Monthly Archives: June 2008

John Gapper

This morning’s Wall Street Journal story on Martin Broughton, chairman of British Airways, predicting that US airlines will soon start lobbying for the relaxation of foreign ownership rules has the ring of truth to me.

The reason is that one senior executive of a US airline said precisely that to me recently (off the record). He said that he could no longer see the point of the US law barring a foreign airline from owning more than 25 per cent of a US one and would not object to it being abolished. Read more

John Gapper

There is a lot of financial action in Qatar at the moment, and that means fees for investment banks. Last week’s announcement of a strategic partnership between NYSE Euronext and the State of Qatar to boost the local stock exchange is being followed by an IPO of Vodafone’s Qatar business.

What strikes me about the latter is the financial advisers to the deal: HSBC Middle East and Qatar National Bank. Neither of these is one of Wall Street’s big swinging investment banks, which are now sweeping into the Gulf in the hope of gaining petrodollars. Read more

John Gapper

I am on leave for a couple of weeks. Normal service will hopefully resume on or about June 30.

John Gapper

The glass ceiling on Wall Street is getting lower.

The abrupt removal of Erin Callan as Lehman’s chief financial officer yesterday (along with Joe Gregory as Lehman’s chief administrative officer) is first and foremost a sign of Lehman’s fight to regain credibility among investors.

But it also means that Ms Callan, who was dubbed “Wall Street’s most powerful woman” in the April issue of Portfolio magazine is powerful no more. She is being unceremoniously bumped down to “a senior position” in the investment banking division.

Ms Callan’s move follows the firing of Zoe Cruz, the previous holder of the “most powerful woman on Wall Street” title. She was dismissed as president of Morgan Stanley last November by John Mack, its chairman and chief executive. Read more

John Gapper

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My Financial Times column this week is about the global food crisis and the stand-off about how to solve it between the US government, Monsanto and environmental activists such as Greenpeace that are opposed to genetically-modified crops. I come down on the side of the former, with caveats. You can read it here and comment below.

John Gapper

Lou Dobbs is very annoying.

Having got this off my chest, I can go on to say why the CNN cable news host, who takes to the air most nights in the US to complain about illegal immigration and free trade has riled me.

As detailed admirably by Andrew Ross Sorkin in the New York Times, Mr Dobbs’ latest populist crusade against foreign ownership of US assets concerns CSX, the US railway company that has been attacked by The Children’s Investment Fund, the London-based hedge fund.

Mr Dobbs described it the other night on CNN as “a new threat to national security and sovereignty” because investors in this “shadowy foreign investment fund” may include sovereign wealth funds. You can see the video hereRead more

John Gapper

I was reminded the other day that it currently costs £13 to enter Kew Gardens as a visitor. Since I grew up in Kew, I happen to be an expert on the history of the entrance fee to Kew Gardens and it is mind-bogglingly high compared with the past.

Forgive the middle-aged reminiscence but, when I was a child, it cost three pence (yes, a thrupenny bit)  to get into Kew Gardens. Upon decimalisation in February 1971, they put the price down to one new penny, or 2.4 old pence. Read more

John Gapper

Lehman Brothers’ announcement this morning that it is seeking $6bn in fresh capital after making a $2.8bn loss in the second quarter shows that things remain tough on Wall Street.

To go with it, here is an anecdote about employment conditions in investment banking that you can treat with as much seriousness as you wish. Read more

John Gapper

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My column this week is about the clever wheezes that private equity funds deployed to ensure that they keep control of companies they bought even in a downturn. Tony James, president of Blackstone, thinks this is good for society; I am not so sure. You can read it here and comment below.

John Gapper

I plan to write in my FT column this week about private equity buyouts and the aftermath of loose financing such as covenant-light loans and payment-in-kind bonds.

For those who cannot wait, here is the list of 10 tongue-in-cheek reasons given by David Rubenstein, a co-founder of the Carlyle Group, for why private equity is still a great career.

Mr Rubenstein included his list in a recent presentation on the industry. The public controversy surrounding private equity has clearly not made him lose his sense of humour.

His reasons are:

1. There is no educational requirement – anyone can get into the business, no barrier to entry.

2. You don’t have to keep time sheets or fill out insurance reimbursement forms.

3. Lack of clear skills or a high IQ is not a handicap – it may be a plus.

4. You get to hire lawyers and economists, the people who were smarter than you in college.

5. Your ability to make charitable contributions will get you invited to much higher class parties (and get your children into higher class colleges).

 Read more

John Gapper

Indian companies are on an acquisition spree in the developed world, with Tata Motors buying Jaguar and Land Rover from Ford and Vedanta Resources paying $2.6bn for the assets of Asarco, a US copper miner. But are companies from India and other developing nations paying too much?

Perhaps, and for an unusual reason in the M&A world, according to a new study by academics at the University of Toronto’s Rotman School of Management. They found that companies from developing countries often top auctions of western assets because of national pride. Read more

John Gapper

The death of Yves Saint Laurent is a reminder of how he revolutionised the lives of working women with the trouser suit.

Hillary Clinton certainly has reason to be grateful to Saint Laurent – and designers such as Liz Claiborne who followed him. Her devotion to the trouser suit (or pantsuit, as it is known in the US) has become a talking point in the contest for the Democratic presidential nomination.

Forty years later, it is difficult to recall the days when women had to be dressed in skirts or dresses in the office and there was an absolute sartorial divide between the sexes at work. Read more

John Gapper

Getting the title of your book into common parlance – as Malcolm Gladwell did with The Tipping Point and Sebastian Junger did with The Perfect Storm – is a good way to measure success in the publishing industry.

Nassim Nicholas Taleb has now joined these luminaries with his bestseller The Black Swan: The Impact of the Highly Improbable. According to Bryan Appleyard in The Sunday Times, Taleb has secured a $4m advance for his next work, which is pretty good for a man who specialises in statistics and probability.

The title comes from the surprise dealt to Europeans when black swans were found in Australia. Guided by induction, they had believed that all swans were white. He uses this example to point out that unusual events do occur, despite the human propensity to discount them, and that some have a huge impact. Read more