U.S. Senator Bob Casey (D-PA) delivers remarks at the Belmont Water Treatment Center during a visit to Philadelphia, Pennsylvania, U.S., February 3, 2023. REUTERS/Elizabeth Frantz Acquire Licensing Rights
Nov 9 (Reuters) – Two U.S. senators plan to introduce a bipartisan bill on Thursday that would require private equity firms to make public how much they invest in China and other countries of concern.
The bill, set to be introduced by Democratic Senator Bob Casey and Republican Senator Rick Scott, is the latest effort to track U.S. investments in China.
“The American people deserve to know where and how their savings are being invested,” Casey said in a statement.
The United States has sought to crack down on U.S. investment in China over fears U.S. dollars and know-how are aiding Beijing’s technological advances to modernize its military.
U.S. private investment firms have poured more than $80 billion into China between 2018 and 2022, some via pension plans, according to Casey’s office.
The new congressional measure would require private equity funds to annually disclose assets invested in China, Iran, Russia and North Korea to the U.S. Securities and Exchange Commission, which would then be required to make public a report based on the information.
It would also require disclosure of certain information about private security sales.
Rick Scott’s office did not immediately respond to an emailed request for comment.
Casey has also co-sponsored a measure that would require government notification of investments in certain sensitive technology sectors in China. That measure has been added as an amendment to the Senate’s National Defense Authorization Act (NDAA) and may or may not survive reconciliation with the House’s version.
The new bill also comes in the wake of an executive order on outbound investment to prohibit some U.S. investments in China in semiconductors and microelectronics, quantum computing and artificial intelligence, and require notification of others. The order has not yet been implemented.
Reporting by Karen Freifeld; Editing by Sharon Singleton
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Oct 18 (Reuters) – Morgan Stanley’s (MS.N) third-quarter profit showed a hit from lethargic dealmaking, while shares sank 7.4% as some analysts pointed to a fall in net new assets in its wealth division and disappointment over the lack of news on succession.
The bank saw a sharp drop in investment banking revenues and sluggish trading as dealflow took a hit when geopolitical risk rose following the war in Ukraine and the Federal Reserve aggressively raised interest rates.
Analysts at Goldman Sachs said they expected a negative market reaction as the inflow of assets to wealth management fell, and conversion to higher fees over the assets was slow.
Net new assets in wealth management shrank to $35.7 billion from $64.8 billion a year earlier.
Meanwhile, analysts at Evercore criticized the lack of an announcement on a long-anticipated CEO succession, which they said “is a mistake by the Board as more time can only increase angst and divide parties.”
CEO James Gorman, who has run the Wall Street giant since 2010, announced in May that he would step down within a year.
Shares fell 7.4% to a one-year low, despite the bank beating estimates.
The bank’s profit dropped about 9% to $2.4 billion, or $1.38 per diluted share, for the three months ended Sept. 30, a smaller drop than analysts had expected. Analysts had forecast $1.28 per share, according to LSEG IBES data.
Gorman said the bank “is in excellent shape, notwithstanding the geopolitical and market turmoil that we find ourselves in,” and added an announcement of his chosen successor is getting close.
“I don’t want to give you an exact time because that’s sort of a spoiler … but we’re well into it,” he told analysts on Wednesday.
The strongest candidates are co-presidents Ted Pick and Andy Saperstein, respectively heads of institutional securities and wealth management, while Dan Simkowitz, head of asset management, is also being considered, Reuters has reported, citing a source.
INVESTMENT BANKING
Revenue from investment banking, led by Ted Pick, fell 27% to $938 million, as global mergers and acquisitions activity showed few signs of improvement due to rising interest rates, antitrust scrutiny and an uncertain economic and geopolitical outlook.
Gorman said although he saw recent improvement, he expected a sustained pick up only next year. While we expect momentum to continue this year, given the fourth quarter has some seasonal considerations, we expect most of the activity to materialize in 2024″, he said.
Morgan Stanley CFO Sharon Yeshaya added that the most active industries are expected to be finance, energy, technology and artificial intelligence.
Morgan Stanley’s revenue in fixed income underwriting fell even as rivals had higher revenues with stronger market activity. Yeshaya said Morgan Stanley cannot be compared to rivals due to different considerations of capital allocation and not only fees.
Trading, under Pick, was also muted, with a 2% rise in equity trading and 11% drop in fixed income. Gorman and Yeshaya told analysts clients were beginning to reduce cash positions and put money into markets.
Gorman said he expects trading to start picking up once interest rates begin to come down. The CEO has repeatedly said the results of each unit will not be a factor in choosing the next CEO.
CRE WEAKNESS
Morgan Stanley also set aside $134 million in provisions for credit losses, surging from $35 million in the same quarter last year, driven by worsening conditions in commercial real estate (CRE). Part of the growth was a provision to cover losses with one specific loan that was not disclosed. Yeshaya said the bank has been “proactive” in the provisioning and that its exposure is smaller than 5% of the credit portfolio.
The results round out a largely upbeat reporting season for Wall Street’s biggest banks, which benefited from rising income from interest payments.
Profit at rival Goldman Sachs also dropped less than expected in the third quarter.
Reporting by Manya Saini, Noor Zainab Hussain and Niket Nishant in Bengaluru and Tatiana Bautzer, Sinead Carew and Saeed Azhar in New York; Editing by Megan Davies, Lananh Nguyen, Shounak Dasgupta and Nick Zieminski
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Oct 17 (Reuters) – Goldman Sachs’ (GS.N) third-quarter profit dropped less than expected as a nascent recovery in dealmaking offset the $864 million writedown related to its GreenSky fintech business and real estate investments.
The Wall Street giant’s net profit slumped 33% to $2.06 billion, or $5.47 per share, it said on Tuesday. Analysts on average had expected a profit of $5.31 per share, according to LSEG data.
Shares of the bank inched up 0.3% at $315.30 in volatile premarket trading.
“The work we’re doing now provides us a much stronger platform for 2024. I also expect a continued recovery in both capital markets and strategic activity if conditions remain conducive,” CEO David Solomon said in a statement.
Goldman was an underwriter for high-profile initial public offerings (IPO) in September, including SoftBank Group’s (9984.T) chip designer Arm Holdings and grocery delivery app Instacart (CART.O).
The share sales sparked optimism about a recovery in the IPO market, but poor performance after debuts and the lukewarm reception to Germany’s sandal maker Birkenstock (BIRK.N) have raised doubts.
Goldman’s investment banking fees of $1.55 billion was largely unchanged from last year as debt underwriting activity resumed and the market for initial public offerings picked up.
The U.S. Federal Reserve may raise interest rates one more time this year, while several bank executives have said they expected borrowing costs to stay higher for longer.
CONSUMER BANKING WEAKNESS LINGERS
Goldman’s ill-fated foray into consumer banking, which has lost $3 billion over three years, continued to weigh.
The bank took a $506 million writedown on GreenSky, which facilitates home improvement loans for consumers and was sold to a consortium of investment firms led by Sixth Street Partners.
It was bought for $1.7 billion last year although it was valued at $2.2 billion when the deal was first announced in 2021. Goldman took a charge of $504 million on GreenSky in the second quarter.
Real estate investments were another drag on earnings as the bank booked an impairment charge of $358 million compared with $485 million in the second quarter.
That weighed on revenue from its asset and wealth management unit, which slipped 20% to $3.23 billion.
Commercial real estate loans, which have emerged as a risk for banks as interest rates rise, accounted for 14% of the total loan portfolio of Goldman.
Solomon has shifted the firm’s focus back to its traditional strengths – investment banking and trading, and aims to grow in asset and wealth management.
Investment banking results have been mixed for peers, with JPMorgan Chase (JPM.N) reporting a 6% decline in revenue, while Citigroup (C.N) said fees jumped 34%. Morgan Stanley (MS.N) is set to report its earnings on Wednesday.
Goldman had a headcount of 45,900 as of September end, up 3% from a quarter ago, but down nearly 7% from the year-ago period.
The bank has laid off thousands of employees this year, including a round of cuts in January that was its largest since the 2008 financial crisis.
Reporting by Niket Nishant and Noor Zainab Hussain in Bengaluru and Saeed Azhar in New York;
Editing by Lananh Nguyen and Arun Koyyur
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NEW YORK, Oct 13 (Reuters) – Citigroup’s (C.N) profit was broadly steady in the third quarter, fueled by rising interest payments and surging investment banking fees.
The bank’s net income rose to $3.5 billion from a year ago, it reported on Friday, while earnings per share remained stable at $1.63, exceeding the consensus estimate of $1.21 by analysts polled by LSEG.
Revenue at Citi’s institutional clients group that houses its Wall Street operations increased 12% from a year ago, fueled by a jump in investment banking fees. The gains were a bright spot after several quarters of depressed dealmaking.
Citi’s overall revenue climbed 9% to $20.1 billion.
The third largest U.S. lender set aside more money to cover potential bad loans, even though delinquency levels were still low compared to historical levels.
CEO Jane Fraser announced a sweeping reorganization last month that will disband ICG and give her more direct oversight over the company’s businesses. The new structure is not yet reflected in the third-quarter results.
Expenses rose due to rising costs and investments in control systems. The expenses included severance payments for employees who were laid off during the sale of its international businesses.
Citi has not yet announced the expected headcount reduction and expected savings with the reorganization that will reduce management layers and prompt layoffs across its businesses.
Fraser has said there was “no room for bystanders” as the bank embarked on its biggest overhaul in almost two decades. The changes are being rolled out at a time of economic uncertainty that has weighed on some of Citi’s key businesses like trading.
Rivals Wells Fargo (WFC.N) and JPMorgan Chase (JPM.N) also reported higher quarterly profits on Friday, boosted by a rise interest payments.
Reporting by Manya Saini in Bengaluru and Tatiana Bautzer in New York; Editing by Lananh Nguyen and Arun Koyyur
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NEW YORK, Sept 26 (Reuters) – JPMorgan Chase (JPM.N) reorganized the leadership in its investment bank, promoting a new head in North America to succeed Fernando Rivas, who plans to retire, according to a memo seen by Reuters.
Rivas, who previously ran the financial institutions group, was one of JPMorgan’s lead negotiators in its purchase of failed First Republic Bank in May. He will be replaced by Jay Horine.
The bank also appointed several global heads for industry groups reporting to Jim Casey and Vis Raghavan, its co-heads of global investment banking, effective immediately.
Reporting by Nupur Anand in New York; Editing by Lananh Nguyen and David Gregorio
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A sign of Wanda is pictured at the headquarters of Dalian Wanda Group, in Beijing’s Central Business District (CBD), China August 8, 2023. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights
LONDON/FRANKFURT/NEW YORK, Aug 17 (Reuters) – Dalian Wanda Group, owned by China’s once-richest man Wang Jianlin, is seeking to sell its sports marketing unit Infront as financial pressure mounts on the property developer to shore up its finances, four people familiar with the matter told Reuters.
China’s largest commercial property group has tapped Deutsche Bank for advice on the sale of Infront Sports & Media, the sources said, adding the process is in the early stages and could take months to complete.
Private equity firms are looking at Infront, three of the sources said. The successful buyer is likely to be an investor with deep pockets because of the minimum guarantees the company is required to pay for sports rights, one of the sources added.
Headquartered in Switzerland, Infront’s businesses include managing Italy’s Serie A and the UK Premier League’s international media rights, as well as event operations, media rights distribution and sponsorship sales.
In June, Infront was awarded broadcast rights in 22 countries in Central and South East Asia for the Olympic Games from 2026 through 2032.
Wanda and Deutsche Bank declined to comment. Infront did not immediately return requests for comment.
The sources, who requested anonymity as the matter is confidential, cautioned a deal is not certain and is subject to market conditions.
China’s property developers have been battered over the last few years as falling sales and a wave of debt defaults have savaged a sector that previously contributed around a quarter of the country’s gross domestic product.
In July, the three main credit ratings agencies downgraded Dalian Wanda’s commercial management unit, warning of “non-payment risk” ahead of the repayment of a $400 million bond that had been due at the time. It raised $320 million through the partial sale of its entertainment unit Beijing Wanda Cultural Industry to pay it off.
It also stalled on a $22 million-dollar bond coupon payment in June, though it ultimately paid within the grace period. Additionally, it is facing litigation and asset freeze orders from courts in China due to payment disputes.
Wanda bought a majority stake in Infront for 1.05 billion euros ($1.1 billion) in 2015, in what was then an effort to support China in bidding for major sports events. It does not disclose financials for Infront.
Companies in the sports marketing sector have been strapped for cash after a downturn during the COVID pandemic.
Spain’s Mediapro, which manages international media rights for LaLiga, restructured 900 million euros in debt a year ago selling shares to investors including the group’s majority shareholder Southwind.
($1 = 0.9204 euros)
Reporting by Amy-Jo Crowley, Emma-Victoria Farr and Milana Vinn, additional reporting by Andres Gonzalez, Kane Wu and Clare Jim, editing by Elisa Martinuzzi and Sharon Singleton
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U.S. President Joe Biden delivers remarks on access to mental health care in the East Room of the White House in Washington, U.S., July 25, 2023. REUTERS/Elizabeth Frantz/File Photo
NEW YORK/WASHINGTON, Aug 9 (Reuters) – President Joe Biden on Wednesday signed an executive order that will narrowly prohibit certain U.S. investments in sensitive technology in China and require government notification of funding in other tech sectors.
The long-awaited order authorizes the U.S. Treasury secretary to prohibit or restrict certain U.S. investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies, and certain artificial intelligence systems.
Biden said in a letter to Congress he was declaring a national emergency to deal with the threat of advancement by countries like China “in sensitive technologies and products critical to the military, intelligence, surveillance, or cyber-enabled capabilities.”
The proposal targets investments in Chinese companies developing software to design chips and tools to manufacture them. The U.S., Japan and the Netherlands dominate those fields, and the Chinese government has been working to build up homegrown alternatives.
The move could fuel tensions between the world’s two largest economies, although U.S. officials insisted the prohibitions were intended to address “the most acute” national security risks and not to separate the two countries’ highly interdependent economies.
Senate Democratic Leader Chuck Schumer praised Biden’s order, saying “for too long, American money has helped fuel the Chinese military’s rise. Today the United States is taking a strategic first step to ensure American investment does not go to fund Chinese military advancement.” He says Congress must enshrine restrictions in law and refine them.
Republicans said the Biden order did not go far enough.
House Foreign Affairs Committee Chairman Michael McCaul praised the move to restrict new outbound investments in China but said “the failure to include existing technology investments as well as sectors like biotechnology and energy is concerning.”
The order is aimed at preventing American capital and expertise from helping develop technologies that could support China’s military modernization and undermine U.S. national security. It is focused on private equity, venture capital, joint venture and greenfield investments.
Most investments captured by the order will require the government be notified about them. Some transactions will be prohibited. The Treasury said it anticipates exempting “certain transactions, including potentially those in publicly-traded instruments and intracompany transfers from U.S. parents to subsidiaries.”
A spokesman for the Chinese Embassy in Washington did not immediately respond to a request for comment on Wednesday but the embassy said Friday the United States “habitually politicizes technology and trade issues and uses them as a tool and weapon in the name of national security.”
Repbulican Senaor Marco Rubio said the Biden administration’s “narrowly tailored proposal is almost laughable. It is riddled with loopholes, explicitly ignores the dual-use nature of important technologies, and fails to include industries China’s government deems critical.”
Democratic Senator Bob Casey said Biden’s order “acknowledges the urgency of the issue and will allow the U.S. to reduce some of the risks we face from bad actors like China.”
The regulations will only affect future investments, not existing ones, an administration official told Reuters.
The Biden administration said it engaged with U.S. allies and partners as it developed the restrictions “and will continue coordinating closely with them to advance these goals.” It added the executive order reflects discussions with the Group of Seven countries.
It is expected to be implemented next year, a person briefed on the order said, after multiple rounds of public comment, including an initial 45-day comment period.
Regulators plan to issue an advance notice of proposed rulemaking to further define the scope of the program and a comment period to solicit public feedback before making a formal proposal.
Sources previously told Reuters investments in semiconductors that will be restricted are expected to track export control rules for China issued by the U.S. Department of Commerce in October.
Emily Benson of the Center for Strategic and International Studies (CSIS), a bipartisan policy research organization, said she expects investments in artificial intelligence to be prohibited to military users and uses, and that other investments in the sector will only require notification to the government.
Benson said the burden will fall on the administration to determine what AI falls into the military category.
“They will have to draw a line of what constitutes a military application of AI, and to define AI,” said Benson, director of CSIS’s project on trade and technology.
The regulations concerning AI are still in development, the person briefed on the order said. The person said the same was also true for quantum computing but that it was expected to prohibit certain sensors and other things related to the technology.
The person added that there could be potential exemptions related to universities and research.
Reporting by David Shepardson, Andrea Shalal, Stephen Nellis, Max Cherney and Karen Freifeld; additional reporting by Idrees Ali; Editing by Lincoln Feast and Jonathan Oatis
Our Standards: The Thomson Reuters Trust Principles.
[1/3]The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 17, 2021. REUTERS/Andrew Kelly/File photo
July 20 (Reuters) – The U.S. commercial property market has faced severe challenges since the pandemic due to lingering office vacancies, diminished retail activity and higher interest rates. That stress has caused banks and other lenders to tighten their standards for new loans and scrutinize existing ones.
While regional banks carry the greatest exposure to the commercial real estate (CRE) sector, second quarter earnings show that a number of big banks have prepared for potential defaults, primarily on office loans.
Here are the highlights across the sector:
BANK OF AMERICA CORP (BAC.N):
Chief Financial Officer Alastair Borthwick said the bank had $17 million in charge-offs, or debt owed to a bank that is unlikely to be recovered, on its office loan exposure during the second quarter versus $15 million in the first quarter. The value of assets under review for credit risk rose by $1.7 billion from the first quarter, due mainly to its CRE exposure. However, Borthwick noted the bank’s office CRE exposure was low relative to its overall loan portfolio, at 2%.
GOLDMAN SACHS GROUP INC (GS.N)
The investment bank reported about $305 million in net losses within a private portfolio,
driven by markdowns on office CRE, it said. The Wall Street giant also said its debt investment revenue of $197 million had declined year-on-year due primarily to “weaker performance” in its real estate investments.
Goldman Sachs Group CFO Denis Coleman said the bank’s provision for credit losses stood at $615 million in the second quarter. CRE loans represented just 15% of the bank’s overall lending book, while only 1% of the CRE loan portfolio was office-related.
JPMORGAN CHASE & CO (JPM.N)
While its CRE revenue grew to $806 million in the second quarter from $642 million in the first, JPMorgan reported $1.1 billion in credit loss provisions driven by its office portfolio. While the portfolio was “quite small”, Chief Financial Officer Jeremy Barnum told investors the bank increased provisions “to what felt like a comfortable coverage ratio.”
WELLS FARGO (WFC.N)
The bank said it had a $949 million increase in its allowance for credit losses, primarily CRE office loans.
At the same time, it saw a quarter-on-quarter rise in CRE revenue as a result of higher interest rates and loan balances.
“While we haven’t seen significant losses in our office portfolio to-date, we are reserving for the weakness that we expect to play out,” CEO Charlie Scharf said.
CITIZENS FINANCIAL SERVICES (CZFS.O)
Citizens’nonaccrual loans – those on which a payment hasn’t been made for 90 days – grew by $195 million to roughly $1.2 billion, while its net charge-offs increased by $19 million to $152 million. Both increases were driven largely by the bank’s CRE holdings.
Citizens recorded a credit loss p
rovision of $176 million in the second quarter. It increased its allowance for credit losses to $2.04 billion from $2.01 billion at the end of the first quarter, which included $41 million in connection with its general office portfolio.
“We believe losses are manageable and readily absorbed by reserves,” Bruce Van Saun, Citizen’s CEO, told investors.
EAST WEST BANCORP (EWBC.O)
The bank highlighted that its CRE portfolio had a low average loan-to-value (LTV) ratio of 61%, a key metric used to determine the credit risk of a loan. East West’s office portfolio had a weighted average LTV of 52%.
While almost three-quarters of the bank’s office loans are to borrowers in the troubled California market, it noted a “high percentage” of its CRE loans carry full recourse and personal guarantees from individuals with “substantial net worth.”
“All of these characteristics help to keep this portfolio strong,” Dominic Ng, East West’s chairman and CEO, said.
FIFTH THIRD BANCORP (FITB.O)
The regional bank’s allowance for credit losses increased 0.09% from the first quarter to $2.53 billion, due in part to a 0.27% increased allowance for its commercial mortgage loans.
Fifth Third’s nonperforming CRE loans declined to 0.13% in the second quarter from 0.29% in the first quarter. Its percentage of CRE loans at least 30 days delinquent grew to 0.29% from 0.04%.
“We have limited office exposure,” Fifth Third CFO James Leonard told investors Thursday, noting the bank “had deemphasized office even before the pandemic.”
MORGAN STANLEY (MS.N)
The investment bank said provisions for credit losses in the second quarter amounted to $97 million versus $82 million the same period last year, primarily driven by deterioration in CRE.
WEBSTER FINANCIAL CORP (WBS.N)
The regional bank’s nonperforming CRE loans ticked up to $47.9 million last quarter from $35.8 million in the first quarter.
Meanwhile, it divested $80 million in CRE loans last quarter, “the vast majority of which were secured by office properties,” resulting in $13 million in charge-offs, Webster CFO Glenn MacInnes told investors. The bank reduced its office exposure by 25% over the last four quarters with a “minimal hit to capital,” CEO John Ciulla said.
Reporting by Matt Tracy; editing by Michelle Price and Nick Zieminski
Our Standards: The Thomson Reuters Trust Principles.
July 14 (Reuters) – JPMorgan Chase (JPM.N) and Wells Fargo (WFC.N) said on Friday they set aside more money for expected losses from commercial real estate loans, in the latest sign that stress is building up in the sector.
Lenders’ exposure to commercial real estate has come under growing scrutiny this year, as the sector globally – particularly office buildings – has been pressured by high interest rates and workers continuing to stay at home.
Wells Fargo reported higher losses in CRE due to its office loan portfolio. It increased its allowance for credit losses by $949 million.
But the bank also said its CRE revenue increased quarter-over-quarter to $1.33 billion, primarily due to higher interest rates and loan balances.
“While we haven’t seen significant losses in our office portfolio to-date, we are reserving for the weakness that we expect to play out in the market over time,” Wells Fargo CEO Charlie Scharf said.
JPMorgan‘s CRE revenue grew to $806 million in the second quarter from $642 million in the first quarter. The bank, which acquired First Republic Bank in May, reported $1.1 billion in credit loss provisions driven by its office portfolio.
While the bank’s office portfolio was “quite small,” JPMorgan CFO Jeremy Barnum told investors that “based on everything we saw this quarter, it felt reasonable to build a little bit there to get to what felt like a comfortable coverage ratio.”
The U.S. Federal Reserve’s annual stress tests last month painted a better-than-expected picture of big banks’ CRE exposure, with projected losses in the event of a market crash declining slightly on last year.
The majority of office and downtown CRE loans, however, are held by smaller regional and community banks, which are not subject to the same strict capital buffers, the central bank said.
Regulators have been keeping a close eye on CRE risk, particularly at banks with the highest ratio of such loans to their total capital, while lenders have been working with customers to try to prevent defaults.
“(T)here’s plenty of little structural enhancements you can make to feel better about it, and then there are also in a lot of cases, getting some partial paydowns,” Michael Santomassimo, Wells Fargo’s CFO, told investors Friday.
CRE borrowers have struggled with higher refinancing costs as property values declined and interest payments have risen. Some $20 billion of office commercial mortgage-backed securities, which bundle together individual loans, mature in 2023, according to real estate data provider Trepp.
The McKinsey Global Institute forecast office property values could decline by $800 billion across nine major U.S. cities over the next seven years, according to a report. Based on a “moderate” scenario, McKinsey predicted demand for office space in 2030 would be 13% lower than in 2019.
McKinsey and others have noted San Francisco’s office market has taken the biggest hit, with several major loan defaults in the city so far this year. Even in the Golden State, however, Santomassimo said Wells Fargo has seen successful workouts in its loan portfolio.
Almost a third of Wells Fargo’s $33.1 billion in outstanding office CRE loans, or $9.9 billion, were to borrowers in California, according to the bank’s latest results. This was followed by New York and Texas, which have also experienced CRE challenges this year.
“So I think it really depends on building, borrower and all the things we sort of talked about in the script, and it’s less focused on just California,” Santomassimo said.
Reporting by Matt Tracy; editing by Michelle Price, Lananh Nguyen and Nick Zieminski
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DUBAI, June 20 (Reuters) – Middle East alternative asset manager Investcorp Holding is seeking to raise up to $600 million from the listing of an investment vehicle in Abu Dhabi this year, two sources with knowledge of the matter told Reuters.
Bahrain-based Investcorp is making preparations for a potential public share sale of Investcorp Capital, registered in the Abu Dhabi Global Market, the international financial centre in the capital of the United Arab Emirates.
The vehicle, which will operate as an independent company, will hold Investcorp’s private market co-investments across assets including credit, real estate and private equity, said the sources, declining to be named as the matter is not public.
Investcorp is working with Goldman Sachs (GS.N), First Abu Dhabi Bank (FAB) (FAB.AD), Emirates NBD (ENBD.DU) and HSBC (HSBA.L) on the plan, the people said. Moelis & Co (MC.N) is acting as financial adviser, they said.
Bloomberg in March reported Investcorp was putting together a plan to list the vehicle.
Deliberations are at early stages and no final decision has been taken while the company is also evaluating other listing venues and options for growth.
Investcorp and FAB declined to comment. Goldman Sachs, HSBC, Moelis & Co, and Emirates NBD did not immediately respond to a request for comment.
With $50 billion of assets under management (AUM), Investcorp is best known for listing luxury goods brands, such as Gucci and Tiffany & Co.
Under the leadership of Mohammed Al Ardhi, Investcorp’s current chairman, Investcorp has grown its AUM fivefold over the last seven years by diversifying into sectors including infrastructure, acquiring stakes in other general partners, and insurance.
It has listed two blank check companies on the Nasdaq in the U.S., one with a focus on Europe and the other on India.
The company, which has opened offices in Singapore, Beijing, Mumbai and Delhi in that time, has also diversified its sources of fundraising.
Abu Dhabi state fund Mubadala Investment Company acquired 20% of the firm in 2017.
Reporting by Hadeel Al Sayegh; editing by Jason Neely
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