Carlyle, Cerberus Cash Out In Asia

A couple of big private equity firms have made all the money they think they're going to on a couple of Asian financial institutions.

Author:
Dealbreaker
Updated:
Jan 14, 2019
Original:
Jan 8, 2013

A couple of big private equity firms have made all the money they think they're going to on a couple of Asian financial institutions.

Private equity firm Carlyle Group sold its remaining stake in China's No.3 insurer CPIC in a deal valued at $793 million, exiting the business with its largest dollar profit on an investment.

Cerberus plans to reduce its stake to about 8% by offering shares in the open market, Aozora said, in a deal that would generate ¥158.1 billion ($1.8 billion) based on Monday's closing price of ¥250 a share on the Tokyo Stock Exchange. That is on top of an estimated ¥100 billion Cerberus made from cashing out some of its stake at a much higher price in 2006, when Aozora's initial public offering priced shares at ¥570.

As the Journal points out, Cerberus is just the lastest p.e. shop, among the hordes who descended on Japan back when it was showing us what a middle-aged decades-long recession looked like, to quit its Japanese bank habit. Lone Star and J.C. Flowers are still biding their time.

The British bank didn't want to be left out of the fun!

The Journal this morning has a sort of funny article whose gist is basically that Asia's new-money millionaires want actual performance from their private wealth managers and do unsporting things like split money among managers, demand products that offer impressive returns, and move money from managers who do a bad job to those who do a good job. You will not be surprised to learn that the bankers take kind of a dim view of this: While clients in the West want to increase their wealth, they also are concerned with keeping what they have by sticking to conservative investments, and focusing on estate- and tax-planning strategies. In Asia, clients also tend to be first generation rich, who want to make more money, rather than preserve it. They seek, as one banker said, "private brokers not private bankers." ... "I have one client who now has more than 10 private bankers, saying he doesn't want to depend on any one bank and risk his assets," said Kenny Lam, McKinsey's head of Asia private banking. "Asian clients are more interested in the next hot product rather than preserving wealth and are more likely to switch to the next banker with a better investment idea." Two and a half years ago the Journal ran what strikes me as a companion piece, about accumulators, which are an equity derivatives trade that banks sold mainly to Asian private-wealth clients and which revel in the nickname "I-kill-you-laters" because they do, and in 2008 they did. You can if you like connect the stories pretty effortlessly: Asian PWM clients demanded too-good-to-be-true returns, so banks happily obliged by selling them products with returns that were in fact too good to be true. And now they are demanding too-good-to-be-true returns and some banks are complaining because they can only offer mediocre-but-true returns, but others are probably just cooking up the next generation of delayed-death too-good-to-be-true products and not telling the Journal about it. Circle of life.

No matter! They're recommending them to private equity firms anyway and telling said firms to make these kids an offer ASAP.

Carl Icahn LYFT

Did you really think that Uncle Carl would fall for this bullsh!t?

The Germans are not yet done firing employees in Asia. Deutsche Bank fired around a third of the staff in its Asia equity derivatives business on Tuesday, as part of a global cost savings plan announced on July 31, according to sources familiar with the matter. Just over 20 people remain in the division, down from a number in the mid 30s, according to one source, as Deutsche Bank and others seek to cut costs in businesses that are failing to generate adequate revenues as the global economy slows. The bank let go five traders, four product structurers and at least one salesperson from the division, the sources said, adding that the numbers were not yet finalised because the discussions were continuing...These cuts follow on the heels of layoffs in June in Deutsche Bank's Asian equities business, which like its counterparts at other firms globally has been struggling this summer due to slack trading volumes and a sharp decline in new share issuance. Deutsche Bank cuts a third of jobs in Asia equity derivs [Reuters]

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