Abigail with attitude: The big picture
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Abigail with attitude: The big picture

How's your 2011?

A source points out that 2011 has also been a poor year for the European IPO sector. Deals have been mispriced and have either been withdrawn or floundered in the secondary market. "Primary market houses have promised too much to issuers and then under-delivered. Long-only managers are fed up and increasingly reluctant to participate," the source says. In March, according to Dealogic, nine EMEA IPOs were withdrawn or postponed. This was the largest monthly volume of lost deals since October 2008. And we know what was going on in October 2008. I only mention this because I have been feeling a little melancholy of late. I asked a well-placed contact in the hedge fund world: "Is it me or are things not great out there?" The source replied: "Abigail, the summer blues have arrived early. Banks are not making any real money. The macro backdrop is volatile. Powerful regulators are on the prowl. And remember that no one has come up with anything to replace the revenue stream from CDOs and asset-backed deals."

I also hear that hedge funds are having a miserable year as the markets whipsaw, making it hard to find a trend to trade.

A friend who is one of the top traders in the market insists that the stellar stock market rally from the March 2009 lows might be drawing to a close. No one can foresee the future but I think I smell the odour of a market top forming. Money has simply been too easy. If there is another shock to the system, western authorities are stymied.


Although the big picture is decidedly autumnal, I detect a few green shoots at UniCredit. In March, Jean Pierre Mustier, the former head of Société Générale’s investment bank, was appointed to run the investment banking division. Sergio Ermotti, the previous chief, left in 2010 to join UBS as chief executive and chairman of the EMEA region. Ermotti is often rumoured to be a potential successor to UBS chief executive Ossie Grübel. I give this rumour little credence since Ermotti has been with the Swiss bank for only two months. Meanwhile at UniCredit, Mustier whom I have always liked and rated, is making changes. In early May, he merged equity and debt capital markets with the firm’s finance and advisory unit. He also hired former Société Générale colleague Olivier Khayat as deputy head of corporate and investment banking at UniCredit. Sources say that this might be bad news for Mike Hammond, co-head of the markets division. TJ Lim looks more secure and has been named sole head of markets. Lim was a high-profile derivatives professional in the 1990s and has worked at various firms including JPMorgan, Merrill Lynch and Dresdner Kleinwort.


“Paulson is so important now. You can’t get in to see him. He only takes one on ones with people who run countries”

Finally, several nuggets have amused me this month. A mole commented that calm seems to have descended on Citi, a bank that looked to be destined for the dustbin in 2008. "Of course, Vikram is very clever," Mole mused. "Think about that hedge fund – Old Lane – which he started with John Havens. They did a genius job setting it up and a genius job selling it. It was just the bit in the middle that was rubbish." Old Lane was formed in 2006. It had some $4.5 billion of assets under management and the firm was sold for over $800 million to Citi in July 2007. The following year the fund was closed down. Reputations

This January, a well-placed Washington denizen told me that before the great recession hedge fund supremo John Paulson was considered a dreary person of no significance: "At Washington dinner parties, he was virtually ignored. He was so boring, always banging on about the housing market being overvalued!" Coincidentally, last month I had a drink with a well-connected money manager who said wistfully: "Paulson is so important now. You can’t get in to see him. He only takes one on ones with people who run countries."

A great reputation is crafted carefully over a period of years: it takes a long time to become an overnight success. There is a lesson for us all as we ponder how Strauss-Kahn lost his good name – and might indeed lose his wealth, marriage and liberty – in an alleged tawdry interlude that would probably have lasted no more than 20 minutes.

How was your month? Please send news and views to abigail@euromoney.com

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