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.
International Herald Tribune – The mergers and acquisitions business is about to take a deep dive.
For most of the financial crisis, it has remained surprisingly buoyant. This was partly because there was a lot of business to be done selling troubled banks like Merrill Lynch, HBOS and Fortis.
There was also the overhang of deals from the bubble era. But in the past week, two such megadeals – the miner BHP Billiton’s hostile bid for a rival, Rio Tinto, and the planned leveraged buyout of Bell Canada – have come apart at the seams.
As the financing squeeze tightens, other deals could follow suit.
Financing Verizon Wireless’s acquisition of Alltel is proving to be a strain. Verizon Wireless has issued bonds and is looking to raise some bank debt. But the company may have to pay a high price.
Minneapolis Star Tribune – Hedge fund manager Whitebox Advisors won’t let customers cash out, according to a national publication that follows the lightly regulated industry that manages money for affluent individuals and institutions.
The Minneapolis firm, which runs about $4 billion in investor assets through several funds and strategies, is drafting a letter to investors that explains recent investment losses and constraints and the terms under which investors may redeem some of their money, according to the Oct. 22 edition of Hedge Fund Alert.
The publication, which circulates among investment managers, said Goldman Sachs put Whitebox in a box earlier this month by requiring that the firm double the amount of collateral it puts up against margin loans used to trade convertible bonds. That puts Whitebox in a temporary squeeze because it must put up more of its own capital and devalued holdings against its margin accounts, which are trading accounts that use borrowed money in part to invest.
CFO.com – Even hedge funds are not immune to the credit crunch. A small hedge fund that provided short-term debt to companies has filed for Chapter 11 bankruptcy protection.
Greenwich, Connecticut-based SageCrest Finance, managed by Windmill Management, said in its Chapter 11 petition filed in U.S. bankruptcy court that it had listed assets of $50 million to $100 million, and debt between $1 million and $10 million, reported Reuters. The fund had about $1 billion in assets under management as recently as a year ago, according to hedgefund.net.
In fact, the website points out that the credit crunch put the squeeze on SageCrest’s business strategy — which is providing asset-backed specialty financing to smaller private companies that have been closed out of traditional sources of capital. Many of its projects involved extending art-, real estate-, and structured settlement-based loans.
