Tag Archive for 'Private Equity'

For Hedge Fund Investors, Brazil Is the Country of Now

Published on April 1, 2011 in Emerging Markets and International Finance. 0 Comments Tags: , , , .

Ten years ago, Goldman Sachs proclaimed that Brazil was among the new economic powerhouses. Now it is the next frontier for hedge funds. Looking to capitalise on the fast-growing region, global hedge fund managers have started to descend on Brazil. In all, hedge fund assets devoted to the region rose 75 percent, to $21.4 billion, in 2010, according to data from Hedge Fund Research.

The appeal is obvious. While many developed countries have sputtered amid weak economic growth, Brazil has continued to thrive, given its rich reserve of natural resources and growing middle class. Last year, the country’s gross domestic product increased 7.5 percent — helping catapult Brazil ahead of Britain and France to become the fifth-largest economy in the world.

“In the past five years, about 34 million Brazilians entered the middle class,” said Oscar Decotelli, a partner at Vision Brazil Investments, a $2 billion alternative investment firm based in São Paulo. “This for a population of 200 million is significant. Brazil is not just a commodity story, but a very strong domestic story.” [Source]

Cleantech 2.0 Is on Its Way

Published on February 27, 2011 in Greentech. 0 Comments Tags: , , .

A learning curve — it’s starting to happen slowly but surely for investors in the cleantech industry. That second wave — or Cleantech 2.0 — will likely be more focused on private equity, will look to scale some of the already proven innovations, and will be far more global in scale.

“We got really excited about this growth area,” said Mondre. The bulk of funding for cleantech has gone into early stage high-risk companies, and there’s been very limited capital going into helping people scale businesses once they’ve reached technological feasibility [Source].

Private Equity is shifting focus to Asia

Published on December 13, 2010 in Emerging Markets. 0 Comments Tags: , .

Blackstone Group named Michael Chae, one of its most senior deal makers in the United States, to head the firm’s private equity business in Asia. He will be based in Hong Kong. The move underscores the private equity industry’s shifting focus to regions outside the United States, particularly Asia.

Blackstone’s president, Hamilton James, has said that he expects roughly half the firm’s deals to be in Asia next year. And Stephen Schwarzman, the firm’s co-founder and chief executive, is relocating to Europe for three to four months next year, in part to oversee the firm’s international portfolio and be close to Asia, where he spends much of his time.

“Michael is one of our leaders and most senior partners in our private equity business, and his move to lead our business in Asia reflects our growing commitment to the region,” Mr. Schwarzman said in a statement. “As our business continues to globalize, Asia is becoming ever more central to the firm.”

Private Equity Thrives Again

Published on October 6, 2010 in International Finance. 0 Comments Tags: , , .

The private equity industry has emerged from a treacherous two years on relatively solid footing. Default rates among the companies they control have dropped sharply and many have tapped into robust debt markets to push back the huge amounts of debt coming due in the next couple of years.

And private equity’s deal-making machine is revving up again. Last month, 3G Capital struck a deal to take Burger King private in a $3.3 billion leveraged buyout. Other firms are prep-ping holdings for initial public offerings so they can return capital to their investors, who have seen little in the way of profits in recent years.

Private equity, however, may soon be facing its gravest challenge yet. Its most important constituents — the large public pension funds that provide it with more than half its capital — are weighing whether or not to stick with private equity in the coming years [Source].

Emergence of a New Global Business Player

Published on September 2, 2010 in Global Strategy and International Business. 1 Comment Tags: , , , .

Burger King agreed on Thursday to sell itself to the investment firm 3G Capital for about $4 billion, including the assumption of debt, marking the second time in eight years that the fast-food giant has taken itself private. The agreement on Thursday for Burger King Holdings to be acquired by a Brazilian-backed investment firm, like a deal two years ago for Anheuser-Busch that involved some of the same investors, is one of those emblematic transactions that seem to herald the emergence of a new global business player.

The growth of the Brazilian economy in recent years has created a whole new class of wealthy entrepreneurs who are looking for opportunities to invest their fortunes and are not daunted by the idea of trying their luck beyond Brazil’s borders. Traditionally, Brazilian business has been dominated by an often cautious elite based in São Paulo, the country’s industrial and financial hub. But the economic surge of the last decade has changed that.

One thing is clear, though: Brazil’s dominance in all phases of the global beef industry. The country is already the leading beef exporter and now, thanks to the Burger King deal on Thursday, it has another outlet to encourage consumption globally [Source].

The Era of the Renminbi?

Published on November 21, 2009 in International Finance. 1 Comment Tags: , , , , .

RenminbiA recent side-by-side comparison of the U.S. and Chinese economies produced a startling result: There were $34.8 billion of initial public offerings in China this year and only $13.7 billion in the U.S.

With numbers like that, is it any surprise that Western fund managers are scrambling to get a bite of the immensely profitable Chinese market for new companies? As the New York Times reported, U.S.-based Blackstone Group has formed a partnership with Shanghai’s municipal government to raise a $732 million private equity fund.

What’s different this time is that Blackstone’s fund is denominated in the Chinese currency, which is officially called the renminbi. Blackstone’s idea is to take advantage of capital from China’s increasingly wealthy institutional and private investors. The fund will then use the investments to buy companies and take them public, earning a hopefully large profit along the way. There is plenty of interest in the Chinese market for new companies—Carlyle Group announced this week that it had invested $60 million in three Chinese growth companies. So there is no shortage of domestic companies ripe for turnaround [Source].

Private Equity Goes East

Published on November 21, 2009 in International Finance. 0 Comments Tags: , .

china_Private_equityA few weeks ago, Stephen A. Schwarzman, the chairman of the Blackstone Group, the world’s biggest private equity firm, signed a joint venture here with Shanghai’s municipal government, creating the first Blackstone fund denominated entirely in Chinese currency.

The $732 million fund was the latest example of two trends: global private equity firms seeking to raise capital from increasingly wealthy Chinese individuals and institutions, and the growing international stature of the Chinese currency, formally known as the renminbi.

According to Zero2IPO, a Beijing-based research firm, more than 190 funds denominated in renminbi have been established in the last two and a half years with a combined total of more than $30 billion. In the past, investments in Chinese companies were largely done through offshore holding companies in tax havens like the Cayman Islands.

Chinese private equity funds are emerging in big cities as China promulgates new regulations aimed at creating a homegrown private equity industry, one that Beijing hopes will strengthen the country’s capital markets and fuel private sector growth in an economy overly dependent on government investment [Source].

The Mood in The City

Published on April 14, 2008 in International Business and International Finance. 0 Comments Tags: , , , .

The mood in London financial markets is not good. House prices are going down, and with them the British pound. Investment bankers within UBS are looking around for jobs, and the Royal Bank of Scotland is sweeping ABN Amro’s trading floor clean with incredible lack of style:

ABN’s structured credit traders were apparently told on Thursday that they should report to RBS’ London office in preparation for a move there on Monday. Terminals needed to be checked and such like. And when they got there… they were all fired (full story).

Luckily, the British have a great sense of humour, and I couldn’t stop laughing at this economic assessment of London 2010 from the price of everything blog:

London, April 2010 – Wall Street firms have just announced their latest results for FY 2009;

300 million staff have been “written down”, leaving just two (Sid and Doris Bonkers) to manage the investment banks’ remaining worldwide debt, equity, merger and advisory, securitisation, syndication and prime brokerage businesses.

Marti Peeps, sole analyst at the last remaining research house, Teletext, welcomed the results as “a bold step in the face of ongoing bad debt provisioning,” though conceded that the City’s newly “rightsized” payroll might struggle to take on board the burgeoning supply of new issuance, namely the packet of Walkers Crisps rumoured to be hitting the primary market in late summer 2012.Hopes for a recovery in Wall Street earnings have for several quarters hinged on the prospects for the successful completion of a 40p private placement of a bag of Salt and Vinegar flavour crisps on behalf of the Walkers Crisps Company. Lead underwriters JPCitigroupMerrill, a subsidiary of the US government, and Northern Rock SocGen KFW Nomura, a wholly owned subsidiary of Tesco plc (Neasden branch), are rumoured to have “solid” interest for the underwriting, most notably from Asia, itself a subsidiary of Texas Pacific Group, but declined to go into further detail. (click here for pdf version. Enjoy!)

Update @ April 15th: London’s financial services sector faces a loss of 20,000 jobs over the next two years. Cuts by Citigroup and RBS are the tip of the iceberg (BusinessWeek).

Fasten Your Safety Belt?

Published on January 15, 2008 in Global Strategy and International Finance. 0 Comments Tags: , , , , .

Financial TraderToday, the world’s biggest bank delivers dreadful results. Citigroup recorded a net loss of $9.8 billion, driven by a whopping $18.1 billion in pre-tax write-downs and credit costs on exposure to subprime mortgages.

Worse, it is no longer just collateralised-debt obligations and other complex securitised products that are hurting the world’s largest bank (by assets if no longer by market value). Credit cards and other consumer-finance businesses are deteriorating fast as America’s economy flirts with recession.

Capital markets around the world ended the day all in red digits. What more can we expect the upcoming weeks when other leading financials record their 4Q and FY2007 results? How much more write downs can capital markets digest? How can we fix it?

The New Kings of Capitalism?

Published on June 22, 2007 in International Finance. 0 Comments Tags: , , .


I am not trying to make a political statement here, or whatsoever with the teaser and image headlining this blog entry. I just wanted to have a catchy and provocative picture accompanying the headline.

The private equity industry is growing at a stunning pace for several consecutive years in a row now, transforming the structure and balance of power in global business. Mark O’Hare, managing director of Private Equity Intelligence – a research group based in London – compiled a ranking of the fifteen largest private equity firms, based upon assets under management. Find here the ranking published by BusinessWeek.

In a previous post I wrote about the real soul of private equity firms. What is their real core business nowadays? With respect to the fact that, PE firms are broadening their service offerings to other areas of “high class” finance.