Brian Bollen's Blog

Did William Get His Name Wrong?

Did my ears deceive me? Did Prince William get his middle names the wrong way round when saying his wedding vows to Katherine Elizabeth Middleton? Without a playback, I don't know, but that was my instant reaction. Just as his Dad, the Prince of Wales, did when marrying Diana in 1981...

AIMA Gets A Brazilian

The Alternative Investment Management Association (AIMA), the global hedge fund association, is waxing lyrical about its latest wheeze as it continues its missionary work to spread the hedge funds word. It has launched an initiative to engage with the Brazilian hedge fund industry and announced the appointment of a local representative, Michelle Noyes of BRZ Investimentos, whose name sounds vaguely familiar.

“The maturity and sophistication of the Brazilian hedge fund industry has been noted internationally, and what is clear is that there is not only an interest from the global industry – whether from managers, investors or service providers - in Brazil, but there is also an increasing desire from the Brazilian industry to engage and to think globally,” said Andrew Baker, AIMA’s CEO.

Does EFAMA Live In An Alternative Universe?

I do sometimes wonder if I’m inhabiting an alternative universe to the ones in which venerable financial institutions ply their trade. By what measure, for example, is an increase in a number to €33bn from €13bn ‘slight’? Answers on an e-postcard please, but that is the term that EFAMA, The European Fund and Asset Management Association, is using to describe the increased outflow from money market funds in the fourth quarter of 2010 (€33bn) compared with the third quarter (€13bn). Maybe they just got their figures wrong, but it is this kind of batsqueak of unreality that jars rather when reading the figures and slightly bruises confidence in them.

That aside, the figures do sound generally positive. EFAMA sums up its latest quarterly international statistical release as follows:

Avantor Advance With POCH Polish Purchase

DC Advisory Partners reports from Warsaw that it advised Kulczyk Holding on the sale of its portfolio company POCH to Avantor Performance Materials, an affiliate of the US private equity firm, New Mountain Capital. Completion of the sale is dependent on obtaining clearance from the Polish competition authority, and is subject to customary closing conditions. Terms of the deal were not disclosed.

Tremors From America: Twin Shocks Hit The USA

By Andrew Milligan, Head of Global Strategy, Standard Life Investments

“Tectonic plates usually shift slowly but occasionally there is a jarring shock, followed by damaging aftershocks. Pressure is building in one of the world’s most important markets, US government bonds. Dramatic changes in the landscape are likely.

The first shock was the recent speech by President Obama about US fiscal policy. For some time investors and commentators have been concerned about the massive build up of US debt: a deficit this year of 10-11% of GDP, so the same order of magnitude as the weakest European countries, while the debt to GDP ratio has reached a post-war high.

BP2S Gets Into Stride In Mumbai

Now getting into its stride is the BNP Paribas Securities Services (BP2S) local custody and clearing operation in Mumbai, India. Launched in February this year with internal wealth management and fixed income clients, the operation dates its conception back to July 2009 when BP2S first sent a custody file to the Indian regulator, SEBI (Securities & Exchange Board of India). It received an agreement in principle authorising it to become a custodian in September 2009, with final approval to follow in February 2010.

“Our primary focus is cash equity markets but we also provide custody services for corporate debt instruments and mutual funds to both local and foreign investors,” says Pierre-Alexandre Thome (pictured), who heads up the operation and is its only non-Indian member of a 20-strong staff body. “The aim is to service clients in India the same way as we already do in Singapore and Hong Kong, as part of our strategy to enable clients to move into Asia.”

Stagflation Hits UK: High Inflation, No Growth, And No May Rate Hike

Azad Zangana, European economist at Schroders, comments on this morning's latest estimate for UK GDP growth in Q1:

“The Office for National Statistics released its latest estimate for GDP growth this morning. It estimates the economy to have grown by 0.5% between January and March, compared to the previous three months, when the economy had contracted by 0.5%.

Snow was blamed for much of the fall in GDP at the end of 2010, but it seems that when we strip out the 'snow effect', the economy has been suffering from stagflation over the past six months - suffering from high inflation, and no growth in real terms.

All aboard the global super-cycle

The corporate treasury function is about to be significantly impacted by rapid growth in emerging markets as new trade corridors develop, forecasts Standard Chartered Bank.

The global super-cycle is going to impact corporate treasuries in a number of ways, as fast growing developing market trade corridors require supply chains to extend into new markets, according to the bank. The growth in these trade corridors was already a well established trend before the global financial crisis, but the rate of growth along these corridors is escalating. Over the next 20 years exceptional growth is expected in these trade corridors, which will be instrumental in driving overall global trade growth in the same period.

London’s Finest: Risk Reward Raises Its Crime-Fighting Game

Would-be financial wrongdoers had better watch out, or up their own game. Risk Reward Limited, a London-based risk reward training and consultancy specialist, reports the latest expansion of its internationally renowned financial crime training and consultation team. Each new member has vast experience in working towards eradicating financial crime in all its forms.

The newly expanded team is led by David Blackmore BA, FCSI, ACIB, ACol, (pictured) who has over 35 years’ experience in banking and financial crime including anti-money laundering and sanctions compliance, fraud, terrorist finance, market abuse, insider dealing, corruption, sanctions breaches and money laundering deterrence. I can personally vouch for David’s credentials, having worked alongside him at the former Midland Bank International’s southern European region, just as the whole Banco Ambrosiano/Roberto Calvi affair hit the front pages in June 1982. 

Bigpoint Sale Brings Up Private Equity Hat-Trick, Before Lunch

Completing a private equity hat-trick before lunchtime, we hear that GMT Communications Partners, a European TMT-focussed house, has agreed to sell a majority of its stake in Bigpoint, the pioneer and market-leader in browser-based Massively Multiplayer Online Games (MMOG) and social games. The buyer is a private equity consortium of Summit Partners and TA Associates. Completion is subject to regulatory approval.

The $350m partial recapitalisation of Bigpoint, we are told, delivers in excess of a 4x initial return to GMT’s investors. As the firm retains an interest it expects to deliver significantly higher overall returns. This is the second exit from GMT’s 2006 fund, GMT III; combined, these will return 89% of drawn down capital to date.

Is it time to relook at China?

By Mike Sell, Fund Manager, Thames River

Chinese equities have been poor relative investments during both 2009 and 2010, significantly underperforming both Asia and Global Emerging. This was despite a resilient economy, with strong GDP growth of 9.1% and 10.3% in those years respectively. During the first quarter of 2011 the stock market has seen the first signs of an improvement in relative performance, which we believe is the start of a reversal of fortunes for the market over the coming 12 months.

First Key

In order to have confidence in this outlook, we need to firstly examine why the market has derated so much, becoming the second cheapest market in Asia. In our opinion, one of the major reasons has been due to the methods the government has used to slow the economy. In addition to orthodox policies, such as increasing interest rates, policy makers have also attempted micro-management at the sector level. For example, lending growth in the banking sector has been tightly controlled, the reserve ratio requirement has been increased nine times, tighter provisioning levels for non performing loans were introduced and exposure to off-balance sheet products scaled back. In the property sector, mandatory deposit downpayment levels have been increased, as well as trialling of a property tax.

Robertson Ditches SWIP For State Street

State Street Corporation has appointed Alan Robertson as head of UK trustee and depositary and managing director of State Street Trustees Limited (SSTL). He will be based in Edinburgh and will report to Steve Smit, head of State Street’s Global Services and Global Markets businesses in the United Kingdom, Middle East and Africa (UKMEA).

Robertson will be responsible for leading the SSTL business in accordance with State Street Global Services’ UKMEA strategy and industry-recognised best practice. State Street describes trustee and depositary services as a key element of its value proposition to asset managers in the UK. It provides trustee services on behalf of more than 450 UK funds.

Absolutely Fabulous: Private Equity Springing Back To Life

Easter is of course the time of year for regeneration and it certainly looks that way for private equity. Barely two hours into the first post-Easter Monday working day than along comes news of the second private equity offer of the day for a listed company.

In this instance, HarbourVest Partners LLC reports that its  HarbourVest-managed secondary funds together with HarbourVest Global Private Equity Limited, a closed-end investment company, will, through an acquisition vehicle, make a public offer for all bearer shares of Absolute Private Equity Ltd currently in circulation. Absolute is an investment company incorporated in Switzerland and listed on SIX Swiss Exchange.

The tender offer is for $17.25 cash per Absolute share and is subject to a minimum acceptance level of 50.01% and other customary conditions. At a 100% acceptance level, the transaction values Absolute at $752 million. The pre-announcement of the public tender offer was issued today (April 26), and the offer prospectus will be published at the latest in early June 2011. Absolute's board of directors supports the offer and intends in its formal report to recommend that its shareholders accept the offer. 

Open Wide: Silverfleet sells €170m EDP

Silverfleet Capital, a European private equity buy-and build-specialist, has agreed to sell European Dental Partners (EDP), a dental consumables distributor operating in Germany and Central and Eastern Europe. Lifco Dental International AB, the dental products division of Lifco AB, a privately held Swedish industrial group, coughed up €170m in a strategic trade sale to. The closing of the transaction is conditional on receipt of approvals from the competition authorities.

RBC Dexia Ups The Ante In Zurich

RBC Dexia Investor Services has strengthened its position in Zurich with the appointment of Corinne Vitte as director of relationship management in Switzerland, starting May 2, 2011. Vitte’s recruitment follows hard on the heels of RBC Dexia’s appointment of Andreas Schmid to a similar role in Luxembourg earlier this year, bolstering client relationships in these two key countries. Vitte will report to Marco Siero, managing director of RBC Dexia in Switzerland. 

“Corinne’s appointment will enable us to further deepen our engagement with clients as we deliver on our commitment to this key market,” said Siero. “Her expertise gives us a strategic edge in what is an extremely competitive and high growth sector and will ensure we maintain our leading position in Switzerland.” 

Vitte has more than 20 years of industry experience with a strong emphasis on relationship management. She has spent the last eight at Citigroup in senior sales and relationship management positions. Prior to this she spent three at Brown Brothers Harriman as a relationship manager. 

 

Private Equity Squared, Or Should That Be Carré?

Private equity squared, or its French equivalent carré, is one way of describing the tie-up between Eurazeo, a Paris-listed specialist in investing in small and mid-sized companies,  and OFI Private Equity Capital, a NYSE Euronext-listed French investment company with a similar investment strategy. Eurazeo, whose president Michel David-Weill was in a previous corporate incarnation the head of Lazards (before that much-loved firm sold its soul and became a mini-Wasserstein Perella), has only just clawed its way back to financial health following near disaster in 2009.

David-Weill, incidentally, is referred to in the plural, as Presidents, in his most recent communication with shareholders on Eurazeo’s website, a curiosity of manners usually reserved for royalty.

The agreement requires MACIF, Olivier Millet and OFI’s other main shareholders to contribute their holdings (representing 75% of the share capital and 79% of the share subscription warrants in exchange for new Eurazeo shares. Completion of the transaction is subject to conditions precedent, including anti-trust and regulatory approvals.

NSD: 21st Century Or Bust!

Russia's National Settlement Depository (NSD) reports from Moscow that it is continuing to focus on improving its corporate governance practices and discussing the direction of its ongoing development with major customers and contractors.

The Supervisory Board meeting held on April 22 is said to have approved amended Regulations for User Committees (the Committee of Settlement and Depository Activities and Tariffs, the Quality Control and Risk Management Committee, and the Committee of Interactions with Registrars and Depositories). It also opened up the opportunity to nominate candidates for the chairmanship of the respective committees from among non-members of the Supervisory Board.

ASEAN Equities Kick Sand In Face Of Rising Commodity Prices

By SooHai Lim

Despite oil prices hitting $120 per barrel, equity markets in the ASEAN region appear to have shrugged off the threat of rising commodity input prices. Markets like Thailand are trading at a year high. The Stock Exchange of Thailand is up 8% in US dollar terms since January 1 2011, versus 4% for the MSCI World US$ and 6% for the MSCI South East Asia US$ over the same period.

Thailand is one of our biggest overweights in the Fund, accounting for around 18% of total holdings. In our view, higher oil prices are unlikely to dampen the expansion of the Thai economy given the offset from strong agricultural prices and consequent gains in farm income. Government controls and fuel subsidies, designed to hold down prices, have lessened the direct impact on consumers of the strong oil price environment.

It is worth noting that the Thai market has a significant Energy & Petrochemicals sector (47% of MSCI Thailand) which is benefiting from the higher oil prices.

Laugh Or Cry? You Decide

I honestly don’t know whether to laugh or cry. I was literally on the point of switching off to enjoy something of an early start to a long weekend (made shorter by the need to write exciting articles for the Financial Times FTfm supplement, Private Equity News and Corporate Financier).

Then came a piece of news from J.P. Morgan Worldwide Securities Services, announcing the launch of its repo trade matching engine.  This new functionality, it says, will enhance the operating model of the U.S. tri-party repo market, in support of the May 2010 recommendations of the Tri-Party Repo Infrastructure Task Force sponsored by the Federal Reserve Bank of New York’s private sector payments risk committee.

Rather appropriately for the time of year, this burst of heavy duty multi-barrelled jargon has removed my will to live. Or at least the will to make some teasing remark. So readers will have to accept the news straight from the horse's mouth.

The Information That Came In From The Cold

Russia’s National Settlement Depository (NSD) and the Kazan Branch of Eurasian Registrar LLC report that they have adopted an electronic data interchange (EDI) system in their information interactions.

They say the use of EDI technology will allow accelerated document interchange and processing in the course of operations conducted in the registers of inscribed securities holders, It will also reduce the risks of error and fraud, increase operational efficiency in the processing of securities owners' lists in the course of corporate actions and enhance confidentiality in the course of information exchanges between two organisations.