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December 2005

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  • A spate of poor deals gets the investment bankers thinking. After a difficult October, in which initial public offerings met with a variety of fates, attention last month swung once again to the IPO process itself.
  • Cash offer for O2 prompts concerns that telecoms sector might be about to embark on another debt binge.
  • The procedure is an important step towards the cash settlement of the entire CDS market.
  • As the festive season approaches, speculation is rife about who will get the lion’s share of this year’s bonus pool. But that’s nothing compared to the build-up to the Morgan Stanley staff pantomime. As the bank is again generously sponsoring the season at London’s Old Vic Theatre, where Kevin Spacey is artistic director, its employees also get the chance to tread the theatre’s hallowed boards. After the Old Vic production of pantomime ‘Aladdin’, Morgan Stanley takes over the theatre for one night in January to put on its own show.
  • GSAM's boutique structure provides a potential model for other asset managers.
  • Australia’s new-issue market heated up this month with the announcement of three large IPOs. Goodman Fielder, a leading Australian foods business, controlled by New Zealand entrepreneur Graeme Hart, intends to raise about A$2 billion ($1.48 billion) from a listing in Australia and New Zealand. Singapore Power’s holding company for its Australian electricity assets, SP AusNet, has also filed a prospectus for a simultaneous IPO in Australia and Singapore that is expected to raise approximately A$1.6 billion. Another electricity asset, Spark Infrastructure, filed in November for an IPO that aims to raise A$1.8 billion to fund the acquisition of minority interests in Australian power assets held by Hong Kong’s Cheung Kong Infrastructure.
  • Although deals by large listed companies grab the headlines, BEE is having an impact at all levels of South African economic life. Despite its short investment horizon, some bankers see a natural fit between private equity and BEE.
  • Wiphold (Women Investment Portfolio Holdings) is one of the best-known Black Economic Empowerment (BEE) companies. From its headquarters in the exclusive northern Johannesburg suburb of Houghton (Nelson Mandela has a house just up the road), Wiphold has spent more than a decade helping South Africa’s women share in the country’s wealth.
  • The exchange traded fund market is an area in which Barclays Global Investors can lay solid claim to being more successful than State Street Global Advisers. BGI has built up its ETF business (iShares) in five years to a level of $178 billion, compared with SSgA’s $80 billion.
  • US private equity group Elevation Partners, which has U2 front man Bono as a partner, announced its first investment in two video game companies, Pandemic Studios and BioWare. The deal will bring the two companies together and, as a result of a $300 million investment, Elevation Partners will become the majority shareholder of the combined group. Elevation Partners closed a $1.9 billion fund in August.
  • Banks get together to create industry utility.
  • Further proof that FX has gone mainstream comes with news that Rydex Investments has filed a registration statement with the SEC to launch a currency exchange-traded fund (ETF). When approved, the new ETF, which is based on the level of the euro against the dollar, will trade as a stock on the New York Stock Exchange.
  • UK Takeover Panel amends its rules on contracts for difference.
  • Greater anonymity, leverage and lower trading costs are seen as incentives.
  • Modest though it might appear, China's first fully-fledged buyout of a state-owned enterprise is significant.
  • First non-investment grade trade shows the spoils to come in distressed debt trading.
  • Report says lower risk weighting will encourage banks to look at MMFs.
  • But UK regulator will not ask for position data.
  • From an asset class perspective, the CDO sector dominates the pipeline and within that sector CLO issuance is at the vanguard.
  • Help could be at hand for market makers in jumbo Pfandbriefe that want to hedge spread movements between different issuers.
  • Deutsche survey finds CFOs think they are great at what they do.
  • James Montier of Dresdner Kleinwort Wasserstein, investors’ favourite equity strategist as ranked by the Thomson Extel Survey, has identified seven common mistakes in the investment process of fund managers everywhere. His analysis challenges some of the most deeply held beliefs.
  • With “no comment” seemingly the stock response to any question that is not about the latest all-singing, all-dancing enhancement to their internet trading platform, senior level appointment or record day, being a press officer or PR for an FX player is probably the easiest job in the market. To encourage more openness, it might be time for Euromoney to launch new categories in its highly regarded and prestigious polls – “most and least helpful press officers of the month”. Polling has already started.
  • According to a new compensation survey by executive search and consulting firm Options Group, M&A bankers will enjoy the biggest increase in overall compensation (salary and bonuses) in 2005, up 20% to 25% on average compared with 2004. Those M&A bankers in Europe are set to get the biggest increases.
  • The wounds from the region’s financial crisis may have healed on company balance sheets but the trauma remains
  • America might still run the internet, but even the biggest bank in the world has to take its time when it comes to cyber-squatting.
  • It is one of the great ironies of the European bond market that one of the largest market distortions occurs within the sovereign sector and are caused by the direct actions of Europe’s sovereign debt managers. The regulatory environment in Europe is tighter than ever, with the EU taking an aggressive and sometimes misguided stance in its aim of eliminating distortions in the capital markets, notably with its Market Abuse Directive and MiFID. And yet, despite all the EU’s talk of market efficiency, it ignores the market abuse happening right under its nose.
  • Investment banks need to think carefully about which institutions they market their services to.
  • According to Morgan Stanley’s chief economist, Stephen Roach: “India is on the cusp of something big.” Roach professes to be as excited about India as he was about China in the late 1990s. The source of this excitement is the country’s burgeoning consumer sector, which, as a share of GDP, is already higher than that of Europe, Japan and China.
  • Explanations for the market's significant retreat in November are more complex than for previous years.
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