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.
New York (HedgeCo.Net) – At a time when many hedge funds are experiencing their worst year to date, private equity firm The Carlyle Group is launching a new fund with around $14 billion in capital.
According to a report by Reuters, the Washington D.C. – based company launched the U.S. buyout fund in the spring of 2007, and has a target goal of $15 billion.
The current economic conditions make it extremely difficult to raise capital, as fear and unfavorable market conditions prompt investors to rush for withdraws from many large hedge funds. According to the Chicago-based Hedge Fund Research, hedge funds are down about 15.5 percent on the year.
The Carlyle Group is one of the country’s largest private equity firms, with almost $90 billion under management. They recently decided to shut down its Asia leveraged finance group “in light of the current global turmoil and the serious dislocation of the credit capital markets.”
The new fund will be added to Carlyle’s already vast portfolio of investment vehicles. According to the company website, Carlyle manages 55 different funds specializing in buyout, growth capital, real estate and leveraged finance.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Shares of Lehman Brothers Holdings Inc. plummeted on Tuesday amidst increasing investor concerns over the bank’s ability to raise capital. The stock dropped 45 percent to $7.79 in early afternoon trading, marking the lowest level in more than decade for the company that has been pummeled by the credit crisis.
Lehman is expected to announce their third-quarter results on September 18. They were hoping to avoid another quarter of sharp losses, after having written down over $8.2 billion since last summer.
Some analysts are expecting Lehman to report losses up to $4 billion this quarter, with plenty more to come. Lehman still has holds about $65 billion in mortgage-backed assets that are continuing to lose value as the subprime fallout trudges along.
Hoping to quell a repeat of the Bear Stearns collapse, Legman has unsuccessfully tried to secure a major investor. Talks with state-run Korea Development Bank ended yesterday due to rumored lack of progress.
"Their talks had not developed to a serious level. There have been several investors who have been in discussions with Lehman other than us," said one Korean official.
Lehman has been in talks with Kohlberg Kravis Roberts & Co. and the Carlyle Group in regards to buying parts of its real estate and asset-management units.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
New York (HedgeCo.Net) – While the U.S. Treasury has done all it can to stave off rumors of a government bailout of Fannie Mae and Freddie Mac , some say the inevitable rescue is bound to take place after attempts to raise capital for the two mortgage giants have proved futile.
Preferred shares of the two companies are trading as low as 19 cents on the dollar, fueled by assumptions that their dividends will be suspended. This belief was the reason behind Moody’s recent ratings downgrade of their preferred stock to Baa3, the lowest possible investment-grade. Meanwhile, shares of both companies have experienced month after month of sharp declines, with Freddie down 93 percent and Fannie down 89 percent since November.
Together, the two companies account for over $5 trillion of outstanding U.S. mortgages. As the number of foreclosures reached record heights thanks to defaults on mortgages by subprime borrowers, Freddie Fannie have taken a beating since last summer, writing down almost $15 billion and forcing some to believe they will not be able to weather this housing crisis without the help of Uncle Sam.
Both Freddie and Fannie make money by offering mortgage-backed security bonds to investors. By selling these bonds, they assume the risk involved in the repayment of these loans. In exchange, they get to keep a guarantee fee that investors pay upon purchasing the bonds. It is easy to see, then, how the two companies that were believed to be “too big to fail,” started to experience problems. As more and more borrowers were unable to pay their mortgages, the responsibility fell on Freddie and Fannie. As they tried to stay afloat in their sea of debt, values of their securities started to plummet.
Recent attempts to try and find investors have been unsuccessful. Hedge funds like the Carlyle Group and Blackstone both expressed interest, only to rescind until further action by Treasury Secretary Henry Paulson.
"I think it starts with the constant doom and gloom, which makes investors quick to react when there is any sign of trouble ahead, and rightfully so," explains Michael Facchini, Portfolio Manager for Chicago-based Regent Global Funds. "Right now, investors are only interested in the cream of the crop when it comes to the MBS markets."
Federal Reserve Chairman Ben Bernanke has spoken several times about increased regulation of the companies, thanks to the widespread belief that Freddie and Fannie are government-backed. While both were created by Congress in an effort to increase homeownership and profits through the sale of their mortgage backed securities, they are in no way guaranteed by government funds.
In July, the Treasury and Federal Reserve outlined a plan to save Fannie and Freddie in order to prevent any chance of a Bear Stearns-like debacle. Among the suggestions, Paulson’s plan allowed for the Treasury to purchase shares of the two companies, should it prove to be necessary. That time has come, with some estimating the government may have to purchase about $60 billion worth of preferred shares.
Shares of Fannie Mae closed on Monday at $5.19, up 4 percent, while Freddie Mac rose 17 percent to close at $3.29.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
The Ledger – Lehman Brothers, the troubled investment bank, is considering the sale of all or part of its prized money management division to private equity firms to raise billions of dollars of capital and ease the pressure caused by losses related to real estate.
The move would be the latest by a Wall Street firm forced to sell off high-end assets, following the recent sale by Merrill Lynch of its stake in Bloomberg L.P. and the sale by Citigroup last month of its large German consumer banking franchise.
Lehman sent letters last week to a number of financial companies, including private equity firms like Kohlberg, Kravis & Roberts, J. C. Flowers, the Blackstone Group, the Carlyle Group and Apollo Management, to test interest in its money management division, according to several people briefed on its contents.
The letter, a so-called memorandum of understanding, did not put a value on the division. It said that interested parties could bid for all or some of the pieces but encouraged bidders to make an offer for the whole business.
New York (HedgeCo.Net) – The private equity firm Carlyle Group will liquidate its lone hedge fund, after stating that it failed to achieve “critical mass.”
The fund, Carlyle-Blue Wave Partners Management LP, was a multi-strat fund launched by Rick Goldsmith and Ralph Reynolds. The two managers previously served as co-heads of global equity derivatives at Deutsche Bank.
"This is an orderly liquidation to ensure fair and equitable treatment of all investors," said Carlyle spokesman Chris Ullman.
The fund was among many to suffer losses fueled by the credit crisis that starting brewing last summer. After posting losses in 2007, the fund looked to be turning around and even showed gains of 2 percent in 2008. However, Carlyle said they could not keep up with the cost associated with staff and infrastructure and decided to go forth with the liquidation.
According to a statement published on the company’s website, the fund was "launched in a challenging market and [has not] been able to achieve the critical mass of assets under management necessary to support a multi-strategy fund infrastructure."
Assets under management are now estimated at $600 million, $300 million less than its peak.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Quamnet.com – Private equity firm Carlyle Group said it has agreed to invest 87 mln usd in Shanghai-based chemical company Sinorgchem (Group) Co.
Sinorgchem is the largest Chinese supplier of para-phenylenediames (PPDs), a key chemical additive in the production of rubber products which help avert premature ageing of rubber. The company has an annual capacity of 45,000 tons of PPDs.
