Welcome to CanadianHedgeWatch.com
Tuesday, October 19, 2021

Ontario Teachers Raises Stake In BCE, Joins Providence In Long-Awaited Takeover

Date: Wednesday, June 6, 2007
Author: National Post

Canada.com reports: The Ontario Teachers' Pension Plan and its U.S. partner Providence Equity Partners Inc. have officially joined the race to take over BCE Inc. and take it private. The communications giant confirmed late Tuesday afternoon that it has entered into discussions with Teachers' Private Capital, the plan's private investment arm, after the group signed non-disclosure and standstill agreements.

It expands the number of potential bidders for the parent of Bell Canada to three. The other two contenders are also groups that include a U.S. private equity firm partnered with Canadian pension plans.

It's not the first time that the Teachers has partnered with Providence, the largest private equity firm specializing in investments in media, communications and information services, which has nearly US$9 billion under management.

Teachers, which is one of Canada's largest institutional investors, is already the largest single shareholder in BCE Inc. - one of Canada's most valuable and most widely held corporations.


Amaranth Aftershock Shuts Abria FoF
by James Armstrong, Reporter June 5, 2007

The lingering aftereffects of last year’s collapse of hedge fund firm Amaranth Advisors are continuing to be felt as Abria Alternative Investments shutters its flagship fund-of-funds.

According to a report by the Toronto Globe and Mail, Abria is shutting down a once popular fund-of-funds that had a slew of redemptions following the collapse of Amaranth last September. The fund, which once had $150 million in assets, has continued to have redemption requests since it posted a more than 8% monthly loss due to Amaranth.

The heavy redemptions led to further losses, as the Abria fund had to liquidate positions in December leading to a 5% monthly loss. That, in turn, led to more redemptions and a rapidly shrinking fund.

The report quoted Abria Chief Executive Officer Henry Kneis as saying clients voted with their feet in exiting the fund. Kneis said the costs of running the fund became prohibitive as it headed toward only $20 million in assets.

About 95% of the fund’s investors were individuals, mostly from Canada. Investing in hedge funds has been popular in Canada due to low minimum requirements and the availability of structured products, but investors have been shocked by the blowups of Canadian hedge fund firms Portus and Norshield.

Greenwich, Conn.-based Amaranth imploded following a series of wrong-way bets on natural gas made by Canadian commodities trader Brian Hunter. The firm lost more than $6 billion in the course of a few weeks after taking highly leveraged positions that went sour.


G8 summit to call for hedge fund vigilance
Mon Jun 4, 2007 9:54 AM ET

By Brian Love, European Economics Correspondent

PARIS, June 4 (Reuters) - Leaders of the G8 powers will call this week for greater vigilance on hedge funds in the hope that the industry will take it upon itself to prevent accidents like the collapse of LTCM in the late 1990s.

The call, to be made at a summit hosted by German Chancellor Angela Merkel, falls way short of Berlin's attempt to crack down on an industry which has blossomed in recent years in the shade of mainstream funds and banks, which are more closely regulated.

"It's the first time the call has been made by a G8 summit, so it's significant in itself," said one official involved in negotiations for the gathering in Heiligendamm on Germany's Baltic coast, taking place from Wednesday to Friday.

A statement to be published at the summit says G8 leaders -- from the United States, Japan, Germany, Britain, France, Italy, Canada and Russia -- prescribes "greater vigilance" and better efforts to improve the transparency of hedge funds.

Once solely reserved for millionaire investors, hedge funds are now a major source of profit for more traditional financial institutions such as banks, raising two key questions about the risks of funds that use high-risk investment strategies:

Would a hedge fund crisis pose a systemic risk for the rest of the financial system? Should investor protection be improved as hedge funds forge closer links with banks and pension funds which invest for people well below the millionaire bracket?

Berlin tried on several occasions in recent months to win G8 support for tighter regulation of hedge funds or, short of that, a code of conduct.

Finance Minister Peer Steinbrueck said after a meeting of G8 finance ministers in Germany last month that he still believed a code of conduct would one day apply, if not in the near future.

He has received little backing since then from France or Italy and failed to overcome outright opposition from Britain and the United States, fans of a more hands-off approach.

"It's gone nowhere," a second official said. Both officials who spoke to Reuters did so on condition of anonymity because of the sensitivity over the statement set to be published in the G8's name in Heiligendamm.


One bad memory that haunts governments and regulators is the demise of Long-Term Capital Management (LTCM), which was a huge profit-spinner until it got burned in the financial crisis when Russia defaulted on its debt in 1998.

The U.S. Federal Reserve had to orchestrate a multi-billion dollar bailout for fear that the fund's implosion would trigger a chain reaction in the financial system more generally.

Since then, the hedge fund industry has bounced back, aided by five years or so of strong economic growth and low interest rates that spurred the quest for bigger returns.

Business has expanded five-fold with assets of $1.6 trillion under its management, according to a report commissioned by G8 governments from the Basel-based Financial Stability Forum.

Washington and London argue that less ritualistic but more real-time and continuous contact between supervisors and hedge funds will be more effective in detecting potential trouble.


Canadian opposition attacks foreign takeovers

29 May 2007  Financial News.com

The Canadian opposition party has called for a block on foreign acquisitions of large local firms as mining companies Alcan and LionOre and telecoms firm BCE all face overseas bids.

Stéphane Dion, Liberal leader, said in a statement: “Canada must take account of the rules followed by our competitors. The Investment Canada Act has not been reviewed for 20 years, and recent developments suggest that in some areas the act may be tilted against both Canadian companies and the national interest to create global champions.”

The Liberal opposition has asked the government to appoint a blue ribbon panel of experts to review changes to the Investment Canada Act within three months and to hold back decisions on major foreign acquisitions and any changes to foreign ownership rules until after this process has been completed.

Scott Brison, Liberal party critic for industry, said: "Canadians want to keep the Canada in Bell Canada. It is shocking that while American private equity firms are bidding for BCE, Minister Bernier muses publicly in New York about loosening foreign ownership rules for Canadian telecommunications firms.”

Potential suitors for the wireless company include US private equity firms Kohlberg Kravis Roberts, Blackstone Group and Cerberus Capital Management. They all need Canadian partners to comply with regulations that limit foreign ownership of Canadian firms.

Dion also pointed to the bid for Alcan by US rival Alcoa. He said: “Alcoa's home state of Pennsylvania has rules that would make it extremely difficult for Alcan to take over Alcoa.”

Alcan rejected the bid last week and Rio Tinto, the Australia-listed mining group, has reportedly called in Deutsche Bank to advise on a rival bid according to The Sydney Morning Herald.

LionOre, a Canadian nickel and gold producer, is also facing competing bids from Xstrata, the Swiss mining group, and Russian rival Norilsk Nickel. Last week LionOre said Norilsk Nickel’s C$6.8bn (S$63bn) offer was “superior”.