Subprime fears hit financial offerings
Subprime fears hit financial offerings
By James Mackintosh in London, Doug Cameron in Chicago and Krishna Guha in Washington
Copyright The Financial Times Limited 2007
Published: July 19 2007 16:02 | Last updated: July 19 2007 21:46
Investor nervousness over subprime losses in the US – which Ben Bernanke on Thursday cited at up to $100bn – is hurting demand for financial share offerings.
London’s MAN Group on Thursday blamed concerns about the impact on the financial sector of defaults on home loans to the riskiest borrowers for raising only $2.9bn, against a target of $3.5bn-$3.8bn from floating MF Global, its brokerage arm. The shares closed down more than 8 per cent from the $30 listing price at $27.55.
The MAN spin-off was the latest in a series of disappointments for financial services initial public offerings prompted by growing worries that credit could become tighter following the meltdown in the subprime market.
New York activist hedge fund Third Point raised $525m on Thursday from listing a fund in London after a 24-hour delay, well below its €500m ($690m) target. Lehman Brothers injected an extra $45m of its own money into a fund of private equity funds it listed in Amsterdam on Wednesday, to ensure hitting its $500m goal. Both have over-allotment options that could raise $48m and $50m extra respectively if the shares rise.
“Traditional investors have become a little bit skittish,” said one investment banker who advises on hedge fund and private equity IPOs.
The troubles in the subprime sector last month brought down two Bear Stearns hedge funds – one of which is now worthless – and have badly wounded a handful of other funds.
Peter Clarke, chief executive of MAN, said investors were cutting back their exposure to the financial sector because of the subprime risk.
“There’s some extra work people have to do in this environment to ensure they know what they’re buying into,” he said, adding that MAN had no subprime exposure.
But Daniel Loeb, founder and chief investment officer of Third Point, said the fund’s float was a “real success” and investors understood that it was not suffering from the US subprime problems.
“The people who are investing with us are sophisticated enough to understand that, if anything, we are doing better now because we are short subprime,” he said.
It remains unclear to what extent subprime contagion will spread into other markets, although widening credit spreads are already hurting some private equity buy-outs.
Shares in Blackstone, the private equity group that listed at $31 a share last month, tumbled 4 per cent on Thursday morning to $27.27.
Mr Bernanke told the Senate banking committee that the losses from subprime would be “significant” and said estimates suggested they may be $50bn to $100bn.
Additional reporting by James Politi in New York
By James Mackintosh in London, Doug Cameron in Chicago and Krishna Guha in Washington
Copyright The Financial Times Limited 2007
Published: July 19 2007 16:02 | Last updated: July 19 2007 21:46
Investor nervousness over subprime losses in the US – which Ben Bernanke on Thursday cited at up to $100bn – is hurting demand for financial share offerings.
London’s MAN Group on Thursday blamed concerns about the impact on the financial sector of defaults on home loans to the riskiest borrowers for raising only $2.9bn, against a target of $3.5bn-$3.8bn from floating MF Global, its brokerage arm. The shares closed down more than 8 per cent from the $30 listing price at $27.55.
The MAN spin-off was the latest in a series of disappointments for financial services initial public offerings prompted by growing worries that credit could become tighter following the meltdown in the subprime market.
New York activist hedge fund Third Point raised $525m on Thursday from listing a fund in London after a 24-hour delay, well below its €500m ($690m) target. Lehman Brothers injected an extra $45m of its own money into a fund of private equity funds it listed in Amsterdam on Wednesday, to ensure hitting its $500m goal. Both have over-allotment options that could raise $48m and $50m extra respectively if the shares rise.
“Traditional investors have become a little bit skittish,” said one investment banker who advises on hedge fund and private equity IPOs.
The troubles in the subprime sector last month brought down two Bear Stearns hedge funds – one of which is now worthless – and have badly wounded a handful of other funds.
Peter Clarke, chief executive of MAN, said investors were cutting back their exposure to the financial sector because of the subprime risk.
“There’s some extra work people have to do in this environment to ensure they know what they’re buying into,” he said, adding that MAN had no subprime exposure.
But Daniel Loeb, founder and chief investment officer of Third Point, said the fund’s float was a “real success” and investors understood that it was not suffering from the US subprime problems.
“The people who are investing with us are sophisticated enough to understand that, if anything, we are doing better now because we are short subprime,” he said.
It remains unclear to what extent subprime contagion will spread into other markets, although widening credit spreads are already hurting some private equity buy-outs.
Shares in Blackstone, the private equity group that listed at $31 a share last month, tumbled 4 per cent on Thursday morning to $27.27.
Mr Bernanke told the Senate banking committee that the losses from subprime would be “significant” and said estimates suggested they may be $50bn to $100bn.
Additional reporting by James Politi in New York
posted by Carlos T Mock at 3:08 AM
0 Comments:
Post a Comment
<< Home