Sudip Bandyopadhyay, former managing director of Indian billionaire Anil Ambani’s Reliance Money, has started a financial services company backed by private equity firm CX Partners. Bandyopadhyay’s Convexity will offer equity broking and portfolio advisory services with a focus on derivatives, according to an e-mailed statement recently as reported by Bloomberg. Bandyopadhyay quit Reliance Money and joined Spice Group to head its financial services business in November.
CX Partners, a $500 million buyout fund whose investors include Goldman Sachs Group Inc. and JPMorgan Chase & Co., will name two people to Convexity’s board, according to the statement. The fund is managed by Ajay Relan, a former managing director of Citigroup Inc.’s private equity arm in India.
Investindustrial SpA, a European buyout firm, opened its Asian head office in Shanghai recently, aiming to tap into China’s growing desire for luxury goods reported Bloomberg. The office will have six employees, who will provide support to the company’s eight manufacturing, distribution and retailing companies in China, Chairman Andrea Bonomi said. Investindustrial plans to increase the number of companies in China to 10, helping to boost sales in the nation to $1 billion from $600 million “fairly quickly,” he said.
Investindustrial, based in Italy and Spain, is expanding in Asia through luxury brands such as Ducati motorcycles and jewelry sales as growth slows in Europe, Bonomi said. “Eventually our goal is to IPO,” he said in a phone interview. “It would be either in China or Hong Kong or Singapore.”
Red Fort Capital Advisors Pvt., a real estate private equity fund, plans to invest as much as $1 billion in India’s property market over the next few years to tap demand in the world’s second-fastest growing major economy reported Bloomberg. The firm has invested $400 million since 2007, mainly in residential projects, and may consider investing in offices, hotels and shopping malls, Managing Director Subhash Bedi said in an interview in Mumbai yesterday.
Demand for homes is picking up and Red Fort and its partners have sold 3,000 apartments over the last six months in New Delhi, Bangalore and Chennai, Bedi said. Red Fort has invested in projects with Parsvnath Developers Ltd. in the New Delhi area, and with closely held Prestige Group in Bangalore, he said.
“In India, there’s a growing middle class whose incomes are rising, the economy is consumption-led, investments come from high domestic savings and it’s a growing economy,” said Bedi. “Mortgage penetration rate is miniscule and as the penetration rate increases, more Indians will be buying homes.”
Red Fort Capital has returned an average 25 percent to its investors in each of the past three years, he said.
Red Fort Capital Advisors Pvt., a real estate private equity fund, plans to invest as much as $1 billion in India’s property market over the next few years to tap demand in the world’s second-fastest growing major economy.The firm has invested $400 million since 2007, mainly in residential projects, and may consider investing in offices, hotels and shopping malls, Managing Director Subhash Bedi said in an interview in Mumbai yesterday.
Demand for homes is picking up and Red Fort and its partners have sold 3,000 apartments over the last six months in New Delhi, Bangalore and Chennai, Bedi said. Red Fort has invested in projects with Parsvnath Developers Ltd. in the New Delhi area, and with closely held Prestige Group in Bangalore, he said.
“In India, there’s a growing middle class whose incomes are rising, the economy is consumption-led, investments come from high domestic savings and it’s a growing economy,” said Bedi. “Mortgage penetration rate is miniscule and as the penetration rate increases, more Indians will be buying homes.”
Red Fort Capital has returned an average 25 percent to its investors in each of the past three years, he said.
Babson Capital Management LLC, which oversees $118 billion in assets, will expand its mezzanine debt and private-equity investment unit in the Asia-Pacific region with an eight-member team reported Bloomberg. The unit, created in 1992, currently has a staff of 21 people and manages about $5 billion in the U.S.
“The Asia-Pacific region offers attractive opportunities for profitable mezzanine investing due to the region’s strong economic outlook, increasing demand for mezzanine as a source of buyout financing, and a pullback by traditional investors in the marketplace as a result of the global financial crisis,” Michael P. Hermsen, a managing director who co-heads the mezzanine and private equity group, said in the statement. He will oversee the Asia-Pacific team.
The team added Shane A. Forster and Adam H. Wheeler, previously of AMP Capital Investors, where they managed more than A$700 million ($643 million), according to the statement. Joining them in Sydney are Elliott Wong and Adrian Ng, who headed a A$200 million mezzanine debt portfolio Babson took over management from Babcock & Brown.
Hermsen’s team will also include Los Angeles-based Benjamin Silver and Asia-based Adam Nowak and Howe Wu, according to the statement.
Mezzanine financing, common in takeovers, usually involves preferred stock or unsecured subordinated debt to expand a company’s equity capital. The debt is senior to common stock and junior in the capital structure.
China Investment Corp., China’s $300 billion sovereign wealth fund, sees a “good opportunity” to boost private-equity investments this year, as companies are undervalued after losses from the global financial crisis reported Bloomberg. “A lot of companies’ valuations are relatively low currently, and investors of many private-equity funds don’t have money to invest,” China Investment Corp. Executive Vice President Jesse Wang said in an interview with the official Xinhua News Agency today that was broadcast online.
CIC had “double-digit” returns from its overseas portfolio last year, Wang said, without being specific. The company increased spending on energy and minerals assets in 2009 to profit from the global economic recovery, announcing almost $10 billion of investments in commodity-related companies.
Carlyle Group‘s most recent Asia buyout fund, launched in July 2006, raised $1.8 billion and has invested in various projects across Asia. Carlyle was raising a new Asia buyout fund with a target size of up to $3 billion, Reuters reported in September. In China, Carlyle has already made about 50 transactions worth a combined total of more than $2 billion. One of its most successful investments in the region was its landmark deal with China Pacific Insurance (Group) Co, China’s No.3 life insurer, which went public in Hong Kong late last year, allowing Carlyle to sell part of its stake for a huge profit. However, Carlyle has a one-year lock-up period since China Pacific’s listing in December. Carlyle recently said it was teaming up with China’s largest non-state-owned conglomerate Fosun Group to launch a $100 million yuan-denominated private equity fund to tap more China deals.
Carlyle said in January it plans to launch a China-dedicated, yuan-denominated private equity in Beijing. Carlyle’s rival Blackstone Group aims to raise 5 billion yuan ($732.5 million) for its first local yuan fund in Shanghai. Chinese media reported Carlyle might raise a similar amount of money for its Beijing fund.
Recent Quotes by David Rubenstein, Carlyle Group’s co-founder and managing director as recently reported by Reuters. Read More »
Indian financial services group Religare Enterprises Ltd agreed to take a controlling stake in private equity firm Northgate Capital, as part of a $1 billion plan to build a global asset management business reported Reuters. Religare will take more than 60 percent in the company, while the management will retain the rest. The terms of the deal were not disclosed, but based on similar transactions, the deal could value Northgate at as much as about $200 million. Northgate, with $3 billion under management, is Religare’s first U.S. deal and the Indian company is hoping to end the year with at least $60 billion to $65 billion of assets under management through further acquisitions, Religare Enterprises Chief Operating Officer Shachindra Nath told Reuters.
“If we happen to get a fixed income shop, we might cross 100 (billion),” said Nath, who was speaking on the telephone after an off-site meeting in the Indian city of Udaipur. Read More »
Apollo Global Management LLC, the buyout firm run by Leon Black and Joshua Harris, has set up its first Asia real estate fund to be run by Grant Kelley, former chief executive officer of Colony Capital Asia reported Bloomberg.
The New York-based company said it has established Apollo Global Real Estate Management Asia Pacific Ltd., focusing on property investments in Australia, Japan and South Korea, Apollo said in a statement today. The fund will be run out of Hong Kong.
Kelley, who founded Holdfast Capital Ltd. after leaving real estate private-equity fund Colony Capital in late 2008, will bring his team of seven investment professionals to join Apollo Global Real Estate in Asia, the company said in the statement. The fund will seek opportunities to buy undervalued property assets, loans and trusts with values between $100 million and $500 million, it said. It also plans to invest in China and India over time, Apollo said.
Apollo manages more than $51 billion globally in private equity.
Douglas Clayton, managing partner & CEO of Leopard Capital, sees vast upside for the Cambodian market and discusses what kind of opportunities this frontier market offers. The length of the video is 2:58 and was aired on December 15, 2009.
About Douglas Clayton, Managing Partner and Chief Executive Officer, Leopard CapitalRead More »
U.K.-based private equity firm 3i Group Plc sees more investments in Asia next year, especially China, 3i partner Anna Cheung said recently as reported by the Wall Street Journal.
Like many other private equity firms, 3i was focused on restructuring portfolio companies in the first half of the year. There was no debt restructuring to do since most acquisitions in Asia have been growth capital investments with very little leverage. But company revenue declined amid the global slowdown and so 3i helped portfolio companies control costs. “Most of the companies are fine now,” Cheung said.
Deals started to pick up in the second half of the year, Cheung said, noting that the firm has been busy looking at new deals and hopes to have one early next year. The firm, which has made several acquisitions in China’s consumer sector, is looking closely at industrial companies these days. Companies are doing well but could benefit from improvements in procuring, sourcing and other areas, Cheung noted. Read More »
Clark T. “Sandy” Randt Jr., U.S. Ambassador to China under President Bush, has been recently named special advisor to Hopu Investment Management, a $2.5 billion private equity fund set-up by Fang Fenglei, a well-connected Chinese banker, with backing from Singapore’s Temasek Holdings and Goldman Sachs. Randt, who stepped down from his ambassadorial post in January, knows his way around China. He was the longest serving U.S. envoy to China and helped set up the U.S.-China Strategic Economic Dialogue. He also knows how to cut deals in both Hong Kong’s financial circles and Beijing’s halls of power from his long tenure as a lawyer overseeing Shearman & Sterling’s China practice before taking the ambassadorship. Read More »
The world’s largest private equity firm Blackstone Group’s Chairman, CEO and Co-Founder, Stephen Schwarzman, provides his perspective on the private equity landscape and investment opportunities in a CNBC interview. The length of the video is 20:03 and was aired on Wednesday, November 18, 2009.
About Stephen A. Schwarzman, Chairman, CEO and Co-Founder, Blackstone Group
Stephen A. Schwarzman is Chairman, CEO and Co-Founder of Blackstone and the Chairman of the board of directors of its general partner, Blackstone Group Management L.L.C. He has been involved in all phases of the firm’s development since its founding in 1985. Mr. Schwarzman began his career at Lehman Brothers, where he was elected Managing Director in 1978 at the age of 31. He was engaged principally in the firm’s mergers and acquisitions business from 1977 to 1984, and served as Chairman of the firm’s Mergers & Acquisitions Committee in 1983 and 1984. Read More »
Two Hong Kong-based fund managers at Stark Investments, one of the largest hedge funds operating in Asia, are setting up a firm after disagreements with Stark over whether to continue investing in illiquid credit deals. Teall Edds, 41 years old, and Stu Wilson, 39, will continue investing in debt and private-equity-like deals through their firm, Orchard Capital Partners. However, Mr. Edds and Mr. Wilson will maintain their ties to Stark, allowing Orchard to manage its $1 billion portfolio of Asian assets as part of a subadvisory agreement. The new equity fund will specialize in Asia’s publicly traded markets, including buying and holding shares as well as betting against some equities through derivatives and other instruments. Of the $1.5 billion in total capital that Orchard is starting with, about $500 million comes from investors who are switching their entire allocations to the new firm.
“We view this as a way to keep one of our core businesses intact while at the same time being able to launch new products,” says Mr. Wilson, a longtime trader in Asia who joined Stark in 1997 from Citadel Investment Group.
Blackstone Group LP, the world’s largest buy-out firm, is planning to list up to eight companies it owns and sell at least five others, marking a reversal of its pessimistic view of the global economy and financial markets reported the Financial Times.
Steve Schwarzman, Blackstone’s founder and CEO, told investors in a letter: “We see the world changing once again. At least for private equity, the worst is behind the industry.” In his letter, Mr Schwarzman expressed some qualifications about the recovery, saying it was the product of fiscal stimulus and inventory rebuilding, both one-time events. He made clear Blackstone was acting to capitalize on improved conditions. “We are seeing the beginning of realisations through strategic sales and public equity offers,” he said.
Mr Schwarzman’s stance is noteworthy because no other leading buy-out firm anticipated the economic downturn to the extent that Blackstone did, nor turned as bearish as early. Blackstone was among the most active private equity buyers in 2005 and 2006 but grew cautious after leading the investment group that bought Freescale Semiconductor in September 2006. As prices and debt levels for buy-out transactions continued to soar, Mr Schwarzman and Tony James, Blackstone’s president, stayed largely on the sidelines the following year, committing money to only one of the 20 biggest deals.
Mr Schwarzman said Blackstone was in the process of selling five companies it owns – at values twice as high as those estimated at the end of 2008. Investors are likely to receive about $2.8bn (€1.9bn) as their share of the profits, with about $1.2bn coming from the expected sale of Kosmos Energy. Blackstone is considering listing eight other companies in which it has invested collectively more than $4bn, during the next year, and the “expected valuation compares very favorably to our costs, in some cases significantly”.
Japan private equity firm Ant Capital, a Tokyo-based buyout firm previously owned by Citigroup Inc, suggests it pays to think small. “We are very busy now despite this (market) situation,” said Kazunori Ozaki, chief executive officer at Ant Capital. Ant Capital, which manages $1.3 billion, targets companies with less than $200 million in enterprise value. It has sold five of its portfolio companies since last year, including Aunt Stella Inc, which runs a cookie store chain, Japanese confectionery maker Morinaga & Co, and BBMF KK, the operator of a mobile phone comic book Website, and major Japanese publisher Shogakukan. Ant Capital recently purchased a nearly 100 percent stake in VarioSecure Networks, a provider of computer security, for $5.7 million. “Basically small cap is undervalued because of its non-profile. To be small caps means they are discounted already,” said Ozaki.
The Hong Kong-based Center for Asia Private Equity Research Ltd says smaller deals have generated higher returns for private equity firms in Japan.
China Investment Corp (CIC) is investing as much overseas each month this year as it did in all of 2008, Lou Jiwei, the chairman of the $298 billion sovereign wealth fund, recently said. CIC is counting on handsome returns this year and might one day ask the government to hand it more of the country’s record hoard of foreign reserves to manage, Lou, a former vice finance minister, said.
The fund invested just $4.8 billion outside China last year as it kept its powder dry during the global financial crisis, when asset prices tumbled. It held fully 87.4 percent of its overseas investments in cash or cash equivalents. Now that markets are recovering, CIC is constructing a broad-based portfolio, Lou told reporters on the sidelines of a forum organised by the Washington-based Brookings Institution and the Chinese Economists 50 Forum, a Beijing think-tank. Read More »
Private equity firm BC Partners wrote up its current fund by almost a quarter in the first half, returning it to par value, a source said recently as reported by Reuters. The markup is one of the first signs that European buyout houses, who took steep writedowns last year, are enjoying something of a recovery in the value of their investments, helped by improving stock markets and in some cases better cash flows from portfolio companies. The source said BC had told its investors in a letter that it had written up the fund’s value by 1.3 percent for the 12 months to end-June, bringing it back to cost.
BC Partners closed its current fund, its eighth, in 2005 with 5.9 billion euros ($8.42 billion) of commitments from some 120 limited partners (LPs) — the private equity term for investors. Some 61 percent of the fund has now been committed to investments.
Amara Equity Investment Management Co., a unit of Dubai-based Amara Holdings Inc. looks to invest around $400 million of its capital in China by the end of this year after becoming the first foreign-invested private equity firm to register in China as an equity investment manager as reported by the Wall Street Journal. Andy Lam, chairman of Shanghai Amara Equity Investment Management Co., said in an interview the company plans to invest more than $100 million in a Chinese renewable energy firm and around $300 million in a mechanical parts producer after its application to register in Shanghai was approved. Shanghai Amara is a joint venture between Amara Holdings and Shanghai Ding Hai Investment Management Co., a unit of one of China’s largest trust fund companies, New China Trust Co. The joint venture, which was launched in October, aims to invest in unlisted companies, private equity, and private placements predominantly in China. Like many other foreign-invested private-equity and venture capital firms in China, it aims to raise funds locally, which will complement investments from Amara Holdings’ investors, mostly family funds based in the Middle East.Read More »
Chinese brokerage Guoyuan Securities Co. recently said it received approval from the China Securities Regulatory Commission to operate a private equity business. The company plans to set up a wholly-owned unit to conduct private equity investments. The securities regulator has been encouraging local securities firms to diversify their business to better compete with foreign rivals. At least nine other domestic brokerages have received regulatory approval for private equity operations, including Guotai Junan Securities Co., Citic Securities Co., Guosen Securities Co., Huatai Securities Co. and Haitong Securities Co.
South Korea’s National Pension Service (NPS), which manages $200 billion in assets, plans to resume overseas investments next month and raise exposure to domestic equities, its CEO said recently. Park Hae-choon, Chief Executive of the world’s fifth-largest pension fund, also said that NPS plans to invest in domestic infrastructures, such as logistics and sea ports, and undervalued non-government bonds. “Last year, due to the volatility of Korean won against the U.S. dollar, we suspended overseas investments,” he said through an interpreter. “We will increase our overseas alternative investments and I think we will do this seriously,” he said, adding the fund will reduce investments in overseas fixed-income areas.
Recent Private Equity Invesment Commitments to South Korea
Last year, New York-based private equity firm Blackstone Group agreed to invest $2 billion in South Korean assets over the next few years.
In October, U.S. investment firm Oaktree Capital Management agreed in-principle to invest $3 billion in South Korea.
In October, private equity house MBK Partners agreed with NPS to pursue another $2 billion investment in the country.
