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Archive for the ‘Private Equity’ Category

GIC, Temasek laughing all the way from Alibaba’s cave

In Financial competency, GIC, Private Equity, Temasek on 10/06/2014 at 4:47 am
FT reported a few moons ago on how Alibaba is likely to be valued in a coming US IPO:
Would-be buyers of Alibaba’s unlisted shares and convertible bonds have recently been making offers that value the group at $120bn-$150bn*, according to bondholders and others involved in the market …

That is a sharp contrast with 2012, when Alibaba issued the $1.6bn convertible bond to a small group of investors including Singapore’s Temasek and GIC.

At the time, Alibaba was valued at less than $40bn, two people with direct knowledge of the situation said. Under the terms of the deal, the bond will convert into equity upon completion of an IPO.

($= US$)

Temasek haters like Chris Balding and Heart Truths must be feeling sick. The bonds are worth 3 times the price that Temasek, GIC paid for them. Even at the low end valuation valuation of US$80bn, the bonds would have doubled in value. Keep on cursing Heart Truths and Chris Balding (and TRE posters). GIC, Temasek are like Sith Lords, they do well when you keep cursing them. LOL

Never mind, these rabid haters can bitch about the failure of an IPO where Temasek among other shareholders were trying to flip less than a yr after they went in. http://www.reuters.com/article/2014/04/30/wh-group-ipo-idUSL3N0NL2OL20140430. Investors tot they were too piggy in a pig farming IPO.

*Another view: Alibaba’s valuation, which a Breakingviews calculator estimates at $113 billion

 

Asiasons: Hero to Zero to …

In Financial competency, Private Equity on 08/05/2014 at 5:13 am

I looked at it when it fell to 40cents. But decided to give it a miss as its financial statements didn’t help me understand the company. A few weeks ago, I tot of buying a few hundred thousand shares at 5 cents on the premise that nothing could go wrong given that chairman and one of the controlling shareholders  Mohammed Azlan Hashimwho is also a director of Malaysian sovereign wealth fund Khazanah. Mohammad Azlan is also the former executive chairman of the Kuala Lumpur Stock Exchange*.

I also had a lot of respect for the guys behind the co based on their actions: see above link.

But I was in no hurry: didn’t see the stock going anywhere. I’ll let yesterday’s BT take up the story:

Asiasons Capital shares have suffered much pain but, unlike many of its penny stock cohorts, the private-equity firm and its top executives are not being investigated by Singapore’s white-collar crime buster for possible breaches of securities laws.

After getting battered to a low of 3.8 cents on Monday, Asiasons shares gained some ground yesterday, ending the day some 5 per cent higher at four cents, still a far cry from the high of $2.83 it hit last October days before the stock came crashing down.

Amid the penny stock controversy surrounding trading in its shares and investigations into several firms linked to it by the Commercial Affairs Department (CAD), one of Asiasons’ founders and chairman, Mohammed Azlan Hashim, has called it a day at the firm.

On April 28, the firm said the 57-year-old, a prominent corporate figure in Malaysia, had volunteered to retire as non-independent and non-executive chairman, a post he had held for seven years.

He now only has a 3.8%  direct interest in Asiasons. Previous in addition to this he had deemed interests of 50% (along with others) via other vehicles. Ng Teck Wah,  one of the joint MDs too is resigning, though he retains his deemed interests.

This leaves only Datuk Jared Lim Chih Li is a co-founder and Joint Managing
Director of Asiasons Capital Limited and also a director of
Chaswood Resources Holdings Ltd. Datuk Jared was formerly
a Non-Executive Director of ISR Capital Limited and he
retired on 25 April 2013.
Datuk Jared is the visionary behind the setting up of an
Asian-owned and Locally-grown private equity fund and
conceptualized Asiasons’ investment model of combining
traditional value enhancing exercises with branding, design
and online strategies.
Prior to the formation of the Asiasons Group in 2007, Datuk
Jared was an investment banker with Avenue Securities and
was responsible for the setting up of the corporate finance
unit, eventually building it up to a 40 man strong unit with a
strong track record in Equity offerings, Restructurings, M&A
and Bond Issues. Datuk Jared built a niche in Malaysia in cross
border equity offerings involving PRC enterprises, which
eventually led to his conviction that it was timely to start an
Emerging East Asian private equity model.
Datuk Jared is also a successful entrepreneur and is the
Chairman of the privately owned Be Group in Malaysia. The
Be Group is a boutique style Property and Lifestyle Group
comprising award winning properties and award winning
lifestyle brands in food and beverages and Wellness.
Datuk Jared has a Bachelors degree in Economics and
Accounting from the University of Bristol and obtained a First
Class in Masters of Finance from the University of Hull and
the Chartered Financial Analyst (CFA) qualification.
(From 2013 annual report)

Is he worth a punt?

——

*Dato’ Mohammed Azlan is the co-founder and Chairman of
Asiasons Capital Limited and also the Chairman of Chaswood
Resources Holdings Ltd. He is the senior statesman in the
Asiasons Group and is an established corporate figure with
interests in Malaysia and Singapore. He is instrumental in
building Asiasons’ relationships with government authorities
and large corporates across the region and provides Asiasons
with strong governance credibility given his previous tenure
as Executive Chairman of Kuala Lumpur Stock Exchange and
current quasi governmental roles.
He has extensive experience in the corporate sector
especially in financial services and investment management.
Aside from his tenure as Chairman of the Stock Exchange
in Malaysia, he also served as Group Chief Executive of
Bumiputra Merchant Bankers, Group Managing Director of
Amanah Capital Malaysia Berhad.
Dato’ Azlan is currently a Board Member of various
government and government related organizations including,
Labuan Financial Services Authority, Khazanah Nasional
Berhad (the investment arm of the Government of Malaysia).
He also serves on the Investment Panels of Employees
Provident Fund of Malaysia and the Malaysian Government
Retirement Fund Incorporated. He is also currently Chairman
of various public listed entities in Singapore, Malaysia, and
United Kingdom, including D&O Green Technologies Berhad,
SILK Holdings Berhad, Aseana Properties Limited, Scomi
Group Bhd and Deputy Chairman, IHH Healthcare Berhad.
A Chartered Accountant by profession, Dato’ Azlan
graduated with a Bachelor of Economics from Monash
University, Australia. He is a Fellow Member of the Institute
of Chartered Accountants, Australia, Malaysian Institute
of Directors, Institute of Chartered Secretaries and
Administrators, Member of Malaysian Institute of Accountants,
and Honorary Member of Institute of Internal Auditors
Malaysia.

 

Asiasons: 2 bull pts

In Financial competency, Malaysia, Private Equity on 24/10/2013 at 4:46 am

Firstly, controlling shareholders are gd financial engineers. I had bot into Integra 2000 for its planned massive dividend in 2007 which I believed that the market had not appreciated because it was conditional on deals getting thru. It then started flying cum dividend. I had expected to sell the shares at a slight loss from the cum di price when it went ex-dividend. Instead I made a profit. Later I learnt that these guys had bot into the shares cum dividend. They must have used the pending dividend to finance the purchases. Financial engineering at its best.

(FYI, BT on Tueday quoted an unname broker, “He believes Asiasons’ “true” value could settle in the region of 30 to 40 cents, while LionGold’s could lie between 40 and 50 cents as it has a higher book value.”. Don’t know what he means, but will explore.)

Secondly, these guys willing to spend dollars trying to look gd. Blumont and LionGold selling controlling shareholders have gone to ground. But still, like Asiasons, their share prices have flown.

It was a masterstroke of Asiason’s PR/ IR team that got ST to carry a story entitled “Were not a bunch of comboys” on Saturday 19th October, juza before relisting on Monday. In it we learn,

– about the sparsely furnished office of Asiasons Capital in China Square Central [Frugal, serious people]

“The share price volatility has absolutely no link or association with Asiasons’ operations,” said chairman Mohammed Azlan Hashim, a prominent corporate figure in Malaysia who sits on the boards of sovereign wealth fund Khazanah Nasional and IHH Healthcare. [Not a nobody]

– Asiasons has a fund management portfolio of about US$300 million (S$372 million) and counts Malaysia’s deep-pocketed state-owned funds such as Ekuinas and government pension scheme Kwap as clients.[Gd, solid connections]

– At current price levels, Mr Azlan admitted that the shares are hovering near the level they were at in 2007 when he and his two partners took control of Asiasons, then a human resources technology firm called Integra2000 and shifted its business focus to private equity investment … three also reiterated that none of them have sold “a single share” in Asiasons over the past six years.  [Long term greedy] That’s quite a contrast from what has been taking place at LionGold and Blumont, which have seen significant trades recently involving insiders, particularly disposals and forced selling involving directors.

– “This so-called web of cross shareholdings makes it appear as if we are in cahoots in this whole thing,” said Mr Lim. “We are our own men and no one else is influencing us.” Asiasons owns 9 per cent of LionGold and has a 27 per cent stake in ISR Capital which it plans to eventually divest.

Mr Azlan reiterated that there are no other connections to the other firms. “We have absolutely no relationship with these other firms, including Blumont. The only relationship there is Jared, a director, and his wife but that’s not related to Asiasons per se,” said Mr Azlan.

Clearwater Developments, which is linked to Mr Lim’s wife Dian Lee, owns a 7 per cent stake in Blumont. That investment, Mr Lim said, came about from an “innocent transaction” a few years back when Blumont, then called Adroit Innovations, was scouting around for some properties in Malaysia.

“She went ahead and made the decision herself and it was a small investment which involved shares. Now she and her partners are looking to sell their stake as it was purely an investment and not part of their business,” said Mr Lim. [Not connected with ...]

– The three founders also categorically denied another topic hot in the market rumour mill that Asiasons is connected to well-known Malaysian stock investor and businessman Soh Chee Wen. [Not connected with ...]

Watch out for the “bowl” consolidation, if thinking of buying. Let you know if I buy some after I buy some.

Japan keeps Asean’s economies motoring along

In Indonesia, Japan, Private Equity, Vietnam on 27/07/2013 at 5:26 pm

Asean round-up

Gd summary from FT on Japan’s reemergence in region

China’s slowdown and the prospect of less easy US money have sent a chill through southeast Asia. Benchmark indices in Jakarta, Bangkok and Manila have lost almost half of the one-fifth gains they had made this year to mid-May. The real economy is weakening, too. Last week the Bank of Thailand cut its growth forecast below 5 per cent and recent comments from Bank Indonesia suggest it accepts growth will slip below 6 per cent. Hardly a disaster then, but nor is it what these countries or their followers are used to. Enter Japan and, crucially, its direct investment. In terms of trading with the region, Japan’s significance has slipped over the past decade as its economy stagnated, but at a shade over $200bn it commands the same share as China. Its FDI of $60bn into the region over that period, however, is 10-times greater than its giant neighbour, according to HSBC. Japan is either the largest or second-largest investor in each country.

 During the past two months, Japanese banks and insurers have spent almost $6bn buying stakes in their southeast Asian counterparts. More deals are expected as they try to escape a weak and ageing home market.

Background

Meiji Yasuda Life Insurance Co is expected to acquire a 15% stake in Thai Life Insurance Co. in what would be one of the biggest investments ever in Asia by a Japanese life insurer With the planned investment worth about ¥70 bn (US%700bn), Meiji Yasuda wants to make the major Thai insurer into an equity-method affiliate and dispatch executives, the sources said.

Like other Japanese insurers, Meiji Yasuda is looking to expand overseas earnings, especially in Asia, amid sluggish business at home due to the aging of society.

Sumitomo Life Insurance Co. has made a ¥28 bn investment in Vietnam’s top insurance group, while Dai-ichi Life Insurance Co. in June announced a ¥34.3 bn investment in Indonesia. Sumitimo which lost out to Yasuda is now looking to Indonesia where Bank Negara is looking to sell up to 40% of its life business for up to $800m, according to the FT.

Japanese banks have been active too. http://atans1.wordpress.com/?s=Mitsubishi

Cambodia’s growing

Low labour costs and Cambodia’s proximity to key markets such as China and other emerging economies in South East Asia are attractive to foreign investors.

And with wages in countries such as Thailand and China on the rise, Cambodia is likely to become even more attractive.

http://www.bbc.co.uk/news/business-23429693

Vietnam R private equity

http://blogs.reuters.com/breakingviews/2013/07/18/vietnam-is-back-in-the-game-for-buyout-firms/

PM, what about asking the right questions? Or at least different ones

In Economy, Political economy, Political governance, Private Equity, Temasek on 29/01/2013 at 7:52 am

“Do you want faster growth or do you want fewer foreign workers? Do you want more hard work or more leisure? Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind? How can we find that balance in between?” the Prime Minister asked. Whatever the hurdles, he emphasised that the PAP had always been open with Singaporeans, even when these trade-offs may be unpopular – SPH.

I got two gripes with the above remarks by PM.

Firstly, as usual he is framing* the issues in such a way so as to try to get us to answer the way he wants us to answer them. Dad used to do this successfully when we didn’t have the best education system in the world, when issues were less complicated, and when there wasn’t the internet. But times have changed, but PM hasn’t shaken off daddy’s influence.

– “Do you want faster growth or do you want fewer foreign workers?” Well how about asking, “How can we have faster growth without FTs? Can we substitute robots, or pay higher wages?” And more fundamentally what about, “Do we need faster growth? What about better quality growth?”

– “Do you want more hard work or more leisure?” What about asking,”Can we work smarter to have more leisure?” Or more fundamentally, “Are we working smart? Or are we working harder because we are not working smart?”

– “Do you want more competitive schools and good results and good futures, or more relaxed schools and fall behind?” Shouldn’t we be asking, “Are there other ways of educating S’poreans that ensure national prosperity and self-development?”

Now the answers to these alternative questions may well be those that the PM thinks are the solutions to the problems that we face. Fair enough, then. But let’s ask alternative questions, think thru the answers, and also think blue sky. The great and the good don’t always have the answers. Even Bill Gates got Google wrong, badly wrong http://dealbook.nytimes.com/2013/01/21/prophesies-made-in-davos-dont-always-come-true/

And lest the PM forget, the PAP has not always been open with us.

The FTs came pouring in on the quiet. The government was not open on this issue, public housing and transport, and inflation.

Mah Bow Tan was telling us that his HDB building programme was sufficient when S’poreans were saying it was insufficient. Well fact that Khaw has accelerated and expanded the building programme shows that Mah was wrong, if not in denial.

And remember Raymond Lim said GST had to rise when we bitched about overcrowded trainds and buses: he implied that we juz wanted more comfort and so should pay for it. He was wrong or in denial about the problem. Well the massive spending plans, shows that we were right to get upset.

And inflation. I’ve gone on and on about Tharman and Hng Kiang saying that higher inflation doesn’t affect S’poreans who don’t buy cars. That is obfuscation, not openness.

But never mind, the PAP can remain complacent because Low has publicly implied that a vote for the WP is a vote for continued PAP rule.

Not that I’ll complain too much. The low-tax environment and the emphasis on making sure property prices “cheong all the way” have allowed me to stop working in my 40s. And have the time to think; and grumble, constructively, I hope.

And oh, keep on spending our money on ourselves. And double it, or triple it. Better return on investment for the PAP, then letting Temasek lose it like in here http://www.breakingviews.com/tpg-runs-rings-around-li-ning-shareholders/21064940.article. And anyway, , potential returns for investors are not going to be that great anyway http://www.economist.com/blogs/buttonwood/2013/01/investing. So it’s a better investment for us and the PAP: make life more comfortable for us using our money.

*Read this on the science of framing questions, to get the “right” answers http://www.bbc.co.uk/news/uk-scotland-20512743

Asean round-up

In Indonesia, Malaysia, Private Equity on 19/01/2013 at 1:21 pm

Almost about the telco market in Burma, but there’s more after this Burmese stuff.

Taiwanese smartphone company HTC has become the latest to enter the largely untapped Burmese market, as the country opens up to foreign firms. HTC launched its smartphones in Burma on Monday. The phones will come with a Burmese language on-screen keyboard, which the company says is the most advanced available. Burma has one of the lowest mobile phone ownership levels in the world: in 2011, only 3% of the population had a mobile phone.

HTC is not the first smartphone maker to try to tap into the Burmese market. Samsung and Huawei lead the market with their low-cost devices. However, HTC is hoping to attract consumers with what it calls one of the most advanced Burmese language keyboards in the country.

Burma is also planning licence four more telco operators: invitations have been made to tender for two. The existing is govt-owned.

The expected bidders are: Russia’s VimpelCom, among the world’s top 10 mobile network operators in terms of subscribers; Telenor of Norway, a major shareholder in VimpelCom; Vietnam’s VNPT-Fujitsu, a joint-venture between Vietnam and Japan’s Fujitsu; Malaysia’s Axiata; and Digicel, the largest mobile operator in the Caribbean.

Local listco and mobile phone distributor mDr Ltd has incorporated a subsidiary in Burma. Itholds a 51% stake in MDR Myanmar while its local partners, Be-Well (Myanmar), Be-Well Corp and Avitar Enterprises, will hold 20, 20 and 9% respectively.

The new company, with a paid-up and issued capital of US$50,000, will provide after-sales services of telecommunication devices to consumers. It will also be involved in the mobile devices and accessories distribution and retail businesses via its provision of exclusive consultancy and retail franchisee procurement services to Myanmar-based Golden Myanmar Sea Co Ltd (GMS).

Thailand: a cheong too far? http://blogs.reuters.com/breakingviews/2013/01/16/thailands-unsustainable-boom-is-piling-up-risks/

Indon private equity firm on a roll: http://www.bloomberg.com/news/2013-01-15/saratoga-seeks-consumer-deals-with-480-million-war-chest.html

Flooding caused by days of heavy rain has hit parts of the Indonesian capital, Jakarta, forcing businesses to close and blocking roads. Areas including the central business district (CBD) were inundated and traffic was grid-locked as residents struggled to move around the city.

Meanwhile there is a water shortage just south of KL.

Indons buys S’pore telco biz

In Indonesia, Private Equity, Telecoms on 22/11/2012 at 5:14 am

Indonesian private equity firm Northstar Group is expanding into take-private deals, agreeing to buy a majority stake in Singapore-listed Nera Telecommunications and offering to buy the entire company for around US$146m

Norway’s Eltek ASA said it has agreed to sell its 50.1% in Nera to Northstar, part-owned by TPG Capital, a major US private equity firm for S$88.8 m  (US$72.6 mn) or S$0.49 a share. Northstar will extend the same offer for the remaining shares in a mandatory unconditional cash offer.

 

 

Private equity increases focus on SE Asia

In Indonesia, Malaysia, Private Equity, Vietnam on 30/10/2012 at 5:58 am

Buyout Firms Increase Focus on Southeast Asia Moves by the Carlyle Group and K.K.R. show their “increasing interest in one of the world’s most promising, but complicated, emerging markets: Indonesia.”

Indonesia attracted a record US$5.9 bn in foreign direct investment in the third quarter. It is a hot despite a bleak global outlook and worries about corruption and corporate governance http://www.reuters.com/article/2012/10/22/us-indonesia-economy-fdi-idUSBRE89L04220121022.

Note KKR has juz opened an office in S’pore.

FT says the economies of Indonesia, Malaysia and the Philippines are being driven by relatively strong corporate balance sheets, commodity exports and robust consumption amid the emergence of a rapidly urbanising middle class with purchasing power, hence the PE interest.

If Vietnam gets its act together, it could join these countries. Thailand has the corporates and the middle class but not commodities. It manufactures. So it too will be on PE radar.

And taz why the PEs have set up shop here. Convenient hub.

GIC: News not reported by SPH, MediaCorp/ LionsXII

In Footie, GIC, Media, Private Equity on 04/10/2012 at 6:36 pm

GIC recently sold out of its investment in British Airports Authority http://www.bloomberg.com/news/2012-08-17/qatar-buys-stake-in-heathrow-owner-baa-for-900-million-pounds.html

According to FT, the sellers recovered their investment and a little more: not a good deal. But these are difficult times.

Still trying to buy some assets, despite being turned down before at same pricehttp://in.reuters.com/article/2012/08/20/msrresort-auction-idINL2E8JK6UJ20120820

On totally different issue, relax Young Lions. Playing winning football, not attractive football. Fans will forgive you if you play ugly and get into finals. And remember, other side has more to lose than you.

“Hank” makes LKY, Li Ka-shing and Warren Buffett look like wimps

In Private Equity on 29/05/2012 at 5:10 am
Maurice “Hank” Greenberg, the 87- year-old former head of American International Group Inc., plans to seek investors to help him fund private-equity deals lasting a decade or more. Starr Principal Holdings LLC, said it plans to raise money from institutional investors such as sovereign-wealth funds and ultra-high-net-worth family offices, without specifying how much.
 
 
He held a 12% stake in AIG valued at about US$21 billion as of March 2006. Sold most of his AIG shares for “peanuts” after the US government took an 8o% stake in AIG during the 2008 financial crisis.
 

Private equity in Asia: Chasing investors

In Private Equity on 24/05/2012 at 5:10 am

Fifty-three funds were attempting to raise a total of $22.3 billion to invest exclusively in Asia as of April 2012, according to data compiled by Preqin Ltd., a London-based research firm.

Indonesia: More private equity funds are a’coming

In Emerging markets, Indonesia, Private Equity on 05/03/2012 at 5:19 am

http://www.bloomberg.com/news/2012-01-25/tpg-partner-paves-way-for-newcomers-to-indonesian-private-equity.html.

Also, buyers from Singapore completed the largest number of transactions as Indonesia witnessed a record year for M&A activity.The 12-month M&A activity for Indonesia ended 31 Jan, 2012, saw 78 transactions worth a total of US$9 billion being recorded, with Singapore-based companies completing nine transactions worth US$372 million, according to global risk management company Kroll and M&A intelligence service mergermarket.

The nine transactions completed by Singapore-based buyers were in a diverse range of industries, highlighting the investment potential in Indonesia. Two transactions were in the energy sector, the rest of the deals were in transportation, consumer food, real estate, construction, financial services, internet and e-commerce, and in other services.

Japan was the most prominent country in the South-east Asian nation’s M&A activity in terms of value and volume, with US$1.1 billion across six deals. The largest Japanese transaction of the year was Mitsui Sumitomo Insurance’s US$827 million, 50% stake acquisition in life insurance provider PT Asuransi Jiwa Sinarmas (Sinarmas Life Insurance), according to the report.

Deals by Asia-Pacific buyers accounted for 72% \of Indonesia’s M&A deal count while 28% of bidders were from outside Asia, with US bidders completing the most transactions,

 Indonesia is expected to see continued strong M&A activity, particularly in the technology, media and telecommunications, financial services, energy and mining & utilities sectors.

But there are problems as highlighted by a corporate governance spat: Indonesian tycoons versus Nat Rothschild.

“Investing in emerging markets is always challenging for investors. Indonesia in particular requires deep local insight into the market and potential target companies, as various reforms continue to raise both opportunities and challenges for potential bidders,” said Kroll.

“Many investors interested in Indonesia tend to seek help from local third-party advisers or partners to assist with administrative functions during a transaction. However these intermediaries may not necessarily have sufficient understanding of global anti-corruption legislation. Overlooking such legislation can lead to costly violations for investors in their home markets … investors also need to be aware of other operational pitfalls that may impact their business such as the state of local infrastructure and the integrity of business partners. These risks often vary according to sector.”

Strikes could also be a problem http://www.bbc.co.uk/news/business-17175833 despite the consumer boom.

Its booming economy also masks its problems with politcal governance and corruption. This is what ISEAS* says about the country in its inaugral ASEAN Monitor dated February 2012

Indonesia

Indonesia is in a period defined simultaneously by stasis and stability. It has yet to move into the next phase of its democratic consolidation, and it is unlikely to do so in 2012.

In fact, several indicators suggest an overall deterioration in earlier democratic achievements. First, the country’s judiciary and police are — and most likely will remain — notoriouslyunpredictable in upholding the rule oflaw. Second, large sections of the bureaucracy are in disarray; they will continue to perform poorly for theforeseeable future. Third, Indonesia’s main political parties have fallen increasingly into internal turmoil over positions of influence and finances.

Those problems and frictions are boundto persist in several important parties in the coming months.

Externally, Indonesia is expected continue playing a fairly minor role despite being the dominant power inSoutheast Asia. This is largely because of the strong emphasis on purely domestic political issues. As the next generalelection and the presidential electionapproach in 2014, all of Indonesia’s political parties will become increasinglypreoccupied with preparations for the polls and the selection of candidates. It must be remembered that an anti-porn bill was introduced in 2008, just before the general election the following year.

The coming months will tell if there is to be a similar populist legislative measure to win conservative votes this time. Overall, it is unlikely that Indonesia’s status as a stable yet static democracy will change substantially during 2012.

Key points: The current consumer boom in Indonesia will continue to mask its problems with corruption. And though Indonesia is less likely to be adversely affected by a global economic slowdownthan other regional countries, will global risk aversion stem the investment inflows it has enjoyed in recent years? Read the rest of this entry »

GIC: A dog of an investment

In GIC, Private Equity on 24/02/2012 at 6:14 am

BAA made a loss as debt payments mount. Rising interest payments on BAA’s debts turned the operating profit of £572m into a pre-tax loss of £256m – a £60m improvement on its 2010 losses.

http://www.guardian.co.uk/business/2012/feb/22/baa-loss-debt-interest-payments

GIC is a one of three members of a consortium that won a bid for BAA, valuing it at £10.3bn in June 2006. The investment went almost immediately wrong. Fortunately, GIC’s initial stake stake was  a peanutty 5-10%. The exact %age has never been disclosed.

Still it is no surprise that Reuters reports that GIC  “is selling US$750 million of private equity and other funds it no longer wants to invest in, and will redeploy the money to other better-performing managers, according to sources familiar with the matter”.

To be fair,”sovereign wealth funds and pension funds are pruning their exposure to alterative assets such as private equity amid the economic downturn”. Taz the problem when one tries to be hip and sassy.

Temasek: Financial engineering STATS

In Private Equity, Temasek on 15/09/2010 at 5:11 am

STATS ChipPAC, a chip-tester, recently raised US$600m. As STATS is undergoing a recapitalisation exercise, this means the $ will go to shareholders. Temasek has 81% of STATS.

Glad to see that that Temasek is using a private equity “trick” to enhance its returns. Borrowing money and using the loan proceeds to return $ to shareholders.  Every little bit helps post the losses on Shin, ABC Learning, Merrill Lynch and Barclays.

Maybe Straits Trading should try this “trick” as a way to reduce the the loans that Tecity is alleged to have taken out to fund its controlling stake in ST. It owns over 70% of ST and ST has lots of solid assets that would provide gd security for the loans.

But borrowers have to be careful. It’s OK if the borrower’s controlling shareholder is a SWF but not if is juz a family company. Cash flow projections may be wrong,  or bonds may mature at the wrong time.

Value in private equity? Truth v reality

In Private Equity on 25/06/2010 at 5:26 am

Private equity firms, where corporate takeovers are planned and plotted, today sit atop an estimated $500 billion. But the deal makers are desperate to find deals worth doing, and the clock is ticking.

Supposedly, Corporate buyout specialists generally raise money from big investors and then buy undervalued or underappreciated companies. Whatever the truth of the last sentence, To maximize investment returns, they typically leverage their cash with loans from banks or bond investors.

Private equity funds generally tie up investors’ money for 10 years. But they typically must invest all the money within the first three to five years of the funds’ life. For giant buyout funds raised in 2006 and 2007, at the height of the bubble, time is short. They must invest their money soon or return it to clients — presumably along with some of the management fees the firms have already collected. Some of the industry’s biggest players, like David M. Rubenstein of the Carlyle Group, Henry Kravis of Kohlberg Kravis Roberts and David Bonderman of TPG, have more than $10 billion apiece in uncommitted capital — what is known as “dry powder” — according to Preqin, an industry research firm.

Some buyout firms are asking their clients for more time to search for companies to buy. Many more are rushing to invest their cash as quickly as possible, whatever the price.

Many in the industry are getting caught in bidding wars. Firms are assigning surprisingly high valuations to companies they are acquiring, even though the lofty prices will in all likelihood reduce profits for their investors. A big drop in returns would be particularly vexing for pension funds, which are counting on private equity, hedge funds and other so-called alternative investments to help them meet their mounting liabilities.

Full story from NYT.

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