Tuesday, January 31, 2012

Carlyle's PEU Stripping Fish

The Carlyle Group strips fish, in addition to corporate cash. 

PacAndes is the proverbial puzzle within an enigma. Its 50,000-gross-tonne flagship, the Lafayette, is registered to Investment Company Kredo in Moscow and flies a Russian flag. Kredo — via four other subsidiaries — belongs to China Fishery Group in Singapore, which, in turn, is registered in the Cayman Islands.

China Fishery and Pacific Andes Resources Development belong to Pacific Andes International Holdings, based in Hong Kong but under yet another holding company registered in Bermuda.

PacAndes, which is publicly traded on the Hong Kong stock exchange, reports more than 100 subsidiaries under its various branches, but a partly impenetrable global network includes many more affiliates.

One of its major investors is the US-based Carlyle Group, which bought $150 million in shares in 2010.

China Fishery Group reported a 2011 revenue gain of 27.2 per cent to $685.5 million from $538.9 million, 55 per cent of PacAndes' earnings. The company attributed it to stronger operations from the South Pacific fleet and the Peruvian fishmeal operations.

Recall how Carlyle co-founder David Rubenstein advocated the China model of capitalism at the recent World Economic Forum meeting in Davos, Switzerland.  The China model is state directed and subsidized, thus it helps to be in good with the state

(Fishing) overcapacity has been driven by government subsidies, particularly in Europe and Asia, experts say.

A landmark report by Rashid Sumaila, along with the oceanographer Pauly and others at the University of British Columbia, estimated total global subsidies in 2003 — the latest available data — at $25 billion to $29 billion.

Between 15 and 30 per cent of subsidies paid for fuel to allow ships to range widely, it said. Another 60 per cent went to increase size and upgrade equipment.

The study calculated China's subsidies at $4.14 billion and Russia's at $1.48 billion.

Carlyle affiliates frequently suckle on the government teat. It helps garner 30% annual returns.

The Carlyle Group cashed in for the fourth time on China Pacific Insurance.  Total proceeds to date are HK$28.7 billion.  If you haven't seen enough offshore tax shelters, Carlyle has another holding China Pacific:

Carlyle Holdings Mauritius, another subsidiary of Carlyle Group, still holds 113 million H shares in China Pacific Insurance.
Some experts call for a five year fishing moratorium for specific species.  A PEU moratorium on government subsidies, stripping cash from affiliates and hiring ex-politicians might allow business ethics and working capital to recover.  Let's hope its not too late for fish and ethical business practices.  Each deserves a chance for survival.