Wednesday, April 4, 2012

PPIP Done: Wilbur Ross Sheds Treasury

MarketWatch reported:

Invesco Ltd. announced it has returned substantially all of its proceeds, at a profit, from its Invesco Mortgage Recovery Fund (Public-Private Investment Partnership or "PPIP") jointly owned by the U.S. Department of the Treasury.

Uncle Sam floated 75% of the JV's capital, Wilbur Ross' Invesco 25%.  

The Fund held its initial closing in September 2009 and ultimately deployed $2.3 billion, including $581 million in equity capital from Treasury, $581 million in equity capital from private investors, and $1.2 billion of debt capital from Treasury. 
Oddly, Invesco's Mortgage Recovery Master Fund set a $2 billion equity target, with minimum investment of $25 million.  Invesco described this offering as a private equity fund.  They reached $1.46 billion.

Obviously the fund raised more private funding that went into PPIP.  Assuming the fund was fully invested, how did the mortgage portfolio compare between Invesco Mortgage Recovery's PPIP and non-PPIP holdings?

Who's money was used to pay an expected $20 million in sales commissions, Invesco investors or Uncle Sam?

Wilbur Ross lives to greed another day:

Invesco Mortgage Recovery Fund will continue to invest directly in residential and commercial mortgage loans as well as structured securities and other real estate related opportunities on an opportunistic basis without Treasury funding. 

 Sharing profits might be as bad as paying taxes.