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Mon, 16-Mar-2009 Evercore Partners Inc., a New York-based investment bank founded by former U.S. Deputy Treasury Secretary Roger Altman, announced a strategic agreement to set up an advisory and investment venture with Citic Securities Co., China’s largest securities firm by market value, to focus on cross-border mergers and acquisitions work between China and other international markets. The new company will be named Citic Securities International Partners and headed by chief executive Donald Tang, former Bear Stearns Cos. Vice Chairman. The new company also plans to set up a $500 million private equity fund, backed mainly by its shareholders. The organization has about 15 employees so far, and hopes to continue to build out its team. Pacific Investment Management Co., run by Bill Gross, former AIG CEO Hank Greenberg and Morgan Stanley may also buy into the venture at some point, sources said.
Donald Tang formerly worked at Bear Stearns and helped negotiate a partnership with Citic Securities in which the firms would invest $1 billion in each other and team up to sell financial services in China. That agreement, reached in 2007, fell through as Bear Stearns collapsed and was bought by JPMorgan Chase & Co. in March 2008.
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Sat, 14-Mar-2009 Press Release
The China-Africa Development Fund (CADFund) opened the first representative office in Johannesburg, South Africa today. The Fund will boost economic development in Africa by encouraging investment by Chinese enterprises. Its creation stems from President Hu Jintao’s pledge at the China-Africa Cooperation summit in 2006.
According to Chen Yuan, Chairman of the Board of the China Development Bank, the Fund is the first of its kind. It will encourage Chinese companies to invest in multiple industries, leading to an improved quality of life for residents throughout Africa.
The China-Africa Development Fund is a $5 billion US Dollar fund. The China Development Bank invested $1 billion, which is the fund’s first phase of capital. Since its establishment in June 2007, the CADFund has facilitated over 20 investments in Africa, amounting to nearly $400 million US Dollars.
Several high-level Chinese and South African government officials and business leaders attended the office opening ceremony, including African National Congress president Jacob Zuma, China Development Bank Chairman Chen Yuan, CADFund CEO Chi Jianxin, and Zhong Jianhua, China’s Ambassador to the Republic of South Africa. In total, over 300 guests were present at the event.
The creation of the China-Africa Development Fund’s Representative Office in South Africa is a further step to help facilitate CADFund’s investments in Africa. The CADFund aims to establish Representative Offices throughout Africa in the future to further promote economic cooperation between China and Africa and to bring about mutual benefits.
China-Africa Development Fund
The China-Africa Development Fund (CADFund) is a US$5 billion equity investment fund in China focusing on investments in Africa. Established on June 26, 2007, with initial funding of US$1 billion from the China Development Bank, CADFund operates independently and assumes sole responsibility for its profits and losses. Among the investments concluded by CADFund: cotton planting and processing facility in Malawi, 560,000kW scalable power station in Ghana, glass factory in Ethiopia, Egyptian Suez Trade Park, and Nigerian Lachish Trade Zone.
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Fri, 13-Mar-2009 Babcock & Brown Ltd., a Sydney-based investment bank founded in 1977 and listed on the Australian Securities Exchange, today appointed administrators after holders of subordinated notes in New Zealand voted against a restructure. The vote was against the proposal that a subsidiary would acquire the Australian-dollar and New Zealand-dollar denominated notes for 10 Australian cents (6.5 U.S. cents) per A$100 and 0.001 New Zealand cent (0.0005 U.S. cent) per NZ$1 in exchange for another class of subordinated notes. The company nominated Deloitte Touche Tohmatsu as voluntary administrator, according to a regulatory filing. Babcock said the appointment would not have a material impact on the process already underway to sell assets over the next two to three years to repay debt.
Babcock also repeated that corporate facility lenders may salvage some value but equity holders and holders of the notes will be left with nothing. Notes and shares issued by Babcock & Brown will likely be removed from relevant exchanges, it said.
Australia’s five biggest banks have almost A$870 million ($570 million) of loans at risk with Babcock, while overseas lenders including Royal Bank of Scotland Plc have almost A$2 billion on the line, according to estimates by UBS AG. Babcock had interest-bearing debt of A$9.6 billion when it last published accounts in August.
Babcock was a high-flyer at one point after listing in 2004 at A$5 a share, with virtually no assets, it took less than three years to soar to A$34.78 a share, putting it on a market cap of A$10 billion, with assets under management reaching A$70 billion globally, and debt across the empire totalling more than A$40billion.
Babcock’s satellite funds distance themselves
- Babcock & Babcock Infrastructure said it doesn’t expect the voluntary administration of Babcock & Brown Ltd. “to have any direct effect on BBI’s asset sales process, its businesses or its operations.”
- Babcock & Brown Wind Partners Group said it terminated its management agreements with Babcock & Brown as part of an internalization program which took effect late last year.
- Babcock & Brown Power said it also doesn’t expect any direct impact on its operations.
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Fri, 13-Mar-2009 China Investment Corp (CIC), the country’s $200 billion wealth fund, needs to become more transparent to quiet fears about its motives and generate a better environment abroad for its investments says its deputy manager Xie Ping in an article.
“Our sovereign wealth fund should and could do its best to increase its transparency under the precondition of not touching on commercial secrets,” Xie wrote in the latest issue of the Chinese-language Economic Research Journal.
“By revealing in a timely manner investment targets, organisational structure, financial information, asset allocation information and more, we can strive to obtain the understanding of Western society and a good international investment environment,” Xie wrote.
A lack of transparency in sovereign wealth funds led foreigners to guess at their strategic intentions and ultimately to resist their investments, he wrote in the article that was co-authored by Chen Chao, who has been listed before as a member of CIC’s research department.
But they also said Western countries need to recognise that the rise of wealth funds reflected global economic changes and should give them a level playing field in investment regulations.
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Tue, 10-Mar-2009 Private equity company Blackstone Group LP CEO Stephen Schwarzman told an audience at the Japan Society that “between 40 and 45 percent of the world’s wealth has been destroyed in little less than a year and a half.” “This is absolutely unprecedented in our lifetime,” added Schwarzman.
“What’s pretty clear is that, if you were looking for one culprit out of the many, many, many culprits, you have to point your finger at the rating agencies,” he said. Rating companies have been the focus of intense criticism for their role in granting top “AAA” ratings for complex bonds that later plummeted in value, resulting in subsequent rating cuts, in many cases to junk status. “Once you bought into … the Triple A paper and it turned out to be paper that was in many situations going to end up defaulting, then you really had the makings of a global problem,” he said.
Schwarzman said problems were then exacerbated by mark-to- market accounting rules. Those rules ask banks and other financial institutions to price assets at a value related to how they would be sold in the open market.
Asked where was a good place to invest, Schwarzman said it made sense to buy cyclical names, which are less exposed to the economic cycles.
He said investors also may find value in debt products, including “senior layers of certain securitizations,” where investors can see 15 percent to 20 percent returns, he said.
Geographically, he said there were “pockets of strength” in China, which is committed to getting to an 8 percent growth level, and in India, where the economy is slowing but banks are in good shape.
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Fri, 6-Mar-2009 Shinsei Bank Ltd., the Japanese lender partly owned by investor Christopher Flowers, plans to sell preferred securities to increase its capital base. The sale will take place this month. A spokesperson said the company expects to raise “several tens of billions of yen.” The Tokyo-based bank’s Tier 1 capital ratio, a key indicator of financial strength, was the lowest of eight nationwide lenders at 6.64 percent as of Dec. 31, according to Bloomberg data.
Shinsei joins larger banks including Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. in raising capital as losses on investments sap their financial strength. The lender said Feb. 3 it expects to post a net loss of 48 billion yen ($493 million) for the full year ending March 31, as it takes losses on overseas investments and loans to bankrupt Lehman Brothers Holdings Inc.
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Thu, 5-Mar-2009 Private equity Permira has written down the value of its portfolio by 36% over the past year to reflect the dramatic fall in the value of listed companies and deteriorating business conditions. Permira, the largest private equity firm in Europe, made its writedowns public after SVG Capital, Permira’s largest investor, indicated the value of its investments had declined by approximately two thirds. SVG’s funds are 88% invested in Permira and the listed company has been widely regarded as a proxy for the private equity group. Damon Buffini, Permira’s chairman, also holds a non-executive position on the board of SVG.
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Wed, 4-Mar-2009
Private equity Blackstone has written down the value of billions of dollars worth of debt it bought at a discount from Deutsche Bank to zero. Blackstone purchased the debt in April and wrote down the value by the end of the year demonstrating that the group bet too early on a recovery. The debt acquired in the Deutsche Bank deal was both senior debt and lower quality debt, most of it issued to help private equity firms pay for their purchases of large listed companies. The loss was compounded by the use of money borrowed from Deutsche Bank at the time.
Blackstone wrote down many of its investments, most notably its stake in semiconductor company Freescale, which it now holds at 15 cents on the dollar.
Blackstone’s results reflect the impact of new rules requiring private equity firms to value their companies at levels comparable to their public market equivalents. The impact has been especially severe for firms which have listed vehicles, such as Blackstone and KKR.
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Tue, 3-Mar-2009 Private equity firm Carlyle Group wrote down the value of the investments in its buyout fund Carlyle Partners IV by 13.8 percent during the fourth quarter. Carlyle Partners IV is a $7.9 billion fund raised in 2005 for buyout investments in the United States. Carlyle recently raised $13.7 billion for its buyout fund Carlyle Partners V. The 13.8 percent figure refers to unrealized — i.e. not yet sold — privately held investments. When including publicly traded investments, the writedown was 14.8 percent. When including gains from realized investments in companies such as car rental firm Hertz Corp and machinery parts firm AxleTech, the writedown was 8.8 percent.
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Tue, 3-Mar-2009 Standard Chartered has reported pre-tax profit for 2008 was $4.8bn (£3.4bn), up 19% compared with a year earlier.
Chairman John Peace said “The uncertainty and the contraction of economies will continue this year and the situation may even worsen.” He added “Our markets are now seeing the effects of the crisis.”
Standard Chartered’s focus on Asia and its prudent attitude to liquidity and costs had helped it to weather the storm.
Chief Executive Peter Sands said “While Asian banks are feeling the stress, as dollar liquidity dries up and the credit environment deteriorates, they are on the whole in much better shape than many counterparts in the West.”
Standard Chartered PLC, listed on both the London Stock Exchange and the Hong Kong Stock Exchange, ranks among the top 25 companies in the FTSE-100 by market capitalisation. The London-headquartered group has operated for over 150 years in dynamic markets such as Asia, Africa and the Middle East. The Bank derives more than 90 percent of its operating income and profits from Asia, Africa and the Middle East, generated from its Wholesale and Consumer Banking businesses. The Group has around 1,750 branches and outlets located in over 70 countries.
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Fri, 27-Feb-2009 Blackstone Group LP, the world’s biggest private equity firm, had a fourth-quarter loss of $827.1 million as it marked down the value of private-equity and real estate holdings. The loss was 68 cents a share (excluding costs tied to its 2007 initial public offering) compared with a profit of $88 million, or 8 cents, a year earlier.
Blackstone, run by Stephen Schwarzman, posted its third loss in four quarters amid a leveraged-buyout drought and global recession that’s slashed the firm’s fees and hampered it from selling what it already owns. The firm wrote down the value of its private-equity holdings by 20 percent and real estate assets by 30 percent to match a global decline in prices.
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Thu, 26-Feb-2009 Royal Bank of Scotland is exiting leveraged finance, project financing, as well as real estate financing. RBS has been one of the biggest lenders in all three areas, but said they are now non-core and it will completely stop loans in these areas, just keeping some advisory business.
This pullback in investment banking is in connection to the RBS announcement of a 24.1 billion pound annual loss ($34.2 billion) – the largest in British corporate history.
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Sat, 21-Feb-2009 The troubled British bank has hired Morgan Stanley to help sell its Asian operations…The reports came as the British government is preparing to acquire a 70 percent stake in Royal Bank of Scotland as part of a financial bailout…
…Morgan Stanley recently helped Royal Bank of Scotland sell its stake in the Bank of China for $2.3 billion…
…R.B.S. said last month that it would write down between £15 billion and £20 billion ($21.4 billion and $28.6 billion) of the value of past acquisitions, with its purchase of ABN and Charter One making up the bulk of the charge…
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Mon, 16-Feb-2009 Macquarie-controlled MGPA, a private equity real estate investment advisory company, will use part of its Asia Fund III (AF III) to acquire more properties in Malaysia, says Chief Executive Officer for Asia developments Michael Wilkinson…
…MGPA will not allow the state of the current economy to deter its plan to grow and hence, will also buy over real-estate companies, he said…
…The AF III real-estate fund, which closed last year, has raised US$3.9 billion (RM14.1 billion), resulting in a potential buying power of US$15.6 billion (RM56.5 billion)…
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Mon, 9-Feb-2009 Private equity veteran Henry Kravis, Founder and Senior Partner of Kohlberg Kravis Roberts & Co, believes market economies would benefit greatly by adopting private equity’s method of linking management compensation with a firm’s long-term financial performance. He states that buyout firms empower managers at their portfolio companies to invest and become part owners, something that could help correct unjustifiable levels of executive pay.
Henry Kravis quotes:
- “The model that we use when managing companies could stabilise the economy worldwide. Aligning interests is key: the real payday comes when our managers sell their stock – stock in which they have invested their own money.”
- “That makes a big difference. If a person only receives stock options in a company, then he himself risks nothing.”
- “Secondly, companies and managers will have to pay more attention to all stakeholders in firms, in other words not just the owners but the employees, customers and the company overall as well.”
- “The companies we buy, we hold in our portfolios for seven years on average. Many exchange-listed companies 60 to 80 percent of the stock changes hands in a year, so we are more long-term oriented than most shareholders.”
- “I can certify that 85 percent of our profits can be traced back to operational improvements, while only 15 percent stem from rising corporate valuations in the market.” He dismisses the notion that the industry billions generated from its investments stemmed mainly from a rise in asset values.
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