China hungry for PE
China’s state investment company says it will take a US$3 billion ($3.64 billion) stake in United States-based investment house Blackstone Group.
The move will turn Blackstone’s initial public offering into the world’s second largest this year and enable its partners to cash in part of their stakes during an unprecedented boom for the private equity industry.
Blackstone’s executives, led by founders Stephen Schwarzman and Pete Peterson, will receive up to US$4.5 billion ($5.46 billion) from the buyout group’s listing after the investment by the Chinese Government prompted them to nearly double the size of the offering to US$7.8 billion ($9.5 billion).
In total, China has invested only US$73 billion ($88.57 billion) abroad. It means this single investment represents 4 per cent of Chinese foreign direct investment to date.
China has carved out US$200 billion ($242.8 billion) to invest in equities, corporate debt, hedge funds and private equity, state media reports have said.
QFII quota may treble
Sino-US talks in Washington may result in a trebling of the quota that allows qualified foreign investors to participate in the China A-share market, according to Chinese press.
The proposal for the program expansion was one of the issues on the agenda for the second bilateral strategic economic talks between the United States and China.
Reports in China Business News said the Chinese Government might expand the US$10 billion ($12.14 billion) quota for the Qualified Foreign Institutional Investors (QFII) scheme to US$30 billion.
The possible trebling of the quota for the program comes at a time when foreign investors are reportedly pulling funds out of the A-share market, due to fears a bubble is forming.
Horeca dumps F and C
Horeca, the €2.7 billion ($4.42 billion) industry-wide fund for the Dutch hotel and catering sector, has replaced United Kingdom-based global investment group F and C Investments on two of its mandates.
The pension fund announced it had tapped United States-based investment manager BlackRock for the €480 million ($785.24 million) fixed income brief previously managed by F and C.
The fund’s entire fixed income portfolio is around €1 billion ($1.64 billion).
Blackrock will manage a global bond mandate, investing in government bonds as well as emerging markets and high-yield credits.
Asset manager Cohen and Steers will manage the scheme’s entire €125 million ($204.52 million) listed real estate equities portfolio, which was also previously with F and C.
AIMA updates guidelines
The Alternative Investment Management Association (AIMA) last month published an update to its five-year-old guide to sound practices for European hedge fund managers, three days after the Group of Eight leading economies said it would welcome a voluntary code of practice for the industry.
The original and updated versions of AIMA’s guidelines include recommendations for passing information to investors.
German Finance Minister Peer Steinbruck has been calling for more transparency from the hedge fund industry.
RBS launches ABN bid
The Royal Bank of Scotland (RBS)-led consortium competing with United Kingdom bank Barclays to buy Dutch bank ABN Amro launched its €71bn bid last month.
The bank promises to achieve much greater cost savings than the €2.8 billion promised by Barclays, which has bid €63 billion for ABN Amro.
RBS claims its consortium is better placed to integrate the bank than Barclays.
It said its fellow bidders, Belgium’s Fortis Bank and Spain’s Santander Bank, had more experience with handling big acquisitions.
RBS bought UK retail bank NatWest in March 2000 and Santander bought UK bank Abbey National in July 2004.
It will also give details of financing for the first time. While RBS will pay cash for its share, Santander and Fortis will have to launch large rights issues, which will be the biggest banking fundraising in Europe.
The offer is expected to include LaSalle, ABN’s United States banking business, which is subject to a separate offer from Bank of America.
SVG closes fund
SVG Advisers, a UK-listed private equity investor and fund manager, has raised just over €4 billion ($5.4 billion) in assets.
It is the first private equity group to close a hat trick of funds that require low investor commitments but promise high returns.
The new leveraged fund of funds, the €700 million ($1.1 billion) SVG Diamond III, will focus on acquisitions in mid to large-sized European and US buyouts.
The diamond funds, which have minimum commitments of €250,000 ($408,623), aim to achieve an internal rate of return of up to 25 per cent.
OTPP targets LatAm
Ontario Teachers’ Pension Plan (OTPP), a C$106 billion ($119.17 billion) pension fund, has made its first acquisition in South America.
The pension fund is buying two water supply, distribution and waste water services companies in central Chile.
It is buying 100 per cent of Aguas Nuevo Sur Maule and a 50.1 per cent interest in Empresa de Servicios Sanitarios del Bio-Bio from Latin American private equity firm Southern Cross Group. Details of the deal were not disclosed.
Dresdner Kleinwort was the sole financial adviser for the pension fund on the acquisitions.
OTPP has been investing in infrastructure since 2001 and currently has a C$6.8 billion ($7.65 billion) portfolio.
Chile ups pension limits
Stocks in Chile dropped more than 3 per cent in the last week of May, weighed down by a government proposal that seeks to raise investment limits on pension funds more quickly than expected by investors.
The fall followed a proposal from Chile’s President Michelle Bachelet that private pension funds be allowed to invest up to 45 per cent of funds in foreign markets, an increase from the previous limit of 30 per cent.
The new limit, if approved by Congress, could go into effect as early as July.
Investors had expected such a change to come by the first quarter of 2008.
Chile’s pension funds manage about US$97 billion ($118.03 billion) in assets, according to Latin American investment group UBS Pactual.
The loss was the index’s largest since the worldwide tumble in markets in late February
