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from Breakingviews:
“Schwarzman scholarships” have many beneficiaries
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Steve Schwarzman is giving something back - to China. The Blackstone founder is contributing his name, and $100 million of his private wealth, to kick-start a scholarship programme at Beijing’s Tsinghua University. The programme may not be entirely philanthropic: China lost much more investing in his buyout firm’s initial public offering. But there will still be many beneficiaries if the scheme helps Western and Chinese elites understand each other better.
Like the Rhodes Scholarship that inspired it, Schwarzman’s scheme will fund the brightest and best to study overseas. In this case, the $300 million programme will select some 200 “Schwarzman Scholars” from the United States, China and other countries to spend a year studying at Tsinghua. Whereas Cecil Rhodes wanted future leaders to visit his alma mater of Oxford University, Schwarzman is sending them abroad to gain a better understanding of the world’s rising economic and political power.
There is bound to be skepticism. Schwarzman’s $100 million pales next to the losses China’s sovereign fund made when it invested $3 billion in buyout firm Blackstone in 2007. Though the shares have recovered somewhat from the depths of the financial crisis, China Investment Corporation is still nursing a near-$1 billion loss. Corporate sponsors such as BP, Boeing and Bank of America will no doubt view Schwarzman’s scheme as a way to improve their influence on the mainland. And the heavyweight advisory board - which includes the likes of Tony Blair, Nicolas Sarkozy and Hank Paulson - is also noticeably light on Chinese luminaries of equal stature.
from Breakingviews:
CVC takes opportunistic tilt at Betfair
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
CVC is taking an opportunistic tilt at Betfair. The buyout giant’s admission that it may make a bid for the UK gambling outfit follows Betfair’s terrible run since flotation. But CVC could struggle to persuade investors to fold their hands at this stage.
from Global Investing:
Rich investors betting on emerging equities
By Philip Baillie
Emerging equities may have significantly underperformed their richer peers so far this year (they are about 4 percent in the red compared with gains of more than 6 percent for their MSCI's index of developed stocks) , but almost a third of high net-worth individuals are betting on a rebound in coming months.
A survey of more than 1,000 high net-worth investors by J.P. Morgan Private Bank reveals that 28 percent of respondents expect emerging market equities to perform best in the next 12 months, outstripping the 24 per cent that bet their money on U.S. stocks.
from Unstructured Finance:
Once-obese Goldman analyst becomes fitness evangelical, gym CEO
Wall Street is shrinking, but so are some of its bankers.
Eight years ago, Goldman Sachs Group’s Kishan Shah weighed 400 pounds and couldn’t find a suit that fit his 62” waist for a job interview. Now he’s 195 pounds, and he’s quitting Goldman to spread the gospel of healthy weight loss as chief executive of a chain of gyms for obese Americans.
“I made a vow that day to focus on diet and exercise, and I lost over 200 pounds – no surgeries, no fad diets, no trainers,” Shah said in a video chat this month with First Lady Michelle Obama.
from Breakingviews:
Private equity at 4-and-20? Think twice
By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Private equity with a 4-and-20 fee structure doesn’t sound too inviting. It’s what a new vehicle will charge people with only $50,000 to invest to gain entry to Carlyle Group’s private equity funds, and it’s far more than what institutions pay. While the firm’s long-term internal rates of return on private equity, after fees, are nearly 20 percent, today’s reality holds less appeal. The arrangement could be risky for Carlyle, too.
from Breakingviews:
U.S. buyout barons have new tax-dodge rivals: MLPs
By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
U.S. buyout barons have new tax-dodge rivals: master limited partnerships. The low tax rates on private equity bosses’ so-called carried interests save them $1.3 billion a year, according to the U.S Treasury, an advantage critics want wiped out. But new data show investors in energy partnerships are now costing Uncle Sam a similar amount thanks to an outdated Internal Revenue Service perk from the 1980s. Both loopholes should be closed.
from Breakingviews:
Offices Depot and Max lucky to have each other
By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Office Depot and OfficeMax are lucky to have each other. Uniting the U.S. purveyors of pens, paper clips and printer toner is about as obvious as it gets in M&A. The potential synergies could be worth more than the market value of the two companies combined. As the Internet ravishes retail, at least this corner can cling to life by merger.
from Breakingviews:
Mega-buyout in UK mobile risks skinny returns
By Quentin Webb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
A 10-billion-pound leveraged buyout of Britain’s biggest mobile operator would be dazzling in its sheer ambition. But the payback would be more in short-term glory than long-term financial returns.
from Felix Salmon:
Heinz: The headline-friendly LBO
Brazilian multi-billionaire Jorge Paulo Lemann's cunning plan seems to have worked. In 2008, when his InBev announced that it was buying Anheuser-Busch, there was an immediate uproar: sites like Drink American and SaveAB immediately appeared to protest the deal. ("With your help we can fight the foreign invasion of A-B. We will fight to protect this American treasure. We will take to the Internet, to the streets, to the marble halls of our capitals, whatever it takes to stop the invasion.")
This time around, Lemann has decided that he wants to be the American -- and he's done it by teaming up with an American icon even more beloved than Budweiser or Heinz ketchup: Warren Buffett. This is a takeover of Heinz by 3G, make no mistake: Lemann approached Buffett with the idea in December. But look at how this is playing on, say, the NYT homepage: the headlines are all about Buffett and Berkshire, not about Brazil. This is a leveraged buy-out, just like most other private equity deals, but it's getting none of the bad press that LBOs often receive, and no one's talking about "corporate raiders". (The headline isn't even accurate: Buffett is paying only half of the $23 billion, with the other half coming from Lemann and his partners in 3G. And it's unclear what mergers are included in this "revival".)
from Felix Salmon:
Why Dell is going private
Why are Michael Dell and Silver Lake taking Dell private at a valuation of $24.4 billion? Christopher Mims explained his theory a few weeks ago: it's all about a company that Dell acquired last year for roughly $500 million. Wyse makes PCs-on-a-USB-stick: everything is in the cloud. According to Mims, if you combine Wyse's technology with Dell's ability to talk the kind of language that corporate IT buyers love, Dell is now well position to disrupt itself:
A privately held Dell, shielded from the pressure to post continual growth on a quarterly basis, could refocus itself on thin clients and cloud computing, which could set itself up for a breathtaking turnaround.
