Wall Street Yard Sale

July 5, 2008

The NYT will report in tomorrow’s paper that Merrill is seeking a buyer for its 20% stake in Bloomberg LP, the maker of the ubiquitous financial terminals. According to the Times:

…Merrill, which has already raised $15 billion since John A. Thain took over as chief executive last fall, is finding it difficult to raise additional capital through previously used means, like selling preferred stock to sovereign wealth funds and other institutional investors, and it would prefer to avoid diluting the holdings of existing investors.

You can imagine SWFs are gun-shy since they’ve already lost billions on the first wave of Wall Street capital infusions made last year. I wonder if flush private equity players have been invited to invest recently.

Merrill hopes to get $5-$6 billion for their stake, which would imply a $25-$30 billion valuation for all of Bloomberg. Hizzoner owns a 72% stake, so that valuation would put his net worth between $18 and $22 billion. If the $5 billion raised from a Bloomberg sale isn’t enough, Merrill may raise another $10 billion selling its BlackRock stake.

Citigroup is also planning a fire sale in order to raise capital.

The more assets sold, the more capital will go back onto Wall Street balance sheets, which is good news…..theoretically, anyway.  The banks may finance some of these asset sales with their own balance sheets, which the Times article notes Merrill may do to sell the Bloomberg stake back to Bloomberg.

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