Saturday, May 23, 2020

Billionaires Won as Unemployment Soared

Forbes reported:

America's billionaires saw their wealth increase by $434 billion during the course of the global pandemic, according to a new report, a staggering figure that coincided with upheaval to the global economy and more than 38 million Americans filing for unemployment.
The Forbes 400 Richest Americans had a minimum of $2.1 billion to make the cut (as of December 2, 2019).  A number of private equity underwriters (PEU) made the list, although some chose to show their income source as something other than private equity.

Also, I included recently pardoned "Junk Bond King" Michael Milken as a founder of the greed and leverage boys.  Pardoner President Donald Trump was #275 on the list with $3.1 billion, the same as Carlyle Group co-founder David Rubestein.

The Federal Reserve Bank, headed by two former Carlyle Group executives, rode to the rescue for the billionaire class after the March 16th coronavirus inspired stock crash.  Fed Chair Jay Powell and Vice Chair Randall Quarles were PEU boys before they joined the Federal Reserve Bank.

They have bailed out their brethren

Wednesday, May 20, 2020

PEU Wake Up Calls

Wall Street on Parade did a piece on Fed Chief Jay Powell and Vice Chair Randall Quarles being former Carlyle Group executives.  It also highlighted a number of Carlyle bankruptcies and the carnage left behind.

American Compass, a Republican think tank, came out against private equity.

“The buying and selling of companies, the mergers and divestments, the hedging and leveraging, are not themselves valuable activity,” the group warned in a bluntly worded primer laying out its Coin-Flip project. “They invent, create, build and provide nothing.” 
PEUReport chronicled the evils of private equity since 2007.  The Fed flooded the financial system with money in Fall 2008.  Carlyle's Randall Quarles helped land Carlyle's sweet BankUnited deal from the FDIC.   Trump Commerce Secretary Wilbur Ross made huge money on that same deal when he partnered with Carlyle to buy BankUnited with massive FDIC subsidies.

Bloomberg wrote in October 2019 how private equity had taken over the world and won the 2008 financial crisis.  That crisis is the template for Federal Reserve interventions around the coronavirus pandemic.

The greed and leverage boys stand to win big again. 

Sunday, May 17, 2020

Billionaires Make Own Rules

Billionaires Jeff Bezos and Elon Musk are apparently above the law.  Bezos refused to testify before Congress while Musk opened his California Tesla plant in violation of state lock-down orders and county public health rules.

On May 1, 2020 the House Judiciary Committee issued a press release:

House Judiciary Committee Chairman Jerrold Nadler (D-NY), Antitrust Subcommittee Chairman David N. Cicilline (D-RI), Subcommittee Ranking Member F. James Sensenbrenner (R-WI), Subcommittee Vice Chairman Joe Neguse (D-CO), Representative Pramila Jayapal (D-WA), Representative Ken Buck (R-CO), and Representative Matt Gaetz (R-FL) sent a letter to Jeff Bezos, the CEO and Founder of Amazon, calling on him to appear before the Committee to testify about competition concerns relating to Amazon's business practices.
 Yahoo News reported on May 15th: Inc said on Friday it would make an "appropriate" executive available to the U.S. House of Representatives Judiciary Committee to testify about allegations related to how the company uses third-party sellers' data.
Wealthy executives and celebrities can continue flying private jets thanks to $27 million in government funds, a grant that does not need to be repaid.  Its founder donated to President Trump's campaign.

Thursday, May 14, 2020

CNBC Edits Rubenstein's Comment to Wilfred Frost

Yesterday I saw irritation/snippyness in Carlyle co-founder David Rubenstein's response to CNBC host Wilfred Frost.  

Rubenstein held it together when Wilfred asked about damage to Carlyle's reputation for backing away from American Express Global Travel deal.

In a followup question about Material Adverse Event clauses Rubenstein said something about Frost's job which was edited out of the CNBC's clip.   It seemed snippy and that may be why his reply got snipped.  It could also be the price of a future CNBC interview.   Have to keep the oligarch's happy.

Sunday, May 10, 2020

Carlyle Bids for India's Animal Health Compay, SeQuent Scientific

The Carlyle Group recently sold nearly all its shares in an Indian healthcare diagnostics company, only to turn around and invest in an animal healthcare company. 

VC Circle reported:

Private equity firm Carlyle has agreed to acquire up to 74% of animal healthcare company SeQuent Scientific Ltd for Rs 1,580 crore (about $210 million) in what would be its biggest control-oriented deal in India.
This is also one of the few buyout deals that Carlyle has struck in India even though it has had a buyout team in India for a decade and a half.
SeQuent functions in the animal health segment through subsidiary Alivira Animal Health. It also provides analytical services.
SeQuent and its two co-founders are also promoters of two other listed companies – Strides Pharma Science Ltd and Solara Active Pharma Sciences Ltd.
One month ago SeQuent wrote about the company's status under the coronavirus pandemic:

Pharmaceuticals and specifically Animal health industry which we cater to, has been categorized as an essential industry across the globe and hence there has been no perceptible impact on the industry. Within the animal health industry, we cater to the production animals' segment, which is not a discretionary spend and hence lock-downs or economic slow-downs have little impact on this business. On the contrary, we do see some positive momentum given that we straddle the generics space which offers better cost dynamics to our customers.
Economic Times reported:

The final negotiations took longer because of the price correction in the stock, said one of the people. Carlyle revised their price downwards after the stock came off, he said. This could not be independently verified.

The Sequent stock has been volatile for the last few months in anticipation of a sale, reaching a 52-week high of Rs 99.35 on February 24 and then a low of Rs 55.25 the very next month, on March 19.

Carlyle has a wide exposure in the animal health space through multiple investments in the last two decades. It had acquired animal nutrition and care products firm Manna Pro Products and sold it in 2017 to Morgan Stanley Capital Partners. The group had sold Saprogal, a producer of animal feed, to the Spanish private equity group Mercapital in 2005.

Sequent manufactures 26 commercial APIs and 1,000 finished dosage formulations (FDFs) of 12 dosage forms and markets those in more than 100 countries.
The company manufactures active pharmaceutical ingredients in plants around the world.

Our API factories in India did see slight manpower availability disruption at the start of the lockdown, but the situation has since getting better. We expect this situation to continue in the medium term and adequate procedures are in place to continue the BCP for the remainder of the COVID-19 crisis.

Many of our global businesses have shown great resilience during these times. Factories at Spain, Turkey, Germany and Brazil are operating at normal levels while all non-manufacturing related staff are working from home.

We have however put on hold our capacity expansion project at the Germany plant, which was scheduled to be initiated from July 2020 till more clarity emerges. Our ongoing expansion at Vizag have also been suitably moderated to minimise human presence at the site, without impacting the growth prospects.
The plant in Vizag, India is US FDA approved for animal health manufacturing.  India stopped exporting pharmaceutical ingredients, then relaxed the ban somewhat.

The U.S. lacks the ability to produce treatments and/or vaccines to address COVID-19

At least 80% of the active ingredients found in all of America's medicines come from abroad - primarily China, according to the Senate Finance Committee.
What does Carlyle see in SeQuent that could produce massive returns during a pandemic?

Carlyle Cancels American Express Deal, Raises Cash

The Carlyle Group announced it plans to cash in on CoreSite Realty and Al-Nabil Food Industries.  The CoreSite stock sale should garner over $200 million. 

Carlyle did not attend the closing of American Express Global Business Travel and was sued for failing to execute the deal.

Qatar's sovereign wealth fund (SWF) is suing Carlyle for failure to close the AmEx travel deal.  Carlyle counter-sued, saying owners violated several terms of the purchase agreement.

In March 2008 Carlyle Capital Corporation (CCC) declared bankruptcy.  Carlyle sold CCC as a safe investment to a Kuwaiti SWF.  Mad Middle Eastern money sued Carlyle in the same Delaware court.  Carlyle won.

Carlyle Capital failed six months prior to the Fall 2008 financial crisis.  The AmEx Travel deal failed two months after the U.S. awakened to a global pandemic.

Upddate 5-12-20:  Bloomberg did a story on the Qatar SWF lawsuit over Carlyle's no show at closing.

Update 5-13-20:  Carlyle wanted their share of a $484m shareholder dividend that fell to $55 million as funds were repurposed to operations due to the coronavirus.

Sunday, May 3, 2020

Organizational Coronavirus Conflicts: Nobody Declares

 Carlyle Group co-founder David Rubenstein interviewed Dr. Anthony Fauci on April 28th on behalf of the Washington Economic Club.  Rubenstein asked Dr. Fauci about the origin of the virus and whether it could have been leaked from a Wuhan lab.  Fauci went down the evolutionary biology road and said it's likely a naturally occurring virus.

The good doctor failed to mention $3.7 million in U.S. government funding for Wuhan Institue of Virology's collection of naturally occurring bat coronoaviruses and an additional $3.7 million for gain of function research into those naturally occurring bat coronaviruses. 

Gain of function research enhances a virus' pathogenic effects and/or its transmissibility  Dr. Fauci has been a proponent of such research.  In the past Fauci "expressed support of studies that aim to remain ahead of what is likely occurring in the natural world."

Dr. Fauci did not declare his organization's role in funding the Wuhan Virology Lab in his answer regarding possible release from a Chinese lab.  U.S funded research was to predict spillover potential for the virus to spread from bats to humans.  The proposal stated:

"We will use S protein sequence data, infectious clone technology, in vitro and in vivo infection experiments and analysis of receptor binding to test the hypothesis that % divergence thresholds in S protein sequences predict spillover potential."
Likewise, Rubenstein did not declare that Carlyle purchased a blood products software maker as COVID-19 spread from China.  Plasma is one blood product and convalescent plasma is under study for treating for COVID-19.  Dr. Fauci's organization plays a role in the analysis and dissemination of treatments for the deadly coronavirus.

In 2009 Dr. Fauci told CSPAN the flu kills 36,000 Americans a year.  In just over two months the novel bat coronavirus killed 67,200 in the U.S.

Private equity exploded since 2009 and currently infects our political system, the economy and the Federal Reserve Bank.  The greed and leverage boys sought and continue seeking massive government assistance.  They have connections to achieve their aim.  Fed Chief Jay Powell and Vice Chair Randall Quarles are former Carlyle executives.

The public is hard pressed to believe U.S. funding to make bat coronaviruses more lethal and transmissible at a Wuhan lab had no role in the current pandemic.  China's quality problems are legendary.  Tainted baby formula killed infants while The Carlyle Group owned a Chinese milk company.  China gave the U.S. lethal blood thinner and toxic pet food after U.S. companies sent work to Chinese suppliers.

None of these disturbing patterns came to light in David Rubenstein's interview with Dr. Fauci.  They did talk Brad Pitt and NBA basketball.