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November 26, 2007

 Past Issues

Cover Story

Japan Holding Fast

When Japan's Shinsei Bank announced that J.C. Flowers & Co. was planning to invest up to $1.8 billion in the banking giant, the news was more than just a deja vu moment for the New York private equity firm that had teamed with Ripplewood Holdings seven years ago to buy the then-ailing Tokyo financial services company. The Shinsei deal is indicative of the buyout investment opportunities in Japan that sprout almost perennially as cherry blossoms in that nation's spring. Despite China's ever-increasing draw for buyout groups, Japan is once again piquing the interest of large US private equity firms due to its mature business climate, well-developed legal system and sophisticated capital markets system. Its credit markets, generally more conservative when it comes to lending standards yet still a source of loans for buyout deals, have largely evaded the subprime fallout roiling the US leveraged loan market.

Corporate Feature

Thinking Like Private Equity

The financial world was riveted earlier this year by the bidding war for Equity Office Properties, one of the largest publicly held office building owners. The Blackstone Group ultimately prevailed in the contest, but only after it raised its offer to $23 billion from $20 billion, outbidding strategic acquirer Vornado Realty Trust. It was a huge win for shareholders of Equity Office, who got a premium of more than 25% compared with their share price before Blackstone made its initial offer. But, you can bet Blackstone expects to get an even bigger return when it sells Equity Office one day in the future.

Credit Derivatives

Monolines in the Crosshairs

In what seems to be a never-ending domino effect in the subprime saga, the next actors being hurt by the credit market debacle are bond insurers -- or monolines. Many have reported third-quarter losses and are subsequently being reviewed by rating agencies for possible downgrades.

Editorial

All Is Not Yet Lost

As another Thanksgiving comes and goes, there is again no shortage of things for which to be grateful, even for an investment banking community that has been beaten up worse than the curmudgeon who always takes the last piece of the white meat.

Global Investing

Standard Chartered Eyed by Chinese Suitors?

Chinese banks are clearly brimming with confidence as they seek equity investments in overseas counterparts. Last Monday, press reports indicated that three Chinese financial institutions approached Singapore's Temasek Holdings about purchasing its 17% stake in London-based Standard Chartered Bank.

Hedge Funds

Q&A: A Hedge Fund Early Adopter

Eric Roper, a senior partner at Gersten Savage and chairman of the firm's financial services practice, was one of the first attorneys to work with hedge funds. He got involved in the industry when a friend of Alfred Winslow Jones -- the pioneer who is credited with forming the first hedge fund -- asked for some advice.

BNP Woos Hedge Funds

For members of the BNP Paribas hedge fund relationship team, the motto is, 'Delivering BNP Paribas to hedge funds and hedge funds to BNP Paribas,' says the bank's global hedge fund relationship manager, Talbot Stark.

Mortgage Lenders

Fannie, Freddie Enter the Fray

These days, some bond market investors - often known for their laconic sense of humor -- are trading an email graphic of a deer frozen in the beams of a car's headlights. They'll tell you the graphic could be a portrait of a market in which many investors are refraining from doing much with their holdings of Fannie Mae and Freddie Mac mortgage securities.

Personnel File

Bermudez Takes Risk Helm at Citi

Citigroup named Jorge Bermudez chief risk officer, effective immediately. He will oversee global compliance and credit, market and operational risk for Citi and its subsidiaries.

Regulation

SEC Rule May Aid Private Placement

The Securities and Exchange Commission recently announced changes to how companies can sell stock or bonds privately, enabling young businesses such as life sciences and technology companies to raise money from a broader range of sources at a potentially lower cost. The changes to Securities Act Rule 144, in most cases, shorten by half the holding period for restricted securities.

Wall Street

Just in Time, a New Recruiting Firm

Two Wall Street professionals have set aside their bid lists, bonds and Bloomberg terminals for a different sort of venture. Brian James and Joe Messineo have launched a recruiting firm, Link Global Solutions, tailored for a niche of specialists -- those involved in securitization -- that increasingly are finding themselves cashiered by Wall Street investment banking firms.

Week on the Street

BlackRock Said to Lead SIV Fund

BlackRock Inc. has reportedly been named by a trio of bulge bracket banks to steward a new $75 billion fund aimed at shoring up the asset-backed securities market.

United Rentals Strikes Back at Cerberus

United Rentals filed a lawsuit against Cerberus Capital Management, seeking to force Cerberus to complete its $7 billion acquisition of the equipment rental concern. Cerberus has tried to scuttle the deal, while United Rentals says there has been no material adverse change in its business.

Goldman Gives, and Not Just to Partners

Goldman Sachs last week unveiled plans for a donor advised charitable fund, Goldman Sachs Gives, that will enable the bank's 350 to 400 partners to contribute money for charities. The fund likely will support health, education, cultural and human services charities and they will be aimed at bolstering causes worldwide.

Chilton Eyes Different Side of China

Hedge fund Chilton Investment, which runs more than $6.5 billion in assets, said it aims to expand its presence in China, particularly in that nation's Western region. Much of Chinese investment by outside firms has been focused on Eastern China, near its coastline.

Fitch Down on More CDOs

Fitch downgraded another $29.8 billion worth of collateralized debt obligations, affecting 74 transactions. The downgrades were prompted by the continued credit deterioration of the underlying collateral, as well as changes to the default forecasting assumptions.