Friday, June 29, 2012

Reuters: Private Equity: UPDATE 1-3i cuts jobs and offices in bid to improve

Reuters: Private Equity
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UPDATE 1-3i cuts jobs and offices in bid to improve
Jun 29th 2012, 06:37

Fri Jun 29, 2012 2:37am EDT

* 3i to cut over 160 jobs, more than one third of staff

* Suspends new investment in southern Europe, Asia

* Closing six offices, cutting jobs at six more

By Simon Meads

LONDON, June 29 - Private equity firm 3i is cutting jobs and closing offices in a move it hopes will help turn around its ailing performance and repair its tarnished reputation.

The cuts are part of new strategy being put in place by former Greenhill banker Simon Borrows, who took over the top job at 3i last month.

The plans will see 3i cut over 160 jobs, equating to more than a third of its staff, as it seeks to reduce annual operating costs by over 40 million pounds ($62 million).

The cuts are designed to assuage shareholders, including Laxey Partners, which have voiced their dissatisfaction with ongoing performance and have called for more money to be funnelled back to them through company sales.

The cuts will see 3i suspend new investments in southern Europe and Asia, but retain a focus on northern Europe and a growing presence in Brazil.

Under the plans, 3i will close its offices in Barcelona, Birmingham, Copenhagen, Hong Kong, Milan and Shanghai and make significant reductions in staff numbers at another six offices.

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Thursday, June 28, 2012

Reuters: Private Equity: FEATURE-U.S. 'Genius' visa attracts entrepreneurs and Playmates

Reuters: Private Equity
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FEATURE-U.S. 'Genius' visa attracts entrepreneurs and Playmates
Jun 29th 2012, 05:00

By Sarah McBride

SAN FRANCISCO, June 29 | Fri Jun 29, 2012 1:00am EDT

SAN FRANCISCO, June 29 (Reuters) - Shera Bechard, the Canadian-born former girlfriend of Playboy Enterprises founder Hugh Hefner, would not be an obvious candidate for the special visas that the U.S. government reserves for "individuals with extraordinary ability."

Playboy magazine named Bechard Miss November in 2010, and she also started an online photo-sharing craze called "Frisky Friday." Neither seems quite on the level of an "internationally recognized award, such as a Nobel Prize," which the government cites as a possible qualification.

But Los Angeles immigration lawyer Chris Wright argued that Bechard's accomplishments earned her a slot. The government ultimately agreed.

That kind of success has put Wright on the map as the go-to visa fixer for both Hollywood and Silicon Valley. It also highlights the use of so-called genius visas known as O-1s and EB-1s, which have largely escaped political controversy and are now the immigration solution of choice for many entrepreneurs.

As many immigration lawyers see it, the paucity of immigration options for the most entrepreneurial foreigners mean they must use any avenue they can. This approach, along with seeming flexibility in Washington on what constitutes "extraordinary ability," means the O-1 is gaining traction in technology circles. Wider use could ultimately land it in political trouble.

For example, the H-1B visa, which allows employers to hire foreigners temporarily in certain specialized fields like technology, has drawn accusations from union groups and others that companies use it to bring in lower-skilled labor.

The O-1 visa allows individuals of "extraordinary ability" to come to the United States for up to three years, and can be extended. British journalist Piers Morgan used one when he replaced Larry King on his late-night TV show, Wright said.

The EB-1 is similar, but leads to a green card and permanent residency rather than a temporary stay, with "extraordinary ability" being one of the ways to qualify - along with being an outstanding professor or researcher, or a multinational executive.

Foreign entrepreneurs have another option - the Immigrant Investor Program, or EB-5 visa - but it requires a capital investment of at least $500,000 and the creation of at least 10 full-time jobs for U.S. workers.

By contrast, no proof of personal wealth or investment in the United States is required for the O-1 or the EB-1.

There is also no cap on the number of O-1s that the government can award each year; about 12,280 were approved in 2011, U.S. Citizenship and Immigration Services said, up from 9,478 in 2006. It issued about 25,000 EB-1s last year, below their cap of 40,000.

The H-1B is much more popular. Applications hit their annual cap of 85,000 earlier this month.

FALLBACK POSITION

While high-profile artists and entertainers have long used the O-1s, they are now becoming a fallback for businessmen and technologists who cannot get H1-Bs.

Josh Buckley, a 20-year-old British-born entrepreneur and a client of Wright's, is among the new crop of Internet entrepreneurs to win an O-1 visa. He applied after starting a few small companies, including one he sold at age 15 for a sum reaching the low six figures, he says.

He got his O-1 last year after lining up letters of recommendation from luminaries including Netscape co-founder and venture capitalist Marc Andreessen and Apple Inc co-founder Steve Wozniak.

Buckley, whose MinoMonsters gaming company is backed by Andreessen, saw little choice other than the O-1. The H-1B was off limits because it usually does not go to people who work for themselves. The O-1, unlike most H-1Bs, also does not require a college education--a key feature for the ever-younger entrepreneurs flocking to Silicon Valley.

Except when it comes to the O-1, visa officials "just don't understand the concept of someone being skilled without 12 years of experience or a bachelor's degree," says John Collison, a 22-year-old Irishman. He dropped out of Harvard University to work on Stripe, the payments company he co-founded with his brother, Patrick.

Like Buckley, he met Wright through the prestigious Silicon Valley start-up incubator known as Y Combinator. He won his O-1 in December 2010 and now has permanent residency status-- as does Buckley.

Wright, himself a South African immigrant, dismisses the notion that some of his clients might not rise to the level of "extraordinary ability."

"There's nothing in those regulations that requires you to be a genius," he says. "It's quite condescending to say, 'Oh, the idiot Playboy Playmates, they don't qualify.'"

At the end of 2010, Bechard posted the first "Frisky Friday" photo on the Twitter microblogging service. Now young women all over the world tweet scantily-clad pictures of themselves on Fridays, with Playboy selecting a weekly winner.

Immigration officials "want to give (a visa) to someone who shows business skills," Bechard says. She also threw in such qualifications as her role as a mute Russian in a 2009 movie, "Sweet Karma," which won her a best actress award at the cult Fantastic Film Festival in Austin, Texas.

QUALIFICATION QUESTION

Many of Wright's young technology clients have had limited time to show they have "risen to the very top of the field of endeavor," as O-1 regulations state.

But quality rather than longevity is the key, Wright says. USCIS rules require extraordinary ability -- demonstrated by "sustained national or international acclaim" -- that he says his clients can prove with awards and testaments from leading players in their field.

The visas are "a lot of work," he said. "You can't just crank them out at high volume."

Asked about how it decides to grant O-1s, a U.S. Citizenship and Immigration Service spokeswoman said: "USCIS decides each benefit request on a case-by-case basis relying on the law and evidence provided for that case. There are a variety of factors that influence the number of visa applications received and approved from year to year."

Wright says he hopes that one day, immigration reform will make it easier for talented immigrants, especially entrepreneurs, to come to this country. That is a widespread goal in Silicon Valley, where immigrant entrepreneurs have helped start many leading companies. Google Inc co-founder Sergey Brin, for example, came to the United States from the Soviet Union when he was a child.

The immigrant entrepreneurs say that far from taking away jobs, they are creating them by founding companies that may go on to employ hundreds or even thousands of people.

They have managed to find allies even among the harshest critics of H-1Bs.

"The O-1 is one of the few visas we support," said Kim Berry, a spokesman for the Programmers Guild, which favors the suspension of the H-1B program. "When they need to bring in the best and the brightest and the entrepreneurs, that's the only visa that helps America."

Indeed, efforts to make it easier for educated and enterprising foreigners to stay in the United States generally enjoy bi-partisan support in Washington. The complicated status of the immigration issue as a whole, though, has blocked any changes.

"The issue is pretty well understood," said Steve Case, the founder of AOL and now head of the venture capital firm Revolution LLC. "But there is this skepticism around the politics of immigration."

Thus the O-1 will probably remain a key channel for many immigrant entrepreneurs - and it does carry some additional side benefits.

British-born Scott Allison, co-founder of a software company called Teamly, was returning to the United States earlier this month and enjoyed a rare welcome from customs officials after they caught a glimpse of his new O-1 visa.

"'Wow, you must be really awesome,'" he recalls one commenting before waving him through. "I'm like, 'Gee, thanks.'"

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Reuters: Private Equity: Nestle Australia sells Peters Ice Cream to PEP

Reuters: Private Equity
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Nestle Australia sells Peters Ice Cream to PEP
Jun 29th 2012, 05:44

MELBOURNE, June 29 | Fri Jun 29, 2012 1:44am EDT

MELBOURNE, June 29 (Reuters) - Nestle Australia Ltd said it has agreed to sell its Peters Ice Cream business to Australia's largest private equity firm, Pacific Equity Partners, for an undisclosed sum.

Reports earlier this year said bids for the business could top A$300 million ($305 million) based on pretax earnings of about A$25 million in 2011.

Peters, a 105-year-old company, has top-selling brands including Drumstick, Heaven and Frosty Fruits.

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Reuters: Private Equity: UPDATE 1-Fushi Copperweld to be taken private in $364 mln deal

Reuters: Private Equity
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UPDATE 1-Fushi Copperweld to be taken private in $364 mln deal
Jun 28th 2012, 22:41

Thu Jun 28, 2012 6:41pm EDT

June 28 (Reuters) - Chinese wire maker Fushi Copperweld Inc said it has agreed to be taken private by a group led by its co-chief executive, in a deal valuing the company at about $364 million.

Co-CEO Li Fu and private equity firm Abax Global Capital will pay Fushi shareholders $9.50 per share in cash, a 21 percent premium to the stock's Thursday close.

Fu, Abax and their affiliates currently own about 29 percent of the company's stock.

Fushi said the deal, which has no financing condition, was approved by the board following the recommendation of its Special Committee.

Fu and his affiliates had initially offered to buy the company in 2010. The company rejected a revised offer in December last year.

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Reuters: Private Equity: Blackstone president: Oust Greece from euro

Reuters: Private Equity
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Blackstone president: Oust Greece from euro
Jun 28th 2012, 21:04

By Greg Roumeliotis

NEW YORK, June 28 | Thu Jun 28, 2012 5:04pm EDT

NEW YORK, June 28 (Reuters) - Blackstone Group LP President Tony James, whose investment firm advised Greece's lenders on a 206 billion euro debt restructuring, said on Thursday that the euro zone will have to expel Greece and Portugal in order to survive.

Debt-laden Greece, whose private creditors were advised by Blackstone on a haircut on their bond holdings last March, is now trying to convince its European peers, including paymaster Germany, that it needs more time to bring its finances on track.

"They will keep Greece in the euro for a while longer but eventually I think they will have to push Greece and Portugal out of the euro and protect the core of the euro some way," James told a market conference in New York on Thursday.

"That will mean that Germany has to pony up and it means that other countries will have to subjugate their budget to the will of the European Union," James said.

Euro zone officials were working on urgent measures on Thursday to ease financial market pressure on Spain and Italy, which are too big to bail out, as EU leaders began a summit deeply divided over how to resolve their debt crisis.

Many international investors have deserted Spanish and Italian debt, pushing yields to levels that Madrid at least cannot afford for long as it tries to save banks ravaged by a property market collapse and rein in an overshooting deficit.

"The crisis in Spain or Italy pushes them to the actual solution because they are too big to hide. How long (until there is a solution)? I don't know, we are getting close," James said.

Saving the euro requires fundamental changes which are challenging to implement because they need backing from 17 euro zone member countries, James said.

"There is political will to keep (the euro) together, clearly. I don't think anyone wants to face the crisis today. I think they will continue to try to substitute liquidity for structural solutions," James said.

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Reuters: Private Equity: UPDATE 2-Mason seeks foreign ownership details from Telus

Reuters: Private Equity
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UPDATE 2-Mason seeks foreign ownership details from Telus
Jun 28th 2012, 19:59

Thu Jun 28, 2012 3:59pm EDT

June 28 (Reuters) - Telus Corp's biggest shareholder, Mason Capital Management LLC, has asked the telecommunications firm to disclose current foreign ownership levels and the basis on which it determined compliance with Canadian regulatory requirements.

Mason, a U.S.-based hedge fund, has been looking for a buyer for its 19 percent stake in the Canadian firm.

"The uncertainty surrounding Telus' compliance with the foreign ownership restrictions has persisted for many months now," said Michael Martino, principal and co-founder of Mason.

Mason said in a letter to Telus that information on proxies submitted for a recent shareholders meeting shows about 42 percent of voting shares were held by shareholders who declared themselves non-Canadian or refused to answer a declaration of their residency.

Mason's allegations are completely unfounded and misleading, Telus' spokesman Shawn Hall said in an email response.

"Telus has been and continues to be fully compliant with foreign ownership restrictions, and (we) have our own control processes in place to ensure we remain compliant."

The fund said the designated 33.3 percent voting shares in Telus for foreign ownership has been fully or close to fully allocated to non-Canadian shareholders.

The Canadian government is introducing legislation that would enable a foreign buyer to control a telecom company with less than a 10 percent market share, a change that does not affect existing foreign-ownership restrictions on Telus.

Foreigners are currently prohibited from owning more than 20 percent of the voting shares in those companies and limited to indirect control of 46.7 percent.

Shares of Telus, whose main rivals are BCE Inc and Rogers Communications, w ere up 68 Canadian cents at C$60.70 on Thursday afternoon on the Toronto Stock Exchange.

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Reuters: Private Equity: RLPC-Asia Pacific lending down 26 pct at half year

Reuters: Private Equity
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RLPC-Asia Pacific lending down 26 pct at half year
Jun 28th 2012, 17:20

Thu Jun 28, 2012 1:20pm EDT

* Asia Pac companies sidestep more expensive loans

* Japan, China first-half lending higher year on year

* Australia, Hong Kong and Singapore down

By Jacqueline Poh

LONDON, June 28 (Reuters) - Asia Pacific lending, excluding Japan, was 26 percent lower at $128 billion in the first six months of 2012, compared to a year earlier, as companies opted to raise bonds and bilateral loans instead of syndicated loans.

Deal flow was also lower with only 424 deals completed in the first half compared to 545 in the same period of 2011 as higher bank funding costs boosted loan pricing and put companies off raising more expensive syndicated loans.

Highly-rated investment-grade companies, which make up most of Asia Pacific's borrowing, chose to tap the bond market instead to secure long-term funding at attractive rates from more reliable bond investors as deleveraging banks remained unpredictable.

"After going through last year's volatility, corporates realised the bank market may not be the most reliable source of financing." said Sonia Li, a managing director and JP Morgan's head of loan syndication.

Japan is Asia's largest loan market and is more resilient due to Japanese banks high deposit ratios and low funding costs. Japanese lending increased 18 percent in the first half to $163 billion, up from $138.7 billion a year earlier.

Outside Japan, China was the only North Asian country to show an increase in first half-volume, to $22 billion from last year's $15.5 billion.

Bankers expected China to see strong growth after the Chinese government relaxed banks' lending quotas earlier this year, encouraging more companies to raise onshore loans.

Australia, Hong Kong and Singapore are usually Asia Pacific's most active markets, but all saw significant drops in volume.

Australian lending fell 20 percent year-on-year to $35 billion in the first half from $44 billion in the same period of 2011. Hong Kong saw a 30 percent decrease and Singapore was down 26 percent.

Although lending was down at the half year, volume was generally higher in the second quarter, compared to the first. Hong Kong lending tripled to $16.7 billion in the second quarter from $4.6 billion in the first quarter.

Hong Kong's increased loan volume was due to several large deals including a $3 billion privatisation financing for Chinese e-commerce company Alibaba and an increased $2.4 billion refinancing for commodities trader Noble Group

"Hong Kong and China's loan markets are active right now. Hong Kong has traditionally been supported by refinancing while new money deals will come from real estate firms or a few surprising acquisition opportunities, said Pedro Cheung, Bank of China Hong Kong's deputy general manager and head of corporate finance.

M&A AND REFI BOOST 2H

Asia Pacific volume is expected to continue to pick up in the second half of the year, with several refinancing loans and deals backing mergers and acquisitions (M&A) in the pipeline. Project and infrastructure financing and offshore borrowing from Chinese companies are also expected to drive loan volume growth.

"The shortfall in volume will be eliminated as the year progresses with refinancing and event-driven transactions," said John Corrin, ANZ's global head of loan syndications.

Refinancing made up 41 percent of all lending in the first six months (excluding Japan) and acquisition financing made up 8 percent. Both figures are expected to rise with several large loans in the offing.

On the M&A side, Hong Kong Exchanges & Clearing is raising a $2 billion bridge loan to back its purchase of the London Metal Exchange and China's Bright Food (Group) Co Ltd is raising a $550-850 million financing to back its purchase of UK cereal maker Weetabix.

Hutchison Whampoa is in the market with a SKr10.5bn ($1.49 billion) refinancing for its Swedish unit Hi3G Access, and commodity refinancing is expected to continue as several one-year loans mature this year.

TAIWANESE BANKS BUSY

The Asia Pacific loan market saw more defensive club deals to counter global market volatility. In the first half, 41 percent of Asia Pacific loans were placed with a small club of banks and 59 percent were syndicated widely.

Club deals have always been a feature of the Asian market, due to the region's strong emphasis on relationship banking, but they have become more prevalent since 2007, when 83 percent of loans were syndicated widely and 17 percent were sold on a club basis.

Relatively few loans were underwritten in the first half of 2012 as Asian companies opted to save fees and arrange their own deals and lean on strong banking relationships.

When loans were syndicated in the first half, cash-rich Taiwanese banks were preferred lenders. Taiwanese banks have avoided rising funding costs and have lower return requirements than other Asian lenders.

Taiwanese banks were Asia Pacific's most active lenders in the first half, followed by Japan's liquid banks, which can also accept lower pricing.

Top Asian companies paid average all-in interest margins of 200 basis points (bp) on three-year loans, but some companies tried to push pricing down.

Cathay Pacific paid an all-in margin of 208 bp on a five-year loan in May which attracted 10 Taiwanese banks.

Other Asian banks found it harder to compete due to higher funding costs and Basel III capital requirements.

"Average pricing now may not even meet some (banks') requirements for returns," one banker said. (Reporting by Jacqueline Poh)

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