Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Bloomberg – Nick Taylor, a former executive of Citadel Investment Group LLC, is preparing to open the largest Asia-focused hedge-fund startup since May 2007 after receiving the backing of Blackstone Group LP, said three people familiar with his plan.
Senrigan Master Fund is scheduled to start trading Nov. 2 with at least $220 million committed by investors, said two of the people, who declined to be identified because the information isn’t public. The fund will invest in companies whose valuations are affected by announced or possible events such as mergers, Taylor said in an interview yesterday. He declined to comment on the fund’s starting size or investors.
Forbes – Private equity firm Blackstone Group is planning to list up to eight of its portfolio companies, according to a source who received a letter the firm sent to investors on Friday.
The letter details that Blackstone is positioning one company — hospital staffing firm Team Health — for an IPO and evaluating the potential for seven others, the source said.
It also says that Blackstone is in the process of five realizations this year — meaning sales of companies it owns. Of these, four have already been announced and one is imminent, the source said.
The Australian – Blackstone Group posted a wider second-quarter loss, but results beat analysts’ expectations as the private-equity giant reported positive returns and better fund-raising at its credit-oriented and funds-of-hedge-funds businesses.
On a conference call with analysts and investors, chairman and chief Executive Stephen A. Schwarzman said that two-thirds of the companies in Blackstone’s private-equity portfolio expect to see either positive or flat earnings before interest, taxes, depreciation and amortisation, or Ebitda.
That’s compared to 35 per cent of the companies in the Standard & Poor’s 500 that Blackstone expects to see gains in that area.
Marketwatch – China’s sovereign wealth fund has selected Morgan Stanley and Blackstone Group LP to oversee hundreds of millions of dollars in new investments, The Wall Street Journal reported Friday.
The $200 billion China Investment Corp. has finalized an additional allocation of $500 million to Blackstone’s /quotes/comstock/13*!bx/quotes/nls/bx (BX11.42, +0.46, +4.20%) fund-of-funds unit, and an additional allocation of money has been earmarked for investment through Morgan Stanley’s /quotes/comstock/13*!ms/quotes/nls/ms (MS28.31, +1.15, +4.23%) asset-management unit, according to the report, which cited people familiar with the situation.
The sovereign wealth fund is also in discussions to potentially invest billions more in hedge funds, possibly doling out money directly to managers rather than using a fund-of-funds vehicles, the report said.
Wall Street Journal – China Investment Corp.’s $200 billion sovereign-wealth fund is reaching out to old friends in the U.S. as it ventures into hedge-fund investing.
The fund has selected Morgan Stanley and Blackstone Group LP to oversee hundreds of millions of dollars in new private-fund investments, people familiar with the matter said.
Forbes – Chinese sovereign wealth fund China Investment Corp is poised to invest around $500 million into a Blackstone Group hedge fund unit, a source familiar with the situation said on Friday.
The Wall Street Journal earlier reported the news and said it was part of a broad effort to put cash to work, and that the hefty injection would be welcome news for hedge funds.
Bloomberg – China Investment Corp., the nation’s $200 billion sovereign wealth fund, may invest as much as $500 million in hedge funds including those run by Blackstone Group LP, said two people familiar with the matter.
CIC aims to allocate $6 billion to hedge funds by the end of 2009, company adviser Felix Chee said two days ago at the GAIM International hedge fund conference at Monaco’s Grimaldi Forum. Chee, who is a special adviser to the chief investment officer of CIC, said he will initially run CIC’s hedge fund and proprietary trading effort.
The move adds to signs of improved confidence by CIC Chairman Lou Jiwei, who said in December that he didn’t “dare to invest in financial institutions” after losing money on investments in Blackstone and Morgan Stanley. CIC raised its stake in Morgan Stanley earlier this month by buying an additional $1.2 billion shares.
Bloomberg – Blackstone Group LP, the world’s biggest buyout company, canceled a plan to start a hedge fund that initially aimed to invest as much as $1 billion in Asian companies affected by events such as mergers and reorganizations.
Blackstone decided not to proceed with the Asian event- driven fund “after a review of the market environment and our strategic priorities globally,” New York-based Blackstone spokesman Peter Rose said in an e-mail. The fund was to be managed by Blackstone A.M.N. Advisors.
Most of about 17 A.M.N. team members, including Chief Investment Officer Aaron Nieman, left after the March decision, said four people familiar with the matter, declining to be identified because the information isn’t public. The rest have been transferred to other Blackstone departments, they said. Rose declined to comment on specific personnel.
Bloomberg – Blackstone Group LP and Fortress Investment Group LLC are seeking to take over credit funds from managers unable to support their businesses after the value of investments fell.
There are “a lot of companies that are on the block,” Tony James, Blackstone’s president, said on a conference call yesterday with investors. New York-based Blackstone, the world’s biggest private-equity company, is “looking hard at consolidating acquisitions,” he said.
Bloomberg – Executives at buyout, venture-capital and hedge-fund firms will pay an estimated $24 billion more in taxes over nine years if President Barack Obama gets his way.
Obama’s 2010 budget proposal, released today, proposes raising taxes on the managers by treating carried interest, the portion of profits they take from successful investments, as ordinary income instead of capital gains. That change would boost the tax rate, starting in 2011, to 39.6 percent for most executives from the 15 percent they now pay.
The proposal applies to partnerships that receive a portion of the profits they make for their clients. It will likely reignite a debate begun in 2007 amid the biggest buyout boom in history, when firms including Blackstone Group LP and Och-Ziff Capital Management Group raised their profiles through public stock listings. While the House of Representatives approved the tax change that year, the measure wasn’t taken up by the Senate.
“Obama and his team are up for a fight here,” said George Teixeira, a managing director with accounting firm RSM McGladrey in New York. “They’re missing key components of what these industries do.”
The change could hurt funds’ abilities to hire and retain managers, Teixeira said. The majority of pay at hedge funds and private-equity firms is drawn from their share of clients’ profits, typically 20 percent of the gains.
“If they have an incentive to give, they can keep their talent,” he said. “If that’s not there, it’s going to be tough to keep people.”
Bloomberg – Blackstone Group LP, the world’s largest private-equity firm, fell to a record low in New York trading this week on concern that a rebound in leveraged buyouts will lag behind any economic recovery.
“Given the economic outlook and pressure on asset values, even on existing investments, it’s going to be a while before they have a chance to come back,” said Robert Lee, an analyst with Keefe, Bruyette & Woods Inc. in New York. “It’s hard for investors to see through that valley.”
After announcing about $169 billion of buyouts in 2006 and 2007, New York-based Blackstone has since completed $9.2 billion of deals. An absence of financing for new acquisitions and an inability to sell current holdings have idled the firm and competitors such as KKR & Co. and Carlyle Group LP. Investors say deal won’t resume until after the economy starts to grow and banks can rebuild capital depleted by losses on mortgage-backed securities and previous LBO loans.
Blackstone, run by Chairman Stephen Schwarzman, probably will report a loss tomorrow of 31 cents a share, its third in the past four quarters, according to the average estimate of seven analysts in a Bloomberg survey. The company had a profit, excluding some costs, of 8 cents a share in the same quarter a year earlier.
Of the nine analysts who rate Blackstone shares, six have ratings equivalent to hold, including Lee. One analyst, Barclays Capital’s Roger Freeman, suggests selling the stock. Two recommend clients buy the shares.
Blackstone dropped below $4 a share for the first time on Feb. 23, closing at $3.89, almost 90 percent less than its $31 initial public offering price in June 2007. The stock declined 17 cents to $4.12 yesterday in New York Stock Exchange composite trading.
Bloomberg – The victims of Marc Dreier, the New York lawyer charged in a $400 million fraud, included Amaranth Group Inc., Perella Weinberg Partners and Blackstone Group LP’s GSO Capital Partners, U.S. prosecutors said.
Government lawyers identified the firms in a court filing in New York on Feb. 9 as three of the 20 institutions they claim are victims of Dreier’s thefts. Prosecutors didn’t disclose how much it alleges each of the companies lost.
Prosecutors say Dreier, 58, persuaded two hedge funds to give him more than $100 million by falsely claiming he was selling notes issued by Sheldon Solow, a New York developer, at a discount.
