Signs of sovereign life

June 6, 2008

ubs.jpgSovereign wealth funds were thought to be nearly extinct sources of capital for the crumbling western banks. But life finds a way. The Government of Singapore Investment Corp, one of the world’s biggest sovereign wealth funds, said it would subscribe to UBS‘s rights issue. A GIC spokeswoman declined to provide the value for the transaction but said it currently owns 0.4 percent in UBS common stock. It controls 9.54 percent of the voting rights in UBS. The fund invested 11 billion Swiss francs ($11 billion) in mandatory convertible notes in UBS last December, after the bank’s U.S. housing crisis losses. In January, GIC invested $6.88 billion in Citigroup. Its sister fund Temasek Holdings pumped $5 billion into Merrill Lynch. GIC says on its website that it manages well above $100 billion but some analysts estimate the figure is closer to $300 billion.

The U.S. Federal Reserve Board approved Bank of America Corp‘s acquisition of Countrywide Financial Corp, the nation’s largest mortgage lender. Bank of America agreed in January to pay $4 billion for Countrywide, a California-based firm that helped fuel a multi-year housing boom that went bust when risky loans to shaky borrowers began to fail. In a statement, the federal regulator said it considered many comments for and against the bank buyout and “has considered carefully the financial factors of the proposal.” The Fed also said that it vetted about 770 individual comments on the proposed takeover and the views of many other stakeholders.

Applied Materials has approached beleaguered Dutch semiconductor equipment maker ASM International to buy a significant part of its business for $400 million to $500 million. Shares in ASMI jumped as much as 23 percent to an eight-month high after the company said its U.S. rival had expressed interest in two of its businesses that make machines to deposit thin films of materials on silicon wafers. ASMI, which is locked in a dispute with activist investors who are trying to sack its chief executive, said a divestment would have major implications for its strategy.

Privately held Landmark Communications, which owns the Weather Channel, has asked bidders for the cable network to submit another round of bids by today, the Wall Street Journal said, citing people familiar with the situation. A consortium of General Electric‘s NBC Universal and private equity firms Blackstone Group and Bain Capital as well as Time Warner are bidding, sources told Reuters last week.

Other deals of the day:

* French information technology services company Sopra said its Axway subsidiary would acquire U.S. e-mail security software company Tumbleweed Communications at $2.70 a share.

* Banpu, Thailand’s biggest coal miner, said it planned to spend $420 million to acquire the remaining 78.40 percent stake in a coal miner in China.

* The board of Australian mining and utilities contractor Ausdrill advised shareholders to reject a A$436 million ($419 million) all-share takeover offer from Macmahon Holdings.

* New Zealand casino operator Sky City Entertainment said that it would keep its cinema business after a possible sale fell through.

* Franshion Properties (China) said it would buy a Chinese high-end real estate development and management firm, China Jin Mao (Group) for 11 billion yuan ($1.58 billion), a deal to be settled in cash and by issue of new shares.

* NTT DoCoMo, Japan’s top mobile phone operator, has sealed a deal to buy a 30 percent stake in Aktel, Bangladesh’s No. 3 cellphone carrier, for about $425 million, sources familiar with the matter said.

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