Private Equity Problems, Deutsche’s New Two-Headed Chief: Wall Street Roundup

Wed, 30 May 2012 07:22:51 -0400

1 percent problems: Steven M. Davidoff digs into reports on private equity and finds an industry in transition: Private equity's share of takeover deals more than halved last year compared against the first six months of 2007, and the industry is sitting on more than $900 billion in dry powder, which—along with cash-flush corporations eying strategic buys—is driving up acquisition prices. A weak IPO market, meanwhile, has lead to increased pass-the-baby sales, in which one PE firm sells to another. Smaller and mid-sized firms are being forced under, and bigger players are turning to emerging markets and other types of alternative investments (industry stalwart Blackstone now derives more than half its revenue from non-private equity investments).

Of two minds: Juergen Fitschen and Anshu Jain are set to take the helm of Deutsche Bank as co-CEOs tomorrow, combining corporate- (Herr Fitschen) and investment- (Herr Jain) experience in the executive suite as the bank sets to grapple with turmoil in the eurozone's weaker economies and new regulations governing how much capital European banks keep on hand. Bloomberg has the details on the lesser-known Mr. Fitschen, including his ping pong-soccer-cricket prowess, but no word from those Italian anarchists on how they intend to divide their attention.

Face-flop: Facebook fell 9.6 percent yesterday as stock options on the company began trading, allowing investors to place negative bets on Zuck & Co. while placing less capital at risk. The most popular options had Facebook falling to below $25 by mid-July, The Wall Street Journal reports.

Henry Blodget reads the tea leaves and finds a solution to one part of Facebook's mobile problem in recent remarks by Apple CEO Tim Cook.

Whither Europe: The EU proposed a "banking union" to share the burden of the region's failing banks between the 17 countries that use the euro.

Spain is likely tap credit markets as it seeks to prop up nationalized lender Bankia SA, but the nation's borrowing costs are near a euro-era peak, and in the neighborhood of where Greece and Ireland sought international bailouts.

Italian borrowing costs are a lso rising.

Dewey's next chapter: Dewey & LeBoeuf and its former partners could be facing years of litigation after filing for Chapter 11 on Monday. That's in part to a federal court ruling last week finding that fees generated by cases started at defunct Coudert Brothers belonged to that law firm's bankruptcy estate, not to the firms to which Coudert's former partners had taken the cases.

Heidi Moore turns her keen eye on Dewey's collapse.

RIMM job: Research In Motion reported losses for the second consecutive quarter and announced that it had hired JPMorgan and RBC Capital Markets to advise on strategic options, including the potential sale of parts of the BlackBerry-maker's business.

Golden whistle: The former Countrywide manager whose fraud suit helped state attorneys general reach a $25 billion settlement with the nation's five largest mortgage servicers earlier this year received a $14.5 million whistle-blower award.

JPMorgan Selling Assets Post-London Whale, Citi Kills Committee That Oversaw Toxic Debt: Wall Street Roundup

Patrick Clark — Tue, 29 May 2012 06:38:37 -0400

Squeeze play: JPMorgan has been selling profitable securities to prop up second-quarter results after the bank's chief investment office and the trader known as the London Whale incurred billions in losses. The asset sales may be tax inefficient, and will deprive the lender of future gains, which is just too bad for Jamie Dimon's firm. With its share price down 18 percent from the day before the trading losses were first reported, JPMorgan is under pressure to generate earnings.

Self-defense: Rajat Gupta's "swept-back hair, square jaw and soothing voice" could make the former McKinsey & Co. CEO his own best witness as he stands trial for insider trading in lower Manhattan's Southern District courthouse. Calling a defendant to the stand is often risky business.

Detoxed: Citigroup dismantled a board committee that oversaw the bank's toxic assets, according to Bloomberg. Citi Holdings, the bad bank created by CEO Vikram Pandit to house risky loans, still holds about $200 billion in assets, including Greek and Spanish bonds. That's no small amount, even if it's down from $600 billion when Citi Holdings was created in 2008.

$850 an hour: Madoff trustee Irving H. Picard has generated more $554 million in fess against $330 million returned to the con man's victims, and Andrew Ross Sorkin wonders if there's a better way.

Weak glue: Dewey & LeBoeuf filed Chapter 11, and the like big law firm failures before it, the recipe was growth-by-merger and poaching of star attorneys from other firms: When times got tough, the firm's lawyers had no common culture to rally around.

Europe leveraged: At least a quarter of European leveraged buyout firms with debt due before 2015 may default, according to Moody's.

The tempered reaction to Moody's downgrade of Nordic banks indicated the ratings company's influence is waning.

Escape from Tokyo: Japanese investors are buying foreign property to serve as safe haven in the event of financial disaster.

[Timothy A. Clary/AFP/GettyImages]

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Private Equity Problems, Deutsche’s New Two-Headed Chief: Wall Street Roundup

JPMorgan Selling Assets Post-London Whale, Citi Kills Committee That Oversaw Toxic Debt: Wall Street Roundup