Damn it c.hinton -- you're HOT on the trail.
You gotta be part bloodhound...
Goldman raking in billions of dollars in it's single
most profitable trade since the founding of the
company in 1869.
And it only took them 6 months to do it!
-- whodathunkit?
Trust me...this is only the beginning.
And Goldman's not after billions.
They're after trillions.
The world is on the precipice of one of the greatest
shifts of power and wealth in modern history.
I've only hinted at half of the story. The money
making touchstones...you must find for yourself.
Nothing that is given away for free - is ever held
at high value.
If you think the Q's, the DOW, and playing dead-cat bounces
in commodity stocks is where the money is... I can only
say -- Thank You, because that leaves mo-money for me.
And I be all about -- mo-money.
Nothing is ever as simple as it seems...and this
isn't simple. You've been given enough (for now) that
even with a small grubstake...if you THINK and don't
follow the madness of crowds, or get doomed by your
own greedy DNA... maybe, just maybe...you'll finally
find that pot of gold at the end of your rainbow.
I found mine in a serendipitous conversation over
lunch at Mama's on Lyford's Cay.
It opened a door that changed my life.
It would be bad...very bad Karma; not to give
something back.
You've been given a start...and enough for now.
Later,
$lider
PS: Always remember "The Goldman Twins" connection...
bloomberg.com
Goldman Sachs China Bank Gambit Proves Biggest Investment Gain
By Cathy Chan and Adrian Cox
Oct. 23 (Bloomberg) -- Goldman Sachs Group Inc. has managed to do in China what nobody on Wall Street has done anywhere: earn almost $4 billion from a six-month-old investment.
That, at least, is the profit so far on the $2.6 billion Goldman put up for about 5 percent of Beijing-based Industrial & Commercial Bank of China Ltd. ICBC's record initial public offering now values the nation's largest bank at $129 billion.
While Goldman and investors in its private equity funds are prohibited from selling their ICBC shares for three years, the gain of $3.9 billion would be the biggest for New York-based Goldman on any trade since it was founded in 1869, according to people with knowledge of Goldman's investments.
The ICBC grubstake is ``a move that Goldman wouldn't have made in the old days because it didn't have the interest or the experience or the capital or the nerve to make those kinds of investments,'' said Roy Smith, a finance professor at New York University in Manhattan, who ran Goldman's London office in the 1980s.
The China bonanza is the result of more than 70 visits by former Goldman Chief Executive Officer Henry M. Paulson Jr., who became the 74th U.S. Treasury Secretary last June.
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Goldman is poised to earn more fees than its global competitors in the world's most-populous country because it is the only foreign securities firm allowed to both trade stocks for brokerage clients and arrange share sales for companies.
Beating Soros
Goldman, which has been the most-profitable securities firm since 2004, relied on its so-called principal investments for $1.4 billion, or 5.1 percent, of revenue in the first three quarters of this fiscal year. The company in April purchased its stake in ICBC, whose shares start trading on Oct. 27.
``At this point, the investment looks great but Goldman isn't cashing out of the deal,'' said Jay Ritter, a professor of finance at the University of Florida in Gainesville. ``There is still political risk,'' as well as an unpredictable business and legal environment in China, he said.
Unless the stock market plummets, Goldman's ICBC profit would dwarf the $1 billion that billionaire George Soros pocketed in September 1992 from his bet against the British pound. Goldman's expected bounty also surpasses the $3.7 billion that it has secured in less than four years from a $1.28 billion investment in Sumitomo Mitsui Financial Group Inc., Japan's third-largest bank. Goldman recorded a $261 million profit from the stake in the Tokyo-based bank in its third-quarter revenue statement.
The ICBC windfall also exceeds the more than $1 billion that Goldman and New York-based rival Morgan Stanley shared last year from selling stakes in China's Ping An Insurance (Group) Co., a stake they bought for $70 million in 1994.
Goldman Funds
The Sumitomo Mitsui and ICBC deals were financed with a combination of Goldman's own money and investments by partners, institutions and wealthy clients. About $1.65 billion, or two- thirds, of the investment in ICBC was from funds managed by Goldman as of Aug. 25 and the rest was the firm's capital.
China gave Goldman favorable terms for the stake in ICBC because of an understanding that Goldman would cooperate on business ventures with ICBC, said Ritter of the University of Florida. ``They weren't merely passive financial investors because they're putting their sweat equity into the deal as well,'' he said.
Lucas van Praag, a Goldman spokesman, said the ICBC stake is a ``strategic investment.'' He declined to comment further.
Allianz SE of Munich, Europe's largest insurer, and New York-based American Express Co., the fourth-biggest U.S. credit- card issuer, together bought $1.24 billion of ICBC shares before the $19.1 billion IPO. Like Goldman, they're also poised to more than double their money.
Bank Stocks
Shares of Bank of China, China Construction Bank and Shanghai-based Bank of Communications Co. appreciated 70 percent on average since they sold shares to the public in mid-2005. Bank of America Corp. earned more than $1 billion from an investment in China Construction Bank Corp. and Royal Bank of Scotland Group Plc showed a $1 billion profit from Bank of China Ltd. during the past one-and-a-half years.
In all, 53 banks have gone public worldwide since the beginning of 2003, according to data compiled by Bloomberg. Only 11 are trading below their initial offering valuations.
China's $2.2 trillion economy grew 10.4 percent in the third quarter from a year earlier. It has expanded at an annual rate of more than 6 percent and outpaced the U.S. and Europe every year since 1991. The nation's stock market may quadruple to $1.9 trillion by 2010 from $402 billion at the end of 2005, according to a Sept. 15 report published by Zurich-based Credit Suisse Group.
Gao Hua
Global financial companies, including UBS AG of Zurich, Bank of America of Charlotte, North Carolina, and London-based HSBC Holdings Plc, have spent $19 billion since 2001 for stakes in Chinese commercial banks as the government opens the capital markets by selling shares to investors.
Goldman also is competing to break into China's nascent investment-banking market. Two years ago, Goldman locked in its ability to sell and trade securities in mainland China when it spent about $200 million to set up brokerage Beijing Gao Hua Securities Co. and an investment-banking affiliate.
To operate an investment bank in China, overseas firms need a license to underwrite stock and bond sales. They need a separate brokerage license to trade securities. Only Goldman, Paris-based BNP Paribas SA and CLSA Ltd., Asia's biggest independent brokerage, have underwriting licenses and just Goldman has an operating brokerage license as well.
Foreign firms are restricted to owning 33 percent of an investment-banking venture and 20 percent of a brokerage. China last month closed the window on future partnerships by barring any more overseas firms from buying domestic brokerages.
`Foot in the Door'
By signing up veteran banker Fang Fenglei as a partner and providing a loan to create Gao Hua, Goldman obtained the underwriting and brokerage licenses and practical control of the venture without violating China's restrictions on foreign ownership. Fang, 54, co-founded China International Capital Corp., the country's first investment bank, in 1995 and ran the securities unit of ICBC. He now runs Beijing Gao Hua.
``Goldman's current foot in the door allows them to build up the necessary infrastructure for the future,'' said Glenn Henricksen, who previously worked at Bear Stearns Cos. and now heads Hong Kong-based CIF Consultants, which specializes in providing advice on credit risk.
UBS, Switzerland's biggest bank, plans to buy 20 percent of a domestic securities firm for $210 million to gain underwriting and brokerage licenses. UBS's partners have won preliminary approval to set up UBS Securities.
New York-based Merrill Lynch & Co., Morgan Stanley and JPMorgan Chase & Co. have said they want to set up local firms.
Ping An Sale
Goldman this year won its first underwriting assignment for an IPO in mainland China. Next year, the company will help arrange a $4.1 billion sale in Shanghai for Ping An Insurance.
Beijing-based China International, now run by Levin Zhu, son of former Premier Zhu Rongji, is this year's leading underwriter in the country with $2.07 billion of deals, Bloomberg data show. China International was among five firms picked to arrange ICBC's share sale.
``Goldman simply doesn't have the branch coverage to compete with Chinese brokerages,'' said Fraser Howie, co-author of ``Privatizing China: The Stock Markets and Their Role in Corporate Reform,'' published in 2003 by John Wiley & Sons Inc. The question is ``whether there will be preferential treatment for large, established Chinese brokers,'' he said.
Thornton's Role
This year, Goldman ranks second behind UBS in underwriting shares of Chinese companies outside the mainland, according to Bloomberg data. Goldman and UBS both worked on Bank of China's $11.2 billion initial share sale in June. UBS also advised BP Plc on the sale of a Russian affiliate to China's Sinopec in a deal valued at about $3.5 billion.
Goldman opened offices in Beijing and Shanghai in 1994 when it became the first overseas firm to get a license to trade dollar-denominated Class B shares on the nation's stock markets. The company, which now has about 140 bankers on the ground, promoted Richard Ong, 41, this month to run investment banking in Asia, including Goldman Gao Hua.
Paulson, 60, led Goldman in cultivating government officials since the mid-1980s. Paulson helped set up a nature reserve in Yunnan province. His onetime deputy John Thornton got to know future Chinese President Jiang Zemin when Jiang was mayor of Shanghai in the mid-1980s, said Smith, the former Goldman partner. Thornton, 52, left in 2003 to become the first non- Chinese professor at Beijing's Tsinghua University.
Paulson's Outlook
``The Chinese government views Goldman as a very important and reliable business partner,'' said Fang Zheng, a partner of New York-based Neon Capital Management LP, which has $450 million invested in emerging markets including China.
Goldman now earns about 60 percent of its revenue in the U.S., according to its financial statements. Chief Financial Officer David Viniar told analysts in June that ``non-U.S. businesses are growing faster than the U.S. businesses, with Asia growing the fastest.'' He didn't address China or Asia in his third-quarter presentation in September.
Paulson told investors at a financial-services conference in New York last November that ``as fast as this business is growing, we don't believe it can be a meaningful percentage of our revenues in the near term. But looking out five years, if things develop as we hope, China may be an important contributor.''
To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net ; Adrian Cox in London at acox2@bloomberg.net . |
