Citi continues to refuse to discuss its 10 percent stake Al Raya Investment, four days after the Kuwaiti firm’s chief executive was found dead.
 
A New York-based spokeswoman for Citi declined to discuss how the investment came to be, what due diligence was done before the investment was made, and what the Citi plans to due with its stake in the embattled firm.
 
Al Raya chief executive Hazem Al-Braiken was found dead in an apparent suicide on Sunday after a whirlwind week in which he and two other finance firms were accused by the U.S. Securities and Exchange Commission of having improperly earning millions of dollars from trades in two U.S. firms.
 
Al-Braikan seemed to be at the top of his career just a year ago, Reuters correspondent Ulf Laessing reported earlier this week.
 
Last summer, Al-Braikan hosted then chairman of Citigroup Sir Winfried Bischoff, who was visiting Kuwait soon after Citi bought 10 percent of Al Raya. Al-Braikan lunched with Bischoff and even took him to meet Kuwait’s ruler.
 
Earlier this week, Bischoff refused to talk about Citi’s investment in Al Raya during an interview with Reuters correspondent Steve Slater.
 
“You have to ask Citigroup on that,” Bischoff said.
    
But we did and they were no more forthcoming.

(Photo: REUTERS/Lucas Jackson)

A Warburg Pincus deal to invest $115 million in Webster Financial on Monday left at least some folks scratching their heads. 

The private equity firm agreed to start with an initial investment acquiring 5.9 percent of Webster’s common stock, to be raised to 15.2 percent after getting regulatory and other approvals. 

On the face of it, the 5.9 percent figure was unusual because the stake threshold for private investors in banks is 9.9 percent — beyond which they need to get the Fed to sign off on the deal.

So, why 5.9 percent and not 9.9 percent (or even nothing) before all approvals?

As it turns out, the 5.9 percent is actually like 9.9 percent – when you include the warrants that Warburg is getting as part of the deal, according to a source familiar with the matter. 

When the Fed works out the 9.9 percent number, it takes into account the warrants — even if they have not or will not execute them, the source said.

Those anticipating a quick return to the heyday of mergers & acquisitions may have a wait a little while longer. 

Lazard CEO Bruce Wasserstein told investors in a conference call that it would be four years before traditional M&A activity picks back up to earlier highs. 

“We are planning for a gradual increase in traditional M&A activity, reaching the prior period highs in about four years,” Wasserstein said.

Lazard, which reported earnings on Wednesday, saw a bounce in M&A from the first quarter, but is still well behind the year-ago quarter. 

In the meantime, the restructuring business is taking up some of the slack. The restructuring unit posted a record quarter with $93 million in operating revenues. 

“The advisory business at Lazard is now much broader than M&A,” Wasserstein said.

Photo Courtesy of Lazard.com

    Buying ABN AMRO may have bankrupted Royal Bank of Scotland and Fortis, but it has proved another coup for Spain’s Santander whose chairman Emilio Botin has shown his eye for a bargain.
    After flipping Italy’s Banca Antonveneta for an impressive profit before the ink was even dry on the contract to take it over from ABN, Botin is now looking to float Banco Santander Brasil, including another former ABN asset, Banco Real, once part of the Dutch bank’s Latin American empire.
    With Brazilian valuations riding high and the IPO market flourishing, Citigroup reckons BSB could be worth as much as $30 billion. If so, the partial sale would again demonstrate Botin’s ability to spot a good deal.
    Brazil is far too important to Santander — it accounted for 18 percent of the bank’s first half profits of 4.5 billion euros — for Botin to give up control. But a flotation of 15 percent of the Brazilian bank could raise $4.5 billion of scarce capital while giving Botin another currency for shopping in South America. lt is already Brazil’s third-largest bank by assets.
    Santander has been able to keep buying through the financial crisis, becoming the biggest bank in the euro zone as a result. Botin has also picked up Sovereign Bancorp in the U.S. and Alliance & Leicester, along with the remains of failed former building society Bradford & Bingley, in Britain.
    Floating the Brazilian business would crystallise its value. It might also boost Santander’s own share price, but risks investors taking the view that a global roll-out of the bank’s name and brand means the parent is becoming a conglomerate rather than an integrated group.
    The possibility of attracting a conglomerate discount won’t have escaped Botin, whose family still owns nearly 2.5 percent of the $115 billion bank.
    Unlike his colleagues in the banks which have failed, Botin has his family fortune tied up in the business he runs. This, surely, is a powerful reason why Santander has avoided plunging into areas where the risk was far greater than the executives knew or cared. The bank has the strength to take advantage of the fashion for things Brazilian, and he can reflect that the acquisition which sunk RBS has done him no harm at all.

Microsoft and Yahoo finally tied a knot, but not the knot that Yahoo shareholders have long yearned for. The new-economy giants inked a 10-year Web search deal in a bid to take on Google. Google shares barely budged but Yahoo’s sank more than 6 percent as the deal stopped short of combining display advertising businesses.

Back when this deal was all the rage, it was a story of egos. Then Yahoo CEO Jerry Yang was ultimately thrown out for not getting a deal done. Veteran agitator Carl Icahn was in top form, blasting Yahoo from the Street. Now under the new management of Carol Bartz, expectations were slowly rising that a broader deal might get done.

The question now is whether the market that had for so long hoped for a big deal will see this one as at least a step in the right direction.

The recent history of Britain’s eccentrically-named Slug & Lettuce pubs should make a sobering read for ambitious property investors with an eye on similar investments.

The chain’s woes began in 2005, when its then owner, the SFI Group, plunged into administration due to difficulties with its finances.

Its collapse triggered property tycoon Robert Tchenguiz to buy up the group’s best outlets and bring them into his Laurel Pub Company.

Three years later, it was the turn of heavily indebted Laurel to crash into administration, caught out by a downturn in the economy and difficult financing conditions. As part of the adminstration process Laurel split into two, with the Slug & Lettuce pubs placed into a new company, the Bay Restaurant Group, as part of its portfolio of 190 outlets.

Yesterday, Bay Restaurant agreed its second financial rescue in as many years, with banks agreeing a new 150 million pound loan in exchange for taking a stake in the company. The banks providing the rescue financing were Iceland’s Kaupthing and Germany’s Commerz – hardly strangers to rescues themselves.

Tchenguiz’s property investment vehicle R20 has not had an interest in the company since March 2009, bringing to an end the company’s bid to make profits from a heady cocktail of leverage, property and pubs.

This mix powered a succession of boom-time pub deals in the first part of the decade, when billions of pounds were borrowed against the income of drinkers’ regular haunts. Punch Taverns (PUB.L) and Enterprise Inns (ETI.L) were among those that supped deeply on the ample liquidity sloshing around the markets.

Almost inevitably the party came to an end. The crunch brought the flow of credit to a standstill, leading to falling property prices as well as a downturn in sales.

As a result, pubs no longer seem an attractive property investment nor a guaranteed supply of income. Property investors like Tchenguiz have exited the stage nursing massive hangovers, leaving debt investors and banks to pick up the pieces.

Spain’s Santander confirms plans to spin-off 15 percent of its Brazilian business in a flotation potentially worth over $3 billion.

Reuters reported on July 21 that the bank was mulling an initial public offering in the second half of the year, and advisers have been appointed, people familiar with the matter say.

Santander will lead and underwrite the share sale alongside Credit Suisse and Bank of America/Merrill Lynch. Banco Pactual, the Brazilian bank sold by UBS in April, will be a bookrunner on the deal, the sources say.

Santander boss Emilio Botin has high hopes for the Brazilian unit, and meeting Brazilian soccer legend Pele, above, won’t have done his bank’s brand any harm. Santander is Brazil’s third biggest private sector bank by assets, after beefing up through the purchase of ABN Amro’s local bank.

Santander will be the latest in a string of companies in Brazil to capitalize on improving market conditions by selling shares to raise money.

Spain’s Banco Santander (SAN.MC) has appointed advisers to spin off its Brazilian business in a $3 billion initial public offering (IPO) to create one of Brazil’s biggest bank, the FT reports. But it’s not new — Reuters carried the story last week, which said Bank of America-Merrill Lynch, Credit Suisse and UBS would underwrite any deal. Click here for that story. More details could come from Santander today alongside its Q2 results.

In other M&A related stories reported by Reuters and other media on Wednesday:

Private equity firm Kohlberg Kravis Roberts & Co is in the advanced planning stage for an initial public offering of stock in Dollar General Corp, a discount retailer. Goldman Sachs, Citigroup and KKR are likely to underwrite the deal, the Wall Street Journal cited people familiar with the matter as saying.

Sumitomo Trust and Banking has agreed to buy Nikko Asset Management, Citigroup’s Japanese asset manager, for about 100 billion yen ($1.1 billion), the Nikkei newspaper reported.

National Australia Bank (NAB.AX) has agreed to buy 80.1 percent of Goldman Sachs JBWere’s private wealth management business in Australia and New Zealand. Click here for a Reuters story.

Reinsurer PartnerRe (PRE.N) has agreed to buy 19.5 percent additional Paris Re (PRI.PA) shares as part of its bid to buy the smaller rival in a $2 billion deal. Click here for a Reuters story.

CIT Group will not provide financing for the Molson family’s deal to buy the Montreal Canadiens hockey team. Click here for a Reuters story.