation policies. Last November, Washington voted to increase its private equity allocation from an already-lofty 17 percent to an extremely bullish 25 percent. Dear has encountered criticism from some quarters for the move, but says the asset class' track record “gives us a lot of confidence that this is an advantage”.With the larger buyout funds that Washington has traditionally backed having struggled with financing difficulties since the middle of last year, the organisation will be carefully scrutinised for any hint that its confidence is wavering.
NIGEL DOUGHTY, DOUGHTY HANSON
If any private equity firms still aren't entirely sure what 'ESG' means, they'd better get clued up soon – and perhaps a conversation with Nigel Doughty, joint chief executive and co-founder of European mid-market GP Doughty Hanson, would help. Underlining its commitment to environmental, social and governance (ESG) issues, the firm has taken a number of seminal steps. For example, it was the first private equity firm to have signed up to the United Nations' Principles for Responsible Investment and recently hired former KPMG sustainability expert Adam Black to address ESG issues within portfolio companies. For those who may be tempted to think that such dedication to the cause is, while admirable, not essential – think again. Increasingly, issues like those prioritised by Doughty Hanson are becoming a fundamental part of limited partner due diligence. This is one lead that other private equity firms will have to follow to ensure continuing success.
STEPHEN FEINBERG, CERBERUS CAPITAL MANAGEMENT
Lakes of ink have been devoted to how Cerberus Capital founder Stephen Feinberg is giving private equity a bad name because of his famous penchant for reclusiveness and secrecy. Even more has been lavished on how Cerberus' handling of Chrysler – a portfolio company and symbol of American industrial prowess – will dictate how the public perceives the industry. For sure: Feinberg's relationship with the media and the eventual outcome of the Chrysler investment will carry broad implications. However, Feinberg's emphasis on the operational improvement of portfolio companies could prove to be of wider importance, as returns based on financial innovation alone are extinguished by the credit crisis. Cerberus employs 107 operational experts dedicated to restructuring and adding value to portfolio companies.
FANG FENGLEI, HOPU INVESTMENTS
Those with high hopes for China as private equity's next major frontier are carefully watching the progress of Fang Fenglei. Seen as the gold standard for home-grown Chinese private equity, Fenglei has a Goldman Sachs pedigree and a superstar reputation. In 2007, he gave up his day-to-day duties running Goldman's China joint venture Goldman Gao Hua Securities, where he remains as chairman, to launch his own private equity operation. Hopu Investment Management found its footing quickly, setting up a $2 billion fund that reportedly includes $1 billion from Singapore's Temasek Holdings, and $300 million from Goldman Sachs. Having made just one investment by April this year, the jury is out on the fund's success – but the verdict will be keenly awaited by those anticipating the emergence of a high-profile Chinese private equity champion.
Paul Fletcher, ACTIS
“The positive power of capital” is a slogan you will find on the website of emerging markets investor Actis. And, as the role of private equity in helping to invigorate the economies of the developing world is increasingly acknowledged, it is clear that the London-based firm will be centre stage. The Actis footprint reaches far: over 120 investment professionals in 14 countries managing more than $6.5 billion of funds. Perhaps most impressive of all is the firm's penetration into Africa, where it has 30 professionals and a portfolio spread across 19 African countries. Africa is increasingly on the private equity map, and Actis – headed by senior partner Paul Fletcher – is in the vanguard in helping to put it there.
J CHRISTOPHER FLOWERS, JC FLOWERS & CO
J Christopher Flowers is spearheading two increasingly popular and controversial trends within private equity: investing in troubled financial institutions, and raising huge commitments from sovereign wealth funds. The former Goldman Sachs financier was eyeing beleaguered banks and brokerages well before the recent spate of private equity-led bailouts, and firms are now studying Flowers' successes (Shinsei Bank) and failures (Sallie Mae) as they move into the financial space. Moreover, the Chinese Investment Corporation's recent investment of $4 billion in JC Flowers' latest fund may not sit well with policymakers uncomfortable with foreign capital owning – albeit indirectly – highprofile financial institutions. The success or failure of the next phase in the Flowers story may carry industry-wide consequences.
BILL FORD, GENERAL ATLANTIC
In a world without leverage, General Atlantic may choose to point out that, since inception, it has preached the gospel of growth capital. Now its time has come again and GA's chief executive Bill Ford has not been shy in defending his strategy against the broader backlash that private equity has endured. In an open letter to UK newspaper
Tom Gibian, EMERGING CAPITAL PARTNERS
In many peoples' eyes, African private equity – or at least African private equity outside South Africa – is still seen as frontier territory. But Emerging Capital Partners (ECP), with former investment banker Tom Gibian at the helm, is convincingly demonstrating that Africa is a big thing now rather than 'the next big thing'. ECP is the first GP to have more than $1 billion for investment across Africa. The firm's most recent $523 million pan-Africa fund is its fifth and, since it was launched in 2000, the firm has invested in no less than 30 African countries. Furthermore, 16 of the firm's 25 staff are based in various African locations. Make no mistake: this is a firm committed to Africa and seemingly doing very well. African private equity is certain to benefit.
PHIL GOLDSTEIN, BULLDOG INVESTORS
Hedge fund manager Phil Goldstein of Bulldog Investors isn't afraid of picking a fight with the SEC. In 2006, Goldstein successfully blocked the regulator from forcing hedge funds to list. His new target is Regulation D of the Securities Act of 1933, which prohibits non-registered funds from marketing to the public. What prompted this latest crusade was an enforcement action by the Secretary of the Commonwealth of Massachusetts, after Bulldog replied to an inquiry made through its website. Bulldog's site was shut down, but Goldstein is expected to file suit in a DC court soon, charging that such an interpretation of Reg D prevents any hedge fund from legally operating an open website. If he wins the case, hedge funds – and, crucially, private equity funds as well – may be able to speak freely for the first time about their fundraising efforts without fear of action being taken by the SEC.
With due apologies to Steve Schwarzman, former US vice president Al Gore has become the most recognisable face in private equity. Whether it's his London-based investment firm Generation Investment Management closing a $683 million fund or his appointment as a partner to Kleiner Perkins Caufield & Byers, Gore's activities inside the industry generate an incredible level of interest outside. Gore's fame and media savvy could prove a valuable asset not only to Kleiner Perkins but all of private equity, as he has the potential to improve the public's understanding of and comfort level with the industry. Moreover, Gore seems like the natural spokesman for an increasingly popular area of investment – cleantech. Riding a wave of increased investor appetite for green technology vehicles, Generation's Climate Solutions Fund, closed last April, will make investments of between $25 million and $30 million in a mix of private and public companies developing solutions to global warming. With Gore's signature fund leading the way, private equity will likely become a financial driving force behind the sustainability movement.
GUY HANDS, TERRA FIRMA CAPITAL PARTNERS
Don't hand him a rulebook and expect to get it back in one piece: Guy Hands' formidable track record is built on a deep-rooted disregard for conventional thinking on how companies and entire industry sectors ought to be run. The latest example of his inimitable style is his biggest challenge yet: in buying music label EMI last year, Hands placed a huge bet that he can reinvent the business model of an industry widely thought to be in terminal decline. Even more intriguingly, he has absolutely embraced the publicity that came with the deal. If the turnaround fails, the private equity industry could lose a figurehead. But if Hands succeeds, EMI will be a textbook example of the transformational powers of private equity – and thus a welcome boost to the industry's public image.
AHMED HEIKAL, CITADEL CAPITAL
Founded as recently as 2004 by Ahmed Heikal, Cairo-based private equity firm Citadel Capital has quickly made a name for itself through some eyecatching transactions. The $1.41 billion sale of Egyptian Fertilisers to Dubai's Abraaj Capital in June 2007, for example, was the largest secondary buyout ever seen in the Middle East and North Africa (MENA) region. Nor is Citadel playing it safe. It has become a leading proponent of frontier market investing, setting up a fully owned subsidiary in Algeria with another one planned in Libya. What is more, the firm has urged other GPs to follow its lead into these promising but embryonic locations. In light of what some now see as a surplus of liquidity in the Gulf markets, don't be surprised to see this advice being acted on.
ROBERT HERZ, FINANCIAL ACCOUNTING STANDARDS BOARD
Private equity CFOs may have been cursing the name of Robert Herz, chairman of the Financial Accounting Standards Board (FASB), as FAS 157 went into effect last November. The chairman advocated stretching the boundaries of fair value accounting to include the private equity space. Already the impact is being felt, not least at Bethesda, Maryland-based American Capital Strategies, the publicly traded private equity firm that reported a loss of $813 million in the first quarter of this year as a result of implementing fair value accounting. Not all firms, however, will face such drastic consequences for valuations. Some have been moving towards the FAS 157 standard for a number of years.
BERTHOLD HUBER, IG METALL
With over 2.3 million members, IG Metall is Germany's most powerful trade union – and no friend of private equity. For years, it has been demanding new legislation making it more difficult for financial investors –
LOU JIWEI, CHINA INVESTMENT CORPORATION
Former Chinese Deputy Finance Minister Lou Jiwei has quite a job on his hands in his first-ever role as a fund manager. As head of the China Investment Corporation (CIC), he has the task of increasing returns by diversifying China's enormous foreign exchange reserves into equities.With $200 billion at his disposal – around $62 billion of which is reportedly earmarked for investments abroad – there is no shortage of pressure weighing on Lou's shoulders. This was firmly underlined following CIC's $3 billion investment in listed alternative assets giant The Blackstone Group in May last year.With the stock's subsequent decline has come criticism from some quarters within China of CIC's strategy, despite Lou's protestations that his bet should be judged over the long term. In February this year, it emerged that CIC was backing a new JC Flowers fund to the tune of $4 billion – evidence that private equity was still high on its priority list. The CIC is now part of a sovereign wealth fund premier league that is fast transforming the dynamics of private equity fundraising. With Lou at the steering wheel, it is also ensuring that China is now writ large on the global private equity map.
MAN ON THE STREET
Accounting standards – and specifically the way companies have to account for the liabilities of their pension funds – sounded the death knell for defined benefit schemes, which guaranteed employees an annual sum on retirement. These became too expensive as their employees enjoyed longer lives and implied too much risk on the balance sheet as pension scheme valuations seesawed with stock markets. The time to transfer that risk to the scheme beneficiary is now. Defined benefit schemes have long been the lifeblood of private equity fundraising. Their demise means the “man on the street” is increasingly responsible for his own provision through defined contribution schemes and personal pensions. Yet access to traditional private equity limited partnerships has tended to be the preserve of super high-net-worth individuals. How then to get that extra juice and super-charge your funds for a ripe old age? Witness the current boom in quoted private equity, or “private equity for the masses”.
MICHAEL KLEIN, CITI
In June 2006, private equity enthusiast Michael Klein had lunch with Steve Schwarzman at the Blackstone founder's house in the Hamptons – and convinced his host that a Blackstone IPO at an astronomical valuation really was a possibility. The rest is history already. Equally critical was Klein's intervention earlier this year when he travelled to Abu Dhabi to negotiate a $7.5 billion capital injection into Citi, his crisis-stricken employer. Both episodes underline Klein's powers as a deal-maker and strategist. “He is the most creative person I've ever worked with,” says a high-ranking Citi colleague. Now installed in a new role as CEO of Institutional Clients, don't bet against Klein returning to his first love private equity and advising some of the industry's biggest names – even if the window for big-ticket IPOs ` la Blackstone has now closed.
LEE MYUNG-BAK, PRESIDENT OF SOUTH KOREA
It would be interesting to know the number of times the word “backlash” has been used in articles about private equity in South Korea. Suffice to say, foreign investors in the country have not always felt entirely welcome – which may or may not have to do with the Government's sense of embarrassment at the huge profits reaped by some Western GPs which had snapped up assets at rock bottom prices following the Asian financial crisis. The fiercely pursued legal investigation into the activities of Texan distressed investor Lone Star perhaps represents the low-point in South Korea's perception of private equity and private equity's perception of South Korea. But thanks to new President Lee Myung-bak, all that appears to be changing. A former businessman and open-market advocate, Lee is fast winning friends overseas. “Lee has a very inviting approach. I think financial firms' investment in Korea will certainly rise under his leadership,”said Goldman Sachs vice chairman Robert Hormats in a recent interview with Reuters. Lee's recent assertion that he will remove legislation to entice foreign investment would have been music to the ears of those in the private equity industry who have South Korea on their radar.
Bob Long, CONVERSUS CAPITAL
Just as GPs are going public, Conversus Capital has shown that LP capital can be both permanent and public. Bob Long and team co-created the firm along with Oak Hill Investment Management and backers including CalPERS and Harvard Management. Long, the former head of Banc of America Strategic Capital, saw an opportunity to take public a diverse portfolio of fund interests, but with the distributions being reinvested back into new private equity partnerships and some direct situations. Conversus currently has roughly $2 billion in net asset value, and this is expected to grow over time, snowballing Conversus into a major source of private equity investment capital. It's a great business plan and one that will be copied by any fund of funds manager and advisor that can pull it off.
Doug Lowenstein, PRIVATE EQUITY COUNCIL
A dozen or so of the US' largest private equity firms have charged Doug Lowenstein with what they've neglected: explaining themselves. Head of industry lobbying group the Private Equity Council, Lowenstein is effectively private equity's voice on Capitol Hill, and, to a certain extent, in America's living rooms. And he's well up to the task. He was previously president of US video game lobbying group Entertainment Software Association, and notably weathered public and legislative outcry over the game
BILL MACAULAY, FIRST RESERVE
SHEIK MOHAMMED BIN RASHID AL-MAKTOUM
This man did not set out to change private equity
Dennis Malamatinas, MARFIN INVESTMENT GROUP
This former chief executive of Burger King is unapologetic about having it his way. Dennis Malamatinas, a Greek native who held a string of senior executive positions around the world before trying his hand at managing a private equity firm, is today the chief executive of Athens-based Marfin Investment Group, which shocked the private equity market last year by raising a whopping €5.19 billion on the Athens Stock Exchange. Under Malamatinas, Marfin is combining a rare strategy (private equity in Southern Europe) with a unique structure (public ownership). Malamatinas seems intent on taking the principles of private equity to extremes. To the assertion that private equity is a long-term asset class, he responds that Marfin has no exit horizon – it may hold some of its portfolio investments in perpetuity if it sees fit to do so. On the subject of alignment of interests between managers and investors, Marfin's structure can't be beaten. Don't be surprised to see other private equity firms attempt to have what Malamatinas is having.
CHARLIE MCCREEVY, EUROPEAN UNION INTERNAL MARKET COMMISSIONER
Faced with the constant threat of greater regulation, European private equity firms are bound to find the presence of industry defenders within the European Commission deeply reassuring. And arguably the EC's leading private equity defender is Charlie McCreevy. Confronted by the stinging criticisms of the asset class that have been leveled at it in recent times by some union leaders and politicians, McCreevy has not been slow to highlight private equity's more positive qualities. Speaking at a conference hosted by Allied Irish Bank earlier this year, he said: “I have never viewed private equity as anything other than a force for good in advancing economic progress and ensuring that Europe adapts to the realities of the global marketplace.” Nor should his support be considered unqualified: McCreevy has been as insistent as any arch-critic that private equity firms must display full transparency. As a friend of private equity, his advice will be carefully listened to – and almost certainly acted upon.
DMITRY MEDVEDEV, RUSSIAN PRESIDENT
It is impossible to say exactly what effect Vladimir Putin's successor will have on his country's private equity firms and rival foreign investors. Suffice it to say, there will be an effect. Russia's stock market is telling Dmitry Medvedev that investors are losing confidence as inflation accelerates and taxes curb profits at the nation's biggest oil producers. Russia's RTS Index through to the beginning of May showed its worst start to a year since 1998, when the Government's $40 billion default sent equities around the world tumbling. But perhaps this will represent an opportunity for domestic growth capital investors triggering the first wave of public-to-privates. Medvedev is unlikely to shift dramatically from the policies of Putin, his predeceesor, mentor and now Prime Minister. Liberals argue the duo are a step backwards for democracy, but Russians are enjoying a fresh sense of pride in their country and capitalists have thrived in the stability and consistency of fiscal policy. Private equity firms will be looking for a steady hand.
KHALDOON AL MUBARAK, MUBADALA DEVELOPMENT COMPANY
In September 2007, Mubadala Development Company became a household name in global private equity when it took a 7.5 percent stake in The Carlyle Group. In May 2008, the acquisitive group controlled by the government of Abu Dhabi made headlines once again when it announced tha it was in the process of obtaining a credit rating from one of the leading credit agencies. Once completed, the move will make Mubadala the first state-owned investment vehicle in the Middle East with a rating, and thus an unusually transparent member of its peer group. Khaldoon Al Mubarak is the man in charge and he has already raised the bar for sovereign wealth funds around the world.
ARIF NAQVI, ABRAAJ CAPITAL
Abraaj Capital, the Dubai-based investment firm, is deploying ever-larger quantities of capital in buyouts, growth equity, infrastructure, real estate and special situations across the Middle East, North Africa and South Asia. Arif Naqvi is the driving force and “moving at a very fast pace”, according to an observer familiar with the firm. Speed and clarity of vision have allowed Naqvi to create a well-oiled fundraising and deal machine, which in turn is doing more than most to establish private equity as a source of capital to businesses in the Middle East and its neighbouring economies. In addition, Naqvi has become a champion of sustainability management – and is using his ever-increasing profile in the Arab region and beyond to promote the concept and its application in business and finance. This is a bandwagon picking up speed, and Naqvi is one of the first private equity professionals globally to have jumped right on top of it.
POUL NYRUP RASMUSSEN, MEMBER OF THE EUROPEAN PARLIAMENT
Former Danish Prime Minister Poul Nyrup Rasmussen is European private equity's bogeyman
Ivan Ross, GOLDMAN SACHS
If private equity firms are square pegs, Ivan Ross is credited with fitting them into round holes. The co-head of the Hedge Fund Industry Group, Ross was an key architect of the $5 billion KKR Private Equity Investors IPO, which created a (much-envied) way for Kohlberg Kravis Roberts to realise the value of its brand on the public markets. He was also involved in the Fortress Investment Group IPO, which saw the alternative investment giant sell a piece of its management company to the public. The growing consensus is that all large private equity firms, and many medium and small ones, will eventually have public affiliates. Ross is poised to structure paths to the public market for many of these groups, and to get handsomely paid in the process.
DAVID RUBENSTEIN, THE CARLYLE GROUP
Considering the jaw-dropping amount of capital The Carlyle Group has raised over the last decade, it seems a safe bet that cofounder David Rubenstein will continue to influence the industry in myriad ways. Last month, the Washington-DC based firm topped the PEI 50,
BADER AL-SA'AD, KUWAIT INVESTMENT AUTHORITY
With approximately $250 billion in his care, Bader al-Sa'ad is at the helm of one of the world's largest pools of sovereign wealth capital in the world. Admittedly, his war chest is substantially smaller than that of Abu Dhabi Investment Authority, which is believed to manage at least three times as much. Both organisations are hugely influential investors in private equity, especially through their fund investment activities. Nevertheless, al-Sa'ad stands out as a publicly visible member of the otherwise more secretive sovereign wealth elite, and has forcefully argued against regulatory pressure on government-owned investment vehicles. Under his leadership, KIA will remain formidable – as an investor and SWF advocate generally, and as a partner and rival of private equity as well.
LEON SHAHINIAN, CALPERS
People say you have to go to New York, London or Dubai to meet the financial world's movers and shakers, but they shouldn't forget Sacramento. California's capital is home to arguably the world's most influential limited partner, The California Public Employees' Retirement System (CalPERS), whose alternative investment programme is headed by Leon Shahinian. In the tradition of predecessor Richard Hayes, now with Oak Hill Investment Management, Shahinian has worked since 2004 to make CalPERS' $42 billion private equity programme increasingly aggressive. It recently developed an inflation-linked asset class, has been snapping up stakes in GPs, backing complex start-ups like fund of funds Conversus Capital and seeding socially-conscious firms like Health Evolution Partners. What's more, Shahinian's not afraid to flex his policy muscles: the pension frequently weighs in on industry issues, most recently speaking out against a proposed state bill that would have limited investment in sovereign fund-linked GPs. Want to know what other public pensions will do in five years? Take a look at Shahinian's 2008 agenda.
LARS THUNELL, INTERNATIONAL FINANCE CORPORATION
Sovereign wealth funds have not had a great press recently, not least when being singled out by politicians as a possible threat to national security. But where others see only the dangers associated with such funds, the International Finance Corporation's (IFC) chief executive Lars Thunell sees opportunity. Giving a recent press briefing, Thunell spoke of his ambition to foster sovereign wealth investment in emerging markets – whether investing alongside the IFC, in IFC-sponsored funds of funds, or in joint ventures. He said that SWFs would gain not just financially but also reputationally from their involvement. Thunell, in other words, is attempting to lead SWFs into pastures new – and, in so doing, encourage some rather more favourable headlines.
SIR DAVID TWEEDIE, INTERNATIONAL ACCOUNTING STANDARDS BOARD
The man who was once branded “the most hated accountant in Britain” by a UK newspaper is now poised to take over the world. Sir David Tweedie, chairman of the International Accounting Standards Board, caused one revolution in private equity when he compelled UK companies to account for their pensions at market value. True to the predictions of Tweedie's critics, the rule did lead to greater volatility in company accounts with the value of pension funds vacillating in line with stock markets and bond markets. The volatility has slowly throttled defined benefit schemes. Now, Tweedie's beloved international financial reporting standards (IFRS) are on the cusp of adoption in the US. Though the US is much further down the road of market valuation of assets, Tweedie's pursuit of clarity in accounting is rarely without repercussions.
THE 44TH US PRESIDENT
Last year's proposals to double the tax rate for carried interest and raise the tax on publicly traded partnerships such as Blackstone's stalled in Congress – and remain stalled as neither party wants to pursue tax hikes in an election year. Expect these proposals to return though, no matter who ends up with the keys to the White House. Should John McCain win, his promise to implement George W. Bush's proposed tax cuts could force Congress, likely still in Democratic control, to scramble for new ways of raising revenue. Both Democratic candidates, meanwhile, have promised to revoke the tax reliefs on the table in favour of middle class tax cuts and higher rates for capital gains. Whatever happens, private equity firms have an anxious wait ahead.
Erol Uzumeri, Teachers' Private Capital
Love deals, hate the road show? Then you'll envy Erol Uzumeri, head of Teachers' Private Capital, the $17 billion private equity arm of the Ontario Teachers' Pension Plan. Uzumeri is picking up where predecessor Jim Leech, now the pension's chief executive, left off, by assertively fusing direct investing with traditional fund and co-investments. While the model isn't unique to Teachers', Uzumeri's division looks more and more like a megafirm each day, having recently reshuffled its staff according to sector focus. In addition, one team is assigned to portfolio company value creation. It's doing deals worldwide (think New Zealand Yellow Pages); setting up mid-market funds in countries where it doesn't have people on the ground (think Turkey, China); targeting infrastructure in emerging markets (Chilean water); and opening global offices (London). Oh, and did we mention it is the lead sponsor in the pending $52 billion buyout of Canadian telecom giant BCE, the world's biggest proposed LBO to date?
SIVENDRAN VETTIVETPILLAI, AUREOS ADVISERS
London-based GP Aureos has been swift to recognise that social and environmental responsibility are key factors in delivering strong returns from its emerging markets-based portfolio companies. Back in 1997, the firm announced an agreement by which the IFC and other donors invested in selected Aureos-backed firms in order to assist them with such things as: reducing carbon emissions; improving energy efficiency; and reducing effluent discharges. Earlier this year, the firm launched a highly innovative HIV/Aids risk management programme for its East Africa portfolio backed by Norwegian development agency Norfund. Through the use of education, voluntary testing, counselling, drug treatment and nutritional supplements, the programme aims to reduce companies' healthcare costs by 60 percent. Given how prolific it has been on the fundraising trail, investors are clearly impressed by the Aureos approach to investing, which has been spearheaded by chief executive Sev Vettivetpillai. Expect rivals to carefully scrutinise Aureos' innovative methods of adding value in the hope of being able to emulate them.
SIR DAVID WALKER
Last summer Sir David Walker, a City of London veteran, embarked on a last-ditch attempt to save the industry from a concerted political campaign to constrain its activities. Under fire from private equity's harshest critics, the former investment banker led the industry's self-defence with a review of transparency and disclosure. Few credited Walker with much chance of success. Fewer still would have held their nerve as Walker did to produce such a measured riposte to trade unions, politicians and others with big buyouts in their sights. However, his independent review won the industry its continued right to self-regulation in the UK. After some initial resistance his guidelines have been enthusiastically embraced by big UK and UK-focused firms as a valuable marketing tool. Given the political pressure building in continental Europe, it is, sources say, only a matter of time before European trade associations follow suit with their own versions of Walker's guidelines. In sum: Walker's legacy to private equity will long outlive the headlines of last summer and is providing a substantial bulwark in its defence.
NOUT WELLINK, BASEL COMMITTEE ON BANKING SUPERVISION
When Nout Wellink's committee introduced the latest revision of the Basel accord, its intention was to create an international standard for banking regulators to use when determining how much capital banks need to put aside to guard against financial and operational risks. The committee almost certainly did not mean to alter the nature of private equity investing. But in 2008 the banks, reeling from the credit crunch, are facing a “double whammy” of unintended consequences with the introduction of Basel II. The latest accord ensures that risk is more accurately reflected on the banks' balance sheets. For every ?100 they lent in the past, they had to have ?8 on their balance sheet to cover the risk. That figure could now be many times higher. If banks make risky loans, they must have more capital to take that risk. And if banks can't find more capital, the result is that they won't be able to cover the same number of deals as in the past. Wellink, however unwittingly, may therefore be a key figure in the evolution of the private equity market in the post-cheap debt era.
WU SHANGZHI, CDH INVESTMENTS
'High-profile' is not a description that can be easily applied to Wu Shangzhi and the Chinese mid-market private equity firm he heads up, CDH Investments. The firm seems to have gone out of its way to avoid being in the limelight. Fortunately for its investors, it has also gained a reputation for an ability to identify equally elusive investment opportunities and harvest the pearls that other GPs, less familiar with the terrain, never get to see. This helps to explain why CDH's current fund raised $1 billion compared with the $310 million collected by its prior vehicle. Sources close to the firm cite the strong relationships it is able to establish with management teams as one of the keys to its success. Those managing the weight of money currently pushing at Chinese private equity's door will soon realize – if they haven't already – that quantum of money doesn't matter all that much in China. By heeding the lessons of CDH's success –heavy spadework by trusted, local professionals – success will be more attainable.
KATHY XU, CAPITAL TODAY
Kathy Xu is fast becoming a model for how local Chinese GPs can navigate the serpentine regulatory and cultural pathways to executing deals on the mainland. Known informally as Tie Niangzi, the “iron lady” of rainmakers, she's become an influential voice on behalf of the industry. As President of the China Venture Capital Association she's lobbied regulators to liberalise investment laws, even winning some concessions last year (though the Ministry of Commerce has since repealed those reforms). Despite such setbacks, she remains a vocal champion of the industry to regulators in Beijing. Xu launched her own firm in 2005, after leaving Baring Private Equity Partners, where she earned accolades for orchestrating the firm's first deals on the mainland. Since then, Xu's China fund has acquired 11 companies. Should she post some head-turning exits in the coming years, expect to see peers attempting to emulate her bold style.
SHEIKH NIZAM YAQUBI, ISLAMIC SCHOLAR
Given the excess of liquidity in the Middle East, it is not surprising that the region is seen as a potentially rewarding stopping point for those on the private equity fundraising trail. But for those investors who must ensure compliance with Islamic principles, committing capital to private equity funds is far from a straightforward matter. After all, under Sha'riah law, lending and borrowing money is frowned upon – raising question marks about whether, and under what circumstances, the use of leverage can be permitted. To resolve such challenging issues, the rulings of Islamic scholars are frequently called upon – and prominent among this group of intellectuals is Sheikh Nizam Yaqubi. Multi-lingual and a financial expert, Yaqubi is in such demand that he sits on no fewer than 55 Sha'riah supervisory boards and has written a host of articles and publications on Islamic finance. As the link between huge pools of capital and their commitment (or otherwise) to private equity funds, Yaqubi's carefully considered decisions have enormous repercussions.