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US private equity heading west, say fund managers

Privately-held investment companies and acquisition groups of all sizes are heading to Arizona from California, New York, Boston and overseas, according to several fund managers.

Privately-held investment companies and acquisition groups of all sizes are heading to Arizona from California, New York, Boston and overseas, according to several fund managers.

E. Patrick La Voie, fund manager for the Arizona-based Westward Fund, says the recession has produced a surplus of high-quality real estate assets that are now available at substantially below-normal prices, particularly in Arizona.

Arizona has historically trailed other states in terms of private equity investments. For example, during the third quarter of 2006, venture capitalists invested USD142.4m in Arizona companies, according to Price Waterhouse Cooper’s most recent Money Tree Report.

Nationally, venture capitalists invested a total of USD6.2bn through 797 transactions.

‘Arizona has the fifth-largest city in the country, and there’s virtually no private equity here," says Chavez, who chairs the Thunderbird School of Global Management’s private equity forum. "We wanted to build private equity as an actual asset class and invest in Arizona companies."

At the same time, the presence of foreign real estate investors in the US, specifically Arizona, is growing. Canada’s investment, for instance, more than doubled within one year, from 11 per cent to 23.5 per cent, making it the largest foreign real estate investor in the US.

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