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The Deal Economy: Hedge Funds deadline, Pvt Equity payments to “Founders”, Doubling IPOs and lasting ETFs

WE have been silent after the week of march 12, as the deal market summaries showed up a 40% to 80% slump depending onw hich part of the World you were and which market you meant incl debt and equity underwriting and M&A business. Goldman Sachs stayed at #2 as JP Morgan closed the few deals there were doing one more big deal than the rest but except for the increased offer for Roche’s Illumina bid, now $6.5 bln, the same number that delivered TNT to UPS mid month all we are talking about from the Housing market to the deals, the IPOs and even ETFs is retail, retail and retail.

More than 157 ETFs, 71 ETFs launched in the USA

According to a Reuters commentator from ETF global Insight, the non equities markets are catching fire from ETF investors including fixed Income and commodities. I personally like JO, Coffee, GLD, Gold and more like SHV US Treasuries. $1 Tln of $1.5 Tln are funds domiciled in the US and each part of the globe is now represented by ETFs effectively, only 8-10% of the ETFs being quasi followers of indices using indiscriminate money market matching and depend on real assets

This year ETFs willg row because investors want to invest in the risk on mode while last two years they were virtually the only class that grew till Equities finally came out this year thus ETFs work both as defensive and aggressive investments for a little risk on surplus.

1400 Hedge Funds have been registered

1400 Hedge funds and PE advisors made the cut before the SEC deadline this week, as required by that one and only Dodd Frank argument, still not in implementation with any version of the Volcker rule and unlikely till just before the elections in the USA atleast. However all advisors with assets more than $150 mln were required to be registered.

The new disclosures include: the names and sizes of the individual funds they manage; their prime brokers, auditor and other financial-industry affiliates; and the rough percentage an adviser has invested in his funds. This information is available on the SEC’s website on a rolling basis as the regulator processes it.(Deal Journal)

Tax day is due in two weeks

Oaktree Founders join the farewell party?

Oaktree Capital followed the illustrious trail of KKR and Carlyle in a bid to pay founders $117.2 mln each as it finalises plans to raise $600 mln from the markets with nearly 12.9 mln shares on offer at an upper end of $46 per share. Though none of the 12.9 mln shares come from the Two founders and five-six other Principals, the $600 mln will fund a buyback of units from the promoters leaving them with hardly 39% of Oaktree after a completely successful IPO. This will result in a fair $117.2 mln pay day for Bruce Karsh and Howard Marks

The company was also different in actually booking a markdown of $3 bln though new PE rules are on the anvil and many at KKR and Carlyle for example have booked huge valuation gains ( carryover gains as Carried Interest left untaxed) to pay themselves glorious “returns” from their Public and private funds

Roche’s $51 bid for Illumina

Roche in the meantime awaits another esponse from Illumina even as UPS’ bid for TNT won over the day at a trifling increase from EUR 9 to EUR 9.5 for the shares of TNT. Roche’s bid for genome sequencing technology as the world tries to get the technology to retail, necessitated a 14% sweetener on top of the old $44.50 offer to take the bid to $6.5 bln. also with this bid increase the word “hostile” has been put to paper by the Roche CEO in the letter explaining the offer to the Illumina CEO. One hedge fund buyer at WSJ expects the bid to reach $60 and we hope for something even better as it looks unlikely someone will be hurry to close a deal in this environment., allowing for probably two or three carries to add to the yardage for this Touchdown.

If this is close to the end, then that means Illumina has no other bidders/white knights and/or poison pills on offer, and that’s a pity as the firm has traded close to $80 and a $10 bln valuation is not overly high priced in this sector, for the nascent technologies and molecules in highly remunerative markets.

The Asian Deal: DBS to buy Bank Danamon

Look more on the sub titled Asian deal front away from sell offs which have crowded the continent since Fuld’s people broke the machine in 2008 and the famd asan take off already halfway down with only resource plays in action moves into higher gear for deal fitting the size of the consumption and growth market in the continent. DBS a 30% investment of Temasek is making a bid for another Indonesian investment of Temasek, Bank Danamon

With the trading and tourism dependent economy of the Islands and the Northern mass that make Indonesia, banks at the top incl Bank Mandiri and Bank Rakyat have hardly $300 bln to $400 bln in assets CIMB (Bank CIMB Niaga PT)has a presence in the country with $140 bln in assets. Bank Danamon was the first publicly listed bank in Jakarta after the 88 reforms and trades at close to $0.50 cents, for a Market Cap of $5 bln. in may its shares were closer to 65 cents. Its 2011 revenues are close to $1.5 bln ( Net Operating Income) and a Net income of $365 mln. The bank company operates a $15.5 bln balance sheet ona substantive equity of $2.9 bln


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2 comments on “The Deal Economy: Hedge Funds deadline, Pvt Equity payments to “Founders”, Doubling IPOs and lasting ETFs

  1. Pingback: The Deal Economy round up (2012 Q1) | The Banking and Strategy Initiative

  2. Pingback: Coty bids for LatAm boutique Avon | The Deal Economy | The Banking and Strategy Initiative

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