Thursday 27 January 2011

Hedge Fund Predators On The Prowl For Stragglers

By Lionel Laurent and Laurence Fletcher

PARIS/LONDON, Jan 27 (Reuters) - Hedge funds are prowling the post-crisis landscape looking to buy small, weakened rivals that are struggling to grow.

The most vulnerable targets are so-called funds of hedge funds, essentially a basket of stakes in individual funds, which have been among the hardest-hit by client outflows.

"Consolidation will potentially be the only way to survive for smaller funds," said Aureliano Gentilini, global head of hedge fund research at Lipper, a Thomson Reuters company. "It will be a trend that cannot be averted."

Funds of hedge funds are also seen as easier targets because they are typically run by a team rather than a single, star manager who could be difficult to replace.

"Funds of hedge funds are more sellable than single-manager funds," said Antoine Haddad, founder of Bainbridge Partners, a $950 million firm that is keen to make acquisitions.

"They are usually managed by a team and are not star-driven; you're selling a business process."

(Read on...)

Wednesday 26 January 2011

Banks Cash In On French Housing Boom

By LIONEL LAURENT | REUTERS

PARIS: The traditional French aversion to risk and debt is being turned on its head as rock-bottom interest rates and tax breaks push investors into real estate, boosting banks’ mortgage lending and their client revenue.

The worry is not that a subprime-style fiasco is in the making, but rather that these trends are unlikely to last.

French housing loan issuance doubled in the 12 months to Nov. 2010, according to the Banque de France, to 145 billion euros ($198.3 billion) — eclipsing mortgage stagnation in crisis-scarred Spain and a 7.9 percent decline in Germany.

House prices in France also outpaced Spain and Germany with an 8.6 percent rise in the third quarter of 2010, according to the Royal Institution of Chartered Surveyors, driven by a cocktail of ultra-low interest rates and government incentives to spur home buying.

Such growth is not a ticking time bomb for domestic lenders like BNP Paribas and Credit Agricole, analysts say. French household balance sheets are solid, lending standards are tight and according to Deutsche Bank France has one of the lowest mortgage-to-GDP rates in Europe at 35 percent.

“Housing loans in France are of a significantly higher quality overall than in a lot of other countries,” said Christophe Nijdam, analyst with Alphavalue. He said France lacked the kind of helter-skelter securitisation that had encouraged U.S. lenders to take big risks in the past.

(Read on...)

Tuesday 25 January 2011

BNP's Merger Maestro Seen As CEO-In-Waiting

By Lionel Laurent

PARIS, Jan 25 (Reuters) - After a decade in the shadows knocking acquisitions into shape, BNP Paribas Chief Operating Officer Jean-Laurent Bonnafe may soon find himself in the spotlight as next in line to head France's biggest listed bank.

Speculation is mounting that BNP -- one of the few banks to have kept its reputation and its top management intact throughout the crisis -- is turning its hand to succession planning, with the 49-year-old COO as the shoe-in candidate.

"The job is his, unless some major screw-up happens on his watch," a former colleague at BNP said.

(Read on...)

Monday 3 January 2011

BNP Funds Face Overhaul As Investors Seek Exit

(This story made the front page of Les Echos' companies section.)

By Lionel Laurent

PARIS, Jan 3 (Reuters) - Two underperforming investment funds recently frozen by French bank BNP Paribas are being restructured in the face of a "significant" number of redemption requests, documents sent by the bank's fund arm to investors reveal.

The "Opportunity" and "Serenity" funds, which are invested in a range of hedge funds and represent $376 million in assets, have been entrusted to a new manager and aim to reopen sometime around March, according to the documents seen by Reuters.

The planned overhaul of the portfolios comes at a tough time for parts of the hedge fund industry as lower-tier funds-of-hedge-funds are squeezed by difficult financial markets and fragile institutional investor sentiment.

(Read on...)