Tuesday, August 31, 2021

PEU Insurance Investments Soar

Insurance Journal

Private equity and venture capital firms have been pouring capital into insurance companies despite the uncertainties about claims and losses from the pandemic.

Actually the PEU boys are pouring insurance company reserves into their fund offerings. 

PE-backed M&A in the sector globally reached $19.28 billion in disclosed value in the year to Aug. 20, already exceeding the full year 2020 total of $12.88 billion,

The five big public PE firms — Apollo, Blackstone, The Carlyle Group Inc., KKR & Co. Inc. and Ares Management Corp. — have all bought into insurance companies over the past two years.

It remains to be seen how regulators view private equity underwriter (PEU) ownership of insurance companies.  

The largest deal has been Apollo Global Management Inc.’s planned merger with retirement services company Athene Holding Ltd. in deal suggesting a total equity value of roughly $11 billion for Athene.

The greed and leverage boys also want access to the common person's retirement funds.   Could buying insurance companies be an interim step to achieve that aim?

Update 6-29-23: Investor Kirk Simon called out the PEU boys buying insurance companies and steering insurance reserves into their PEU offerings.

The whole private equity thing of buying up life insurance companies then investing the premiums just seems a bit sketchy.

I'll shorten it to the whole private equity thing seems a bit sketchy.

Monday, August 30, 2021

Paulson Pans Crypotcurrencies to Paxos Investor Rubenstein


“I wouldn’t recommend anyone invest in cryptocurrencies,” John Paulson told David Rubenstein, co-founder of Carlyle Group, on Bloomberg TV.

Rubenstein:  What about cryptocurrencies? Are you a believer?

Paulson:  No, I’m not. And I would say that cryptocurrencies are a bubble. I would describe them as a limited supply of nothing. So to the extent there’s more demand than the limited supply, the price would go up. But to the extent the demand falls, then the price would go down. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount.

Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies.

Rubenstein's family office was the lead investor in the Series C funding round for cryptocurrency play Paxos.   The press release on Declaration Partners investment in Paxos stated:

  • The launch of Paxos Crypto Brokerage, a platform solution that powers crypto services for PayPal and Revolut US; 
  • The issuance of more than $7.5 billion in stablecoins across three of the leading US dollar-backed stablecoins; 
  • Becoming the first company to settle US equity trades on a blockchain outside of the legacy system (under No-Action relief from the US Securities and Exchange Commission staff); and
  • Confirmation of more than $3.5 trillion in commodities trades with its Post-Trade automation service.

Rubenstein's Declaration Partners threw more money at Paxos in its $300 million April 2021Series D funding round, which valued the firm at $2.4 billion.  That press release stated:

  • Supported the launch of crypto buying and selling services on Venmo through its partnership with PayPal;
  • Received conditional approval for the first de novo Trust Bank charter for digital assets from the Office of the Comptroller of the Currency;
  • Completed same-day settlement of traded stocks for Instinet and Credit Suisse via the Paxos Settlement Service;
  • Grew total stablecoin assets across three of the leading US dollar-backed stablecoins to nearly $10 billion; and
  • Tokenized more than 100,000 oz of the highest quality investment-grade gold with PAX Gold.

Paxos latest press release stated:

Paxos is building a new system that allows assets to move instantaneously, anywhere in the world, at any time, in a trustworthy way. Paxos uses technology to tokenize, custody, trade and settle assets. It offers crypto solutions for enterprises, crypto trading and settlement solutions for securities and commodities. 

That would be powerful tool for billionaires and their sponsored government officials.  An Afghan President could leave the country with only the clothes on their back after Paxos'ing millions to their desired destination, say Dubai.

Update 3-11-22:  On Tuesday, PAX Gold reached $2,071, its highest price in the last three months.

Update 5-27-22  Paxos received a federal trust charter from the Office of the Comptroller of the Currency.  Paxos National Trust entity is a federally regulated entity offering custody services, stablecoin management, payment, exchange and other services.  It is different from New York Department of Financial Services-chartered Paxos Trust Co. 

Update 8-2-22:  A number of FDIC insured banks ran with the crypto devils and may go under as a result.  How this is remotely OK is a question one should ask David Rubenstein and his former employee Jerome Powell/

Saturday, August 28, 2021

Afghan People Got PEU Model

The Afghan military evaporated in the midst of the U.S. withdrawal from Afghanistan.  Ides of August reported:

Afghans did not reject us. They looked to us as exemplars of democracy and the rule of law. They thought that’s what we stood for.

And what did we stand for? What flourished on our watch? Cronyism, rampant corruption, a Ponzi scheme disguised as a banking system, designed by U.S. finance specialists during the very years that other U.S. finance specialists were incubating the crash of 2008. A government system where billionaires get to write the rules

The U.S. government has long catered to billionaire private equity underwriters (PEU).   The bipartisan effort started under Bill Clinton and every following president furthered the PEU agenda.  

BIG by Matt Stoller wrote:

U.S. military leaders, like bad consultants or executives, lied about Afghanistan to the point it was routine. Here are just a few quotes from generals and DOD spokesmen over the years on the strength of the Afghan military, which collapsed almost instantly after the U.S. left.  

In 2011, General David Petraeus stated, “Investments in leader development, literacy, marksmanship and institutions have yielded significant dividends. In fact, in the hard fighting west of Kandahar in late 2010, Afghan forces comprised some 60% of the overall force and they fought with skill and courage.”

In 2015, General John Campbell said that the the Afghan Army had “proven themselves to be increasingly capable,” that they had “grown and matured in less than a decade into a modern, professional force,” and, further, that they had “proven that they can and will take the tactical fight from here.”

KKR, a New York based PEU, hired General Petraeus in 2013. As a KKR partner Petraeus serves on the board of OPTIV, a government cybersecurity contractor.  General Campbell also serves a middle market PEU.

J.F. Lehman & Company, a leading middle-market private equity firm focused on the defense, aerospace and maritime sectors, is pleased to announce the addition of General John F. Campbell, U.S. Army (Ret.) to its Operating Executive Board (””OEB””). The OEB is a group of seasoned industry and government executives who have significant experience in the firm's target industries. Through key relationships and sector-specific knowledge, OEB members contribute to sourcing and evaluating transactions, advising on portfolio company strategy and recruiting senior level portfolio company management.
The greed and leverage boys are happy to partner with Middle East strongman Saudi Crown Prince Mohammed Bin Salman.  

Afghan President Ghani fled with either millions of dollars or just the clothes on his back.  Using wire transfers he could have left with both.  Ghani ended up in the United Arab Emirates (UAE), a haven for western financial interests and Afghan graft.  

Former Pentagon CFO and PEU Dov Zakheim wrote for The Hill.

For years it was widely known that Afghan leaders were acquiring estates in Dubai with embezzled funds they had deposited in that city state. 

DealBook reported in 2008, as did FedInsider:

The Carlyle Group has a scroll like list of ex-government insiders. They even have one of their own, Dov Zakheim, on the President's Commission for Wartime Contracting in Iraq & Afghanistan.

Zakheim facilitated The Carlyle Group's sale of Standard Aero and Landmark Aviation to Dubai Aerospce in 2007

Private equity greed retrograded management practice in their flipping companies for massive profits.  Public companies copied PEUs overuse of debt, over-reliance on technology and over-emphasis on achieving that final profitgasm.  Government leaders catered to PEU founders, policy making billionaires.  Former elected officials and public servants did their best to steer government purses to their private equity affiliates.  

The 2020 U.S. State Department report on Afghanistan states:

Officials frequently engaged in corrupt practices with impunity. Reports indicated corruption was endemic throughout society, and flows of money from the military, international donors, and the drug trade continued to exacerbate the problem. Local businessmen complained government contracts were routinely steered to companies that paid a bribe or had family or other connections to a contracting official.

According to prisoners and local NGOs, corruption was widespread across the justice system, particularly in connection with the prosecution of criminal cases and in arranging release from prison. There were reports officials received unauthorized payments in exchange for reducing prison sentences, halting investigations, or outright dismissing charges.

Freedom House reported inadequately trained judges and extensive corruption in the judiciary, with judges and lawyers often subject to threats and bribes from local leaders or armed groups.

During the year there were reports of “land grabbing” by both private and public actors. Most commonly, businesses illegally obtained property deeds from corrupt officials and sold the deeds to unsuspecting prospective homeowners who were later prosecuted. Other reports indicated government officials confiscated land without compensation with the intent to exchange it for contracts or political favors. There were reports provincial governments illegally confiscated land without due process or compensation in order to build public facilities.

Afghans understood exactly what the U.S. brought them.  Management greed and self service is not an inspiring model for the common person, be they citizen or worker.

Update 9-21-21:  Former Treasury Secretary Steve Mnuchin formed PEU Liberty Strategic Partners, a $2.5 billion PEU fund whose initial investment came in Cybereason.

Mnuchin will join the Cybereason Board of Directors, and Liberty’s Senior Advisor General Joseph F. Dunford (Ret.), who served as the 19th Chairman of the Joint Chief of Staff (2015-2019), will join the Cybereason Advisory Board.

The Saudi Public Investment Fund provided a significant portion of Liberty's initial cash raise.  Mnuchin should ask Carlyle Group co-founder David Rubenstein about losing Middle East investor money.  He could also look at how the Saudi's treated journalist Jamal Khashoggi.

Friday, August 20, 2021

Carlyle's Rubenstein Holds Over 33 Million CG shares

Carlyle Group co-founder David Rubenstein recently sold 4 million shares of CG stock for nearly $190 million.  It is his third sale of Carlyle Group stock this year.  

Fellow founder Daniel D'Aniello also sold a 5 million share chunk of CG stock.  He hold almost 39 million shares in the private equity underwriter (PEU).

Carlyle monetized Novetta with a sale to Accenture Federal Services.  Twilio agreed to pay a 10% premium for a SPAC investing in Carlyle affiliate Syniverse.

Another profitgasm for the greed and leverage boys.