When good opportunities are scarce, hedgies will seek them in rather unlikely places.
Take Sareb, the Spanish ‘bad bank’ in the process of raising €250m in new equity for the second round of asset transfers from the country’s beleaguered lenders. Read more
US hedge funds and private equity firms that specialise in distressed situations are gearing up new or existing European offices in expectation of a surge in coming opportunities, the FT says. Two of the biggest names in the field Centerbridge Partners and Baupost, which is headed by industry legend Seth Klarman, have opened offices in London in recent months, while others have launched Europe-dedicated funds or bolstered staff numbers by poaching from the distressed debt desks of banks. Bruce Karsh, the co-founder of Oaktree Capital, one of the world’s largest distressed investors, has also been telling investors that Europe will be one of the firm’s principal areas of focus. Other US distressed debt funds increasingly focused on Europe include Apollo Global Management, Marathon Asset Management and Carlyle Strategic Partners.
Citigroup has scaled back the planned sale of its former CitiFinancial unit as part of negotiations with Centerbridge and Leucadia, as potential buyers grapple with how to fund the business as a standalone entity. Citi is discussing a sale of about $9bn in assets, held within the consumer lending business recently renamed OneMain Financial, people familiar with the matter told the FT. About $4bn in property assets have been carved out of the sale. The bank has gone backwards and forwards with potential buyers as to the composition of the asset pool, those people said, which began at $13.5bn. Berkshire Hathaway, Warren Buffett’s investment vehicle, is providing financing to Centerbridge and Leucadia to help fund OneMain, one person familiar with the matter said.
A group including investors such as Blackstone, Carlyle, Centerbridge and WLRoss won an auction for BankUnited on Thursday after the Florida lender – worth nearly $13bn by assets – was closed by federal regulators in the biggest US bank failure of 2009. The auction, conducted by the Federal Deposit Insurance Corporation, was the second of a troubled US bank in the credit crisis. Earlier, a group including JC Flowers, hedge fund manager John Paulson and Dune Capital won the bid for IndyMac’s assets. See FT Alphaville: BankUnited fails, long live BankUnited!
The $6.1bn private equity takeover of Penn National Gaming – one of the last remaining buy-out deals negotiated before the credit crisis – had been aborted, the company said Thursday, because of market conditions and the risk of spiralling legal costs. Fortress Investment Group and Centerbridge Partners agreed over a year ago to buy Penn for $67 a share before the debt markets froze and the gambling industry’s outlook weakened. Penn said that renegotiating a deal at a lower price was “not a viable option”. The company, which operates 19 gaming and racing facilities and makes much of its revenues from slot machines, said it would receive a termination fee of $225m and $1.25bn in redeemable preferred equity from the buyout partners and their affiliates, Wachovia and Deutsche Bank.
Shareholders on Wednesday urged DaimlerChrysler to dump its Chrysler unit as the German-US carmaker for the first time officially confirmed it was in talks over a sale. Discussion over a possible sale of US carmaker Chrysler dominated a relatively low-key annual meeting for Daimler as most large investors stayed away. Three bidders are thought to have made indicative offers last week: supplier Magna International possibly in conjunction with private equity fund Ripplewood, buy-out group Cerberus and a grouping of private equity firms including Blackstone and Centerbridge. An exclusive bidder will be chosen this month but talks will last until the summer, say people close to the matter.
General Motors will not be submitting a first-round bid for Chrysler this week but may enter the sale process later, people close to DaimlerChrysler’s sale of its lossmaking US unit say. Bids worth $4bn-$6bn are expected to be submitted by Friday to JPMorgan Chase, which is advising DaimlerChrysler on the sale, from at least three private equity groups and Magna International, the Canadian automotive parts and vehicle assembly concern. GM is not likely to be involved in the first round, but could enter the process as soon as next month after expected bids from Cerberus Capital Management and the Blackstone Group in a consortium with Centerbridge Partners. Ripplewood Holdings may also bid.
The pace of the Chrysler sale process is accelerating, according to the Wall Street Journal, after several potential buyers met with management in anticipation of presenting preliminary offers by the end of the month.
Among those interested are private equity group Cerberus and a consortium led by Blackstone and Centerbridge Partners. Read more