(Reuters) - China's economic recovery may have slowed or even gone slightly into reverse over the past month, two international banks said in separate reports.
Credit Suisse economists said economic activity appeared to have softened in the second half of April and that the trend was more pronounced in May, with weakness in the materials sector and power consumption spreading to retail sales.
"We argue that the recovery in China is still ongoing, but that the pace may not be as strong as many have hoped recently," Dong Tao, Asia economist at Credit Suisse, said in a report.
He forecast that the Purchasing Managers' Index might slip below the watershed of 50 over the next few months, suggesting that the Chinese manufacturing sector was contracting.
Economists at Merrill Lynch said the PMI, which has been closely watched by the market as a leading economic indicator, would soften but remain above the 50-point mark, pointing to a milder expansion.
"Although manufacturing investment growth is not as strong as that of infrastructure, it has actually picked up so far this year, and we believe the momentum could be maintained for another several months," Merrill Lynch economists Ting Lu and T.J. Bond said in a report.
"We need to factor in seasonality and focus on the big picture: the V-shape recovery of PMI," they said, noting signs of more property transactions and faster investment growth.
Read more here
Wednesday, May 20, 2009
Tuesday, May 19, 2009
U.K. Banks Get Lawyers for Free as Job Cuts Increase
(Bloomberg) -- U.K. banks such as Royal Bank of Scotland Group Plc, Barclays Plc and HSBC Holdings Plc are increasingly asking law firms to lend them lawyers for free as they’re forced to cut jobs in their legal departments.
The highest-grossing U.K. law firms are getting more requests from financial and corporate clients to provide lawyers on temporary loan, or “secondment,” and are being asked to pay most of or all of the lawyer’s salary for what’s often a six- month stint.
U.K. banks have cut thousands of jobs as they grapple with the worst financial crisis since the Great Depression. Hundreds of lawyers in bank legal departments have been fired and others are having their pay frozen or cut, said Scott Gibson, the director of legal recruiter Hughes-Castell Ltd. in London.
“In-house orgs are thinking, we have fired a lot of people, why don’t we just get the people in who will do that work cheaper?” Gibson said. “In a downturn, organizations want to get lawyers to do things cheap.”
While loaning lawyers to clients isn’t new, requests have risen sharply during the recession. As much as 25 percent of some banks’ legal departments may be staffed by lawyers on loan now, said Andrew Darwin, the managing director of Europe at DLA Piper LLP, the world’s largest law firm by number of lawyers.
“Of the clients I’m closest to, the biggest U.K. banks, the legal teams are clearly being impacted by the general downsizing,” said Darwin, whose clients include RBS, HSBC, Barclays and Lloyds TSB Bank Plc. “I suspect we haven’t seen the full impact on them.”
Law Firm Incentive
Firms are keen to loan out lawyers while work is slow because it helps them maintain good relationships with clients, said Tony Williams, the former managing partner of Clifford Chance LLP and a consultant at Jomati Consultants LLP.
“A year or 18 months ago, it was almost impossible” to loan out lawyers because firms were too busy, Williams said. Now, U.K. firms have about 40 to 50 lawyers on loan at any time.
London-based HSBC has cut more than 7,300 jobs this year, Barclays 5,200 and RBS more than 9,000. Barclays’ spokeswoman Gemma Abbott and HSBC spokesman Tim Pie and RBS spokesman Michael Strachan declined to comment on secondments or firings at in-house legal departments.
“You’ll find secondees from one firm working for secondees at another” in a client’s legal department, Darwin said. “We may find ourselves doing work for an Allen & Overy secondee.”
Magic Circle
U.K. law firms are also struggling, being forced to slash lawyers, staff and salaries as mergers and financing work dried up last year. Three of the so-called Magic Circle firms, London’s largest by revenue, have cut jobs. They include Clifford Chance, Allen & Overy LLP, and Linklaters LLP.
During a typical secondment, a salaried lawyer with at least five years experience is loaned to a client for about six months. While the salary is often split, companies are increasingly asking firms to pay the entire amount, said Laurie Robertson, the global head of business development and client focus at Clifford Chance.
“We hear from clients that are saying ‘Can you help us out?’” Robertson said. “Clients are facing pressures on the costs of their legal departments and obviously getting help from a law firm from a secondee helps.”
Clifford Chance, the largest U.K. law firm by revenue, now has about 125 lawyers on secondment to clients or regulators, 20 percent more than the same time last year, Robertson said.
Read more here
The highest-grossing U.K. law firms are getting more requests from financial and corporate clients to provide lawyers on temporary loan, or “secondment,” and are being asked to pay most of or all of the lawyer’s salary for what’s often a six- month stint.
U.K. banks have cut thousands of jobs as they grapple with the worst financial crisis since the Great Depression. Hundreds of lawyers in bank legal departments have been fired and others are having their pay frozen or cut, said Scott Gibson, the director of legal recruiter Hughes-Castell Ltd. in London.
“In-house orgs are thinking, we have fired a lot of people, why don’t we just get the people in who will do that work cheaper?” Gibson said. “In a downturn, organizations want to get lawyers to do things cheap.”
While loaning lawyers to clients isn’t new, requests have risen sharply during the recession. As much as 25 percent of some banks’ legal departments may be staffed by lawyers on loan now, said Andrew Darwin, the managing director of Europe at DLA Piper LLP, the world’s largest law firm by number of lawyers.
“Of the clients I’m closest to, the biggest U.K. banks, the legal teams are clearly being impacted by the general downsizing,” said Darwin, whose clients include RBS, HSBC, Barclays and Lloyds TSB Bank Plc. “I suspect we haven’t seen the full impact on them.”
Law Firm Incentive
Firms are keen to loan out lawyers while work is slow because it helps them maintain good relationships with clients, said Tony Williams, the former managing partner of Clifford Chance LLP and a consultant at Jomati Consultants LLP.
“A year or 18 months ago, it was almost impossible” to loan out lawyers because firms were too busy, Williams said. Now, U.K. firms have about 40 to 50 lawyers on loan at any time.
London-based HSBC has cut more than 7,300 jobs this year, Barclays 5,200 and RBS more than 9,000. Barclays’ spokeswoman Gemma Abbott and HSBC spokesman Tim Pie and RBS spokesman Michael Strachan declined to comment on secondments or firings at in-house legal departments.
“You’ll find secondees from one firm working for secondees at another” in a client’s legal department, Darwin said. “We may find ourselves doing work for an Allen & Overy secondee.”
Magic Circle
U.K. law firms are also struggling, being forced to slash lawyers, staff and salaries as mergers and financing work dried up last year. Three of the so-called Magic Circle firms, London’s largest by revenue, have cut jobs. They include Clifford Chance, Allen & Overy LLP, and Linklaters LLP.
During a typical secondment, a salaried lawyer with at least five years experience is loaned to a client for about six months. While the salary is often split, companies are increasingly asking firms to pay the entire amount, said Laurie Robertson, the global head of business development and client focus at Clifford Chance.
“We hear from clients that are saying ‘Can you help us out?’” Robertson said. “Clients are facing pressures on the costs of their legal departments and obviously getting help from a law firm from a secondee helps.”
Clifford Chance, the largest U.K. law firm by revenue, now has about 125 lawyers on secondment to clients or regulators, 20 percent more than the same time last year, Robertson said.
Read more here
Sunday, May 17, 2009
Lloyds Chairman Victor Blank Plans to Step Down by June 2010
(Bloomberg) -- Lloyds Banking Group Plc said Chairman Victor Blank plans to step down by June of next year, after the government-brokered purchase of HBOS Plc at the peak of the credit crisis led it to fall into state control.
Blank, 66, plans to retire by the annual meeting in June 2010, the London-based company said in a statement yesterday. Alexander Leitch, 61, was named the bank’s deputy chairman with immediate effect.
Blank’s departure is “definitely a good thing,” said Roger Lawson, a spokesman for the U.K. Shareholders’ Association. “The decision to buy HBOS was clearly a mistake and has resulted in a good quality bank, which paid a high dividend, being intermingled with the poor assets of HBOS.”
Lloyds agreed to buy HBOS for about 7.7 billion pounds ($11.7 billion) in September as the government sought to prevent HBOS from collapsing after credit markets froze. HBOS posted a 2008 net loss of 7.5 billion pounds, greater than Lloyds had originally expected. The British government now owns 43 percent of Lloyds and its stake may rise to as much as 75 percent.
Lloyds’ market value plunged 73 percent in 2008. The stock has declined a further 27 percent this year, valuing it at 15 billion pounds.
The bank wouldn’t have needed government money if it hadn’t taken over HBOS, Chief Executive Officer Eric Daniels told a parliamentary committee in February. Lloyds would have liked more time to examine HBOS’s accounts before making the purchase, he said.
Read more here
Blank, 66, plans to retire by the annual meeting in June 2010, the London-based company said in a statement yesterday. Alexander Leitch, 61, was named the bank’s deputy chairman with immediate effect.
Blank’s departure is “definitely a good thing,” said Roger Lawson, a spokesman for the U.K. Shareholders’ Association. “The decision to buy HBOS was clearly a mistake and has resulted in a good quality bank, which paid a high dividend, being intermingled with the poor assets of HBOS.”
Lloyds agreed to buy HBOS for about 7.7 billion pounds ($11.7 billion) in September as the government sought to prevent HBOS from collapsing after credit markets froze. HBOS posted a 2008 net loss of 7.5 billion pounds, greater than Lloyds had originally expected. The British government now owns 43 percent of Lloyds and its stake may rise to as much as 75 percent.
Lloyds’ market value plunged 73 percent in 2008. The stock has declined a further 27 percent this year, valuing it at 15 billion pounds.
The bank wouldn’t have needed government money if it hadn’t taken over HBOS, Chief Executive Officer Eric Daniels told a parliamentary committee in February. Lloyds would have liked more time to examine HBOS’s accounts before making the purchase, he said.
Read more here
Thursday, May 14, 2009
Satyam Win for Mississippi Pension Fund Boosts Plaintiff Role
(Bloomberg) -- Mississippi’s pension system, the 65th largest in the U.S., has emerged as one of the nation’s most aggressive institutional litigants against companies it says committed securities fraud.
The Public Employees’ Retirement System of Mississippi is involved in at least 21 active federal securities-fraud class actions. It’s a lead plaintiff, either on its own or as part of an investor group, in at least 11 of them, including its May 12 appointment to co-manage litigation against Satyam Computer Services Ltd., the software-services provider at the center of India’s biggest corporate fraud inquiry.
“It certainly is at the high end of public pension fund participation,” said Michael Perino, a securities-law professor at St. John’s University School of Law.
The lead plaintiff in a class action manages the case, including approval of any settlement. It can push for corporate- governance changes at the targeted company.
“You have control of the litigation, and you’re going to make sure you not only protect your retirement system and the employees, but also other states and other retirement systems,” Mississippi Attorney General Jim Hood said in a phone interview. Hood’s office oversees the state’s lawsuits.
Under Hood, a Democrat elected in 2003 with support from trial lawyers, Mississippi has become a leader in the field, though Hood denies he’s doing the bidding of the plaintiffs’ bar.
Lead Plaintiff
The Satyam litigation in New York federal court is the third this month in which Mississippi PERS was appointed a lead plaintiff. Among institutional investors, Mississippi PERS was the most frequent lead plaintiff last year, with three cases, either on its own or as part of an investor group.
Teachers’ Retirement System of Louisiana was the most frequent lead plaintiff from 2000 to 2008, with 18 cases, according to Stanford Law School’s Securities Class Action Clearinghouse and Michael Klausner, a Stanford law professor. Mississippi PERS is now the second-most frequent, with 14.
Since 2005, Louisiana’s lead-plaintiff activity has fallen off while Mississippi PERS’s has risen.
Mississippi PERS, based in Jackson, ranked as the 65th largest U.S. pension fund or sponsor, with $18.8 billion, as of Sept. 30, according to Pensions & Investments magazine. The largest pension system is California Public Employees Retirement System, with $214.6 billion.
Under U.S. securities law, the person or entity with the largest financial interest is typically chosen to lead a class action, and so is often an institutional investor.
Legal Fees
The lead plaintiff’s attorneys usually get the majority of the legal fees of a settlement or court victory. The lawyers only get paid if they win back money for their clients. Typically, contingency lawyers take a third of any recovery. Institutional investors, including Mississippi PERS, push for lower fees, allowing more money for injured shareholders.
For example, Mississippi’s standard contract calls for the law firm to receive -- if a settlement is reached after fact- finding is completed and before a trial is started -- 20 percent of up to $25 million, another 18 percent for any amount between $25 million and $75 million, and so on, with the percentage decreasing as the recovery amount increases.
Last year, New York-based Bernstein Litowitz Berger & Grossmann LLP, which represents Mississippi PERS in Satyam and other cases, had a median settlement of 6 percent of estimated damages in securities class actions, according to Cornerstone Research. That was the highest figure for the most-active plaintiffs firms.
‘Terrific Guardian’
“I view them as a terrific guardian of integrity in the capital markets,” Sean Coffey, a Bernstein Litowitz partner, said of Mississippi PERS. “They are folks who talk the talk and walk the walk, and they’re very active.”
Of six completed cases for which the pension system served as a lead plaintiff, four of the companies settled and two won dismissals. The rest haven’t been resolved.
Delphi Corp., the Troy, Michigan-based car-parts maker, settled for $333.4 million; Mills Corp., the Chevy Chase, Maryland-based real-estate investment trust, for $165 million; Scor Holding (Switzerland) AG, the Zurich-based reinsurer, for $114.6 million; and Sonus Networks Inc., the Westford, Massachusetts-based maker of software used for Internet-based phone calls, for $9.5 million.
The Mills settlement hasn’t yet been approved by the judge.
Read more here
The Public Employees’ Retirement System of Mississippi is involved in at least 21 active federal securities-fraud class actions. It’s a lead plaintiff, either on its own or as part of an investor group, in at least 11 of them, including its May 12 appointment to co-manage litigation against Satyam Computer Services Ltd., the software-services provider at the center of India’s biggest corporate fraud inquiry.
“It certainly is at the high end of public pension fund participation,” said Michael Perino, a securities-law professor at St. John’s University School of Law.
The lead plaintiff in a class action manages the case, including approval of any settlement. It can push for corporate- governance changes at the targeted company.
“You have control of the litigation, and you’re going to make sure you not only protect your retirement system and the employees, but also other states and other retirement systems,” Mississippi Attorney General Jim Hood said in a phone interview. Hood’s office oversees the state’s lawsuits.
Under Hood, a Democrat elected in 2003 with support from trial lawyers, Mississippi has become a leader in the field, though Hood denies he’s doing the bidding of the plaintiffs’ bar.
Lead Plaintiff
The Satyam litigation in New York federal court is the third this month in which Mississippi PERS was appointed a lead plaintiff. Among institutional investors, Mississippi PERS was the most frequent lead plaintiff last year, with three cases, either on its own or as part of an investor group.
Teachers’ Retirement System of Louisiana was the most frequent lead plaintiff from 2000 to 2008, with 18 cases, according to Stanford Law School’s Securities Class Action Clearinghouse and Michael Klausner, a Stanford law professor. Mississippi PERS is now the second-most frequent, with 14.
Since 2005, Louisiana’s lead-plaintiff activity has fallen off while Mississippi PERS’s has risen.
Mississippi PERS, based in Jackson, ranked as the 65th largest U.S. pension fund or sponsor, with $18.8 billion, as of Sept. 30, according to Pensions & Investments magazine. The largest pension system is California Public Employees Retirement System, with $214.6 billion.
Under U.S. securities law, the person or entity with the largest financial interest is typically chosen to lead a class action, and so is often an institutional investor.
Legal Fees
The lead plaintiff’s attorneys usually get the majority of the legal fees of a settlement or court victory. The lawyers only get paid if they win back money for their clients. Typically, contingency lawyers take a third of any recovery. Institutional investors, including Mississippi PERS, push for lower fees, allowing more money for injured shareholders.
For example, Mississippi’s standard contract calls for the law firm to receive -- if a settlement is reached after fact- finding is completed and before a trial is started -- 20 percent of up to $25 million, another 18 percent for any amount between $25 million and $75 million, and so on, with the percentage decreasing as the recovery amount increases.
Last year, New York-based Bernstein Litowitz Berger & Grossmann LLP, which represents Mississippi PERS in Satyam and other cases, had a median settlement of 6 percent of estimated damages in securities class actions, according to Cornerstone Research. That was the highest figure for the most-active plaintiffs firms.
‘Terrific Guardian’
“I view them as a terrific guardian of integrity in the capital markets,” Sean Coffey, a Bernstein Litowitz partner, said of Mississippi PERS. “They are folks who talk the talk and walk the walk, and they’re very active.”
Of six completed cases for which the pension system served as a lead plaintiff, four of the companies settled and two won dismissals. The rest haven’t been resolved.
Delphi Corp., the Troy, Michigan-based car-parts maker, settled for $333.4 million; Mills Corp., the Chevy Chase, Maryland-based real-estate investment trust, for $165 million; Scor Holding (Switzerland) AG, the Zurich-based reinsurer, for $114.6 million; and Sonus Networks Inc., the Westford, Massachusetts-based maker of software used for Internet-based phone calls, for $9.5 million.
The Mills settlement hasn’t yet been approved by the judge.
Read more here
Wednesday, May 13, 2009
SEC proposes suit vs Countrywide founder Mozilo
(Reuters) - U.S. regulators have recommended filing a civil fraud suit against Countrywide Financial co-founder Angelo Mozilo for insider trading, the Wall Street Journal reported on Wednesday.
Staff at the Securities and Exchange Commission had decided to recommend filing the suit against Mozilo, co-founder of the No. 1 U.S. home-mortgage lender taken over by Bank of America Corp, the Journal cited people familiar with the investigation as saying.
Mozilo attorney David Siegel said he would not comment "on any rumors" regarding the SEC's previously-disclosed investigation of Mozilo's trading activities.
"The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings," Siegel said in an e-mailed statement.
According to the Journal, the SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.
U.S. securities regulators and criminal prosecutors have brought some big insider trading cases in recent years. The SEC, in particular, has made insider trading a priority, setting up a hedge fund unit within its enforcement division to combat unlawful trading.
Two of the biggest recent cases were the 2007 criminal conviction of former Qwest Communications CEO Joseph Nacchio for insider trading in company stock and the 2004 conviction of homemaking expert Martha Stewart on criminal charges of lying to investigators about a suspicious stock sale.
Bank of America, which bought Countrywide for $2.5 billion in July, last month dropped the Countrywide name from its mortgage operations, shedding a 40-year-old brand that became synonymous with risky lending practices that helped fuel a U.S. housing boom and bust.
A Wells notice is a precursor to a civil lawsuit in an SEC investigation. It outlines to an individual or company under investigation what allegations might be filed against them and gives a target a chance to respond to the allegations.
A civil suit against Mozilo, if his lawyers fail to deflect it and SEC commissioners approve a filing, may be announced in coming weeks, the Journal cited unidentified sources as saying.
Lawyers for the Commission were not immediately available for comment.
Founded in 1969, Countrywide -- blasted for offering loans to would-be homeowners who could scarcely afford them -- already faces a string of lawsuits over past business practices, as well as an FBI investigation.
The SEC had been investigating Mozilo's systematic sales of the lender's stock, which began shortly before the housing crisis began. He had received several hundred million dollars of compensation for running Countrywide this decade.
In 2007, Mozilo told a conference call he had engaged in no trading decisions based on any material nonpublic information and said he welcomed the SEC's informal inquiry into his activities.
Bank of America acquired Countrywide last July for $2.5 billion.
During the housing boom, Mozilo ranked as one of the top- paid U.S. executives, getting about $387 million from pay and stock option gains from 2002 to 2006, according to regulatory filings.
Read more here
Staff at the Securities and Exchange Commission had decided to recommend filing the suit against Mozilo, co-founder of the No. 1 U.S. home-mortgage lender taken over by Bank of America Corp, the Journal cited people familiar with the investigation as saying.
Mozilo attorney David Siegel said he would not comment "on any rumors" regarding the SEC's previously-disclosed investigation of Mozilo's trading activities.
"The persistent innuendo in the media and political circles that Mr. Mozilo was selling Countrywide stock because he was aware of some supposedly 'secret' adverse information about the Company is scandalous and inconsistent with even a cursory examination of the facts surrounding the history of his stock holdings," Siegel said in an e-mailed statement.
According to the Journal, the SEC sent a "Wells" notice to Mozilo weeks ago alerting him of the planned charges, which included alleged violations of insider-trading laws, as well as failing to disclose material information to shareholders.
U.S. securities regulators and criminal prosecutors have brought some big insider trading cases in recent years. The SEC, in particular, has made insider trading a priority, setting up a hedge fund unit within its enforcement division to combat unlawful trading.
Two of the biggest recent cases were the 2007 criminal conviction of former Qwest Communications CEO Joseph Nacchio for insider trading in company stock and the 2004 conviction of homemaking expert Martha Stewart on criminal charges of lying to investigators about a suspicious stock sale.
Bank of America, which bought Countrywide for $2.5 billion in July, last month dropped the Countrywide name from its mortgage operations, shedding a 40-year-old brand that became synonymous with risky lending practices that helped fuel a U.S. housing boom and bust.
A Wells notice is a precursor to a civil lawsuit in an SEC investigation. It outlines to an individual or company under investigation what allegations might be filed against them and gives a target a chance to respond to the allegations.
A civil suit against Mozilo, if his lawyers fail to deflect it and SEC commissioners approve a filing, may be announced in coming weeks, the Journal cited unidentified sources as saying.
Lawyers for the Commission were not immediately available for comment.
Founded in 1969, Countrywide -- blasted for offering loans to would-be homeowners who could scarcely afford them -- already faces a string of lawsuits over past business practices, as well as an FBI investigation.
The SEC had been investigating Mozilo's systematic sales of the lender's stock, which began shortly before the housing crisis began. He had received several hundred million dollars of compensation for running Countrywide this decade.
In 2007, Mozilo told a conference call he had engaged in no trading decisions based on any material nonpublic information and said he welcomed the SEC's informal inquiry into his activities.
Bank of America acquired Countrywide last July for $2.5 billion.
During the housing boom, Mozilo ranked as one of the top- paid U.S. executives, getting about $387 million from pay and stock option gains from 2002 to 2006, according to regulatory filings.
Read more here
Tuesday, May 12, 2009
Sheikh Who Backed Barclays Gets Another Shot With Qatar’s Money
(Bloomberg) -- On a March morning in Qatar’s Ras Laffan Industrial City on the Persian Gulf, a red flame shrouded in black smoke shoots into the haze from a 650-foot stack. The burst of fire is burning off excess fuel as workers rush to finish equipment that will help the nation, already the world’s biggest exporter of liquefied natural gas, more than double output in the next two years.
An hour away in Doha, amid the glass and steel skyscrapers turning this desert capital into a modern metropolis, Sheikh Hamad bin Jassim bin Jaber Al-Thani will invest as much as $20 billion a year from the gas bonanza.
Sheikh Hamad, Qatar’s prime minister and foreign minister, wears a third hat: chief executive officer of the Qatar Investment Authority, which was founded in 2005. A latecomer among nations with sovereign wealth funds, Qatar formed the QIA to preserve its oil and gas wealth.
Last year, the Connecticut-sized emirate -- best known as a staging ground for the 2003 U.S.-led invasion of Iraq -- earned more from LNG than oil for the first time. That milestone followed a 15-year, $120 billion spending binge by the country on its gas, petrochemical and other industries. Gross domestic product has surged to $101 billion, or $101,000 for each of the 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.
“Qatar is on the verge of being transformed,” says Thierry Bros, a gas companies analyst at Paris-based Societe Generale SA. “It’s a small amount of people with a tremendous amount of wealth.”
Barclays Rebound
Now, as Ras Laffan’s 140,000 workers race to multiply Qatar’s riches, Hamad is navigating investments overseas and at home. He bet QIA money on international banks just as the credit crisis forced many to take government handouts.
On Oct. 31, he raised the QIA’s 6.4 percent stake in Barclays Plc to as much as 12.7 percent, propping up the U.K.’s third-biggest bank after it had rejected money from Prime Minister Gordon Brown. Since then, Barclays stock has jumped 40 percent through May 11. The QIA’s original stake, purchased in July 2008, had tumbled as much as 82 percent by January. It’s now up 1.8 percent.
The QIA said on April 22 it had sold 35 million Barclays shares, lowering its original stake to 5.8 percent as part of a trading strategy. The Qatari fund said it still planned to increase its overall Barclays stake under the terms of the October deal.
Assets Drop
The value of Qatar’s 9.7 percent stake in Credit Suisse Group AG, Switzerland’s No. 2 bank, dropped to 4.93 billion Swiss francs ($4.45 billion) on May 11. Credit Suisse stock has lost 20 percent of its value since February 2008, when Hamad said he was first buying shares; it’s dropped about half a percent since October 2008, when he added more.
QIA assets, which peaked at about $75 billion in June 2008, dropped to about $50 billion at the end of March, according to estimates by RGE Monitor in New York, which researches sovereign funds. Qatar’s estimated $35.6 billion in 2008 LNG exports spared the fund from a worse decline.
“They got burned,” says Rachel Ziemba at RGE Monitor. “There was a lot of money to manage quickly and get it invested.”
At home, Hamad is deploying as much as $5.3 billion of QIA cash on shares of Qatari banks hammered in the global rout. In March, his government agreed to buy the investment portfolios of seven local banks traded on the Doha Securities Market.
Read more here
An hour away in Doha, amid the glass and steel skyscrapers turning this desert capital into a modern metropolis, Sheikh Hamad bin Jassim bin Jaber Al-Thani will invest as much as $20 billion a year from the gas bonanza.
Sheikh Hamad, Qatar’s prime minister and foreign minister, wears a third hat: chief executive officer of the Qatar Investment Authority, which was founded in 2005. A latecomer among nations with sovereign wealth funds, Qatar formed the QIA to preserve its oil and gas wealth.
Last year, the Connecticut-sized emirate -- best known as a staging ground for the 2003 U.S.-led invasion of Iraq -- earned more from LNG than oil for the first time. That milestone followed a 15-year, $120 billion spending binge by the country on its gas, petrochemical and other industries. Gross domestic product has surged to $101 billion, or $101,000 for each of the 1 million men, women and children on the thumb-shaped peninsula -- among the highest per-capita GDPs in the world.
“Qatar is on the verge of being transformed,” says Thierry Bros, a gas companies analyst at Paris-based Societe Generale SA. “It’s a small amount of people with a tremendous amount of wealth.”
Barclays Rebound
Now, as Ras Laffan’s 140,000 workers race to multiply Qatar’s riches, Hamad is navigating investments overseas and at home. He bet QIA money on international banks just as the credit crisis forced many to take government handouts.
On Oct. 31, he raised the QIA’s 6.4 percent stake in Barclays Plc to as much as 12.7 percent, propping up the U.K.’s third-biggest bank after it had rejected money from Prime Minister Gordon Brown. Since then, Barclays stock has jumped 40 percent through May 11. The QIA’s original stake, purchased in July 2008, had tumbled as much as 82 percent by January. It’s now up 1.8 percent.
The QIA said on April 22 it had sold 35 million Barclays shares, lowering its original stake to 5.8 percent as part of a trading strategy. The Qatari fund said it still planned to increase its overall Barclays stake under the terms of the October deal.
Assets Drop
The value of Qatar’s 9.7 percent stake in Credit Suisse Group AG, Switzerland’s No. 2 bank, dropped to 4.93 billion Swiss francs ($4.45 billion) on May 11. Credit Suisse stock has lost 20 percent of its value since February 2008, when Hamad said he was first buying shares; it’s dropped about half a percent since October 2008, when he added more.
QIA assets, which peaked at about $75 billion in June 2008, dropped to about $50 billion at the end of March, according to estimates by RGE Monitor in New York, which researches sovereign funds. Qatar’s estimated $35.6 billion in 2008 LNG exports spared the fund from a worse decline.
“They got burned,” says Rachel Ziemba at RGE Monitor. “There was a lot of money to manage quickly and get it invested.”
At home, Hamad is deploying as much as $5.3 billion of QIA cash on shares of Qatari banks hammered in the global rout. In March, his government agreed to buy the investment portfolios of seven local banks traded on the Doha Securities Market.
Read more here
Monday, May 11, 2009
Blackstone Defends Pension Agents Amid SEC Crackdown
(Bloomberg) -- Middlemen who lobby public pensions for private-equity and hedge funds are fighting efforts to ban placement agents by arguing that the scandal engulfing their business will cull influence peddlers.
“What’s going on in the short term is important and something we have to respond to,” said Joseph Herman, a senior management principal for Park Hill Group, which provides such services as a unit of Blackstone Group LP, the world’s biggest private-equity company. “It’s going to clean out people who aren’t qualified and the cause of the problem.”
Herman said he is part of a coalition that’s advocating the value of placement agents to state treasurers. New York Attorney General Andrew Cuomo said he is probing influence peddling, kickbacks and unregistered brokers in the industry and has issued more than 100 subpoenas. The U.S. Securities and Exchange Commission also is investigating.
“Groups like Park Hill are going to be in a great position” once industry practices are improved because the firms will be poised to gain a bigger share of the business, Herman said in an interview. He spoke last week while attending a New York conference for private-equity firms on raising capital during the worst recession since the Great Depression.
The pool of pension assets available for middlemen to chase is shrinking. Public and private retirement-fund assets totaled $10.4 trillion at the end of 2006, according to the latest annual report on institutional-investor assets by the Conference Board, a New York research group.
Shrinking Assets
The Standard & Poor’s 500 Index of U.S. stocks has since fallen 36 percent. Census Bureau data published April 30 show that state and local public pension assets fell to $2.23 trillion at the end of 2008, a 24 percent decline from 2007 and the lowest since the third quarter of 2004.
Some pensions are moving to restrict middlemen. New York state and city have banned the use of paid intermediaries by money managers seeking slices of their pension funds, with assets of $122 billion and more than $30 billion, respectively. New Mexico Governor Bill Richardson has ordered his state’s investment council to do likewise.
North Carolina’s state pension is preparing rules for placement agents to prevent abuses.
“We’re in the process of developing a formal policy, given all the activity,” state Treasurer Janet Cowell, who oversees $60 billion in pension investments, said in a May 8 interview. “It’s been our informal practice that placement agents must be disclosed, and we’re trying to formalize that.”
Disclosing Middlemen
The California Public Employees’ Retirement System, the largest U.S. public pension, also is moving to require investment firms to disclose payments to middlemen.
“Those who are called placement agents today in a year are going to be divided into three groups: legitimate investment bankers, lobbyists and bad guys,” Steve Robling, managing director of New York-based placement agency Liati Group LLC, said in an interview. “A good placement agent, like a good investment banker, knows what someone would invest in and tries to identify the highest quality product in the asset class for that person.”
Scrutiny of the industry intensified March 19, when Cuomo and the SEC filed criminal and civil complaints against Henry “Hank” Morris, former New York Comptroller Alan Hevesi’s political adviser, and Deputy Comptroller David Loglisci.
Read more here
“What’s going on in the short term is important and something we have to respond to,” said Joseph Herman, a senior management principal for Park Hill Group, which provides such services as a unit of Blackstone Group LP, the world’s biggest private-equity company. “It’s going to clean out people who aren’t qualified and the cause of the problem.”
Herman said he is part of a coalition that’s advocating the value of placement agents to state treasurers. New York Attorney General Andrew Cuomo said he is probing influence peddling, kickbacks and unregistered brokers in the industry and has issued more than 100 subpoenas. The U.S. Securities and Exchange Commission also is investigating.
“Groups like Park Hill are going to be in a great position” once industry practices are improved because the firms will be poised to gain a bigger share of the business, Herman said in an interview. He spoke last week while attending a New York conference for private-equity firms on raising capital during the worst recession since the Great Depression.
The pool of pension assets available for middlemen to chase is shrinking. Public and private retirement-fund assets totaled $10.4 trillion at the end of 2006, according to the latest annual report on institutional-investor assets by the Conference Board, a New York research group.
Shrinking Assets
The Standard & Poor’s 500 Index of U.S. stocks has since fallen 36 percent. Census Bureau data published April 30 show that state and local public pension assets fell to $2.23 trillion at the end of 2008, a 24 percent decline from 2007 and the lowest since the third quarter of 2004.
Some pensions are moving to restrict middlemen. New York state and city have banned the use of paid intermediaries by money managers seeking slices of their pension funds, with assets of $122 billion and more than $30 billion, respectively. New Mexico Governor Bill Richardson has ordered his state’s investment council to do likewise.
North Carolina’s state pension is preparing rules for placement agents to prevent abuses.
“We’re in the process of developing a formal policy, given all the activity,” state Treasurer Janet Cowell, who oversees $60 billion in pension investments, said in a May 8 interview. “It’s been our informal practice that placement agents must be disclosed, and we’re trying to formalize that.”
Disclosing Middlemen
The California Public Employees’ Retirement System, the largest U.S. public pension, also is moving to require investment firms to disclose payments to middlemen.
“Those who are called placement agents today in a year are going to be divided into three groups: legitimate investment bankers, lobbyists and bad guys,” Steve Robling, managing director of New York-based placement agency Liati Group LLC, said in an interview. “A good placement agent, like a good investment banker, knows what someone would invest in and tries to identify the highest quality product in the asset class for that person.”
Scrutiny of the industry intensified March 19, when Cuomo and the SEC filed criminal and civil complaints against Henry “Hank” Morris, former New York Comptroller Alan Hevesi’s political adviser, and Deputy Comptroller David Loglisci.
Read more here
Sunday, May 10, 2009
BlackRock Is Go-To Firm to Divine Wall Street Assets
Bloomberg) -- Got assets you can’t value? Call Larry Fink.
That’s what Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Timothy Geithner have done, as have many heads of banks and insurance companies, including Robert Willumstad, former chief executive officer of American International Group Inc., and current AIG CEO Edward Liddy.
Fink, 56, is CEO of BlackRock Inc., the U.S.’s biggest publicly traded asset management firm, with $1.3 trillion under management for clients that include Ford Motor Co. and Microsoft Corp. BlackRock, like many other money managers, has taken some hits in the credit crisis. It also loaded up on Lehman Brothers Holdings Inc. stock, for example, buying shares last June at $28 only three months before Lehman declared bankruptcy. One BlackRock fund that rushed in to buy distressed debt in September 2007 saw its value plunge 25 percent during the following 12 months.
More recently, mirroring results at rival firms, BlackRock’s first quarter profits fell 65 percent to $84 million after stock and bond market declines hurt its fees.
Dominant
Fink has a way of making good money in bad times. A decade ago, he created a subsidiary called BlackRock Solutions, looking to capitalize on ever-more-sophisticated risk-management analytics that the firm was running for clients, including mortgage giant Freddie Mac, that needed help in assessing stressed portfolios or in deciding whether an investment made sense.
In the unfolding credit crisis, BlackRock Solutions has become the dominant player in evaluating and pricing distressed assets such as mortgage-backed securities by winning more contracts from the government, investment banks and insurance companies than other firms.
“It’s our fastest-growing unit,” says Robert Kapito, BlackRock’s president, citing revenue that doubled to $400 million last year. In the latest quarter, the unit’s revenue more than doubled to $140 million from $60 million a year earlier.
“BlackRock has established itself as the go-to firm when you have problems,” says Terrence Keeley, a managing director at UBS AG, which sold a $22 billion portfolio of subprime mortgages to a fund managed by BlackRock.
Desperate Customers
The terms -- in which UBS offered a $7 billion discount and provided $11.25 billion in financing -- demonstrate how desperate banks are to get distressed assets off their books. “It’s hard to replicate the BlackRock approach because they built their systems, tools and analytics a long time ago,” Keeley says.
The Federal Reserve and U.S. Treasury Department have awarded contracts to BlackRock Solutions to manage $130 billion in distressed debt formerly on the books of investment bank Bear Stearns Cos. and crippled financial giant AIG. The Fed called on the company in September to analyze the assets of Fannie Mae and Freddie Mac after the government took an 80 percent stake in the two mortgage giants. BlackRock is also one of four co-managers of a $500 billion Fed program, announced in November and expanded to $1.25 trillion in March, to buy residential mortgage-backed securities.
Fink began his career as a bond trader who three decades ago helped pioneer collateralized-mortgage obligations, the forerunners of the complicated derivatives at the heart of the present crisis.
Lucrative Work
Over time, Fink and BlackRock Solutions stand to earn tens of millions or even hundreds of millions of dollars in fees, primarily from lucrative private-sector toxic-asset work, according to Fink and people familiar with the contracts.
“We’re managing hundreds of billions for governments,” Fink says. Asked for details about whom else BlackRock is working for and how it actually goes about its tasks, he demurs. “I have to be opaque,” he says. “It’s hundreds of billions and not necessarily for the U.S. government.”
The Fed and Treasury, beyond confirming Fink’s contracts, also have little to say about the exact nature of the work -- a stance that worries some. Janet Tavakoli, president of Chicago- based Tavakoli Structured Finance Inc. and the author of three books on derivatives, says the government should be more forthcoming.
Need for Transparency
“The Federal Reserve and the Treasury would do the world a favor by giving us more transparency on AIG and Bear Stearns assets,” she says. “The regulators have just given up and are just throwing the assets with BlackRock and saying ‘Manage this.’” (Bloomberg News filed a Freedom of Information Act lawsuit in November asking a federal judge to require the government to disclose data about the Bear Stearns assets.)
Not content to be a manager of toxic assets with no transparent value, Fink is also planning to buy them. He says BlackRock Inc. wants to raise $5 billion to $7 billion from investors to participate in a government plan, announced March 23 by Geithner, to finance up to $1 trillion of such purchases. BlackRock intends to apply to become one of the five managers under the plan, known as the Treasury Department’s Public- Private Investment Program. Fink says he sees no conflict of interest in being one of the Treasury’s managers and participating in the plan.
“I don’t get any inside information, and it’s a competitive auction pool,” he says.
Read more here
That’s what Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Timothy Geithner have done, as have many heads of banks and insurance companies, including Robert Willumstad, former chief executive officer of American International Group Inc., and current AIG CEO Edward Liddy.
Fink, 56, is CEO of BlackRock Inc., the U.S.’s biggest publicly traded asset management firm, with $1.3 trillion under management for clients that include Ford Motor Co. and Microsoft Corp. BlackRock, like many other money managers, has taken some hits in the credit crisis. It also loaded up on Lehman Brothers Holdings Inc. stock, for example, buying shares last June at $28 only three months before Lehman declared bankruptcy. One BlackRock fund that rushed in to buy distressed debt in September 2007 saw its value plunge 25 percent during the following 12 months.
More recently, mirroring results at rival firms, BlackRock’s first quarter profits fell 65 percent to $84 million after stock and bond market declines hurt its fees.
Dominant
Fink has a way of making good money in bad times. A decade ago, he created a subsidiary called BlackRock Solutions, looking to capitalize on ever-more-sophisticated risk-management analytics that the firm was running for clients, including mortgage giant Freddie Mac, that needed help in assessing stressed portfolios or in deciding whether an investment made sense.
In the unfolding credit crisis, BlackRock Solutions has become the dominant player in evaluating and pricing distressed assets such as mortgage-backed securities by winning more contracts from the government, investment banks and insurance companies than other firms.
“It’s our fastest-growing unit,” says Robert Kapito, BlackRock’s president, citing revenue that doubled to $400 million last year. In the latest quarter, the unit’s revenue more than doubled to $140 million from $60 million a year earlier.
“BlackRock has established itself as the go-to firm when you have problems,” says Terrence Keeley, a managing director at UBS AG, which sold a $22 billion portfolio of subprime mortgages to a fund managed by BlackRock.
Desperate Customers
The terms -- in which UBS offered a $7 billion discount and provided $11.25 billion in financing -- demonstrate how desperate banks are to get distressed assets off their books. “It’s hard to replicate the BlackRock approach because they built their systems, tools and analytics a long time ago,” Keeley says.
The Federal Reserve and U.S. Treasury Department have awarded contracts to BlackRock Solutions to manage $130 billion in distressed debt formerly on the books of investment bank Bear Stearns Cos. and crippled financial giant AIG. The Fed called on the company in September to analyze the assets of Fannie Mae and Freddie Mac after the government took an 80 percent stake in the two mortgage giants. BlackRock is also one of four co-managers of a $500 billion Fed program, announced in November and expanded to $1.25 trillion in March, to buy residential mortgage-backed securities.
Fink began his career as a bond trader who three decades ago helped pioneer collateralized-mortgage obligations, the forerunners of the complicated derivatives at the heart of the present crisis.
Lucrative Work
Over time, Fink and BlackRock Solutions stand to earn tens of millions or even hundreds of millions of dollars in fees, primarily from lucrative private-sector toxic-asset work, according to Fink and people familiar with the contracts.
“We’re managing hundreds of billions for governments,” Fink says. Asked for details about whom else BlackRock is working for and how it actually goes about its tasks, he demurs. “I have to be opaque,” he says. “It’s hundreds of billions and not necessarily for the U.S. government.”
The Fed and Treasury, beyond confirming Fink’s contracts, also have little to say about the exact nature of the work -- a stance that worries some. Janet Tavakoli, president of Chicago- based Tavakoli Structured Finance Inc. and the author of three books on derivatives, says the government should be more forthcoming.
Need for Transparency
“The Federal Reserve and the Treasury would do the world a favor by giving us more transparency on AIG and Bear Stearns assets,” she says. “The regulators have just given up and are just throwing the assets with BlackRock and saying ‘Manage this.’” (Bloomberg News filed a Freedom of Information Act lawsuit in November asking a federal judge to require the government to disclose data about the Bear Stearns assets.)
Not content to be a manager of toxic assets with no transparent value, Fink is also planning to buy them. He says BlackRock Inc. wants to raise $5 billion to $7 billion from investors to participate in a government plan, announced March 23 by Geithner, to finance up to $1 trillion of such purchases. BlackRock intends to apply to become one of the five managers under the plan, known as the Treasury Department’s Public- Private Investment Program. Fink says he sees no conflict of interest in being one of the Treasury’s managers and participating in the plan.
“I don’t get any inside information, and it’s a competitive auction pool,” he says.
Read more here
Thursday, May 7, 2009
AIG loss narrows, no new bailout plan
(Reuters) - American International Group (AIG.N), the giant insurer bailed out by the U.S. government, reported its smallest loss in six quarters on Thursday, hurt once more by investment losses and write downs.
AIG has lost more than $100 billion over those periods, largely from excessive mortgage bets taken by a financial products unit. In the fourth quarter of 2008, AIG had a loss of $61.7 billion, the largest quarterly loss in corporate history.
The first-quarter loss was $4.35 billion, equal to $1.98 per share, compared with a loss of $7.81 billion, of $3.09 a share, in the same period a year ago.
Unlike other quarterly announcements since its federal rescue last September, AIG's most recent quarter did not include a new iteration of its bailout plan.
But as in past periods, costs related to AIG Financial Products again burned a hole in the insurer's financials. The quarter included a $1.9 billion restructuring charge primarily related to its wind-down of the controversial financial products unit.
AIG warned that future quarters could include similar charges.
The insurer also recorded $2.5 billion in pretax investment losses and write-downs, and had to pony up about $1.5 billion in interest and amortization charges for a Federal Reserve credit facility.
Shareholders' equity fell to $45.8 billion at the end of the first quarter, 13 percent lower than 3 months earlier.
LOWER STRESS SCENARIO?
AIG released its results just as investors were digesting news that U.S. banks were not as strapped for cash as feared.
Citigroup analyst Joshua Shanker said optimism over the state of the banks could spread to AIG's stock on Friday.
AIG's stock rallied this week after a source familiar with AIG's financial state said it was expected to report a lower net loss in the quarter and would not need new government aid.
"Early reactions to the bank stress test results seem to be favorable, and we would expect that AIG, perceived as an option on distressed asset appreciation, may benefit," said Shanker in a research note.
AIG shares were trading one cent above their $1.95 close in post-market trading.
Read more here
AIG has lost more than $100 billion over those periods, largely from excessive mortgage bets taken by a financial products unit. In the fourth quarter of 2008, AIG had a loss of $61.7 billion, the largest quarterly loss in corporate history.
The first-quarter loss was $4.35 billion, equal to $1.98 per share, compared with a loss of $7.81 billion, of $3.09 a share, in the same period a year ago.
Unlike other quarterly announcements since its federal rescue last September, AIG's most recent quarter did not include a new iteration of its bailout plan.
But as in past periods, costs related to AIG Financial Products again burned a hole in the insurer's financials. The quarter included a $1.9 billion restructuring charge primarily related to its wind-down of the controversial financial products unit.
AIG warned that future quarters could include similar charges.
The insurer also recorded $2.5 billion in pretax investment losses and write-downs, and had to pony up about $1.5 billion in interest and amortization charges for a Federal Reserve credit facility.
Shareholders' equity fell to $45.8 billion at the end of the first quarter, 13 percent lower than 3 months earlier.
LOWER STRESS SCENARIO?
AIG released its results just as investors were digesting news that U.S. banks were not as strapped for cash as feared.
Citigroup analyst Joshua Shanker said optimism over the state of the banks could spread to AIG's stock on Friday.
AIG's stock rallied this week after a source familiar with AIG's financial state said it was expected to report a lower net loss in the quarter and would not need new government aid.
"Early reactions to the bank stress test results seem to be favorable, and we would expect that AIG, perceived as an option on distressed asset appreciation, may benefit," said Shanker in a research note.
AIG shares were trading one cent above their $1.95 close in post-market trading.
Read more here
Wednesday, May 6, 2009
Ford Volvo Sale Said to Speed Up; Geely Reviews Books
(Bloomberg) -- Ford Motor Co.’s sale of Volvo is gathering pace, as Geely Holding Group Co., China’s biggest privately owned carmaker, and at least two more bidders review the automaker’s books, three people familiar with the talks said.
Geely sent a team to Volvo’s factory in Gothenburg, Sweden last month to scrutinize the automaker’s financial records, said the people, who declined to be identified because the talks are private. Volvo Chief Executive Officer Stephen Odell told employees in an April 24 memo obtained by Bloomberg News his managers would meet potential buyers in coming months.
“Members of the Volvo Cars management team will participate in presentation meetings for interested parties visiting Volvo,” Odell told employees in the memo. “For us at Volvo, nothing else will change for now.”
Ford Motor Co. is seeking about $2 billion for Volvo, less than a third of what it paid for the maker of station wagons a decade ago, two of the people said. Ford, the only major U.S. automaker to avoid seeking federal aid, was battered by a record $14.7 billion loss last year, and seeking to raise cash. In December, the carmaker put Volvo up for sale after the Swedish brand’s U.S. sales slid 31 percent.
“We have no new news on Volvo,” Ford Chief Executive Officer Alan Mulally told reporters at a Michigan car factory on May 6. The sale of the Swedish automaker “is the next step in the process.”
Ford rose 41 cents, or 7 percent, to $6.26 at 4:15 p.m. in New York Stock Exchange composite trading. The closing price was the highest since June 19.
Third Overseas Purchase
The inspections bring Geely a step closer to making its third overseas purchase since 2006. The firm first approached Ford more than a year ago, before the automaker was prepared to sell. Chinese automakers including Guangzhou Automobile Group Co. are seeking access to global technologies and foreign brands through acquisitions to improve the quality of their vehicles.
Wang Ziliang, a spokesman for Zhejiang, Hangzhou-based Geely, couldn’t be reached on his mobile phone today.
Chongqing Changan Automobile Co., China’s second-biggest maker of minivans, said in a statement yesterday it isn’t planning a bid for Volvo.
Geely submitted a formal bid in March, one of the people said. The company aims to boost sales to 2 million units by 2015 from 219,512 units last year. To reach the target, Geely has said it plans to have more than 40 new products over the next six years.
Founder Li Shufu said in March the company is “closely following” developments in the global auto industry and will consider “all sorts of strategic choices.” He hired Yin Daqing, formerly with the S.T. Dupont SA China venture, in 2004, and Zhao Fuquan, a former DaimlerChrysler executive, two years later.
Read more here
Geely sent a team to Volvo’s factory in Gothenburg, Sweden last month to scrutinize the automaker’s financial records, said the people, who declined to be identified because the talks are private. Volvo Chief Executive Officer Stephen Odell told employees in an April 24 memo obtained by Bloomberg News his managers would meet potential buyers in coming months.
“Members of the Volvo Cars management team will participate in presentation meetings for interested parties visiting Volvo,” Odell told employees in the memo. “For us at Volvo, nothing else will change for now.”
Ford Motor Co. is seeking about $2 billion for Volvo, less than a third of what it paid for the maker of station wagons a decade ago, two of the people said. Ford, the only major U.S. automaker to avoid seeking federal aid, was battered by a record $14.7 billion loss last year, and seeking to raise cash. In December, the carmaker put Volvo up for sale after the Swedish brand’s U.S. sales slid 31 percent.
“We have no new news on Volvo,” Ford Chief Executive Officer Alan Mulally told reporters at a Michigan car factory on May 6. The sale of the Swedish automaker “is the next step in the process.”
Ford rose 41 cents, or 7 percent, to $6.26 at 4:15 p.m. in New York Stock Exchange composite trading. The closing price was the highest since June 19.
Third Overseas Purchase
The inspections bring Geely a step closer to making its third overseas purchase since 2006. The firm first approached Ford more than a year ago, before the automaker was prepared to sell. Chinese automakers including Guangzhou Automobile Group Co. are seeking access to global technologies and foreign brands through acquisitions to improve the quality of their vehicles.
Wang Ziliang, a spokesman for Zhejiang, Hangzhou-based Geely, couldn’t be reached on his mobile phone today.
Chongqing Changan Automobile Co., China’s second-biggest maker of minivans, said in a statement yesterday it isn’t planning a bid for Volvo.
Geely submitted a formal bid in March, one of the people said. The company aims to boost sales to 2 million units by 2015 from 219,512 units last year. To reach the target, Geely has said it plans to have more than 40 new products over the next six years.
Founder Li Shufu said in March the company is “closely following” developments in the global auto industry and will consider “all sorts of strategic choices.” He hired Yin Daqing, formerly with the S.T. Dupont SA China venture, in 2004, and Zhao Fuquan, a former DaimlerChrysler executive, two years later.
Read more here
Tuesday, May 5, 2009
Li & Fung Plans Acquisitions as U.S. ‘Bottoming Out’
(Bloomberg) -- Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., is working on “plenty” of possible deals in the U.S. as the world’s biggest economy shows some signs of improving.
“We see a lot of opportunities in the U.S. right now to buy things that we’ve always wanted, at prices that we feel are very reasonable,” Company President Bruce Rockowitz said in a Bloomberg TV interview late yesterday. “The whole U.S. is in a bottoming out phase that’s going to last, probably till the end of this year, and then start to see a pickup into next year.”
Li & Fung yesterday announced plans to raise HK$2.7 billion ($348 million) selling new shares to fund purchases. Rockowitz is signing outsourcing deals and buying rivals, last month completing an agreement to supply Liz Claiborne Inc., whose brands include Kate Spade and Juicy Couture. Li & Fung made 62 percent of its HK$110.7 billion sales last year in the U.S.
Li & Fung rose as much as 2 percent to HK$22.50 in early trading in Hong Kong. It was trading at HK$21.80 by 11:04 a.m. local time. The company said it will sell shares at a price of HK$22.55 each, 6 percent lower than the May 4 closing price.
The share sale “will further strengthen Li & Fung’s existing liquidity position and equity base,” Elizabeth Allen, a vice president at Moody’s Investors Service, said in a statement late yesterday. The share placement “will have no immediate impact” on the company’s A3 ratings, Moody’s said.
Li & Fung, which also supplies Inditex SA’s Zara chain and Gap Inc., is eyeing “acquisitions and some major outsourcing deals” as prices of assets have fallen globally, Rockowitz said. The company also has plans for acquisitions in Asia, he added.
The agreement to acquire Liz Claiborne’s sourcing business may boost sales by $1 billion, the company has said.
Read more here
“We see a lot of opportunities in the U.S. right now to buy things that we’ve always wanted, at prices that we feel are very reasonable,” Company President Bruce Rockowitz said in a Bloomberg TV interview late yesterday. “The whole U.S. is in a bottoming out phase that’s going to last, probably till the end of this year, and then start to see a pickup into next year.”
Li & Fung yesterday announced plans to raise HK$2.7 billion ($348 million) selling new shares to fund purchases. Rockowitz is signing outsourcing deals and buying rivals, last month completing an agreement to supply Liz Claiborne Inc., whose brands include Kate Spade and Juicy Couture. Li & Fung made 62 percent of its HK$110.7 billion sales last year in the U.S.
Li & Fung rose as much as 2 percent to HK$22.50 in early trading in Hong Kong. It was trading at HK$21.80 by 11:04 a.m. local time. The company said it will sell shares at a price of HK$22.55 each, 6 percent lower than the May 4 closing price.
The share sale “will further strengthen Li & Fung’s existing liquidity position and equity base,” Elizabeth Allen, a vice president at Moody’s Investors Service, said in a statement late yesterday. The share placement “will have no immediate impact” on the company’s A3 ratings, Moody’s said.
Li & Fung, which also supplies Inditex SA’s Zara chain and Gap Inc., is eyeing “acquisitions and some major outsourcing deals” as prices of assets have fallen globally, Rockowitz said. The company also has plans for acquisitions in Asia, he added.
The agreement to acquire Liz Claiborne’s sourcing business may boost sales by $1 billion, the company has said.
Read more here
Monday, May 4, 2009
Apple and Google Ties Investigated
The Federal Trade Commission has begun an inquiry into whether the close ties between the boards of two of technology’s most prominent companies, Apple and Google, amount to a violation of antitrust laws, according to several people briefed on the inquiry.
Apple and Google share two directors, Eric E. Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech. The Clayton Antitrust Act of 1914 prohibits a person’s presence on the board of two rival companies when it would reduce competition between them. The two companies increasingly compete in the cellphone and operating systems markets.
Antitrust experts say the provision against “interlocking directorates,” known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential.
F.T.C. officials declined to comment. Spokespeople for Apple and Google also declined to comment. A spokesman for Genentech declined to make Mr. Levinson available for comment.
The inquiry, which appears to be in its early stages, is the second antitrust examination involving Google to have surfaced in recent days. It suggests that despite the company’s closeness to the Obama administration, Google will not escape scrutiny from regulators.
Mr. Schmidt campaigned for then-Senator Barack Obama during his presidential campaign and advised the transition team and the administration on various matters. He was recently appointed to President Obama’s advisory council on science and technology.
Christine A. Varney, who was recently confirmed as the head of the antitrust division of the Justice Department, last year singled out Google as a probable source of future antitrust concerns because of its near monopoly on Internet search and advertising.
Some antitrust experts said they did not expect Google’s ties to the administration to play a role in antitrust issues.
“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson. Last year, while working for the Justice Department, Mr. Litvack built a case to block a prominent advertising partnership between Google and Yahoo. “I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.
Antitrust experts say that investigations of interlocking directorates rarely lead to major confrontations between companies and the government. Executives typically choose to resign from the board of a competitor if it poses a problem rather than face a lengthy investigation or a bruising legal fight.
Like many companies in the technology industry, Google and Apple are both allies and competitors. Google, for instance, worked with Apple to design early versions of some its services, like Gmail and Google Maps, for Apple’s iPhone.
But the areas in which the companies are bumping up against each other as rivals have been increasing.
Mobile phones, in particular, loom large in the future of both Google and Apple. Much of Apple’s fortunes these days are tied to the success of the iPhone. Google, for its part, has said repeatedly that one of its biggest strategic opportunities is to expand its online advertising empire into mobile phones.
Read more here
Apple and Google share two directors, Eric E. Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech. The Clayton Antitrust Act of 1914 prohibits a person’s presence on the board of two rival companies when it would reduce competition between them. The two companies increasingly compete in the cellphone and operating systems markets.
Antitrust experts say the provision against “interlocking directorates,” known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential.
F.T.C. officials declined to comment. Spokespeople for Apple and Google also declined to comment. A spokesman for Genentech declined to make Mr. Levinson available for comment.
The inquiry, which appears to be in its early stages, is the second antitrust examination involving Google to have surfaced in recent days. It suggests that despite the company’s closeness to the Obama administration, Google will not escape scrutiny from regulators.
Mr. Schmidt campaigned for then-Senator Barack Obama during his presidential campaign and advised the transition team and the administration on various matters. He was recently appointed to President Obama’s advisory council on science and technology.
Christine A. Varney, who was recently confirmed as the head of the antitrust division of the Justice Department, last year singled out Google as a probable source of future antitrust concerns because of its near monopoly on Internet search and advertising.
Some antitrust experts said they did not expect Google’s ties to the administration to play a role in antitrust issues.
“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson. Last year, while working for the Justice Department, Mr. Litvack built a case to block a prominent advertising partnership between Google and Yahoo. “I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.
Antitrust experts say that investigations of interlocking directorates rarely lead to major confrontations between companies and the government. Executives typically choose to resign from the board of a competitor if it poses a problem rather than face a lengthy investigation or a bruising legal fight.
Like many companies in the technology industry, Google and Apple are both allies and competitors. Google, for instance, worked with Apple to design early versions of some its services, like Gmail and Google Maps, for Apple’s iPhone.
But the areas in which the companies are bumping up against each other as rivals have been increasing.
Mobile phones, in particular, loom large in the future of both Google and Apple. Much of Apple’s fortunes these days are tied to the success of the iPhone. Google, for its part, has said repeatedly that one of its biggest strategic opportunities is to expand its online advertising empire into mobile phones.
Read more here
Sunday, May 3, 2009
Fiat May Spin Off Auto Division If It Acquires GM Europe Assets
(Bloomberg) -- Fiat SpA, the Italian carmaker taking a stake in Chrysler LLC, may spin off its automobile operations if it’s able to purchase General Motors Corp.’s European unit.
Chief Executive Officer Sergio Marchionne will seek “over the next few weeks” to assess the viability of a combination and a new company, the board of the Turin, Italy-based carmaker said yesterday in a statement.
GM says it’s open to offers for the Germany-based Opel division, which is running out of cash and seeking 3.3 billion euros ($4.4 billion) in German aid. Fiat faces competition from other potential investors, including Magna International Inc., North America’s largest auto-parts maker. Fiat already plans to take control of Chrysler, based in Auburn Hills, Michigan, in a deal announced by President Barack Obama last week.
“Instead of defending its niche market in Italy, Fiat decided to be a predator worldwide,” Luca Peviani, managing director at P&G Sgr in Rome, said before the announcement. “Italy will remain just an appendix of the empire.”
Marchionne said last week he regards Opel as an “ideal partner” and would concentrate on buying that part of Detroit- based General Motors after the unveiling of the Chrysler agreement. A combined company would have 80 billion euros in annual sales, the board said yesterday.
“The group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe,” it said in the statement.
Opel Competition
Magna has held talks with German government officials about a purchase of Opel. Russian billionaire Oleg Deripaska, owner of carmaker OAO GAZ, may be considering an offer, Rheinische Post reported April 29. The company declined to comment after initially denying interest.
Joerg Schrott, an Opel spokesman, said in a May 2 telephone interview that talks with interested parties will be held “in the coming days.” He declined to identify potential investors.
Bidders for Opel, based in Ruesselsheim outside Frankfurt, will meet with GM this week to seek clarity over financial data before each presenting an “industrial plan,” German Economy Minister Karl-Theodor zu Guttenberg said April 28.
GM and Chrysler have been kept afloat with U.S. government aid. As part of the deal for Chrysler to seek court protection and begin handing over the reins to Fiat, the No. 3 U.S. automaker will get as much as $3.5 billion in operating loans from the government. Fiat has agreed to make engines and cars in the U.S.
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Chief Executive Officer Sergio Marchionne will seek “over the next few weeks” to assess the viability of a combination and a new company, the board of the Turin, Italy-based carmaker said yesterday in a statement.
GM says it’s open to offers for the Germany-based Opel division, which is running out of cash and seeking 3.3 billion euros ($4.4 billion) in German aid. Fiat faces competition from other potential investors, including Magna International Inc., North America’s largest auto-parts maker. Fiat already plans to take control of Chrysler, based in Auburn Hills, Michigan, in a deal announced by President Barack Obama last week.
“Instead of defending its niche market in Italy, Fiat decided to be a predator worldwide,” Luca Peviani, managing director at P&G Sgr in Rome, said before the announcement. “Italy will remain just an appendix of the empire.”
Marchionne said last week he regards Opel as an “ideal partner” and would concentrate on buying that part of Detroit- based General Motors after the unveiling of the Chrysler agreement. A combined company would have 80 billion euros in annual sales, the board said yesterday.
“The group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe,” it said in the statement.
Opel Competition
Magna has held talks with German government officials about a purchase of Opel. Russian billionaire Oleg Deripaska, owner of carmaker OAO GAZ, may be considering an offer, Rheinische Post reported April 29. The company declined to comment after initially denying interest.
Joerg Schrott, an Opel spokesman, said in a May 2 telephone interview that talks with interested parties will be held “in the coming days.” He declined to identify potential investors.
Bidders for Opel, based in Ruesselsheim outside Frankfurt, will meet with GM this week to seek clarity over financial data before each presenting an “industrial plan,” German Economy Minister Karl-Theodor zu Guttenberg said April 28.
GM and Chrysler have been kept afloat with U.S. government aid. As part of the deal for Chrysler to seek court protection and begin handing over the reins to Fiat, the No. 3 U.S. automaker will get as much as $3.5 billion in operating loans from the government. Fiat has agreed to make engines and cars in the U.S.
Read more here
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