Libyan Rebels: Corporate ABC's

Arab Banking Corp (ABC). received 73 loans totaling $35 billion from the Federal Reserve Bank during the Fall 2008 financial implosion.  The bank was one third owned by the Libyan Central Bank at the time.  Since then, Libya's Central Bank raised their stake to 59% of ABC.  Despite heavy LCB ownership,Arab Banking is unencumbered.  Bloomberg reported:

The U.S. government has frozen assets linked to the regime of Libyan ruler Muammar Qaddafi> and engaged in air strikes against his military forces, which are battling a rebel uprising in the North African country. Arab Banking got an exemption that allows the firm to continue operating while barring it from engaging in any transactions with the Libyan government, according to the U.S. Treasury Department. 

Here's why ABC is exempted:

“ABC’s New York branch conducts wholesale business and plays an important role in helping U.S. companies conduct business in the Middle East,” the company said in the statement. “The New York branch of ABC also participates in enhancing the liquidity of U.S. markets and virtually all of its employees are U.S. citizens.”

It's a funnel for U.S. corporate interests and Middle Eastern oil money:

Libya previously shared the bank with the Abu Dhabi Investment Authority (United Arab Emirates) and the Kuwait Investment Authority, both sovereign investment funds.

ABC stands ready to serve old clients, other than Gadhafi.  How might it help the Libyan rebel's new Libyan Oil Corporation and Central Bank in B?  Will the U.S. figure out who the corporate savvy opposition is?  If so, ABC can serve their banking needs.  How long before the rebels need structured finance?

ABC's press release "Arab Banking Corporation not subject to asset freeze by US or UN" stated:

The Central Bank of Libya owns 59.3% of ABC and the Kuwait Investment Authority has a 29.6% stake in the bank. 

Shareholders’ equity at 31 December 2010 stood at US$3,428 million compared to US$2,191 million the previous year, boosted by the US$1,110 million share capital increase in the first quarter of 2010. ABC Group’s capital adequacy ratio at 2010 year-end was very strong at 23.1%, predominantly Tier 1, which totaled 18.4%.

The Central Bank of Libya holds 59% of ABC's $3.5 billion in shareholder equity. ABC's Board chair is head of Libya's sovereign wealth fund (SWF), the Libyan Investment Authority (LIA).  LIA had billions invested in The Carlyle Group, a private equity underwriter (PEU) part owned by a United Arab Emirates SWF.  This is your clue to our mixed-up financial world.

SWF's will be banks, and SWF's will be PEU's.
It's a mixed up, muddled up, shook up world,
including LIA, la la la Lia. la la la Lia

Well, I'm not dumb but I can't understand
why ABC walks like Gadhafi and talks like Blair
Oh my LIA, la la la Lia. la la la Lia

It brings back the days when Tony Blair et al courted Col. Gadhafi.  History rewriters are out in force:

“There was an uneasy detente between the United States and Libya” when the loans were made, said William Poole, senior economic adviser to Merk Investments LLC and a former president of the Federal Reserve Bank of St. Louis. “It would not happen in the morning.”

 LIA, la la la Lia. la la la Lia...

Update 8-28-11:  The currency that helped get BP's Libyan oil deal, the convicted Lockerbie bomber, will remain in Libya under Rebel rule.  A deal's a deal.

Dunkin' Brands: Latest Carlyle IPO?

Dunkin' Brands could go public later this year in a $500 to $750 million offering.  Three private equity underwriters (PEU's) own Dunkin', The Carlyle Group, Bain Capital and Thomas Lee Partners.  Reuters reported:

An IPO by Dunkin' Brands, which owns donut and coffee seller Dunkin' Donuts and ice cream shop Baskin-Robbins, would be the latest in a number buyout-backed deals.

In other words, Carlyle's "Great Cash-In" continues.  It makes Congress' carried interest gift all the sweeter.

Carlyle might need more billions.  It could soon monetize itself, like Apollo Global Management.  Get in line for your PEU gift card, aka stock certificate.  

Update 4-1-11:  Bloomberg noted PEU's IPO frenzy

Gov. Rick Scott's PEU Day

Florida Governor Rick Scott ordered drug tests for state employees and citizens on state assistance.  Rick Scott, the ethically challenged ex-CEO of Columbia/HCA, started Solantic, a chain of urgent care centers, which happen to perform drug tests.  The Palm Beach Post reported on the possible conflict of interest: 

Scott divested his interest in Solantic in January, the controlling shares went to a trust in his wife's name

Controlling shares means more than 50% of the company.  The investment remains in Scott's immediate family.

Welsh, Carson, Anderson & Stowe (WCAS) owns part of Mrs. Scott's Solantic.  WCAS purchased their stake in 2007.

WCAS, like other private equity underwriters (PEU's), conducted deals for health insurers.  They and The Carlyle Group sold MultiPlan for $3.1 billion.  WCAS is selling Universal American, a Medicare Part D insurer to CVS Caremark.  After health reform passed, PEU's expressed interest in buying health insurors.  WCAS clearly states their focus on health care:

WCAS believes that demographic changes, adoption of new technologies, and ongoing regulatory changes, which create near-term uncertainty and value dislocations, will generate attractive areas for investment opportunities in the years ahead. 

Some examples of healthcare sectors in which WCAS invests include payors, facilities, providers, pharmaceutical outsourcing and medical technology

Politicians can create disruptions, near term uncertainty and value dislocations, the very thing WCAS desires.

Governor Rick Scott wants Florida to spend state Medicaid money differently:

Raising a groundswell of concern and questions about his health policy initiatives, especially his push to move Medicaid into private HMOs.

As for Solantic's sister WCAS company, Universal American, their recent conference call revealed::

On November 19th 2010, CMS (Center for Medicare/Medicaid Services) notified the Company of the imposition of intermediate sanctions
–– Effective December 5th 2010, marketing and enrollment of new members was suspended in Medicare Advantage plans

The suspension relates primarily to agent oversight and market conduct issues

It's not surprising the ethical race to bottom should be led by Rick Scott.One month after being sanction by CMS, Universal American announced a deal with CVS Caremark.  It effectively monetizes UA for current shareholders, while giving investors a stake in New UAM, the combined entity.  Adding to the bounty, the old UAM paid $2 a share special dividend in 2010.

As for Rick Scott's Solantic defense:

Any perception that the governor's business interests pose a conflict of interest with his health policies are "baseless and incorrect," said Scott's deputy communications director, Brian Hughes.

Scott is setting up sending state money to his former company, longtime friends and associates, all with an insatiable need for profit growth.  On that, Rick Scott and friends are remarkably consistent.

Take Tom Scully, ex. CMS Chief under President George W. Bush, and designer of Medicare Part D coverage.  Scully served on Solantic's Board of Directors.  He is also on the board of Universal American and Select Medical Corporation.  Scully stands to make $2.1 million, $15.20 per share for 138,680 shares held in his name.  The $15.20 comes from $13.20 in sale proceeds and the $2 special dividend.  It's not clear Tom's proceeds from indirectly beneficially owned 2,083,500 shares of Common Stock held by WCAS. of which Scully is a General Partner.  What's Tom's take of $31.6 million?

That indicates the kind of money PEU's can make on a deal.  I expect Governor Scott told close friends and associates, how he plans to steer state money.  At some point Scott has to tell the public, like he did on drug testing. 

Signal, privatize, profit.  That's the cycle for PEU's and purchased politicians.  It's easier to do when the PEU is in the politician, like Rick Scott.

Update 9-11-12:  PEU Mitt Romney avoided PEU Rick Scott on the Presidential campaign trail.  

Update 7-14-18:  Scott wants to be a U.S. Senator for Florida but questions about his finances remain. 

Chris Dodd's Bright Lights

Chris Dodd is the new CEO and Chairman of the Motion Picture Association of America, Inc. (MPAA).  He didn't land at a private equity underwriter (PEU) or hedge fund, like Evan Bayh, Tom Daschle, or Bill Frist. Yet, the MPAA has a number of PEU connections.  The question is how Dodd will get Congress to subsidize movie making or enforce their franchise.  .

Note the global nature of Dodd's new job:

Former United States Senator Chris Dodd is Chairman and Chief Executive Officer of the Motion Picture Association of America, Inc., which serves as the voice and advocate of the U.S. motion picture, home video and television industries around the world.

He's primarily concern is "protecting this great American export during a challenging economy and an ever-changing technological landscape."  That's where a three decade serving Senator comes in handy. 

Update 1-20-12:  Chris Dodd's MPA looked to have Congress in hand for anti-piracy legislation (SOPA & PIPA).  After they regroup, Dodd will make another run at it.

Update 8-1-23:  Chris Dodd is a Senior Advisor for Teneo.

Rubenstein's D.C. in New Economic & Political Environment

Bisnow will host Carlyle Group cofounder David Rubenstein on April 27, 2011.  Their website states:

The incomparable David Rubenstein returns for his third headline appearance with Bisnow, having riveted large audiences on two previous occasions with remarkable analysis and predictions concerning the key economic and political events and trends of our time—and the implications for our region, country, and world.

By some measures the greatest business success in the history of the Washington region, David founded the Carlyle Group in 1987, which has grown into the world’s largest private equity firm.

Barry Glassman will interview Rubenstein, described as having "original insight, disarming candor, and droll humor."  Bisnow calls it the Signal event of the year.  They revealed one new sign in relation to Carlyle.

The Carlyle Group is one of the world's largest private equity firms. David co-founded the firm in 1987 and it now manages $100B from 27 international offices. The company has 76 funds across four investment disciplines (buyouts, credit alternatives, growth capital, and real estate).

Evidence of the greatest business success includes:

Pay attention to this dynamic duo on foreign aid.  Watch how Rubenstein manages his Libyan history, in light of looming economic opportunities.  It's a "new economic and political environment," much like the Guilded Age with its Robber Barons. 

Obama's Libyan Mission a Logical Sandstorm

The Pentagon spent $550 million on its Libyan incursion, according to the AP:

Of the $550 million in added spending through Monday, about 60 percent was "for munitions, the remaining costs are for higher operating tempo" of U.S. forces and of getting them there, Cmdr. Kathleen Kesler, a Pentagon spokeswoman, said Tuesday. 

The half a billion went to support unknown rebels, according to another Pentagon official:

When asked at the Defense Department briefing about who the opposition rebels are, Vice Admiral William Gortney told the press that he did not know.  "We would like a much better understanding of the opposition but we don't have it," Gortney said. He said they are providing neither direct support nor is the U.S. "consulting" with those fighting Col. Gadhafi's forces.

Yet, Secretary of State Hillary Clinton meets with the Libyan opposition today in London.  The opposition is well enough organized to form a Libyan Oil Company and Central Bank two days after a March 17 UN Resolution.   To clear up the opposition confusion, the U.S. will dispatch a special envoy. 

Meanwhile NATO considers ground troops for new "regime stabilization," something ruled out in Obama's speech to the nation.  CFR noted Clinton's assertion the U.S. attacked Libya as pay back for allied cooperation in Afghanistan.  How much sand can they throw in the public eye?

Update:  The U.S. Treasury approved oil sales by said unknown rebels, opening the door for oil funding for al Qaeda.

Update 4-9-11:  WikiLeaks cables show how the U.S. courted Libya under George W. Bush and Barack Obama.

Update 9-17-16:   The British investigated the West's abysmal intervention in Libya.  It cited Libya's current state as chaos.

Odor Issues

The Carlyle Group, a private equity underwriter (PEU), will reduce its stake in Hertz.  In 2009 Hertz successfully tackled vehicle odor problems.  Carlyle tried to get rid of their PEU by calling the firm a Global Alternative Asset Manager (GAAM). It's not clear if their new name stuck.  Check your shoes...