Interview: AXA Private Equity, now "Ardian", eager for deals

By Lionel Laurent and Matthieu Protard

PARIS, Oct 4 (Reuters) - French private-equity firm Ardian, recently spun off from insurer AXA AXAF.PA, expects to make two more deals before the end of the year after closing its latest buyout fund, one of its executives told Reuters.

Ardian, which has committed almost a quarter of the 2.4 billion-euro ($3.27 billion) fund, is riding a pickup in interest in European assets from foreign investors and is eyeing mid-sized targets in France, Germany and Italy that have international exposure and growth potential.

"We are looking to make two more transactions before the end of the year," Ardian Senior Managing Director Philippe Poletti said in an interview. "(European) companies are broadly in good shape... But not everyone has growth potential."

Formerly known as AXA Private Equity, Ardian manages $36 billion in assets and is headed by Dominique Senequier, one of France's best-known female executives. Recent acquisitions include German pharmaceuticals specialist Riemser, French engineer Fives and a minority stake in London's Luton airport.

As well as mid-sized buys, Ardian Managing Partner Dominique Gaillard said in the same interview that the firm was eyeing infrastructure assets like Vinci's SGEF.PA parking lots and more sizeable investments such as French catering group Elior.

"(Vinci Park) is something that interests us," Gaillard said. "If we look at it, it will be via our infrastructure fund. On Elior, there is no offer ... But we are interested."

Ardian also recently teamed up with China's Fosun 0656.HK to bid for French resort chain Club Med CMIP.PA, worth around 550 million euros. The bid was extended after shareholders issued a legal challenge but Gaillard said the bid would stay the same and that the complaints were "excessive".

Although deal making in Europe has been in the doldrums throughout the eurozone crisis, market conditions in the private-equity market have begun to improve with competition for assets less heated and banks more willing to lend, Poletti said.

There is also plentiful liquidity for the time being, he added, despite the risk of a knock-on effect in bond markets once central banks begin to unwind crisis-era liquidity support.

FRENCH IMAGE
When it comes to selling assets in Europe, the key will be taking advantage of growing cross-border interest from U.S. trade buyers and Chinese investors, Ardian's Gaillard said.

Although France has a reputation for being hostile to foreign takeovers - the French government scuppered a planned takeover of Dailymotion by U.S. web giant Yahoo YHOO.O - Gaillard said there was less uncertainty now on the tax environment and that he was optimistic about the future.

"We will see U.S. trade buyers come back ... And the Chinese have always been ready to seize opportunities," he said. "There is a gap between the (French) rhetoric and the reality, even though it's clear that the rhetoric has done a lot of harm."

As for Ardian's future strategy as an independent entity, with AXA retaining 23 percent in the firm, Gaillard stayed tight-lipped. Asked whether there could be an initial public offering of Ardian one day, he said it was not on the agenda.

Embattled head of pan-African Ecobank tells us he's open to changes

By Lionel Laurent

PARIS Fri Sep 27, 2013 6:32pm BST
 
(Reuters) - The chief executive of Ecobank (ETI.LG) said on Friday he was open to changing how the African lender decides on compensation and selection of board members amid Nigeria's continuing inquiry into governance issues at the bank.


While CEO Thierry Tanoh reiterated there was no substance to allegations of misconduct by a former employee that first triggered the probe by Nigeria's SEC, he told Reuters there were certain changes he believed could improve transparency and governance at the pan-African bank that operates in 34 countries.

"One issue that has already been raised is that Ecobank's group chairman is also the chairman of the governance committee," Tanoh said in an interview.
"There are other things: we could have a remuneration committee for certain executives and a selection committee for board members."

Ecobank, which is often touted as a pan-African banking success story, has seen its image take a hit from the Nigerian probe. The bank says the group's suspended head of finance, Laurence do Rego, has alleged she was asked to misstate 2012 results and that assets were being unnecessarily sold at a loss.

"I arrived in October 2012 ... How could I have put pressure in order to go back and misstate results?" said Tanoh, who dismissed the alleged activity as illogical and impossible to achieve without misconduct at all levels of the bank. "The SEC is obliged to investigate ...(But) the claims are impossible."

According to Ecobank, do Rego was suspended after she was caught lying about one of her qualifications and only then filed her complaint.

"I obtained permission to suspend (do Rego) ... I informally suggested she look for other opportunities ... And then she triggered everything," Tanoh said.

Looking to the future, Tanoh said he had no intention of stepping down but that calls for Chairman Kolapo Lawson to resign could only be answered by Lawson himself.

The CEO also said that he was confident in Ecobank's ability to drive growth organically and to cut costs.

 He said the bank's cost-to-income ratio should fall to below 70 percent next year from 71.3 percent in the first half of 2013.

"We have to work in a more efficient way ... This could mean taking a bank branch with too many staff and reallocating headcount elsewhere," he said.

Europe set for financial M&A pick-up, private-equity fund says

By Lionel Laurent and Matthias Blamont
PARIS, Sept 11 (Reuters) - Financial dealmaking will pick up in Europe as slow growth and tougher regulation prompts banks to try to slim down and boost profits, the co-founder of private equity firm BlackFin said on Wednesday.

Paris-based BlackFin has built up a portfolio of niche financial businesses across Europe since launching a 220-million-euro ($290-million) fund in 2011.

It expects to make more acquisitions of up to 100 million euros each and is eyeing Spain, Germany and Central Europe, Paul Mizrahi told Reuters in a telephone interview.

BlackFin is part-owner of brokerage Kepler Capital Markets, which recently struck a deal to buy French bank Credit Agricole's CAGR.PA broker Cheuvreux.

The firm sees more buying opportunities in asset management, insurance and equities brokerage and may launch a new fund within the next year or two, Mizrahi said.

While BlackFin focuses on small niche investments, there is increasingly deep-pocketed competition for European banking assets in general. Carlyle Group, Warburg Pincus and Apollo Global Management have all focused on European financials in recent years with varying degrees of success.

"This is a pretty ripe market for investment," Mizrahi said. "We are seeing an increase in the number of asset sales, either by insurers or banks, of subsidiaries that are no longer seen as strategic ... It's a big opportunity."

European banks have been under pressure since the 2008 financial crisis to sell assets to meet tougher post-crisis capital requirements. However, depressed valuations and the euro zone's troubles have deterred major cross-border deals.

"In asset management, whether in France or Germany, we once saw banks actively buying boutique firms ... some were successful but others were left by the wayside," said Mizrahi. "We are really interested in this sector."

BlackFin already owns wealth management advisory firm Cyrus Conseil.

There are also more bolt-on acquisitions to find for businesses like Kepler, which has struck deals with Italy's Unicredit CRDI.MI as well as Credit Agricole; the next step could be acquiring a broker in Spain, said Mizrahi, who also cited Germany as another market where deals could be made.

"We are seeing more and more offers from Germany," he said, noting that the country's banks were "not ahead of the pack" in terms of balance-sheet clean-up.

Mizrahi says BlackFin's portfolio, which includes French paycard provider Moneo, Italian insurance website Chiarezza and German online finance marketplace Finanzen, was overall bought relatively cheaply at around 6 to 7 times earnings before interest, tax, depreciation and amortization (EBITDA).

"We are already getting offers for a few of our holdings," he said. "In a world where there is zero growth, where the overall size of the market is not increasing, you must invest in the small players."

Special Report: Inside Qatar's (Tax-Free) Luxe Property Empire

(Full story)

My investigation of Qatar's property holdings in France, using a mix of public regulatory filings, turned up 6 billion euros' worth of luxury real estate and prompted TV coverage such as this report: http://videos.tf1.fr/infos/2013/le-parc-immobilier-du-qatar-en-france-depasserait-les-6-milliards-8260647.html

 
(Reuters) - The Champs-Elysees lures millions of tourists every year to enjoy shopping at the Elysees 26 mall, poker at the Aviation Club, plush cars and futuristic architecture in the Citroen showroom, or feather-clad showgirls at the Lido cabaret.


But for all their Parisian charisma, none of these attractions are French-owned. They belong to the royal family of Qatar, a resource-rich emirate about 3,000 miles away.

Some Muslims may frown on investments in gambling, alcohol and high-kicking dancers, but over the past few decades the buildings have helped bolster Qatar's global portfolio of trophy assets, including London's Harrods and Singapore's Raffles Hotel. The latest French addition was a chain of upscale malls under the Printemps banner, bought by a fund controlled by Qatari royals in August for 1.7 billion euros ($2.23 billion).

For oil-rich royalty from the Arab Gulf, part of the attraction of the United Kingdom has been the fact it charges no taxes on profits foreign investors make when they sell real estate. Five years ago, Qatar sealed a similar agreement with France. The treaty was agreed by former center-right president Nicolas Sarkozy in 2008, and is one of the most generous Qatar has secured, exempting Qatari investors from taxes on the profits they make when they sell properties.

In a country where 3.6 million people lack decent housing, according to Abbe Pierre, a charity, that is controversial.

Politicians, including some in Francois Hollande's new Socialist government, have been critical. In April budget minister Bernard Cazeneuve called the treaty "an exception that we do not wish to duplicate." Others have asked if the accord brings economic benefit to compensate for the lost tax revenue.

The government has said it is examining the treaty, but an official at the French finance ministry told Reuters that Qatar's purchases don't have to be declared, so it is impossible to see how much tax is at stake.

A Reuters examination of regulatory filings, court documents and other data sheds new light on Qatar's property assets. Reuters mapped around 40 properties in France that are owned by Qataris, a total investment of 5.9 billion euros ($7.8 billion) over the past decade, including 4.8 billion since 2008. At current values they would be worth around 6.3 billion euros.

The Qatari state and its sovereign wealth fund own about a dozen of the properties, together worth around 3 billion euros, Reuters found; the rest belong to members of the ruling al-Thani family. A personal fund set up by Sheikh Hamad bin Khalifa al-Thani, the previous emir, controls about nine of them; his children, including the current emir, six. The rest were bought either by other relatives, or businessmen with strong ties to the al-Thanis, such as Ghanim bin Saad al-Saad.

Each property is owned by a holding company that is itself held by one or more entities, some of them outside France. This makes it hard to track when properties change hands, to see how much tax the French have forgone with the deal.

If there had been no treaty, though, market values at the end of 2012 suggest the French government would have collected at least 145 million euros in tax if the entire portfolio were sold and taxed at the lowest applicable rate, according to Reuters calculations which were assessed by three experts.

While that's less than a day's gas export revenues for Qatar, in France it would equate to a year's pre-tax pay for some 4,500 schoolteachers or nurses.

The Qatari authorities and the sovereign wealth fund Qatari Diar did not respond to questions. Chadia Clot, whose company French Properties Management handles private investments made by the al-Thani family, did not respond.

Gilles Kepel, a professor at the Paris Institute of Political Studies, Paris, said Qatar's financial gains symbolize how the emirate has gained influence by spending its resource wealth, but has also triggered friction.

"Qatar has had a full-speed-ahead investment strategy in France, forged under the previous French administration," said Kepel. "But this has led to antagonism."

 (Full story)

Europe's recovery is real, BNP's CFO tells us

Europe's economy is showing signs of improvement and should lead to a more visible turnaround in the second half of 2013, the co-chief operating officer of French bank BNP Paribas (BNPP.PA) told Reuters Insider TV.


"We are seeing early signs of improvement but for me it will be more in the second part of the year," Philippe Bordenave said in an interview to present BNP's second-quarter results.

Commenting on the outlook for loan-loss provisions, he added: "We are relatively confident as far as France and Belgium are concerned...in Italy, it may be somewhat more difficult, given the recession."

French bank eyeing more deals in China's lucrative insurance market

PARIS, July 8 (Reuters) - BNP Paribas, France's No. 1 listed bank, has taken its first step into China's insurance market by buying Dutch bank ING's stake in a partnership with Bank of Beijing.

BNP is in the early stages of a plan to ramp up revenue and staff in Asia to offset recession in the euro zone, where it is heavily exposed.

ING, meanwhile, is having to shrink into a smaller, Europe-focused bank after it was bailed out by the Dutch government in the 2008 crisis.

The terms of the China deal were not disclosed, but BNP's insurance chief told Reuters on Monday that the joint venture represented 200 million euros ($257 million) in insurance premium income.

"We want to invest in this joint venture and will grow by adding clients, new products and eventually by making new partnerships," Eric Lombard said in a phone interview.

The deal, which has yet to be signed off by regulators, gives BNP a slice of the world's No. 2 insurance market and offers a route to cross-selling with other parts of the French bank, which recently raised its stake in existing partner Bank of Nanjing.

It also shows that top French banks like BNP and Societe Generale are stepping up their investments in China after focusing on more mature, developed banking markets in the past. SocGen last month opened its seventh mainland branch in northeastern China, near the Russian border.

However, smaller French rival Credit Agricole has been cutting its Asia exposure as part of a drive to focus on its home market in the wake of the euro zone crisis. It is in the closing stages of a deal to sell its CLSA Asian brokerage unit to China's CITIC Securities.

ING said in a statement that the sale of its 50 percent stake in the China venture would not have a "material" impact on group results or affect ING's own 13.7 percent stake in Bank of Beijing.

Currently, foreign banks are not allowed to own more than 20 percent of a Chinese lender. Canada's Bank of Nova Scotia said in May that Chinese authorities were reevaluating a proposed deal to sell 20 percent of Bank of Guangzhou to the Canadian bank.

Jerome Kerviel, still in Paris at a courtroom near you

By Lionel Laurent

PARIS, July 4 (Reuters) - A Paris employment tribunal on Thursday rejected former Societe Generale trader Jerome Kerviel's plea for a new expert inquiry to help overturn his dismissal in France's biggest-ever trading scandal in 2008.

In a separate criminal case, Kerviel is running out of options to escape conviction and a jail sentence upheld by an appeals court in October over 4.9 billion euros ($6.4 billion) in losses that French bank SocGen said were the result of unauthorized trades by Kerviel.

The 36-year-old ex-trader, who was ordered to repay the huge sum in its entirety, has never denied masking the 50 billion euros in market positions that went wrong as the financial crisis unfolded in early 2008. He has, however, always said his bosses knew what he was doing, an accusation SocGen denies.

Kerviel has asked the employment tribunal to overturn his dismissal and grant him 4.9 billion euros in damages but no new inquiry will now be opened.

Speaking to supporters and media outside the courthouse after the hour-long hearing, an unshaven and tieless Kerviel said he was disappointed but would keep fighting ahead of a final ruling by the employment tribunal, which could take months.

"I am disappointed, of course ... They've refused (my demands)," he said. "We will keep going."

Far-left groups and the popular press in France have painted Kerviel as a naive victim of big finance, despite his role before the case as a highly-paid trader. Dozens of supporters chanted slogans against SocGen and threw fake banknotes like confetti outside the court, also brewing coffee and serving croissants to the crowd.

SocGen's legal team issued a short statement saying Kerviel had been late in submitting several demands and that after a "lengthy debate" the employment tribunal had rejected them.

"Despite the media presence orchestrated by Jerome Kerviel, the legal system showed once again that it could remain clear-headed," it said.

Without a new inquiry, it is unlikely there will be any new elements brought to light that might help Kerviel's case, either before the employment tribunal or in the criminal proceeding.

LEGAL PARADOX
The former banker still has a chance of winning on some points, however, thanks to the technicalities of French employment law, argued Mabrouk Sassi, a lawyer who specializes in tax, business and employment law.

Under the terms of his dismissal, SocGen said he had wilfully sought to hurt the company, which may be successfully rejected, Sassi said. But even a victory for Kerviel in this case would only represent around 800,000 euros, barely a dent in the 4.9 billion due. He may also still face time in jail.

"The paradox is that SocGen could lose on the dismissal but win the criminal case," said Sassi.

Kerviel was flanked by his lawyer, David Koubbi, and far-left political firebrand Jean-Luc Melenchon, who compared the former trader to Alfred Dreyfus, a Jewish military officer and victim of anti-Semitism who was wrongfully charged with treason in the 19th century.

"This is a case of one individual against the financial world," Melenchon told reporters. "It is emblematic of the kind of world we are living in."

One of Kerviel's supporters, 60-year-old former secretary Sylvana Fauvet, said she viewed the ex-trader as a victim.

"I came to support (Kerviel)...They've already condemned him to death by making him repay the 4.9 billion," she said. "It's the bosses who are always responsible for what happens at a company, including when there are losses."