Free Internet Press – With the leveraged-buyout business on life support, major private-equity firms such as the Carlyle Group are taking a closer look at the battered banking sector as a way to make money for their clients.

Last September, Washington, D.C.-based Carlyle invested $75 million in Boston Private Financial Holdings. Last month, it was part of a group that injected $900 million into Florida’s BankUnited. Carlyle was part of a group looking to buy Atlanta, Georgia-based Silverton Bank earlier this month, until regulators decided to liquidate the institution instead.

Private-equity firms have long eyed the financial services industry, but the sector took a back seat over the past two decades as private equity pursued fat returns fueled by leveraged-buyout deals. Until recently, those buyouts helped Carlyle generate an annual net return of 26 percent across the firm..

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Bloomberg - Atsuko Tsuchiya, the Japanese hedge- fund adviser who left Merrill Lynch & Co. to found her own firm, led Atom Japan Equity Fund to an 18 percent return in 2008, beating rivals who suffered the worst year on record.

Tsuchiya, 36, achieved the gains in the fund’s first full year of trading, withstanding market losses and investor withdrawals that ravaged the $1.5 trillion hedge-fund industry, Bloomberg data shows. The Eurekahedge Hedge Fund Index fell a record 12 percent in 2008.

One of the nation’s few female hedge-fund advisers, Tsuchiya combined so-called event-driven and equity long-short strategies in the Japan-focused, 3 billion yen ($33 million) fund. Bets on companies that launched buyouts or bought affiliates to combat Japan’s first recession in seven years helped Atom dodge a 33 percent slide in assets at Japan-focused hedge funds last year.

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New York (HedgeCo.Net) – JPMorgan Chase & Co. has purchased Washington Mutual’s branch network for $1.9 billion, making them the largest U.S. bank by deposits. The deal was encouraged by the U.S. government after consumers withdrew over $16 billion from the nation’s largest savings and loan in the latter half of September.

WaMu was having trouble finding a buyer after the Treasury’s proposed $700 billion bailout package created reluctance among would-be investors. Others companies said to have been considering an offer included Citigroup and Wells Fargo.

Many believed that WaMu was next in line to sink thanks to over $180 billion in outstanding mortgage-related loans and the paranoia of a pending liquidity crunch. On top of that, Standard & Poors once again cut WaMu’s ratings to CCC from BB-, though the company was quick to quell any fears associated with the downgrade.

"Washington Mutual Bank’s deposit rating from Standard & Poor’s continues to be investment grade and it is important to note that Standard & Poor’s rating actions do not affect the safety of customer deposits, which are insured up to the limits allowed by the FDIC," said WaMu in a recent statement.

Washington Mutual continued to deny rumors of any problems. The bank recently stated they had over $50 billion in liquidity despite being hit hard by the subprime mortgage fallout.

It was just a few months ago that WaMu rejected a bid from JPMorgan for about $4 a share, even after JPMorgan urged the bank to consider a deal before the economy got worse.

JPMorgan, who also acquired Bear Stearns earlier this year, will not inherit WaMu’s liabilities, including claims by shareholders and subordinated and senior debt holders. By purchasing WaMu, Chase can now increase their presence on the West Coast and in Florida.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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