A $2.1 Billion Signal That the Next Takeover Boom is Imminent by Louis Basenese
In this issue:
Merger Monday is back!
The subtle trend most investors are ignoring.
Three sectors ripe for consolidation.
On Monday, $24.8 billion worth of takeovers were announced. It was the third busiest Merger Monday on record in 2009. Yet most investors remain unimpressed....
They're convinced it's nothing more than a short-lived Darwinian event. Weak and unfit companies, exposed by a nasty recession, are simply being forced into the arms of the strong. Or as Jack Ablin, Chief Investment Officer at Harris Private Bank puts it, "A lot of these deals are motivated by self-defense."
But they're wrong.
Even though this Monday wouldn't even make the cut for the top 20 deal days during the last boom (in 2007), it's more than just a function of survival or some freak bear market anomaly.
Another takeover boom is brewing. Here's how I can be so sure...
A Record-Setting Fundraise
We all know the catalyst behind any serious takeover boom is private equity. Because when they're flush with cash, competition for targets heats up and bidding wars ensure.
We also know such activity sputtered along in the first quarter.
Only $8.7 billion worth of private-equity-led deals were completed, compared to the $57.6 billion in the first quarter of 2008, according to Dealogic.
Moreover, private equity fundraising - the fuel for future activity - also fell off the cliff, dropping 81%, to its lowest level in over five years.
But those are only the headlines. And sadly, most investors stop there. Digging deeper, though, reveals a new trend is unfolding.
The number of firms hitting the pavement to raise new funds is on the rise. In January, there were 1,624 funds trying to raise $889 billion, a 25% increase from last year... and a 43% increase from 2007.
And they're enjoying success.
Morgan Stanley raised a record-setting $1.14 billion for its Private Markets Fund IV. Abbott Capital Management also raised more than $1 billion for their latest fund.
In other words, the next takeover boom is incubating. And it makes perfect sense. Despite such a challenging environment, the smart money knows it's time to make a deal...
Stock valuations rest at historically low levels. Financing, although hard to come by, is similarly cheap. And thanks to the bear market, every manager is amenable to a deal. In many cases, it's their only hope at quickly restoring shareholder value.
So if you're not preparing for the imminent boom by investing in potential takeover targets now, you should be. After all, the institutional money is getting ready. And history proves the premiums will be rich and the opportunities plentiful.
Three Sectors Screaming, "Let's Make a Deal"
Of course, half the battle is being prepared, like a Boy Scout. The other half is knowing where to look, a la G.I. Joe.
In my opinion, you should focus on the following three sectors because they will attract both private equity suitors and publicly traded competitors. Thus, bidding wars will erupt and premiums paid to shareholders will be the greatest.
Health care (specifically drug makers)
All major pharmaceutical companies are scrambling to replenish pipelines. Sure $150 billion worth of deals have already been announced this year. But the largest drug makers are still sitting on a $100 billion in cash and need to replace $84 billion in annual sales.
Energy
As famous oilman T. Boone Pickens famously acknowledged, it's much cheaper to drill for oil on Wall Street than in the ground. The pullback in oil and natural gas prices should entice cash-rich international giants to try to replenish reserves on the cheap.
Technology
This is another cash-rich sector with cheap valuations and technologies becoming more essential to everyday life. At the same time, the industry heavyweights are struggling to grow organically. Acquisitions are the only quick fix. Yet private equity shops are equally eager to pounce on the high margin, high penetration products in this sector.
Next week, I'll show you how to do identify the most attractive takeover targets in each sector. I'll even include three companies at the top of my list. So stay tuned.
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Private Equities
Re: Private Equities
by winston » Thu Apr 23, 2009 7:30 am
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Re: Private Equities
by winston » Tue Apr 28, 2009 4:13 pm
Distressed investing experts say too early for Asia
HONG KONG, April 28 (Reuters) - Despite growing opportunities in the United States and Europe, it is too early to jump into distressed investing across Asia, according to a panel of regional experts.
The reason to wait is that there is still plenty more pain to come from Asian corporations, as corporate earnings across the region are being propped up by stimulus plans and bank lending mandates, panelists said.
"It's going to be a while before true distress comes out," Robert Appleby, chief investment officer at ADM Capital, said at a FinanceAsia conference here on Tuesday.
While loan defaults are expected to rise in Western regions as well, the restructuring and court systems there are seen as more dependable and predictable as compared to Asia.
For now, distressed investors and bankers are more focused on the United States and Europe.
That factor, plus a lack of clarity on how much further there is to fall in Asia has kept Asia distressed funds quiet so far.
The consensus of the panel seemed to be no major activity in Asia until at least the next three to six months.
"We're going to wait and see how things cycle out," said panelist Brian Chinappi, head of Asia acquisitions (excluding Japan) for RREEF Alternative Investments.
Distressed investors typically invest in struggling companies defaulting on loans. Where other investors would look to less risky bets, distressed funds are experts at turning cheap debt into big profits.
"In this cycle, we're not seeing a lot of distressed opportunities," said panelist Bernard Lau of Nomura Holdings (8604.T).
"At some point, it will materialise, but that will depend on measures by the governments," he said.
Predicting economic drops comes easily to vulture funds, who profit from down cycles. Like most investors, they've been wrong before. But Asia's once red-hot economy is slowing, even as governments try to keep businesses humming with state-backed loans.
Another obstacle for distressed money is that bull market financings done several years ago were poorly structured for the lenders, presenting little appeal to new investors.
"These were fair weather deals written on the back of a beer mat," Appleby noted.
Chinappi agreed. "We've looked at some deals but we don't know how to work them out," he said.
Timothy Donahue of Blackstone Group's (BX.N) GSO Capital Partners said he saw great distressed investing opportunities coming up in Australia, where restructurings have a "fairly predictable" route compared to those in China and India.
For Lau, the opportunities were in Japan's property space but added that could be at least 12-18 months away.
http://www.reuters.com/article/marketsN ... dChannel=0
HONG KONG, April 28 (Reuters) - Despite growing opportunities in the United States and Europe, it is too early to jump into distressed investing across Asia, according to a panel of regional experts.
The reason to wait is that there is still plenty more pain to come from Asian corporations, as corporate earnings across the region are being propped up by stimulus plans and bank lending mandates, panelists said.
"It's going to be a while before true distress comes out," Robert Appleby, chief investment officer at ADM Capital, said at a FinanceAsia conference here on Tuesday.
While loan defaults are expected to rise in Western regions as well, the restructuring and court systems there are seen as more dependable and predictable as compared to Asia.
For now, distressed investors and bankers are more focused on the United States and Europe.
That factor, plus a lack of clarity on how much further there is to fall in Asia has kept Asia distressed funds quiet so far.
The consensus of the panel seemed to be no major activity in Asia until at least the next three to six months.
"We're going to wait and see how things cycle out," said panelist Brian Chinappi, head of Asia acquisitions (excluding Japan) for RREEF Alternative Investments.
Distressed investors typically invest in struggling companies defaulting on loans. Where other investors would look to less risky bets, distressed funds are experts at turning cheap debt into big profits.
"In this cycle, we're not seeing a lot of distressed opportunities," said panelist Bernard Lau of Nomura Holdings (8604.T).
"At some point, it will materialise, but that will depend on measures by the governments," he said.
Predicting economic drops comes easily to vulture funds, who profit from down cycles. Like most investors, they've been wrong before. But Asia's once red-hot economy is slowing, even as governments try to keep businesses humming with state-backed loans.
Another obstacle for distressed money is that bull market financings done several years ago were poorly structured for the lenders, presenting little appeal to new investors.
"These were fair weather deals written on the back of a beer mat," Appleby noted.
Chinappi agreed. "We've looked at some deals but we don't know how to work them out," he said.
Timothy Donahue of Blackstone Group's (BX.N) GSO Capital Partners said he saw great distressed investing opportunities coming up in Australia, where restructurings have a "fairly predictable" route compared to those in China and India.
For Lau, the opportunities were in Japan's property space but added that could be at least 12-18 months away.
http://www.reuters.com/article/marketsN ... dChannel=0
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Re: Private Equities
by winston » Wed Jun 24, 2009 2:27 pm
UPDATE 1-Ex-Goldman 'Goldfinger' raises $2.5 bln fund - sources
* Led by former Goldman partner Mark McGoldrick
* Completed raising first $2.5 billion fund
* Targeting $100 million deal with focus on Asia (Adds quotes, investment scale and competitors) By George Chen, Asia Private Equity Correspondent
HONG KONG, June 24 (Reuters) - "Goldfinger" is back in the market and has a new focus -- Asia.
Mount Kellett Capital, a private equity firm run by former Goldman Sachs partner Mark McGoldrick, has completed raising about $2.5 billion for its first fund with a focus on Asia, especially China, two people with knowledge of the details told Reuters.
McGoldrick earned his nickname while at Goldman Sachs where, as co-head of its lucrative global special situations group, media reported he was paid $40-$70 million in 2006.
The Asia-focused firm, which McGoldrick and former Goldman colleagues launched early last year, initially set a target to raise about $5 billion, but pared this back as markets fell sharply late last year, said the sources, who declined to be identified as they were not authorised to speak to the media.
A representative for Mount Kellett could not be immediately reached for comment.
"In fact, it's not that bad at all. $2.5 billion is a very impressive number in such a tough market environment," said one of the sources.
Along with scaling back its original target, Mount Kellett also shifted its global investment scale to focus on Asia, especially China, said the sources.
BIG APPETITE
Mount Kellett, named after a mountain in Hong Kong and also known as MKC, has an office in the former British colony with about 10 investment professionals seeking deals across Asia, especially in China and India, said one person familiar with operations.
Even before the firm raised its first $2.5 billion fund, MKC executives had begun talks with several Chinese firms for potential investments, the person said.
"It's a new firm, but it has a big appetite from the start," said the source, who is bidding against Mount Kellett for one China deal.
"People are talking about Mount Kellett and you can actually see these guys on many big deals these days. They are apparently an aggressive investor," he said, declining to elaborate.
The ideal deal size for Mount Kellett would be about $100 million, he said -- a similar target range to other investment firms such as Primus and FountainVest that are run by ex-senior bankers.
In April, Robert Morse, a former top Asia executive of Citigroup , and two former colleagues launched Primus after raising $1 billion.
[ID:nHKG183730] FountainVest, launched late last year, is a $1 billion China-dedicated fund backed by Singapore's sovereign wealth fund Temasek Holdings
* Led by former Goldman partner Mark McGoldrick
* Completed raising first $2.5 billion fund
* Targeting $100 million deal with focus on Asia (Adds quotes, investment scale and competitors) By George Chen, Asia Private Equity Correspondent
HONG KONG, June 24 (Reuters) - "Goldfinger" is back in the market and has a new focus -- Asia.
Mount Kellett Capital, a private equity firm run by former Goldman Sachs partner Mark McGoldrick, has completed raising about $2.5 billion for its first fund with a focus on Asia, especially China, two people with knowledge of the details told Reuters.
McGoldrick earned his nickname while at Goldman Sachs where, as co-head of its lucrative global special situations group, media reported he was paid $40-$70 million in 2006.
The Asia-focused firm, which McGoldrick and former Goldman colleagues launched early last year, initially set a target to raise about $5 billion, but pared this back as markets fell sharply late last year, said the sources, who declined to be identified as they were not authorised to speak to the media.
A representative for Mount Kellett could not be immediately reached for comment.
"In fact, it's not that bad at all. $2.5 billion is a very impressive number in such a tough market environment," said one of the sources.
Along with scaling back its original target, Mount Kellett also shifted its global investment scale to focus on Asia, especially China, said the sources.
BIG APPETITE
Mount Kellett, named after a mountain in Hong Kong and also known as MKC, has an office in the former British colony with about 10 investment professionals seeking deals across Asia, especially in China and India, said one person familiar with operations.
Even before the firm raised its first $2.5 billion fund, MKC executives had begun talks with several Chinese firms for potential investments, the person said.
"It's a new firm, but it has a big appetite from the start," said the source, who is bidding against Mount Kellett for one China deal.
"People are talking about Mount Kellett and you can actually see these guys on many big deals these days. They are apparently an aggressive investor," he said, declining to elaborate.
The ideal deal size for Mount Kellett would be about $100 million, he said -- a similar target range to other investment firms such as Primus and FountainVest that are run by ex-senior bankers.
In April, Robert Morse, a former top Asia executive of Citigroup , and two former colleagues launched Primus after raising $1 billion.
[ID:nHKG183730] FountainVest, launched late last year, is a $1 billion China-dedicated fund backed by Singapore's sovereign wealth fund Temasek Holdings
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Re: Private Equities
by winston » Tue Jun 30, 2009 4:05 pm
UPDATE 1-Carlyle raises $1.04 bln for Asia growth fund
HONG KONG, June 30 (Reuters) - The Carlyle Group on Tuesday said it raised $1.04 billion for its fourth Asian growth capital fund, a 46 percent increase from the previous fund size.
CAGP, one of four investment funds Carlyle has in the region, invests in high growth private companies in China, India, Korea and other Asian markets.
Carlyle said it raised the money in 14 months, adding that it reflects improving investor sentiment towards China and India as the two major economies begin to stabilize.
Nearly 40 percent of the fund's investors are new, Carlyle said.
"Despite the economic downturn, most of our growth capital portfolio companies have achieved growth rates in the range of 20-50 percent over the last year," Wayne Tsou, Managing Director and Head of Carlyle Asia Growth Partners, said in a statement.
CAGP IV made its first investment in a Chinese high-end women's fashion company Ellassay.
Washington D.C.-based Carlyle Group is a global private equity firm with $84.5 billion of assets under management committed to 64 funds as of March 31, 2009. Carlyle invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America.
HONG KONG, June 30 (Reuters) - The Carlyle Group on Tuesday said it raised $1.04 billion for its fourth Asian growth capital fund, a 46 percent increase from the previous fund size.
CAGP, one of four investment funds Carlyle has in the region, invests in high growth private companies in China, India, Korea and other Asian markets.
Carlyle said it raised the money in 14 months, adding that it reflects improving investor sentiment towards China and India as the two major economies begin to stabilize.
Nearly 40 percent of the fund's investors are new, Carlyle said.
"Despite the economic downturn, most of our growth capital portfolio companies have achieved growth rates in the range of 20-50 percent over the last year," Wayne Tsou, Managing Director and Head of Carlyle Asia Growth Partners, said in a statement.
CAGP IV made its first investment in a Chinese high-end women's fashion company Ellassay.
Washington D.C.-based Carlyle Group is a global private equity firm with $84.5 billion of assets under management committed to 64 funds as of March 31, 2009. Carlyle invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America.
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Re: Private Equities
by winston » Tue Jul 21, 2009 11:57 am
UPDATE 1-Merrill may sell mgmt of Asian property fund -source
* Blackstone, Apollo Investment among likely buyers -source
* Deal could be a few hundred mln dlrs * Merrill may stay invested in the fund
By Saeed Azhar SINGAPORE, July 21 (Reuters) - Bank of America's Merrill Lynch is in talks with several firms including Blackstone and Apollo Investment Management to sell management rights of its $2.65 billion Asian Real Estate Opportunity Fund, a source with knowledge of the deal said.
The value of the deal would in the range of a few hundred million dollars as Merrill would try to command a multiple on the annual fee it earns from the fund, the source told Reuters. The source declined to be identified because the deal was not public.
The potential sale comes as Bank of America, which took over Merrill Lynch earlier this year, is moving away from asset management. The bank is currently in talks to sell its Columbia asset management unit.
"The U.S. banking model is very different from say the Singapore or Asian model of universal banking due to historical and regulatory reasons," said David Lum, an analyst at Daiwa Institute of Research.
Merrill invested $700 million in the property fund that closed late last year and plans to stay invested, the source said, adding the talks may also involve other Asian real estate assets.
In October, Merrill said it had raised the fund to invest in Asian real estate, which it said then would invest mainly in Japan, China, India and South Korea. [ID:nHKG282178].
"We are looking to transfer the GP function of this fund to an asset manager," the source told Reuters, adding the fund is fully invested.
Often, a GP (general partner) is active in the day-to-day operations of the partnership, which Merrill currently is for this fund and some other real estate assets.
BofA-Merrill Lynch declined to comment, and Blackstone and Apollo were not immediately available to comment.
A Reuters poll in June said demand for residential property is picking up in key Asian cities, but economic recession will continue to depress the region's office markets, pushing Grade A rents in Singapore and Tokyo down nearly 40 percent in the next 18 months.
* Blackstone, Apollo Investment among likely buyers -source
* Deal could be a few hundred mln dlrs * Merrill may stay invested in the fund
By Saeed Azhar SINGAPORE, July 21 (Reuters) - Bank of America's Merrill Lynch is in talks with several firms including Blackstone and Apollo Investment Management to sell management rights of its $2.65 billion Asian Real Estate Opportunity Fund, a source with knowledge of the deal said.
The value of the deal would in the range of a few hundred million dollars as Merrill would try to command a multiple on the annual fee it earns from the fund, the source told Reuters. The source declined to be identified because the deal was not public.
The potential sale comes as Bank of America, which took over Merrill Lynch earlier this year, is moving away from asset management. The bank is currently in talks to sell its Columbia asset management unit.
"The U.S. banking model is very different from say the Singapore or Asian model of universal banking due to historical and regulatory reasons," said David Lum, an analyst at Daiwa Institute of Research.
Merrill invested $700 million in the property fund that closed late last year and plans to stay invested, the source said, adding the talks may also involve other Asian real estate assets.
In October, Merrill said it had raised the fund to invest in Asian real estate, which it said then would invest mainly in Japan, China, India and South Korea. [ID:nHKG282178].
"We are looking to transfer the GP function of this fund to an asset manager," the source told Reuters, adding the fund is fully invested.
Often, a GP (general partner) is active in the day-to-day operations of the partnership, which Merrill currently is for this fund and some other real estate assets.
BofA-Merrill Lynch declined to comment, and Blackstone and Apollo were not immediately available to comment.
A Reuters poll in June said demand for residential property is picking up in key Asian cities, but economic recession will continue to depress the region's office markets, pushing Grade A rents in Singapore and Tokyo down nearly 40 percent in the next 18 months.
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Re: Private Equities
by winston » Wed Aug 12, 2009 7:17 pm
Private equity funds alone are sitting on $1.02 trillion in dry powder, according to London-based research house Preqin. Almost half of that - $472 billion - resides in buyout funds.
If they don't find it a home (i.e. - start buying companies), they'll be forced to return it to investors.
If they don't find it a home (i.e. - start buying companies), they'll be forced to return it to investors.
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Re: Private Equities
by winston » Sat Aug 15, 2009 9:32 am
Blackstone to Team With Shanghai on First Domestic Chinese Fund By Cathy Chan
Aug. 15 (Bloomberg) -- Blackstone Group LP, the world’s biggest buyout company, agreed to set up a 5 billion yuan ($731 million) private-equity fund with Shanghai, the first venture between a global buyout firm and the Chinese government.
Blackstone will be the first global private-equity firm to secure investment from a tier-one city government in China. The agreement signifies China’s endorsement of private equity to bolster corporate governance and profit, said Vincent Chan, co- founder of China-focused fund Spring Capital Asia Ltd. TPG, Carlyle Group and KKR & Co. haven’t established domestic funds.
Playing Catch-Up
Shanghai, home to the nation’s largest stock exchange, is playing catch-up with Tianjin, Beijing and Hong Kong to become a private-equity hub by proposing tax breaks to attract buyout firms.
Fang Fenglei, a Chinese partner at Goldman Sachs Group Inc., also is planning to raise a domestic private-equity fund for his Beijing-based Hopu Investment Management Co., after raising $2.5 billion from overseas investors.
Shanghai imposes tax rates of up to 35 percent on private- equity and venture-capital firms under limited partnership structures, and charges 20 percent on capital gains earned by non-executive partners, according to rules announced in August last year. In Hong Kong, capital gains are exempt from taxation and the corporate tax rate was cut to 16.5 percent.
http://www.bloomberg.com/apps/news?pid= ... mDTFf_eCLQ
Aug. 15 (Bloomberg) -- Blackstone Group LP, the world’s biggest buyout company, agreed to set up a 5 billion yuan ($731 million) private-equity fund with Shanghai, the first venture between a global buyout firm and the Chinese government.
Blackstone will be the first global private-equity firm to secure investment from a tier-one city government in China. The agreement signifies China’s endorsement of private equity to bolster corporate governance and profit, said Vincent Chan, co- founder of China-focused fund Spring Capital Asia Ltd. TPG, Carlyle Group and KKR & Co. haven’t established domestic funds.
Playing Catch-Up
Shanghai, home to the nation’s largest stock exchange, is playing catch-up with Tianjin, Beijing and Hong Kong to become a private-equity hub by proposing tax breaks to attract buyout firms.
Fang Fenglei, a Chinese partner at Goldman Sachs Group Inc., also is planning to raise a domestic private-equity fund for his Beijing-based Hopu Investment Management Co., after raising $2.5 billion from overseas investors.
Shanghai imposes tax rates of up to 35 percent on private- equity and venture-capital firms under limited partnership structures, and charges 20 percent on capital gains earned by non-executive partners, according to rules announced in August last year. In Hong Kong, capital gains are exempt from taxation and the corporate tax rate was cut to 16.5 percent.
http://www.bloomberg.com/apps/news?pid= ... mDTFf_eCLQ
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Re: Private Equities
by winston » Fri Sep 11, 2009 12:12 pm
Carlyle raising $3 bln Asia buyout fund -sources
HONG KONG, Sept 11 (Reuters) - The Carlyle Group is raising a new Asia buyout fund with target size up to $3 billion as the U.S. private equity giant aims to tap more deals in Asia, two fund industry sources said on Friday.
It would be Carlyle's [CYL.UL] third buyout fund for Asia. Its last Asia buyout fund was $1.8 billion launched in July 2006, and it is invested in various projects across the region, including a landmark deal with China Pacific Insurance (Group) Co Ltd <601601.SS>, China's No. 3 life insurer.
The sources, who are institutional investors who were briefed on Carlyle's plan, declined to be identified because the fund-raising process is private.
Carlyle declined to comment.
(Reporting by George Chen; Editing by Ken Wills) (([email protected]; +852 2843 6532; Reuters Messaging: [email protected]))
HONG KONG, Sept 11 (Reuters) - The Carlyle Group is raising a new Asia buyout fund with target size up to $3 billion as the U.S. private equity giant aims to tap more deals in Asia, two fund industry sources said on Friday.
It would be Carlyle's [CYL.UL] third buyout fund for Asia. Its last Asia buyout fund was $1.8 billion launched in July 2006, and it is invested in various projects across the region, including a landmark deal with China Pacific Insurance (Group) Co Ltd <601601.SS>, China's No. 3 life insurer.
The sources, who are institutional investors who were briefed on Carlyle's plan, declined to be identified because the fund-raising process is private.
Carlyle declined to comment.
(Reporting by George Chen; Editing by Ken Wills) (([email protected]; +852 2843 6532; Reuters Messaging: [email protected]))
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Re: Private Equities
by winston » Mon Sep 14, 2009 11:02 am
DJ INTERVIEW: Hony CEO Eyes Pharma, Media, Retail Sector Buys
By Aaron Back Of DOW JONES NEWSWIRES
DALIAN, China (Dow Jones)--Chinese private equity firm Hony Capital is seeking investment opportunities in domestic Chinese industries that are fragmented and likely to be consolidated, Chief Executive John Zhao said in an interview.
Speaking on the sidelines of the World Economic Forum meeting that ended Saturday, Zhao said Hony is looking at new investments in the pharmaceutical, media, and retail sectors in China. He considers all three to be highly fragmented industries where Hony hopes to benefit from consolidation.
'We have too many so-called pharmaceutical companies. We have more than 4,500 in China, while the total sales volume, if you add all that together, is less than one huge multinational,' he told Dow Jones Newswires.
Zhao said Hony is not currently planning to list shares, although its parent company, Legend Holdings Ltd., does intend to become a publicly traded company in the medium to long term.
On Tuesday, Legend Holdings Chairman Liu Chuanzhi said he hopes to list Legend, but that its unit companies should be listed first. Zhao said Liu didn't mean that Legend's money-management units, Hony and venture capital unit Legend Capital, would be publicly listed themselves.
'Currently, I don't see any benefit' to listing Hony, Zhao said. He said Liu's point in discussing the listing of Legend's units was to send a message to companies that Legend might acquire in the future that they can still enjoy independent governance and be independently listed.
Legend Holdings plans to invest CNY10 billion over the next five years in five areas: clean energy, new materials, technology, financial services and industries related to Chinese domestic consumption. Zhao said Legend's intention is to add 'core companies' in various industries to complement its current holdings, the best known of which is Chinese computer maker Lenovo Group Ltd. (LNVGY). Legend also has a property unit, Raycom Real Estate Development Co.
Legend also announced Tuesday that the Chinese Academy of Sciences had sold a 29% stake in Legend for CNY2.76 billion to private conglomerate China Oceanwide Holding Group Co. Zhao said reducing the stake held by the state-controlled academy would improve management.
'It means more focus on the corporate agenda versus the state agenda,' he said.
Hony has over $2.8 billion in assets under management across five funds, including one yuan-denominated fund with CNY5 billion ($730 million) to invest.
As Hony is 'a fairly large fund,' Zhao said he would look to invest in companies that can be consolidators, rather than buyout targets, in the three sectors it is focusing on. He described the strategy as his 'secret sauce.'
Last month, Hony teamed up with U.S. private-equity firm TPG Capital LP to jointly take a 10.95% stake in Wumart Stores Inc., which operates more than 426 supermarkets and convenience stores in China, for HK$1.65 billion ($212.9 million).
At the time, Zhao said Hony was attracted to the industry due to the potential for consolidation. Less than two weeks later, the Wall Street Journal reported that rival supermarket chain Times Ltd. had been put up for sale by its majority shareholder, and that potential bidders included Wumart along with a third chain, Lianhua Supermarket Holdings Co. -
By Aaron Back, Dow Jones Newswires; (8610) 6588 5848; [email protected]
By Aaron Back Of DOW JONES NEWSWIRES
DALIAN, China (Dow Jones)--Chinese private equity firm Hony Capital is seeking investment opportunities in domestic Chinese industries that are fragmented and likely to be consolidated, Chief Executive John Zhao said in an interview.
Speaking on the sidelines of the World Economic Forum meeting that ended Saturday, Zhao said Hony is looking at new investments in the pharmaceutical, media, and retail sectors in China. He considers all three to be highly fragmented industries where Hony hopes to benefit from consolidation.
'We have too many so-called pharmaceutical companies. We have more than 4,500 in China, while the total sales volume, if you add all that together, is less than one huge multinational,' he told Dow Jones Newswires.
Zhao said Hony is not currently planning to list shares, although its parent company, Legend Holdings Ltd., does intend to become a publicly traded company in the medium to long term.
On Tuesday, Legend Holdings Chairman Liu Chuanzhi said he hopes to list Legend, but that its unit companies should be listed first. Zhao said Liu didn't mean that Legend's money-management units, Hony and venture capital unit Legend Capital, would be publicly listed themselves.
'Currently, I don't see any benefit' to listing Hony, Zhao said. He said Liu's point in discussing the listing of Legend's units was to send a message to companies that Legend might acquire in the future that they can still enjoy independent governance and be independently listed.
Legend Holdings plans to invest CNY10 billion over the next five years in five areas: clean energy, new materials, technology, financial services and industries related to Chinese domestic consumption. Zhao said Legend's intention is to add 'core companies' in various industries to complement its current holdings, the best known of which is Chinese computer maker Lenovo Group Ltd. (LNVGY). Legend also has a property unit, Raycom Real Estate Development Co.
Legend also announced Tuesday that the Chinese Academy of Sciences had sold a 29% stake in Legend for CNY2.76 billion to private conglomerate China Oceanwide Holding Group Co. Zhao said reducing the stake held by the state-controlled academy would improve management.
'It means more focus on the corporate agenda versus the state agenda,' he said.
Hony has over $2.8 billion in assets under management across five funds, including one yuan-denominated fund with CNY5 billion ($730 million) to invest.
As Hony is 'a fairly large fund,' Zhao said he would look to invest in companies that can be consolidators, rather than buyout targets, in the three sectors it is focusing on. He described the strategy as his 'secret sauce.'
Last month, Hony teamed up with U.S. private-equity firm TPG Capital LP to jointly take a 10.95% stake in Wumart Stores Inc., which operates more than 426 supermarkets and convenience stores in China, for HK$1.65 billion ($212.9 million).
At the time, Zhao said Hony was attracted to the industry due to the potential for consolidation. Less than two weeks later, the Wall Street Journal reported that rival supermarket chain Times Ltd. had been put up for sale by its majority shareholder, and that potential bidders included Wumart along with a third chain, Lianhua Supermarket Holdings Co. -
By Aaron Back, Dow Jones Newswires; (8610) 6588 5848; [email protected]
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winston - Billionaire Boss
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Re: Private Equities
by Aspellian » Wed Sep 23, 2009 9:07 am
<TOL: Private equities are raising funds again. alot of money from sovereign wealth funds. the mentality of not wanting to miss out on action and prob believe that green shoots are growing taller. This could drive the economy and market up another leg... just like the past.
until you see ridiculous billion dollar deals with unrealistic valuations, you know the party music is slowing down.... the lady whom whom you partied whole night with could be your neighbor's mother!!!
remember to leave before the party lights come on!!!
>
CDH Investments, backed by Singapore's sovereign fund and the World Bank, is raising a US$1.4 billion ($1.98 billion) private equity fund, its fourth fund targetting growth-stage companies in China, a source said today.
CDH, established in 2002 as a spin-off from China International Capital Corp, the investment banking joint venture one-third owned by Morgan Stanley (MS.N), has recently raised US$750 million for the new fund's first closing period, said the source who was briefed on the plan but declined to be identified as the fund-raising process is private.
CDH aims to complete fund-raising and reach the target of US$1.4 billion for the new China-dedicated private equity early next year, said the source.
Wu Shangzhi, chairman of Beijing-based CDH, told the SuperReturn Asia Conference that the firm is closing its fourth fund soon but he declined to disclose the size of the fund publicly due to company policy.
Wu, an influential private equity executive in China, said he believed consolidation in many industries in the country will bring huge buying opportunities to private equity funds and returns are expected to be higher in the coming years.
Beijing, which has historically viewed private equity firms as speculators, is becoming more welcoming of international and domestic private equity funds as it seeks to boost investments in China, thereby creating more jobs.
The Government of Singapore Investment Corp (GIC), the bigger of Singapore's two sovereign wealth funds, and the International Finance Corp (IFC), the private investment arm of the World Bank, are two major institutional investors, also known as “limited partners†of CDH's new fund, said the source.
Singapore’s GIC and IFC also participated in CDH’s previous fund-raisings.
CDH’s last China fund is about US$1.5 billion and about 85% of capital in the third fund has been invested, the source said, adding it was not difficult for private equity firms to secure investment for China-concept funds.
Instead, some speakers at the SuperReturn forum in Hong Kong noted there may already be too much private equity money in Asia, which will stiffen competition for dealmaking.
More than 50% of participants in the SuperReturn forum voted China as the place for best investment returns in the next three years, but many raised concerns about the country’s regulatory environment and investment exit options, a straw poll conducted by the forum‘s organiser showed.
Source: Thomson Reuters
until you see ridiculous billion dollar deals with unrealistic valuations, you know the party music is slowing down.... the lady whom whom you partied whole night with could be your neighbor's mother!!!
remember to leave before the party lights come on!!!
>CDH Investments, backed by Singapore's sovereign fund and the World Bank, is raising a US$1.4 billion ($1.98 billion) private equity fund, its fourth fund targetting growth-stage companies in China, a source said today.
CDH, established in 2002 as a spin-off from China International Capital Corp, the investment banking joint venture one-third owned by Morgan Stanley (MS.N), has recently raised US$750 million for the new fund's first closing period, said the source who was briefed on the plan but declined to be identified as the fund-raising process is private.
CDH aims to complete fund-raising and reach the target of US$1.4 billion for the new China-dedicated private equity early next year, said the source.
Wu Shangzhi, chairman of Beijing-based CDH, told the SuperReturn Asia Conference that the firm is closing its fourth fund soon but he declined to disclose the size of the fund publicly due to company policy.
Wu, an influential private equity executive in China, said he believed consolidation in many industries in the country will bring huge buying opportunities to private equity funds and returns are expected to be higher in the coming years.
Beijing, which has historically viewed private equity firms as speculators, is becoming more welcoming of international and domestic private equity funds as it seeks to boost investments in China, thereby creating more jobs.
The Government of Singapore Investment Corp (GIC), the bigger of Singapore's two sovereign wealth funds, and the International Finance Corp (IFC), the private investment arm of the World Bank, are two major institutional investors, also known as “limited partners†of CDH's new fund, said the source.
Singapore’s GIC and IFC also participated in CDH’s previous fund-raisings.
CDH’s last China fund is about US$1.5 billion and about 85% of capital in the third fund has been invested, the source said, adding it was not difficult for private equity firms to secure investment for China-concept funds.
Instead, some speakers at the SuperReturn forum in Hong Kong noted there may already be too much private equity money in Asia, which will stiffen competition for dealmaking.
More than 50% of participants in the SuperReturn forum voted China as the place for best investment returns in the next three years, but many raised concerns about the country’s regulatory environment and investment exit options, a straw poll conducted by the forum‘s organiser showed.
Source: Thomson Reuters
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