Exclusive outtakes from industry leaders
Quadrangle Group Managing Principal Steven Rattner says he and other private equity fund managers are are benefitting from a credit bubble for which he and cohorts in the private equity area — which has been a prime mover behind the buyout boom of recent years — can thank “the imprudence of our lenders.”
Barry Rosenstein, founder and managing partner of activist hedge fund Jana Partners, says that not every chief executive ignores activist investors. Kerr-McGee Corp. Chief Executive Luke Corbett met with shareholders, and then decided it made sense to speak to the activist investors that were lobbying for change at the oil and gas producer, which ultimately sold itself to Anadarko Petroleum Corp.
Quadrangle Group managing principal Steven Rattner says that while the magazine industry isn’t showing blistering growth, it remains attractive to his fund. The former New York Times reporter told the Reuters Hedge Funds and Private Equity Summit that magazines rely less than newspapers on classified advertising — a market where newspapers are quickly losing market share to the Internet — and have lengthy articles which many readers would be less likely to read online.
A private equity buyout targetting the New York Times doesn’t look likely to happen anytime soon, says Steven Rattner, managing principal of private equity and hedge fund Quadrangle and a confidant of the paper of record’s chairman Arthur Sulzberger Jr. Rattner told the Reuters Hedge Funds and Private Equity Summit that while going private could address the Times’ current face-off with some of its shareholders, it would create “a whole other set of issues.”
A San Diego pension fund may have lost $175 million when hedge fund Amaranth Advisors LLC blew up last year, but that does not mean hedge funds should face increase regulation, said Jim Chanos, chairman of the Coalition of Private Investment Cos. and a hedge fund manager himself. Investors routinely make bad investments, but “you can’t regulate or legislate people from doing stupid things with their money,” Chanos said.
Baring Private Equity Asia Group has spent about half of a $490 million fund it raised last year, mostly in China, and the firm’s founder and chief executive Jean Eric Salata is on the hunt for more deals including in Japan, Southeast Asia and India. Salata told a Reuters Hedge Funds and Private Equity Summit that he still saw the best value for money in China and thought many Indian companies were priced too high.
Europe’s biggest listed private equity and venture capital firm, 3i Group Plc, expects the money it puts to work in Asia to nearly double to around $700 million-$800 million, mostly through growth capital deals. Chris Rowlands, managing partner for Asia at 3i, told a Reuters Hedge Funds and Private Equity Summit that the Asia proportion of his firm’s assets under management would grow to 20 percent over the next two or three years from around 5 percent last November. Here he speaks about the opportunities in Asia, especially in China.
The Asian prime brokerage business at Swiss bank UBS is targetting around 50 percent annual growth of assets under management over the next few years because of rapid expansion in the hedge fund industry in the region. David Gray, head of the unit, told the Reuters Hedge Funds and Private Equity Summit of the bank’s strategy of running full-scale operations in Sydney, Tokyo, Hong Kong and Singapore.
Vision Investment Management, an Asian fund of hedge funds, is setting up its “Vision Angel Fund” to seed and incubate hedge fund start-ups, which it hopes will give annual returns of around 24-30 percent. Julius Wang, a managing director at the Hong Kong-based firm, told the Reuters Hedge Funds and Private Equity Summit that new fund managers tended to be much better performers than veterans, partly because they were more ambitious and less conservative. Wang also spoke about plans by Vision to create a new fund of up to 100 million pounds to be traded on the London Stock Exchange.
Commodities guru and author Jim Rogers says if oil prices go high enough, drillers will have incentives to go after crude in some now unthinkable locations, but adds that the price boom that he predicts won’t last forever — in part because higher prices will inevitably boost supply in the end.