New Masters Of the Universe: Private Equity Funds

"Two and Twenty

By Sachin Khajuria

(Currency, 248 pages, $28)

Critics of private equity funds hate them for what they do and for the money they make.

What they do is buy companies, whip them into shape and sell them back to investors after a few years. Funds often borrow most of the money they use to acquire a company, financing the rest with debt that will be paid by the rehabilitated company itself. Any unexpected disruption creates a risk of default. The strategy for mitigating that risk? Frequently, layoffs.

What they make is 2% of the value of the assets they manage each year, plus 20% of any profits, a lucrative compensation scheme called "two and twenty." No matter what happens, the fund wins: The 2% fee brings steady income, even if the investment crashes, and the fund takes a large piece of the profits of each successful investment. The U.S. government boosts the payout further with a tax perk called "carried interest." Fund managers aren't taxed on the profits until the company or investment is sold, and they pay the very low capital gains tax rate.

Sen. Elizabeth Warren, standard bearer for private equity's despisers, excoriates the industry for going after short-term profits at the expense of businesses' long-term prospects.

The Stop Wall Street Looting Act she and co-sponsors introduced in 2019 and re-introduced last year would end the carried interest tax break, add employee protections and bar dividends from a target company for two years after an acquisition.

In "The Bonfire of the Vanities" Tom Wolfe famously satirized bond traders as "masters of the universe." In the current environment, it's easy to imagine a scathing expose of private equity as the new masters. In "Two and Twenty: How the Masters of Private Equity Always Win," Sachin Khajuria has written precisely the opposite of such an expose. For Mr. Khajuria, a 25-year private equity veteran who rose to partnership at Apollo, "masters" is an honorific, deployed without a trace of Wolfe's irony. Mr. Khajuria believes private equity deserves to be defended.

He's right about the need for a defense.

Some criticism of private equity is well-founded, to be sure -- funds do siphon out value, and 70% of the large corporate bankruptcies filed in the past few years are companies owned by private equity.

But the public caricature obscures the benefits of private equity. Private equity funds often improve the companies they acquire or invest in, and they make loans that banks can't or won't.

Mr. Khajuria's sanitized portrayal of the industry, however, won't persuade many skeptics. He relies on "fictitious sketches" of a private equity firm -- blandly identified as "the Firm," headed by a saintly "Founder." The Firm seems largely to be modeled on Apollo, and many of the deals resemble Apollo transactions.

Early sketches supply helpful information about the structure of private equity funds, which typically have three layers: the "analytical base," where young associates begin; midlevel employees; and the partners, or managing directors, at the top. A committee anchored by the Founder vets each potential acquisition or transaction proposed by a partner and his or her team.

The vignettes enable Mr. Khajuria to show the wide range of industries and transactions in which private equity now operates. The Firm invests in "TV Corp" during the 2008-09 crisis; buys General Insurance Group, an insurance company that ran into trouble when fellow insurer AIG collapsed; persuades the founder of Charlie's Cookies to sell the company to the Firm, then remakes it by adding healthier alternatives to its famous cookies. The Firm extracts value wherever it can, distributing $300 million of General Insurance Group reserves in a dividend and borrowing $1 billion to make more dividends when it concludes General Insurance can handle more debt.

Mr. Khajuria sands out the industry's rough edges. "Let's concentrate on our work, and growth and size will follow," Founder says (with a smile) to a partner who predicts the Firm is on track for $1 trillion in assets. "If there's one thing I can't stand, it's greed." If the investment committee's questions reveal flaws in a proposal, "the deal team will be the first to admit it."

Because the story is told through fictional sketches, readers unfamiliar with the industry won't learn who the leading figures and firms in the industry are, and how their strategies differ. Other than an early reference to Blackstone, Carlyle and KKR -- three industry giants -- actual names of individuals and firms are almost entirely absent.

Private equity's ruthlessness does occasionally peek through. When a young partner proposes that the Firm agree to $20 million of bank fees to help finance a $2 billion deal, since the fees "were tantamount to a rounding error," Founder reminds him that they need to press "for every cent." After agreeing to purchase part of a business, the Firm improves its deal by battling over every feature of the transition: "the period between signing a deal and closing it for a carve-out is the ideal time for private equity to drive a harder bargain."

To defend private equity, Mr. Khajuria points to the complexity of the transactions and the industry's success. He also has a convenient human shield: retirees. Public pensions are responsible for 35% of investment in private equity funds. The irony here is that public pensions are forced to seek out investments with unusually high returns -- such as private equity -- because they have overpromised with their pension benefits and consistently failed to set aside enough money for them. This enables Mr. Khajuria to say, as he repeatedly does, that private equity funds are making money for "pension funds and other investors."

For readers unpersuaded by Mr. Khajuria's claims that "in private equity, capitalism has perfected its version of a virtuous circle," he suggests that private equity is too big and has insinuated itself too deeply into American life to be stopped. That may be the book's most persuasive point.

---

Mr. Skeel teaches bankruptcy law at the University of Pennsylvania Law School.” [1]

1. New Masters Of the Universe
Skeel, David. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 28 July 2022: A.15.

Prof. Gutas: COVID-19 gali sumažinti smegenis

„Virusologas pabrėžia, kad naujojo varianto Covid virusas yra tas pats, nes turi tą patį receptorių ir tą patį patekimo kelią, t. y. atakuoja tas pačias kraujagyslių sistemos ląsteles. 

 

Tai gali sukelti sunkų smegenų pažeidimą.

 

Pastebėta, kad viena iš vėlyvųjų COVID-19 komplikacijų yra bendras smegenų susitraukimas – ir tai paveikia nemažai žmonių, sakė virusologas prof. Włodzimierzas Gutas interviu „Polsat“. Jis pridūrė, kad virusas pirmiausia gali atakuoti smegenų kraujagysles.

 

Paklaustas, kodėl naujausias COVID variantas retesni koronavirusinei infekcijai būdingi simptomai, tokie, kaip skonio ar uoslės praradimas, akcentavo, kad sergant daugeliu infekcijų pradiniu laikotarpiu gana dažni simptomai pasikeičia vėlesniame viruso adaptacijos etape.

Nauji Omicron variantai sparčiai plinta, ypač BA.5 variantas yra ypač užkrečiamas. Yra daug požymių, kad jis gali būti atsparus esamoms vakcinoms ir gali užpulti žmones, kurie jau sirgo COVID-19. Taip pat atsiranda naujų simptomų.

 

Pasak prof. Guto virusas yra tas pats, nes jis turi tą patį receptorių ir tą patį patekimo kelią. – Tai daugiausia kraujagyslių sistemos ląstelės, todėl simptomai labai įvairūs, – sakė jis.

 

Jis taip pat priminė, kad skiepai nuo koronaviruso paruošia organizmą infekcijai, tačiau neapsaugo nuo pačios infekcijos ar ligų. „Visi būdai, kurie neleidžia virusui pereiti nuo asmens prie asmens, apsaugo nuo užteršimo“, – sakė jis."

 

Prof. Gut: COVID-19 can shrink the brain

“The virologist emphasizes that the covid virus in the new variant is the same because it has the same receptor and the same route of entry, i.e. it attacks the same cells of the vascular system. 

 

It can cause severe brain damage.

 

One of the late complications of COVID-19 has been observed to be overall brain shrinkage - and that affects a fair number of people, said virologist Prof. Włodzimierz Gut in an interview with Polsat. He added that the virus can primarily attack the vessels in the brain.

 

When asked why the latest variant of covid less frequent symptoms characteristic of coronavirus infection, such as loss of taste or smell, emphasized that with many infections, symptoms that are quite common in the initial period, change at a later stage of virus adaptation.

The new Omicron variants spread rapidly, especially the BA.5 variant is particularly contagious. There are many indications that it may be resistant to existing vaccines and may attack people who have already suffered from COVID-19. There are also new symptoms.

 

According to prof. Guta virus is the same because it has the same receptor and the same entry route. - These are cells mainly of the vascular system, therefore the symptoms are very diverse - he said.

 

He also reminded that vaccination against the coronavirus prepares the body for infection, but does not protect against the infection itself or against disease. "All activities that prevent the passage from individual to individual protect against contamination," - he said."

D.I. numato beveik visų mokslui žinomų baltymų formą

 „DeepMind išplėtė savo mikroskopinių biologinių mechanizmų duomenų bazę, tikėdamasi paspartinti visų gyvų dalykų tyrimus.

 

    2020 m. dirbtinio intelekto laboratorija, pavadinta „DeepMind“, pristatė technologiją, galinčią numatyti baltymų formą – mikroskopinius mechanizmus, lemiančius žmogaus kūno ir visų kitų gyvų būtybių elgesį.

 

    Po metų laboratorija pasidalijo įrankiu, vadinamu AlphaFold, su mokslininkais ir išleido daugiau, nei 350 000 baltymų, įskaitant visus žmogaus genomo ekspresuojamus baltymus, prognozuojamas formas. Tai iš karto pakeitė biologinių tyrimų eigą. Jei mokslininkai gali nustatyti baltymų formas, jie gali pagreitinti gebėjimą suprasti ligas, sukurti naujus vaistus ir kitaip ištirti gyvybės Žemėje paslaptis.

 

    Dabar „DeepMind“ išleido beveik visų mokslui žinomų baltymų prognozes. Ketvirtadienį Londone įsikūrusi laboratorija, priklausanti tai pačiai patronuojančiai bendrovei kaip ir „Google“, paskelbė, kad įtraukė daugiau, nei 200 milijonų prognozių į internetinę duomenų bazę, kuri laisvai prieinama viso pasaulio mokslininkams (https://alphafold.ebi.ac.uk). /).

 

    Su šiuo nauju leidimu DeepMind mokslininkai tikisi paspartinti neištirtų organizmų tyrimus ir paskatinti naują sritį, vadinamą metaproteomika.

 

    „Mokslininkai dabar gali tyrinėti visą šią duomenų bazę ir ieškoti modelių – koreliacijų tarp rūšių ir evoliucinių modelių, kurie iki šiol galėjo būti neaiškūs“, – interviu telefonu sakė Demisas Hassabis, „DeepMind“ generalinis direktorius.

 

    Baltymai prasideda kaip cheminių junginių stygos, tada susisuka ir susilanksto į trimates formas, kurios apibrėžia, kaip šios molekulės jungiasi su kitomis. Jei mokslininkai gali tiksliai nustatyti konkretaus baltymo formą, jie gali pabandyti iššifruoti, kaip jis veikia.

 

    Šios žinios dažnai yra gyvybiškai svarbi kovos su liga dalis. Pavyzdžiui, bakterijos priešinasi antibiotikams, išskirdamos tam tikrus baltymus. Jei mokslininkai gali suprasti, kaip šie baltymai veikia, jie gali pradėti kovoti su atsparumu antibiotikams.

 

    Anksčiau norint tiksliai nustatyti baltymo formą, reikėjo daug eksperimentuoti, naudojant rentgeno spindulius, mikroskopus ir kitus įrankius laboratorijoje. Dabar, atsižvelgiant į cheminių junginių, sudarančių baltymą, eilutę, AlphaFold gali numatyti jo formą.

 

    Technologija nėra tobula. Tačiau pagal nepriklausomus etaloninius testus jis gali nuspėti baltymo formą tokiu tikslumu, kuris konkuruoja su fiziniais eksperimentais maždaug 63 procentus laiko. Turėdamas prognozę, mokslininkas gali palyginti greitai patikrinti jos tikslumą.

 

    Klimentas Verba, Kalifornijos universiteto (San Franciskas) tyrėjas, kuris naudoja šią technologiją siekdamas suprasti koronavirusą ir pasiruošti panašioms pandemijoms, sakė, kad ši technologija „papildė“ šį darbą ir dažnai sutaupo kelis mėnesius trukusio eksperimentavimo laiko. Kiti naudojo šį įrankį, kovodami su gastroenteritu, maliarija ir Parkinsono liga.

 

    Ši technologija taip pat paspartino tyrimus už žmogaus kūno ribų, įskaitant pastangas pagerinti naminių bičių sveikatą. Išplėsta „DeepMind“ duomenų bazė gali padėti dar didesnei mokslininkų bendruomenei gauti panašios naudos.

 

    Kaip ir daktaras Hassabis, dr. Verba mano, kad duomenų bazė suteiks naujų būdų suprasti, kaip baltymai elgiasi įvairiose rūšyse. Jis taip pat vertina tai, kaip būdą ugdyti naują mokslininkų kartą. Ne visi tyrinėtojai išmano tokią struktūrinę biologiją; visų žinomų baltymų duomenų bazė nuleidžia įėjimo kartelę. „Tai gali atnešti struktūrinę biologiją masėms“, – sakė dr. Verba."

 

Naudojantis tekste nurodyta duomenų baze, paspaudę aminorūgščių liekaną pirminėje struktūroje, galite pamatyti, kur yra ši liekana tretinėje struktūroje ir kaip ten atrodo šios aminorūgščių liekanos struktūra.

 

A.I. Predicts the Shape of Nearly Every Protein Known to Science

“DeepMind has expanded its database of microscopic biological mechanisms, hoping to accelerate research into all living things.

In 2020, an artificial intelligence lab called DeepMind unveiled technology that could predict the shape of proteins — the microscopic mechanisms that drive the behavior of the human body and all other living things.

A year later, the lab shared the tool, called AlphaFold, with scientists and released predicted shapes for more than 350,000 proteins, including all proteins expressed by the human genome. It immediately shifted the course of biological research. If scientists can identify the shapes of proteins, they can accelerate the ability to understand diseases, create new medicines and otherwise probe the mysteries of life on Earth.

Now, DeepMind has released predictions for nearly every protein known to science. On Thursday, the London-based lab, owned by the same parent company as Google, said it had added more than 200 million predictions to an online database freely available to scientists across the globe (https://alphafold.ebi.ac.uk/).

With this new release, the scientists behind DeepMind hope to speed up research into more obscure organisms and spark a new field called metaproteomics.

“Scientists can now explore this entire database and look for patterns — correlations between species and evolutionary patterns that might not have been evident until now,” Demis Hassabis, the chief executive of DeepMind, said in a phone interview.

Proteins begin as strings of chemical compounds, then twist and fold into three-dimensional shapes that define how these molecules bind to others. If scientists can pinpoint the shape of a particular protein, they can decipher how it operates.

This knowledge is often a vital part of the fight against illness and disease. For instance, bacteria resist antibiotics by expressing certain proteins. If scientists can understand how these proteins operate, they can begin to counter antibiotic resistance.

Previously, pinpointing the shape of a protein required extensive experimentation involving X-rays, microscopes and other tools on a lab bench. Now, given the string of chemical compounds that make up a protein, AlphaFold can predict its shape.

The technology is not perfect. But it can predict the shape of a protein with an accuracy that rivals physical experiments about 63 percent of the time, according to independent benchmark tests. With a prediction in hand, scientistic can verify its accuracy relatively quickly.

Kliment Verba, a researcher at the University of California, San Francisco, who uses the technology to understand the coronavirus and to prepare for similar pandemics, said the technology had “supercharged” this work, often saving months of experimentation time. Others have used the tool as they struggle to fight gastroenteritis, malaria and Parkinson’s disease.

The technology has also accelerated research beyond the human body, including an effort to improve the health of honeybees. DeepMind’s expanded database can help an even larger community of scientists reap similar benefits.

Like Dr. Hassabis, Dr. Verba believes the database will provide new ways of understanding how proteins behave across species. He also sees it as a way of educating a new generation of scientists. Not all researchers are versed in this kind of structural biology; a database of all known proteins lowers the bar to entry. “It can bring structural biology to the masses,” Dr. Verba said.”

When using the database mentioned in this text and clicking on amino acid residue in primary structure, you can see where is this residue in tertiary structure and how does the structure of the amino acid residue look there.

Ekologiški ūkininkai Vokietijos Bavarijoje gauna didesnį finansavimą

„Žemės ūkio subsidijavimo programų kūrimas yra didelis virvės traukimas. Šį kartą ekologiniai ūkininkai galėjo tvirtinti – jiems greit bus maksimali suma.

Retai kada ūkininkai pagerbia politikus. Tai vienodai taikoma ekologiniams ūkininkams ir tradiciniams ūkininkams. Bet dabar tai atsitiko. Ekologiški ūkininkai negaili pagyrų žemės ūkio ministrei Michaelai Kaniber (CSU). 

 

Priežastis: Laisva valstybė nuo 2023 metų didins finansavimą ekologiniam ūkininkavimui iki maksimalios galimos ribos.

 

„Bavarija siunčia aiškų signalą už ekologinį ūkininkavimą“, – trečiadienį pristatydamas naujas programas sakė Bavarijos valstybinės ekologinio ūkininkavimo asociacijos (LVÖ) pirmininkas Hubertas Heiglas. „Taip žemės valdžia aiškiai nustato mūsų, ekologiškų ūkininkų, augimo kursą. 

 

Heigl požiūriu, naujos programos rodo, kad Kaniber rimtai žiūri į savo įsipareigojimą didinti gyvūnų gerovę, biologinę įvairovę, dirvožemio, vandens ir klimato apsaugą kaime. Dėl savo gamtą tausojančio verslo būdo ekologiniai ūkininkai teikia būtent tokias paslaugas.

 

Subsidijų žemės ūkiui programų rengimas visada yra didelis virvės traukimas. Nes ne tik ekologiškų ūkininkų ir jų įprastinių kolegų interesai labai skiriasi. Bet taip pat maži ir dideli ūkiai, galvijų laikytojai ir kiti ūkininkai. Štai kodėl anksčiau retai kada nors grupė buvo tikrai patenkinta derybų rezultatais. Atvirkščiai, tai buvo laikoma sėkme, jei niekas nebuvo tikrai nepatenkintas.

Šį kartą LVÖ akivaizdžiai sugebėjo visiškai įgyvendinti savo reikalavimus. 

 

Pagal tai Laisva žemė ekologiniams ūkininkams mokės 284 eurus už hektarą pievos, kurias jie ūkininkauja ekologiškai. Ekologiniams laukams subsidija siekia net 314 eurų už hektarą per metus. 

 

Remiantis 400 000 hektarų ekologinės žemės ūkio paskirties žemės Bavarijoje, tai lemia papildomą dešimties milijonų eurų finansavimą per metus. Heigl požiūriu, tai ne tik stiprus ekologiškų ūkininkų pripažinimo ženklas. Tačiau taip pat signalas įprastiems ūkininkams, norintiems pereiti prie ekologinės gamybos, kad jų įsipareigojimas yra pageidaujamas. Valstybės valdžia nori iki 2030 metų ekologinio ūkininkavimo dalį padidinti iki 30 procentų. Šiuo metu jis sudaro apie 13 proc."

Organic farmers in Germany's Bavaria get higher funding

“The design of the subsidy programs for agriculture is a big tug of war. This time the organic farmers were able to assert themselves - for them there will soon be the maximum amount.

It's rare for farmers to pay tribute to politicians. This applies equally to organic farmers and conventional farmers. But now it happened. The organic farmers are full of praise for Minister of Agriculture Michaela Kaniber (CSU). 

 

The reason: From 2023, the Free State will increase funding for organic farming up to the maximum possible limit.

 

"Bavaria is sending a clear signal in favor of organic farming," said Hubert Heigl, Chairman of the State Association for Organic Farming (LVÖ) in Bavaria, at the presentation of the new programs on Wednesday. "With this, the state government is clearly setting the course for us organic farmers to grow." 

 

From Heigl's point of view, the new programs show that Kaniber is serious about her commitment to more animal welfare, biodiversity, soil, water and climate protection in the countryside. Because of their nature-friendly way of doing business, organic farmers provide precisely these services.

 

The design of the subsidy programs for agriculture is always a big tug of war. Because it's not just the organic farmers and their conventional colleagues who have very different interests. But also the small and large farms, the cattle keepers and other farmers. That's why it was rare in the past for a group to be really satisfied with the outcome of the negotiations. Rather, it was considered a success if no one was really dissatisfied.

This time the LVÖ has obviously been able to fully enforce its demands. 

 

According to this, the Free State will pay the organic farmers 284 euros per hectare of grassland that they farm organically. For organic fields, the subsidy even amounts to 314 euros per hectare and year. 

 

Based on the 400,000 hectares of organic agricultural land in Bavaria, this results in an additional funding of ten million euros per year. From Heigl's point of view, this is not only a strong sign of recognition for the organic farmers. But also a signal to conventional farmers who want to switch to organic that their commitment is desired. The state government wants to increase the proportion of organic farming to 30 percent by 2030. It is currently around 13 percent.”