What happens if the Super-SIV sinks? 19 Oct 2007 The $80bn Treasurybrokered fund designed to buy assets from stumbling SIVs is having a hard time attracting backers. Not everyone will be disappointed if it fails. But such a spectacle could be the death knell for troubled SIVs.
Rock discovers limited taste for boardroom blood 19 Oct 2007 Replacing the UK bank s chairman, Matt Ridley, with Bryan Sanderson looks a step in the right direction. Sanderson should meet both City and political approval. But it s not clear why Ridley is the only casualty. Unlike other fallen banks, Rock is still being run by the executives who got it into trouble.
Don’t blame the foreigners for India’s overheating 18 Oct 2007 India s attempt to prevent speculative capital inflows is understandable they have driven the rupee up 12%. But further restrictions are not the answer. Instead, India should cut its budget deficit, raise interest rates and allow its own residents to invest overseas.
Sovereign Wealth Funds 18 Oct 2007 Threat or menace? Or neither? These government funds with global ambitions account for more than $2tr. Breakingviews looks at the top players and examines how much fear they inspire.
Cablevision governance should make investors stubborn 17 Oct 2007 Shareholders look set to vote down the Dolan family s $36.26 a share offer. The holdouts think it s worth $47. That may be a stretch. Still investors are right to vote no. The Dolan s voting lock due to the company s dualshare structure has deprived them of a proper auction.
JPMorgan trumps Citi again 17 Oct 2007 The US bank took its own black eye in credit and relied on some oneoffs to top earnings estimates. But most of JPMorgan s other businesses did well. And with a much stronger balance sheet than its crosstown rival, it s better placed to take advantage of troubled markets.
No quick fix for securitisation’s opacity 16 Oct 2007 Assetbacked investors will welcome Treasury secretary Hank Paulson s call for more transparency. They ve wanted it for years. Now, after the summer rout and nearcollapse of longtrusted structured vehicles, they have their chance. But history suggests it won t be easy.
SEI’s hybrid asset management model offers stability 16 Oct 2007 So far, asset management stocks have weathered the credit crunch rather well. Shares of SEI Investments have lagged the group. But with its mix of asset management and fund services revenue, SEI may prove a relatively safe haven if troubles return.
Och-Ziff IPO price is on the high side 15 Oct 2007 Even after cutting back its planned offer, the hedge fund is shooting for a value of $11.5bn in its IPO. That s a quarter higher than Fortress, which manages nearly 50% more in assets. OchZiff's higher management fees justify a premium to its competitor. But even so, the target IPO price is pushing it.
US Treasury’s credit bailout could backfire 15 Oct 2007 It hopes a bankbacked conduit to buy assets from structured investment vehicles will boost their lenders confidence. But losing their top assets could also repel their existing investors and starve SIVs further for financing only delaying their day of reckoning.
Och-Ziff is right to push ahead with IPO 12 Oct 2007 The altasset meltdowns in August made fund floats look unlikely. But Danny Och is pressing ahead. He looks smart to do so. Toptier funds can still reap a lot of benefits from being public. And with markets touching highs, this may be as good a time as ever to float.
Rock rollercoaster puts hedge funds in a spin 10 Oct 2007 First, the UK bank s crisis handed big gains to funds like GLG shorting it. Now the stock s doubling since its nadir has put funds like RAB Capital, who are buying the shares, on the front foot. Northern Rock is trading like an option. Extreme volatility and a longer time to exercise the option thanks to the government rescue give it some value.
Private equity gets lucky with UK tax reform 9 Oct 2007 Abolishing taper relief for capital gains tax is sensible. The new standard rate of 18% won t deter investment, but removes the unfair advantage of private over public equity. Buyout groups can t complain too much: at least they get to keep their cozy deal on carried interest.
Wilbur Ross’s subprime foray could signal opportunity 9 Oct 2007 Calling the bottom in a troubled sector is a dicey exercise. But Ross has made a fortune betting on ailing industries. Now he s poking around subprime. That doesn't mean the worst is over. But following Ross's lead has paid off for investors in the past.
European IPO market open again for business 9 Oct 2007 Sure, the E3.5bn IPO of La Caixa's industrial holding division has been priced at the bottom of the range but the discount to NAV is in line with other Spanish holding companies. Meanwhile, France's Bureau Veritas is looking at a E1bn IPO that values it in line with competitors.
It’s too soon to write off US inflation threat 8 Oct 2007 The Fed has decided that low growth is a greater risk than high inflation. The bond market agrees, and the recent price numbers look good. But there are two significant threats: more expensive imports soon and eventual government efforts to prop up house prices.
Merrill Lynch saves worst for last 5 Oct 2007 Now it s clear why heads are rolling: $5bn of writedowns related to CDOs, subprime and LBOs more than any other Wall Street firm. Stan O Neal has replaced some of his henchmen. But the Merrill boss bears ultimate responsibility for directing a strategy that backfired.
Permanent capital sorts hedge fund sheep from goats 4 Oct 2007 Winners such as Dexion Absolute and Brevan Howard trade at premiums to NAV and are wellplaced to raise new cash for their listed vehicles. But the losers face a vicious circle: poor performance, discounts and little chance of raising new cash.
Do LBO break fees protect sellers or buyers? 3 Oct 2007 Break fees are supposed to protect a target's shareholders against a buyout firm getting cold feet. But they seem to be doing the opposite. Instead of encouraging the consummation of deals, they give buyers a way out. In fact, they make some buyout deals look like cheap options.
Banks should turn the tables on loan investors 2 Oct 2007 Distressed debt investors want banks to lend them money to purchase hung LBO loans. It s not clear this makes sense for the banks. They retain downside exposure to the loans while losing the chance to benefit if their price improves. A DIY approach might be better.