Bermuda court orders halt to US lawsuit against Apollo

3 total views, no views today

A Bermuda court has ordered a halt to a lawsuit filed in New York against Apollo Global Management in a decision that could have implications for investors in foreign-registered companies traded on US stock exchanges.

The temporary injunction was obtained by Apollo’s affiliated life insurance company, Athene Holding, which is listed on the New York Stock Exchange but incorporated in the island territory of Bermuda.

The order purports to bar a US-based Athene shareholder, Central Laborers’ Pension Fund, from pursuing a lawsuit that accuses Apollo of “looting” the insurance company by charging “extravagantly expensive” fees running into hundreds of millions of dollars a year.

Apollo and Athene declined to comment on the Bermuda order. Apollo has said it will “vigorously” defend the case, and that the allegations lack any legal or factual basis. The private equity firm’s contract to manage a $130bn portfolio of assets on behalf of Athene accounts for one-third of the management fees earned by the private equity firm.

It is unclear whether the Bermuda order will prevent the New York lawsuit from proceeding. “[US] courts often will respect the judgments of foreign courts, though they may not be obligated to do so,” said Aryeh Portnoy, a partner at law firm Crowell & Moring. But he added that “context matters”, with judges likely to consider factors such as when the foreign lawsuit was filed and whether any constitutional rights are engaged.

Even before the Bermuda court issued its injunction, the pension fund faced a potential battle to persuade judges that they should hear the lawsuit in New York.

Athene maintains that the suit should have been filed in Bermuda itself, which, under the company’s articles of incorporation has sole authority to adjudicate matters relating to the directors’ conduct. The pension fund says … Read More...

European Investment Bank: the EU’s hidden giant

6 total views, no views today

Safely hidden in the woods of Luxembourg sits one of the world’s biggest and most peculiar banks.

It issues more bonds than JPMorgan but is not supervised by any external regulator. As an EU institution, it spearheaded a €500bn plan to boost investment yet managed to shrink its loan book at the same time.

Created with a mission to lend in the public interest — to go where private banks do not care or dare — it rarely loses a cent on its bets. Only in 2006, after almost half a century of operations, did it write off a loan. Even today the bank will spend more on staff in a single year than it expects to lose on its entire €455bn loan book.

This is the strange world of the European Investment Bank, a huge, unsupervised leverage machine for Europe’s politicians that has comprehensively mastered the art of dodging risk.

“This bank has been growing more or less undetected in the woods of Luxembourg over the last 60 [or] 61 years — to an unknown dimension and firepower,” says Werner Hoyer, EIB president.

“I am sometimes surprised that political leaders are not aware what kind of instrument they have in their hands,” he adds. “It’s a political instrument. It serves a political purpose.”

This reality is beginning to sink in. Europe is in the midst of an expensive transition to cleaner energy. Its capital markets are patchy and sometimes struggle with long-term finance. Its leaders are watching China’s rise — propelled by state-backed soft-loans — with alarm and envy. There is a widespread sense it has fallen behind on technology.

The remedy for some of these issues may be hiding in plain sight in Luxembourg. The EIB has long been prized by the … Read More...

Acting IMF chief backs monetary easing by central banks

6 total views, no views today

David Lipton, the acting IMF chief, has backed new monetary stimulus by the world’s top central banks to sustain the flagging global economy — in a thinly veiled nod to the US Federal Reserve and the European Central Bank as they consider easing policy.

In an interview with the Financial Times as G7 finance ministers and central bankers prepare to meet this week in France, Mr Lipton said that “in light of sluggish growth and downside risks, it makes sense for monetary policy in the major central banks to remain accommodative”.

Mr Lipton said he did not want to comment on specific decisions in individual countries, but added that central banks should not shy away from loosening policy — if it was justified — because of fears of losing ammunition to combat a future downturn.

“Our view is that if the economy needs support, you provide support — but not inappropriate policies that contribute to the slowdown, just in order to be in a position to fight the very slowdown that has been created,” he said.

Mario Draghi, ECB president, recently signalled the eurozone may move to strengthen its commitment to low interest rates or even resume bond purchases to tackle weak inflation, while Jay Powell, the Fed chairman, has indicated the US central bank might cut rates as early as this month because of “uncertainties” in the outlook.

The IMF in April downgraded its forecast for global growth this year to 3.3 per cent, but predicted a rebound to 3.6 per cent in 2020.

“We see some acceleration next year but that presupposes a few very important things, including that trade tensions continue to be resolved rather than intensify, and that a number of countries that had extreme stress recover somewhat,” Mr Lipton said, … Read More...

H2O blames ‘unfair’ media for €8bn fund outflows

9 total views, no views today

H2O Asset Management says it has seen €8bn of investor outflows from some of its funds, blaming “deeply unfair” media interest in its portfolio of illiquid bonds for sparking a “rampage”.

In a statement on Tuesday, H2O said it had lost more than 30 per cent of assets in its Ucits funds. The outflows follow a Financial Times investigation last month that revealed the London-based asset manager had put more than €1bn of investor money into bonds linked to Lars Windhorst, a controversial German financier with a history of legal troubles.

The firm suggested that it had staunched the bleeding, noting that since June 18, the date of the FT’s original story, it had received €869m of gross inflows. The company did not immediately specify whether the €8bn outflows took account of these inflows.

Shares in H2O’s parent company Natixis fell 1.1 per cent on Tuesday. H2O ran €32.5bn in assets as at the end of last year.

The fund firm, headed by bond trader Bruno Crastes, said the bonds at the centre of media attention in recent weeks accounted for a “small portion” of its overall assets, at 3.7 per cent, at the time of the FT’s original article.

Asking “Why such rampage?” H2O said that “to dispute the liquidity of a fund” created a major risk of a snowball effect, “especially in today’s over-mediated world”.

It went on to liken the episode to a bank run. “Questioning the liquidity of our funds is equivalent to ascertaining the incapability of a bank to refund its deposits, with the devastating consequences which economic history has already taught us,” it said.

Since the crisis erupted last month Mr Crastes has described Mr Windhorst, who has presided over a number of corporate collapses and been declared personally … Read More...

Americans broaden their July 4 appetites beyond beer and burgers

13 total views, no views today

Beer, barbecue and burgers are as much a part of Fourth of July celebrations as fireworks and the Stars and Stripes. Today, however, meatless sausages, gluten-free pita chips and canned wine are also on the menu — the latest sign that shifting consumer behaviour is upending the global food and drinks business.

Reasons for the changing Independence Day tastes are varied, and go beyond dietary considerations. The rise of social media has made image-conscious young people more reluctant to get loaded on lager, while concerns about agriculture’s impact on the environment are helping fuel demand for alternatives to meat.

David Lee, chief financial officer of Bill Gates-backed Impossible Foods, known for its plant-based burger that “bleeds”, said: “The all-American hamburger is still iconic, but finally there is an entirely plant-based Impossible Burger that can satisfy that craving.”

While industry sales figures for this week have yet to be compiled, data from consultancy Nielsen for the same period in 2018 highlight the shifts, and executives are expecting more of the same this year.

While beer sales dipped 1.6 per cent from 2017 levels, canned wine sales leapt 57 per cent, and so-called hard seltzers — sparkling water infused with alcohol — jumped 150 per cent. In food, sales of fresh beef ticked up 2.1 per cent, while plant-based meat alternatives rose 11 per cent.
Chart showing familiar fare fades on the Fourth as Americans swallow alternatives

Not everyone is convinced that the familiar favourites are on their way out. “Hot dogs are Americana — in my opinion, that never has changed and never will change,” said Wayne Rosenbaum, who runs Manhattan hot dog joint Papaya King.

Papaya King is staying open later than usual to mark the occasion, until 1am. Its hot dog sales on Independence … Read More...