Category Archives: Investment Banking

Investments of Macquarie Group Limited in West African Resources Ltd.

According to Yahoo Finance, Macquarie Group Limited (“Macquarie“) announces that, due to the recent acquisition of 40,545,224 options, as compensation for services in connection with a loan, it now has ownership of 40,545,224 options of West African Resources  Ltd (“West African Resources“), each warrant with a strike price of AUD 0.14. To Macquarie’s knowledge, this represents approximately 13.04% of the issued and outstanding shares of West African Resources, on a partially-diluted basis.

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As Canadian M&A Soars on Oil, Goldman Sachs Becomes Top Adviser, edging out JPMorgan Chase, Royal Bank of Canada, Barclays and Citigroup

Mergers and Acquisitions Conference 2015 New York City

Mergers and Acquisitions Conference 2015 New York City

Goldman Sachs was the top investment banking adviser on Canadian mergers and acquisitions in 2014, as oil and gas and cross-border deals drove takeovers to a seven-year high.

According to Bloomberg, Canadian firms were involved in $229 billion worth of transactions through Dec. 29, the highest annual tally since 2007 and up 45 percent from last year, according to data compiled by Bloomberg.

Goldman advised on $61.6 billion worth of those deals, its highest ever in Canada, and narrowly edging out JPMorgan Chase, which advised on transactions valued at $61.3 billion. Royal Bank of Canada slipped to third spot after three consecutive years at No. 1, while Barclays and Citigroup rounded out the top five. The figures and rankings are based on announced date and subject to change as more deals are recorded.

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The New York Times: As Hewlett-Packard and Compaq Show, Mergers and Acquisitions Cycle All About Buy, Divide and Conquer

In the fall of 2001, Hewlett-Packard announced a momentous $25 billion merger with Compaq, as commented by The New York Times.

“This is a decisive move that accelerates our strategy and positions us to win by offering even greater value to our customers and partners,” declared Carly Fiorina, HP’s chairwoman and chief executive at the time, describing how the deal would “create substantial share owner value.”

Thirteen years later, just this fall, Meg Whitman, HP’s current chairwoman and

Mergers and Acquisitions Conference 2015 New York City

Mergers and Acquisitions Conference 2015 New York City

chief executive, undid that deal, splitting the company in two. “It will provide each new company with the independence, focus, financial resources and flexibility they need to adapt quickly to market and customer dynamics.”

Eerily mirroring Ms. Fiorina’s words, she said the divorced companies “will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders.”

So which was the right decision? The merger or the spinoff?

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Goldman Sachs’s David Kostin on Why 2015 Could be Better than We Think

According to CNBC, Goldman Sachs already appears to be having second thoughts on its tepid forecast for 2015.

The firm’s clients believe Goldman is overestimating how much interest rates will rise in the years ahead, strategist David Kostin said in his weekly report that summarized recent meetings with market pros.

Kostin has projected the Federal Reserve‘s target funds rate to hit 3.9 percent by the end of 2018. Fund managers, though, believe slow global growth and low inflation will keep the U.S. central bank in only modest hiking mode, translating to just a 2 percent funds rate in that span.

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Volcker Rule Ushers in Era of Increased Oversight of Trades

According to Bloomberg,

Wall Street faces more intensive government scrutiny of trading after U.S. regulators issued what they billed as a strict Volcker rule today, imposing new curbs designed to prevent financial blowups while leaving many details to be worked out later.

The Federal Reserve, Federal Deposit Insurance Corp. and three other agencies formally adopted the proprietary trading ban. The rule has been contested by JPMorgan Chase & Co., Goldman Sachs Group Inc. and their industry allies for more than three years.

Wall Street’s lobbying efforts paid off in easing some provisions of the rule. Regulators granted a broader exemption for banks’ market-making desks, on the condition that traders aren’t paid in a way that rewards proprietary trading. The regulation also exempts some securities tied to foreign sovereign debt.

At the same time, regulators said the final version imposed stricter restrictions on hedging, providing banks less leeway for classifying bets as broad hedges for other risks. To pursue a hedge, banks would need to provide detailed and updated information for review by on-site bank supervisors.

Limiting Risks

 

“This provision of the Dodd-Frank Act has the important objective of limiting excessive risk-taking by depository institutions and their affiliates,” Fed Chairman Ben S. Bernanke said in a statement. “The ultimate effectiveness of the rule will depend importantly on supervisors, who will need to find the appropriate balance while providing feedback to the board on how the rule works in practice.”

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Warren Hits Banks, Expands Base to Solidify Senate Power

According to Bloomberg,

Elizabeth Warren, in her first year as a U.S. senator, has captured headlines by pressuring such industry titans as Goldman Sachs Chairman Lloyd C. Blankfein for transparency, including a Dec. 4 call for Wall Street banks to disclose their contributions to policy groups that provide financial analysis to Congress.

With less fanfare, she’s forging alliances with Republican Senate colleagues, expanding her political network in Massachusetts, and tapping her backers to help Democrats running for re-election in other states.

It’s a strategy that sounds a lot like one adopted by another woman who entered the chamber with a national profile that made her a lightning-rod for praise and derision as she was dogged by questions about her presidential aspirations.

“I think she’s followed a path not unlike that of Hillary Clinton, which is learn how to be a senator,” said Ross Baker, a political science professor at Rutgers University in New Brunswick, New Jersey.

“Clearly, she has decided not to be a liberal Ted Cruz, to learn the ropes, particularly in the area that she cares most about, which is financial services,” Baker said, contrasting Warren with the Texas Republican freshman senator whose push to defund the 2010 health-care law helped lead to the partial government shutdown in October.

Future Contests

Warren, 64, is building relationships that could be helpful in future races, nationally or statewide. While she has said she won’t run for president in 2016 and signed a letter encouraging Clinton to do so, she’s also seizing on speculation about her future to advance her causes.

Asked by reporters on Dec. 4 if the presidential speculation hurts or helps her consumer-oriented legislative proposals, she said: “I’m glad to see any possible energy put behind those fights.”

Related: Elizabeth Warren Versus the Think Tanks

After rising to prominence as a critic of the housing and financial industries during the 2008 financial collapse, Warren became the architect for the Obama administration of the Consumer Financial Protection Bureau, created by the 2010 Wall Street Reform and Consumer Protection Act. After she failed to secure the top job at the bureau, Warren won her Senate seat by challenging Republican incumbent Scott Brown in 2012.

At her first appearance as a member of the Senate banking committee in February, she asserted that Wall Street firms had become “too big for trial” and, at a March hearing, she criticized regulators because no one went to jail after HSBC Holding Plc operations in the U.S. admitted to enabling Mexican and Caribbean drug cartels to launder billions of dollars.

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Bank of America Intern’s 5 A.M. E-Mail Before Death Worried Mom

According to Bloomberg,

Bank of America Corp. intern Moritz Erhardt worked day and night in the weeks before his death, sending e-mails to his parents and colleagues in the early hours of the morning.

The 21-year-old died of an epileptic seizure while taking a shower on Aug. 15, a London coroner said after an inquest yesterday. He never once complained about his workload, Erhardt’s parents and co-workers said, even when staying up until 5 a.m.

“It may be that Moritz had been working so hard that his fatigue was a trigger for the seizure that killed him,” Coroner Mary Hassell said at the inquest. “But that is only a possibility.”

The plight of Erhardt prompted Bank of America to set up a panel of senior managers to “review all aspects of this tragedy,” the bank said following his death. Erhardt was found unconscious at Claredale House, a student residential facility in East London. He was pronounced dead at the scene at 8:34 p.m. after being treated by paramedics.

“Moritz had a natural cause of death, though it’s not so natural that a young man should die like this,” Hassell said.

Erhardt’s parents told the coroner that their son contacted them the day before his death in a 5 a.m. e-mail.

“My wife noticed in his last week that he didn’t get enough sleep,” Hans-Georg Dieterle, his father, said. “We thought this might be a risk in terms of his epilepsy.”

An autopsy found that he was regularly taking medicine to treat epilepsy.

Medical Form

Bank of America's London Offices (Bloomberg)

Bank of America’s London Offices (Bloomberg)

Erhardt didn’t tell the bank about his condition, answering “no” to questions about whether he suffered from seizures on a medical form, according to Hassell, who read the document out in court.

Jonathan Hough, a lawyer for the bank, asked the court to make “no reference” to circumstances other than the primary cause of death “including working practices” in the coroner’s final verdict.

Erhardt’s mother bowed her head, almost touching the wooden table in front of her, during Hough’s arguments.

“We continue to extend our heartfelt condolences and sympathy to Moritz’s family,” the bank said in an e-mailed statement. “Moritz Erhardt’s death was a tragedy that affected and saddened everyone in our company and especially those who had the privilege to spend time with him.”

Hassell questioned Erhardt’s development officer at the bank’s Merrill Lynch unit about whether working late was necessary in investment banking.

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