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New York (HedgeCo.Net) – A Blackstone Group executive has been sued by the U.S. Securities and Exchange Commission after allegedly fronting an insider trading scam that involved supermarket chain Albertsons.
According to the complaint, Managing Director Ramesh Chakrapani tipped off a friend with private information regarding the acquisition of Albertsons in 2006 by private equity firm Cerberus, before it was announced to the public. The SEC alleges Chakrapani’s actions raked in about $3.6 million in illegal profits.
“We are shocked by this alleged breach of the law and violation of our own compliance policies and ethical standards,” said Peter Rose, spokesman for Blackstone.
The original acquisition, valued at $17.4 billion, included splitting up the Albertsons stores between a consortium of buyers, including Supervalu, drugstore chain CVS and the New York-based Cerberus.
At that time, Albertson’s Inc. was the nation’s second-largest supermarket chain. The SEC is alleging that the Blackstone team, led by Chakrapani, advised Albertson’s on the deal.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
Reuters – GSO Capital Partners LP, Blackstone Group’s $25 billion credit hedge fund, is closing its Asia investment desk after failing to find attractive investments in the region, sources familiar with the matter said on Tuesday.
The four-member team, led by Asia-Pacific head Timothy Donahue, will be relocated to either London or New York, the sources said, adding that GSO’s Asia fund raising team would remain in place.
The sources, who did not want to be identified because the information was not public, said GSO was shutting its Asia desk because there were better debt and credit investment opportunities in the United States and Europe.
Paul Volcker, one of the men President-elect Barack Obama is counting on to save the U.S. economy, last night helped the Museum of American Finance raise about $470,000 at a gala dinner.
The former Federal Reserve chairman’s Rolodex and clout helped the museum come within $30,000 of the money raised at its inaugural gala before the crisis started last year.
Jeanne Driscoll, the museum’s development director, smiled as patrons arrived, including Merrill Lynch & Co. Vice Chairman William McDonough and Blackstone Group L.P. co-founder Pete Peterson. She said a Volcker-less affair and the absence of many of his rich and powerful friends would have raised much less in the current economy, which he is charged with fixing as head of Obama’s Economic Recovery Advisory Board.
Reuters - Two years ago, investors scrambled to snap up shares in elite hedge fund firms, eager for a piece of the lucrative action. What they got instead were big losses.
Starting in early 2007, when hedge fund and private equity firms were minting cash, four private investment firms cracked open the door to let in small investors. Fortress Investment Group LLC, Och-Ziff Capital Management Group, Blackstone Group LP and GLG Partners Inc led a new class of firms that let ordinary investors ride the wave of hedge fund riches.
Reuters – Daiwa Securities Group Inc, Japan’s second-largest brokerage, said that it would drop its plans for a large private equity fund after talks with Blackstone fell through.
Daiwa had been in talks with private equity firm Blackstone Group LP to form a fund targeting Asian companies, Daiwa Securities Chief Executive Shigeharu Suzuki told Reuters on Tuesday.
Suzuki said in August that the brokerage was aiming for a 500 billion yen ($5.4 billion) fund to diversify its revenue sources.
"Now we are looking at funds as large as 20 billion yen to 30 billion yen," he said on Tuesday
"It is difficult to collect 500 billion yen in private equity fund in this environment," he added.
Daiwa had been aiming to form a big fund with Blackstone which has expertise in this area, Suzuki said.
Reuters – Blackstone Group LP said on Tuesday it plans to liquidate two hedge funds as a lack of outside investing amid tight credit markets will prevent them from getting big enough to be meaningful to the company.
The private equity firm plans to consolidate its distressed securities fund with GSO Capital Partners, a hedge fund manager it acquired in March for $10 billion.
Blackstone also plans to spin off Blackstone Kailix advisers, the investment manager of its long/short equities fund, to a management team led by Manish Mittal, who plans to form a new fund as an independent entity.
"We believe these measures will enable us to operate more profitably in the current environment," Chief Operating Officer Tony James said.
West Palm Beach (HedgeCo.net) – The Blackstone Group is making changes to the single manager hedge funds businesses within its Marketable Alternative Asset Management (MAAM) segment.
Blackstone is consolidating its distressed securities fund onto a single operating platform and moving Blackstone Kailix Advisors, the investment manager of Blackstone’s long/short equities fund, which will be spun off to its management team led by Manish Mittal, who intends to form a new fund as an independent entity.
Commenting on the changes, Tony James, President and Chief Operating Officer of Blackstone, said, “We believe these measures will enable us to operate more profitably in the current environment. Although these funds have performed better than the S&P 500 and other global market averages, we expect that adverse fundraising conditions in the hedge fund industry will prevent these two initiatives from scaling up to a size where they are meaningful for our business on a stand alone basis.”
Blackstone will be an investor in the new fund and investors in the existing fund will be offered the option of investing in the new fund on a preferred basis as their interests in the existing fund are liquidated. Although the existing fund has outperformed global equities measures, its size does not make it a core strategic business for Blackstone and it is not anticipated that this will change in the near term. The fund has not imposed any gates or liquidity restrictions on investors.
“We continue to have a significant commitment to the hedge fund business," James continued, "The current market turmoil with its associated dislocation of asset prices presents us with a multitude of compelling opportunities to invest capital. It is during times like these that we need to be especially disciplined to focus both our people and our capital on the largest opportunities.”
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The Australian – HFA, which has $5.8 billion in assets, joins a long line of fund managers — including Perpetual, Babcock & Brown and Macquarie Group — in suspending redemptions from some funds this year as the credit crisis takes its toll on the value of fund assets.
Standard & Poor’s has placed 80 to 90 per cent of all the mortgage funds, property funds and fund of hedge funds it rates "on hold" this year due to changes in the redemption process.
HFA shares plummeted 55 per cent to 4.3c in local trade yesterday, taking the year’s decline to 98 per cent, after the company said it had stopped allowing withdrawals from the HFA Diversified Investments Fund, the HFA Octane Fund and the HFA Octane Fund Series 2 because of "deteriorating liquidity in underlying investments".
