Thursday, November 23, 2006

Private equity

Private equity : "It has accurately been suggested that something dies inside us every time a friend succeeds. The rise of private equity means that fits of pique of the kind simulated above are heard with growing regularity. According to statistics company Dealogic, the total value of private equity transactions this year in the UK is already £20bn more than for 2005, at £63bn. Worldwide buyouts are $250bn ahead at $604bn."

Saturday, November 18, 2006

Energy investment Talks about the investment in clean energy.

"One estimate puts the total investment going into clean energy at $63 billion this year, up from $49 billion last year and just $30 billion in 2004. Some supposedly green business is more relabelling than revolution—companies flogging slightly more efficient versions of standard technologies as exciting innovations—but there is also a flood of money into new energy technologies. Clean energy now gobbles up almost a tenth of America's venture capital. After years of wondering what would be the next big thing after the dotcom boom, America's technology industry is betting on alternative energy (see article). "

Fine art

The talks about the market for fine art. Is this another symptom of the excess liquidity in the world?
"What went wrong? Observers in the room noted an absence of American buyers, perhaps because of a fear of flying or a weakening dollar. The dealers' fingers were pointed at the auction houses for posting forbidding estimates. The auction houses attempted to distract attention by talking up their (few) successes. All were united in the hope that the poor sales were just a blip, and not the first sign of a turn in the market. "

Thursday, November 16, 2006

Exchange-Rate Models

Engel on the latest exchange rate models.

Exchange-Rate Models: "Recent research that my co-authors and I have undertaken, as well as related research by other NBER researchers, suggests that theoretical models of foreign exchange rates are 'not as bad as you think.'"

Monday, November 13, 2006

Tesco Clubcard

UK - Eyes in the till:
" 'It was the first time we presented to the board. We told them what we had found. When we'd finished there was this deadly silence - I don't know whether it lasted 30 seconds, but it felt like 30 minutes, as I recall! There was this hush and my heart dropped a little bit.'
The silence was broken by Lord MacLaurin, uttering his now legendary line: 'What scares me about this is that you know more about my customers after three months than I know after 30 years.'"

Sunday, November 12, 2006

Social dimension to consumption

The Economist on the way that we buy things that are popular. There is clearly a certain comfort in knowing that others have bought the same thing. Some of the costs of finding out about quality are removed.
Swarming the shelves:
"And the psychology that works in physical stores is just as potent on the internet. Online retailers such as Amazon are adept at telling shoppers which products are popular with like-minded consumers. Even in the privacy of your home, you can still be part of the swarm. "

This can be linked to the puchase of popular items and means of communication. The star system.


Small scale schools. Is this an equivalent of micro-finance. Small steps making a big difference.
Private schooling in Pakistan:
"The key element in their rise is their low fees-the average fee of a rural private school in Pakistan is less than a dime a day (Rs.6). They hire predominantly local, female, and moderately educated teachers who have limited alternative opportunities outside the village. Hiring these teachers at low cost allows the savings to be passed on to parents through low fees. This mechanism-the need to hire teachers with a certain demographic profile so that salary costs are minimized-defines the possibility of private schools: where they arise, fees are low. It also defines their limits. Private schools are horizontally constrained in that they arise in villages where there is a pool of secondary educated women. They are also vertically constrained in that they are unlikely to cater to the secondary levels in rural areas, at least until there is an increase in the supply of potential teachers with the required skills and educational levels."

Tuesday, November 07, 2006

Private equity

The Economist.comon the attraction of media for private equity.
Private-equity firms like media companies better than public markets do. Public markets love a growth story. Private equity appreciates cash flow. Radio and television stations and even newspapers throw off loads of cash, which private-equity firms can borrow against, using this leverage to repay their equity fast. That is true even of businesses whose cash flow is in long-term decline, such as newspapers, as long as the rate of decline is relatively predictable. The biggest risk in many of the current batch of deals is that the private-equity firms discover the cash-flow models to be less predictable than they thought, says Colin Blaydon of Tuck Business School's Centre for the Study of Private Equity and Entrepreneurship.