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.
Reuters UK – New Horizon Capital, a Japanese private equity firm, said it may start raising its second fund this year as it sees opportunities to make money from investing in struggling companies.
New Horizon has five potential transactions in its pipeline, Chief Executive Officer Yasushi Ando said at the Reuters Private Equity and Hedge Funds Summit in Tokyo.
New Horizon is seeking commitment of 20 billion yen (142.1 million pounds) from Japanese and overseas investors for its first fund, Ando said.
Bloomberg – Private-equity investors are being offered stakes in Indian companies as hedge funds and banks seek to offload assets, said an executive at 3i Group Plc.
Hedge funds and banks that bought minority stakes in Indian firms in recent years are finding it hard to unwind their investments because the “listed market is dead,” said Anil Ahuja, who heads the Asian business of the London-based private- equity firm. 3i has poured more than $2 billion into Asia since 2006, and last month invested $161 million in Krishnapatnam Port Company Ltd., its third infrastructure investment in the nation.
“There’s a whole new slew of transactions that are starting to be discussed where people who need the capital are offloading stakes which they hold in unlisted companies,” he said, declining to name the companies.
The offers could ease a slowdown in private-equity sales as stakes are offloaded for less than what management of the companies are prepared to accept, Ahuja said. Private-equity investments in India may fall to as low as $5 billion this year, according to estimates by TPG Inc. and Bain Capital executives at an industry conference in Mumbai last month. That would be less than half the $10.7 billion invested in 2008, based on estimates from the Asian Venture Capital Journal.
Initial share sales by Indian companies fell 46 percent to 183 billion rupees ($3.5 billion) in 2008, making it harder for private-equity investors, banks and hedge funds to cash out their investments. The benchmark Sensitive Index tumbled a record 52 percent last year.
Reuters – U.S. private equity firm TPG has expressed interest in providing debtor-in-possession (DIP) financing for Aleris International Inc, a company it bought in 2006, a source familiar with the situation told Reuters.
The private equity firm wasn’t able to participate in an original round of DIP financing because of technical reasons, but expressed interest in the secondary DIP, the source said.
Aleris, a maker of aluminium products, filed for Chapter 11 bankruptcy protection last month.
The Financial Times reported earlier that TPG asked the judge in the Aleris bankruptcy case to allow it to join a group offering the DIP facility. The source that spoke to Reuters, however, said that TPG had not asked the court or judge to intercede.
Forex Pros – Private equity firm TowerBrook Capital said on Monday it had reached an agreement to take control of French debt-ridden auto parts firm Autodistribution Group.
The deal, at a time of slumping sales in the European car industry, will see Autodistribution’s debt slashed and new management brought in.
A majority of lenders have accepted a debt-for-equity swap, which will reduce the company’s debt from approximately 600 million euros ($755.6 million) to 140 million euros, a source familiar with the transaction said.
TowerBrook said it would obtain a 62.5 percent stake, the lenders would hold a 21.5 percent stake, while Bahrain-based private equity firm Investcorp, the company’s previous owner, would retain a 16 percent stake.
The U.S. government announced a restructuring of a bailout plan for the troubled insurer American International Group Inc. Monday, extending $30 billion in additional aid to the company.
News of the additional funds comes as AIG, once the world’s largest insurer, said it lost $61.7 billion in the fourth quarter, the biggest quarterly loss in U.S. corporate history, amid continued financial market turmoil.
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.
Guardian Unlimited – Three "distressed debt investors" – hedge fund Polygon, restructuring specialist Oaktree and private equity firm Alchemy – have taken control of Countrywide, Britain’s biggest residential estate agent, which was bought by US private equity firm Apollo less than two years ago for about £1bn, mostly financed by debt. Together, they have taken a majority stake for one-third of the price paid by Apollo.
Distressed debt investors, which specialise in buying financial instruments relating to troubled companies at rock-bottom prices, have been saying for two years that buying debt on the "secondary market" – where company loans are traded after the original lender has sold the debt on – was too expensive. Now, they appear to be judging it the right time to move back in.
Reuters – Investment firm SW1 Capital said on Friday it has bought into hedge fund platform PCE Investors and plans to build a controlling stake, cutting private equity firm Ubequity Capital Partners’ own holding.
PCE runs $1.6 billion (1.1 billion pounds) in assets and by next month will have 21 funds, run by 15 teams, in its stable. SW1 is hoping to exploit greater demand for robust and transparent hedge fund operations, thrown into the spotlight by the financial crisis and Madoff scandal.
The deal initially sees two-thirds owner Ubequity temporarily increase its holding as it and SW1 buy out minority shareholder Schneider Trading Associates.
New York (HedgeCo.Net) – Italian automaker Fiat S.p.A. may be interested in acquiring a stake in Chrysler that could help lift the U.S. automaker out of financial distress.
According to an article published on autonews.com, Fiat may invest in a 30-35% stake in Chrysler, while helping the company to design vehicles that create fewer emissions.
While the website didn’t cite specific sources, Chrysler is maintaining ambiguity by stating they do not “confirm or disclose the nature of its private business meetings.” They also downplayed the situation by saying that, “In today’s economic environment, talks are going on between companies in all industries – ours is no different.”
Chrysler, who has already received $4 billion in rescue funds from Uncle Sam, shut down production in all of their U.S. plans in December until inventory is moved. Many fear that Chrysler cannot weather the storm unless they align themselves with a partner.
Fiat would provide new engine and transmission technology that would help Chrysler to produce more fuel-efficient vehicles that pollute less, said people familiar with the matter.
Private equity firm Cerberus Capital Management currently holds an 80.1 percent stake in Chrysler, while Daimler holds the remaining 19.9 percent.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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
Charleston Gazette – Whether it’s a buildup of Civil War troops, Depression-era bureaucrats or defense contractors after Sept. 11, the region has prospered in times of crisis. Today, the financial meltdown is delivering a jolt of its own.
Lawyers, lobbyists and public relations experts — many of whom live and work in Virginia and Maryland suburbs — are benefiting as companies from Wall Street to Motor City seek a piece of Washington’s $700 billion financial bailout, and try to influence any regulatory strings attached. Business is also percolating as President-elect Barack Obama prepares an economic stimulus package comprised of infrastructure spending and tax breaks that could exceed $800 billion.
"There will be a mad rush to have influence on where that money should go,” said David Rubenstein, co-founder and managing director of The Carlyle Group, the Washington-based private-equity firm whose partners include former high-ranking U.S. and foreign government officials. Far from struggling, the Washington region could be on the verge of "boom times,” Rubenstein said.
New York (HedgeCo.Net) – The glitz and glamour that is usually indigenous to one of the world’s most prestigious car shows will be somewhat absent this year, as the U.S. auto makers instead will focus on what’s to come at the annual Detroit Auto Show.
Chrysler, who was granted a $4 billion bailout by Uncle Sam, announced they would unveil 24 new models over the next four years while denying rumors of a sale.
“No one should read what we’re doing as if we are trying to position the company for sale,” said Chrysler CEO Robert Nardelli. “Hibernation would be the furthest thing from the truth.”
Private equity firm Cerberus Capital Management purchased over 80 percent of Chrysler from Daimler AG in August 2007, although Daimler has said that their demands had surpassed their original $7.2 billion investment.
Consumers should expect three or four brand new or revamped models in 2009. All 30 of Chrysler’s plants have halted production until at least January 19th, so dealers can get rid of current inventory first.
The Detroit Auto Show, formally called the 2009 North American International Auto Show, will see a plethora of new models and ideas. All in all, there will be 57 new car debuts, with 14 coming from North America.
GM is no exception. After almost sinking in the wake of its troubles, GM will be forced to come up with new concepts and ideas that lean more towards fuel efficiency. Such as the Cadillac Converi concept car, introduced this past weekend, which would run for about 40 miles on just electric power before needing a charge or switching over to its gas-assist engine.
The Detroit Auto Show runs from January 17 – January 25.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
