UK’s Osmond to launch vehicle

Hugh Osmond, the entrepreneur behind Pizza Express and Punch pub chain, is targeting indebted consumer-facing businesses with a new investment vehicle set to be listed on the LSE next month. The vehicle, Horizon, is aiming to raise £500m in the City, and will seek cash-and-shares deals for what it terms “good companies” with an enterprise value of more than £1bn which are constrained by heavy debt and looking to deleverage....

Golfer Woods on ‘indefinite’ leave

Tiger Woods is to take an “indefinite” leave from golf following damaging personal revelations that have tarnished the reputation of the sport’s greatest star. Woods has not made any public appearances since a minor car accident outside his Florida home in late November. But the incident triggered revelations from several women claiming they had affairs with the golfer....

The Non Sequiturs Keep Piling Up

The non sequiturs keep piling up. The U.S. economy is supposedly on the mend, yet the Federal Reserve is keeping interest rates at 0% for the foreseeable future. Large company chief executives reportedly expect their companies' sales to climb in 2010, yet they are not planning on doing much hiring. The banking system has apparently been stabilized, yet institutions keep failing and loans are getting harder to come by. And finally, countries keep saying that protectionism is bad, yet, as a new report from The Global Trade Alert (with highlights, below, via indicates, they are continuing to erect new barriers to cross border commerce:

Many economies may have turned the corner in the second half of the year, but protectionist pressures have not relented. If anything, recent evidence suggests that the protectionist dynamics were worst in the first three quarters of 2009 than the Global Trade Alert reported in September 2009. For sure, protectionism hasn't yet reached the scale of the 1930s--but water doesn't have to boil to scald.

Since its last report was published, just before the Pittsburgh G20 summit, the Global Trade Alert team has filed 183 new reports on government measures that--when announced--looked like they could affect international commerce. The Global Trade Alert is the only trade monitoring initiative that identifies the trading partners affected by crisis-related state measures--so, taken together, its 611 reports provide decision-makers and commentators with a comprehensive overview of the scope and harm done by crisis-era protectionism.

Concerning governments' resort to protectionism, the main findings are:

  1. Since the first G20 crisis-related summit in November 2008, the governments of world have together implemented 297 beggar-thy-neighbour policy measures; that is, more than one for every working day of the year. Add another 56 implemented measures that are likely to have harmed some foreign commercial interests, the total reaches 353.
  2. Since the GTA's last report was published in September 2009, the number of beggar-thy-neighbour measures discovered (105) was more than eight times the number of benign or liberalising measures (12). Looking back on all of the measures implemented since November 2008, the ratio of blatantly discriminatory measures to liberalising measures stands at nearly six to one.
  3. When examining quarter-by-quarter changes in protectionism, experience has taught us that many beggar-thy-neighbour acts only come to light with delay. This fact alone has had an important impact on the number of discriminatory measures reported in the GTA database in the last quarter of 2008 and first two quarters of 2009. In the GTA's second report it was estimated that in the first half of this year approximately 70 measures that likely harmed foreign commercial interests were imposed by governments. This estimate is now revised upwards by 20-25 percent; conservatively estimated, governments imposed 85 protectionist measures per quarter during the first half of 2009.
  4. In the light of this finding, the reported number (78) of discriminatory measures implemented in the third quarter of 2009 is not far short of this quarterly average, especially when one bears in mind that this figure will almost certainly be revised upwards as more information about protectionist acts comes to light.
  5. 5. Particular caution is needed in interpreting the reported figure of 38 harmful measures imposed in the fourth quarter of 2009. First of all, this figure only refers to measures announced or implemented in October and November 2009, two out of the three months of the quarter. Moreover, prior experience suggests that information about many recent protectionist measures taken by governments is not yet in the public domain. For these reasons, the very recent fall off in the number of discriminatory measures is more apparent than real.

Brewster Boyd Joins CleanLaunch

Brewster Boyd has joined Colorado cleantech incubator CleanLaunch as director of finance. He previously was a vice president with Plymouth Venture Partners and as a fellow with the Frankel Commercialization Fund.


Continuing to build out its leadership team, CleanLaunch, Colorado’s clean tech incubator, announced today that it has hired Brewster Boyd as its Director of Finance.

As director of finance, Boyd will help recruit qualified prospects to the incubator; assist clients with funding plans and presentations; seek out grants, angels, venture capital firms, and private equity investors suitable for client companies; track business plan competitions and other opportunities for client funding and exposure; and sit on the client selection committee.

“This is an exciting time for Colorado’s cleantech industry, and we are thrilled to bring in a key executive with venture capital experience like Brewster Boyd to help us propel the industry forward,” said Stephen Miller of CleanLaunch. “Brewster’s experience and expertise will help foster real growth and success for our incubator clients.”

Prior to joining CleanLaunch, Boyd was a Vice President with Ann Arbor-based Plymouth Venture Partners and as a Fellow with the Frankel Commercialization Fund. He also worked with Ross & Associates Environmental Consulting in Seattle, a firm dedicated to helping public agencies improve management programs and achieve better environmental results, and was a management consultant with A.T. Kearney, serving global corporations based in Sydney, Australia. He is also the coauthor of the book “Hybrid Organizations: New Business Models for Environmental Leadership,” and is a founding member of the Eagle Fund, a philanthropic organization dedicated to supporting education in Colorado through financial grants and service.

Boyd is a graduate of the University of Michigan’s Erb Institute for Global Sustainable Enterprise where he earned a Master of Business Administration, with High Distinction and Beta Gamma Sigma, and a Master of Science in natural resources and the environment. He earned his Bachelor’s degree from Middlebury College in economics and environmental studies. He lives with his family in Denver, but travels whenever possible having spent significant time on six continents.

Boyd is the third new member of the CleanLaunch executive team. In recent weeks, the incubator brought on software and health care veteran Fiona Schlachter to be its Director of Operations; as well as Nicole Glaros as Director of Client Services. Glaros has dedicated the better part of her career to helping early-stage expanded technology companies grow.

“We have assembled a phenomenal team that will help our client firms reach the next level as clean tech entrepreneurs,” said Miller. “Real change can only truly happen through smart investments in new innovations and we are helping to drive that change.”

About CleanLaunch

The CleanLaunch Technology Incubator’s mission is to stimulate the development and success of early-stage companies who will provide the next generation of clean, renewable, and efficient energy technologies. CleanLaunch helps companies assemble solid management teams, secure adequate funding, and accelerate the commercialization of sound product ideas into the market. CleanLaunch grew out of a group of technology incubators, including Boulder Technology Incubator (BTI), Denver Ventures at Stapleton (CTEK Stapleton) and the Longmont Entrepreneurial Network. As part of its mission, CleanLaunch will partner with industry leaders, including NREL, the Governor’s Energy Office, the Colorado Renewable Energy Collaboratory (Colorado State University, Colorado School of Mines, University of Colorado), CORE, and the Colorado Clean Tech Industry Association to further the advancement of clean tech in Colorado.

Volcker: We Need to Think More Boldly

Mr. Volcker has become quite vocal lately. Be sure to check out the interview he has with Der Spiegel and in Monday’s WSJ:

Der Spiegel:

SPIEGEL: As chairman of the Economic Recovery Advisory Board, you advise President Barack Obama on how to prevent such a recurrence. Is he following your guidance?

Volcker: We have various working groups that work on and make recommendations on particular problems like retirement programs and social security. We made some recommendations on financial reforms which were not accepted, but that is part of the game. The president is more eloquent than I can be on these issues. Getting it done as compared to talking about it is a problem, but we have some suggestions along that line.

SPIEGEL: The US has not yet instituted any kind of reform policy. What we see is the government and the Federal Reserve pouring money into the economy. If one looks beyond that money, one sees that the economy is in fact still shrinking.

Volcker: What should I say? That’s right. We have not yet achieved self-reinforcing recovery. We are heavily dependent upon government support so far. We are on a government support system, both in the financial markets and in the economy.

SPIEGEL: To get the recovery to the point where it is right now has cost a lot of money. National debt will probably reach $12 trillion in 2019. Just serving the debt costs $17 billion a year — at least according to this year’s forecast. That’s difficult to sustain.

Volcker: You’ve got to deal with the deficit and you’ve got to deal with it in a timely way. Right now, with the unemployment rate still very high, excess capacity is still evident, and the economy is dependent on government money as we said. We are not going to successfully attack the deficit right now but we have got to prepare for attacking it.

SPIEGEL: Should Americans prepare themselves for a tax increase?

Volcker: Not at the moment, but I think we would have to think about it. The present tax system historically has transferred about 18 to 19 percent of the GNP to the government. And we are going to come out of all this with an expenditure relationship to GNP very substantially above that. We either have to cut expenditures and that means reducing entitlements and certainly defense expenditures by an amount that may not be possible. If you can do it, fine. If we can’t do it, then we have to think about taxes.


ALAN MURRAY: Mr. Volcker, you have heard the reports from all four of these groups and you have heard the priorities that they have agreed on. We would love to hear your responses.

PAUL VOLCKER: Well, you are not going to be very happy with my response. I heard an awful lot of particulars here that I agree with to some degree, but my overall impression is that you have not come anywhere near close enough to responding with necessary vigor or structural changes to the crisis that we have had.

If it is really true that financial weaknesses brought us to the brink of a great depression that would have ended your livelihood and destroyed a lot of the global economy, then let me explain.

You concluded with financial-services executives showing cultural sensitivity and responsible leadership. Well, I have been around the financial markets for 60 years, and how many responsible financial leaders have we heard speaking against the huge compensation practices?

Every day I hear financial leaders saying that they are necessary and desirable, they are wonderful and they are God’s work. Has there been one financial leader to stand out and say that maybe this is excessive and that maybe we should get together privately to think about some restraint?

I hear about these wonderful innovations in the financial markets, and they sure as hell need a lot of innovation. I can tell you of two—credit-default swaps and collateralized debt obligations—which took us right to the brink of disaster. Were they wonderful innovations that we want to create more of?

You want boards of directors to be informed about all of these innovative new products and to understand them, but I do not know what boards of directors you are talking about. I have been on boards of directors, and the chance that they are going to understand these products that you are dishing out, or that you are going to want to explain it to them, quite frankly, is nil.

I mean: Wake up, gentlemen. I can only say that your response is inadequate. I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information. I am getting a bit wound up here.

Paul Volcker: Think More Boldly
WSJ, DECEMBER 14, 2009

America Must ‘Reassert Stability and Leadership’
Der Spiegel, 12/12/2009,1518,666757,00.html

University Endowments Outperform S&P 500 in 2009

BOSTON (Reuters) - Endowment funds of major colleges and universities lost 19 percent for the year ended June 2009, outpacing the 28 percent drop in the Standard & Poor’s 500, according to a survey released on Thursday.

Despite some high-profile hedge fund disasters, alternative investments remained quite popular with the 435 educational institutions.

The group had 51 percent of assets in alternatives compared to just 19 percent in traditional U.S. stocks, according to the survey conducted jointly by the National Association of College and University Business Officers and the Commonfund Institute.

The heavy emphasis on alternatives like hedge funds, private equity and venture capital helped the group outperform the market, William Jarvis, managing director at the Commonfund Institute, said. “In a real sense, they did hedge,” Jarvis said.

Still, Jarvis said the allocation to alternatives was inflated by endowments selling off more liquid investments like stocks and bonds in the midst of the wake of last year’s credit crunch. The percentage invested in alternatives was 46 percent on June 30, 2008.

The overall results confirm that the very largest endowments, like those at Harvard University and Yale University, lagged their peer group. Harvard has said its endowment declined 27.3 percent in its fiscal year ended June 30, 2009, while Yale said its fund lost 24.6 percent. (Reporting by Aaron Pressman, editing by Leslie Gevirtz)

Hercules Tech Buying Spa Chakra

Hercules Technology Growth Capital has agreed to acquire Spa Chakra Inc., a global luxury spa network. No financial terms were disclosed for the deal, which would be part of a prepackaged Chapter 11 bankruptcy.


Spa Chakra, Inc., a global luxury spa network, announced today that it is proceeding towards a sale of substantially all of its assets to Hercules Technology Growth Capital (Nasdaq: HTGC), the leading specialty finance company providing venture debt and equity to venture capital and private equity-backed technology and life science companies at all stages of development. As part of the process to successfully complete the sale, Spa Chakra also announced today that it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for New York. As part of the filing, Spa Chakra has arranged for immediate financing from Hercules, which will be used by Spa Chakra to fund normal business operations during the sale process.

“Spa Chakra and Hercules have had an incredibly effective working relationship since 2008 and both parties agree that this current transaction is a fantastic opportunity for the successful operations of the business. The mechanics of the transaction will have no impact on the day-to-day operations of Spa Chakra — with the immediate financial backing of Hercules, Spa Chakra will continue to provide the highest quality spa services for our clients at our prominent spa locations worldwide,” said Michael Canizales, founder and chief executive officer of Spa Chakra, Inc.

“Having worked with and provided additional financing to Spa Chakra for the last two years, Hercules recognizes the investment potential that Spa Chakra represents,” said Manuel A. Henriquez, co-founder, chairman and chief executive officer of Hercules. “Because of this potential, we have decided to continue to support and provide additional financing, so that Spa Chakra could have immediate liquidity while we move forward with the anticipated acquisition. Uniquely positioned in the marketplace, Spa Chakra has developed a strong network of luxury spas worldwide and leading high-end luxury cosmetic brands that we believe position the company for future growth post the Chapter 11 reorganization. We are confident that the company will continue to execute its growth strategy and anticipate that Spa Chakra, shortly after emerging from its reorganization, will swiftly return to profitability.”

About Spa Chakra, Inc.:

Initially founded in 1998 in Australia, Spa Chakra has continued to expand both domestically and overseas, and is currently recognized as one of the top spa operators in the world. Spa Chakra provides its clients with comprehensive health and wellness care in an environment that integrates conventional and holistic methods with a definitive sensorial experience.

About Hercules Technology Growth Capital, Inc.:

Hercules Technology Growth Capital, Inc. is a NASDAQ traded specialty finance company providing debt and equity growth capital to technology and life science companies at all stages of development. Founded in December 2003, the company primarily finances privately held companies backed by leading venture capital and private equity firms. Hercules invests in a broad range of ventures active in technology and life science industries and offers a full suite of growth capital products at all levels of the capital structure. The company is headquartered in Palo Alto, Calif. and has additional offices in the Boston, Boulder and Chicago areas. Providing capital to publicly-traded or privately-held companies backed by leading venture capital and private equity firms involves a high degree of credit risk and may result in potential losses of capital. For more information, please visit Companies interested in learning more about financing opportunities should contact, or call 650.289.3060.

Anyone interested in learning more about Spa Chakra or with any questions regarding this press release should visit the company’s website at

Cazenove Capital Buys Thornhill Holdings

Cazenove Capital Management has acquired Thornhill Holdings Ltd., a UK-based provider of wealth management services. No financial terms were disclosed.


Cazenove Capital Management (“Cazenove Capital”) is pleased to announce the acquisition of Thornhill
Holdings Limited (“Thornhill”). Founded in 1985, Thornhill provides discretionary private wealth management services to its clients from offices in London and Edinburgh.
Commenting on the transaction, Andrew Ross, Chief Executive of Cazenove Capital, said: “We have known and admired Thornhill for many years. Given the similar culture, approach to investment and focus on client service, Thornhill and Cazenove Capital are an excellent strategic fit, both being independent businesses largely owned by their employees. We are excited by the addition of Thornhill and look forward to welcoming their team and clients to the enlarged group.’’

This deal will also give Cazenove Capital access to a successful and well established private client business in Edinburgh. Thornhill’s Scottish business came out of Martin Currie in 2003 and combining this pedigree with that of Cazenove Capital will create a powerful wealth management competitor in this market.

Sandy Dudgeon, Managing Director of Thornhill, added: “This is excellent news for our clients. Like us, Cazenove Capital is a privately owned and independent business where the management of private clients and charities is the largest area of the business. In addition, Cazenove Capital possesses a highly respected investment management team which will allow us to strengthen the investment offering we bring to our clients.”

Through the acquisition, it is estimated that Cazenove Capital will add over £600 million of assets managed on behalf of clients throughout the UK. This will take the assets managed on behalf of private clients to £6.5 billion, charities to £2.5bn and total group assets under management to over £14bn.

Cazenove Capital was the highest rated private client investment manager in the latest MDRC Client Satisfaction Survey 2008 and is the 4th largest charity investment manager in the UK. The transaction remains subject to a number of conditions including regulatory approval from the FSA. It is anticipated that completion of the deal will take place in early 2010.

MDCP To Sell Some Sirona Shares

Sirona Dental Systems Inc. (Nasdaq: SIRO) has filed to sell 7.35 million shares via a secondary public offering. The deal could be worth around $257 million, based on Friday’s closing price of $34.93 per share. Most of the shares will be offered by Madison Dearborn Capital Partners, which currently is Sirona’s majority shareholder.

Madison Williams Spins Out of Sanders Morris Harris

Madison Williams & Co. has been formed via a management buyout of the principal capital markets business of Sanders Morris Harris Group.


Madison Williams and Company, an integrated capital markets and advisory firm, announced today that it has completed a management buyout of the principal capital markets business from Sanders Morris Harris Group ( SMHG). The new firm has received its broker-dealer license from FINRA and is now privately owned by management, employees, and key institutional investors, including Fletcher International, Inc.

Madison Williams has 80 employees in five cities. The new firm’s strategy is to concentrate its resources on industry and product sectors where its integration of investment banking, research and institutional sales and trading services can most effectively meet the needs of the firm’s targeted clientele.

“Over the past 25 years, investment banking firms have become increasingly transaction-oriented at their clients’ expense,” says President and Chief Executive Officer William Sprague, the former head of the Capital Markets business of SMH Capital. “As a private company, we can more efficiently focus on the longer-term needs of our clients by providing thoughtful solutions that meet their financial and strategic needs.”

The cornerstone of Madison Williams’ strategy is the energy sector, where the firm has rapidly established itself as a market leader, completing more than 30 transactions so far this year. The firm is ranked third in number of co-managed energy equity offerings in 2009, having completed 20 public equity and one public debt offering in the oil and gas sector year-to-date. “We have an excellent energy investment banking team, headed by Sylvia Barnes,” Sprague explained. “The SMH Energy practice of Madison Williams exemplifies its growth strategy going forward - hire exceptional people with a strong track record of success and provide them the resources necessary to excel.”

Year-to-date energy transactions include: advising Resaca Exploration, Inc. with its recently announced merger with Cano Petroleum, Inc., executing two PIPE’s totaling C$262 million for Malone Mitchell’s new company TransAtlantic Petroleum Corporation, advising ATP Oil & Gas Corporation on a $150 million infrastructure monetization with General Electric, representing U.S. Energy on its drilling venture with Brigham Exploration Company, and providing a number of fairness opinions. Most recently the firm (as SMH Capital) completed a secondary offering of three million common shares for GeoResources as sole book-running lead manager.

A key component of Madison Williams’ growth strategy is the development of a top-notch research team. The firm currently covers the energy, health care, and industrial sectors, and the research team is co-led by Michael Bodino and Karen Kane. “We are pleased to have our energy research effort under the guidance of Michael Bodino. He is a recognized leader in the exploration and production sector,” says Sprague. The firm continues to attract leading analysts in other industry sectors as it expands its institutional sales team.

In addition to providing targeted institutional sales and trading, Madison Williams is one of a few firms that offers a hedging product to the mortgage banking sector. Led by Ansel Eshelman and Bill Sias, Madison Williams’ Fixed Income Group has taken advantage of the chaos in the mortgage markets to build a leading and rapidly growing product segment that has increased eight-fold in the past two years.

Madison Williams recently hired Stephen Nash to head up the firm’s expansion into targeted non-U.S. based businesses through its OTCQX Group. “We believe that OTCQX advisory is another practice area in which we can become a market leader, and Stephen Nash is recognized as one of the pioneers in this rapidly emerging market,” says Sprague.

Sanders Morris Harris Group retains a minority stake in Madison Williams. In addition, the firm will distribute select retail-oriented capital market products in partnership with Sanders Morris Harris Group, which has $10.6 billion in assets under management. Madison Williams has established its own institutional equity business and currently has 11 institutional salespeople.

According to Sprague, “While there are a large number of investment banking firms, clients seek financial advisors whose uncompromising integrity and valuable insights can lead to long-term, trusting relationships. The Madison Williams team is building a reputation for independent thinking, unquestioned ethics, and the ability to generate and execute creative solutions.”

About Madison Williams

Madison Williams is a privately held, integrated capital markets and advisory firm, offering investment banking, equity and fixed income sales, and trading and research services to institutional and corporate clients. Headquartered in New York, the firm has 80 employees in five major offices, including New York, Houston, Dallas, San Francisco and New Orleans. Madison Williams (formerly the capital markets business of SMH Capital) was recently spun out of Sanders Morris Harris Group (Nasdaq: SMHG) in a management-led buyout. For more information about Madison Williams, contact 212-317-2707, or log on to

About Fletcher International, Inc.

For more than 18 years, investments from Fletcher International, Inc. and its affiliates, structured by Fletcher Asset Management, Inc., have supported dynamic and responsible management teams leading more than 50,000 people at dozens of companies. Additional information is available at

About Sanders Morris Harris Group

Sanders Morris Harris Group is a wealth management company that manages approximately $10.6 billion in client assets. Client assets include the gross value of assets under management directly or via outside managers and assets held in brokerage accounts for clients by outside clearing firms. Its corporate philosophy of investment in common aligns its interests with those of its clients. Sanders Morris Harris has more than 600 employees in 21 states. Additional information is available at

Morgan Stanley Hires Ex-Merrill COO Fleming

NEW YORK (Reuters) - Morgan Stanley said on Sunday it hired former Merrill Lynch President and Chief Operating Officer Gregory Fleming to run its investment management group.

Fleming — one of the architects of Merrill Lynch & Co Inc’s sale to Bank of America Corp — will be president of Morgan Stanley Investment Management, which includes the firm’s merchant banking business. He will also be responsible for Morgan Stanley’s global research and will report to incoming Chief Executive James Gorman, the firm said.

Fleming left Bank of America after the deal closed in January and has been working as a senior research scholar at Yale University. He has been portrayed as a key proponent of the sale of Merrill Lynch at the height of last year’s financial crisis despite initial reluctance from then-Merrill CEO John Thain.

In Andrew Ross Sorkin’s book on the financial crisis, “Too Big to Fail,” Fleming was also credited with getting Bank of America to agree to pay Merrill bankers 2008 bonuses up to the same level as in 2007. He also got the bank to agree to an airtight “material adverse change” agreement, meaning that even if Merrill’s businesses continued to deteriorate Bank of America couldn’t easily back out of the deal.

Both elements of the deal proved to be very controversial as public outrage was sparked by news about the bonuses and as figures in subsequent months showed that Merrill’s businesses were in worse shape than had been publicly acknowledged and Bank of America CEO Kenneth Lewis threatened to back out of the deal.

Fleming joined Merrill Lynch in 1992 and from 2003 to 2007 co-headed Merrill Lynch’s markets and banking group. Fleming, a noted rainmaker who focused on financial companies, oversaw Merrill’s investment banking.

He will be joining Morgan Stanley in February. Fleming’s hiring follows a shuffle of executives announced earlier this week when Gorman pegged Morgan Stanley’s chief financial officer and head of investment banking to run its crucial institutional securities unit.

(Reporting by Michael Erman, additional reporting by Martin Howell, editing by Martin Golan)

Apax Buys Israeli Asset Manager Psagot

Apax Partners has agreed to acquire a majority stake in Israeli asset management firm Psagot from York Capital Management. No financial terms were disclosed. Psagot has nearly $32 billion in assets under management.


Funds advised by Apax Partners today announced an agreement to purchase a majority shareholding in Psagot Investment House Ltd (“Psagot”), the largest asset management business in Israel with assets under management of over NIS 121bn (€21.7bn, $31.9bn), from shareholders led by York Capital Management.  The investment is subject to customary regulatory approvals.  Financial terms of the transaction were not disclosed.

Driven by a young population of almost 7.5m, a resilient economy and a high savings rate, the managed savings market in Israel is expected to grow strongly in the future, presenting attractive growth opportunities for Psagot.  Psagot is a strong brand name in Israel with a 20 year track record.  The company has significant scale versus its competitors, a diversified asset base and strong distribution relationships.

Apax Partners is the only global private equity firm to have a dedicated presence in Israel.  Funds advised by Apax Partners have invested in Bezeq (the country’s largest telecoms provider) and Tnuva (Israel’s leading dairy and food producer). 

Financial & Business Services is one of the five sectors in which Apax Partners focuses exclusively.  The fund’s most recent financial services investment is the acquisition of Bankrate Inc.  Other key investments include Azimut, a leading Italian fund manager, Travelex, the world’s largest non-bank provider of international payment services, and Hub International, a leading North American insurance brokerage.

Zehavit Cohen, a Partner and head of the Israeli office, commented: “This is a company that we have been tracking for some time, and we are delighted to have the opportunity to support a very strong management team in its next phase of growth.”

Max Belingheri, a Partner at Apax, commented: “As the largest asset management business in Israel, Psagot allows us to access Israel’s fast growing managed savings market.  Apax Partners’ considerable expertise in financial services and our unique understanding of the Israeli market means we are ideally positioned to assist Psagot.”

About Apax Partners

Apax Partners is one of the world’s leading private equity investment groups.  It operates across the United States, Europe and Asia and has more than 30 years of investing experience.  Funds under the advice and management of Apax Partners globally total around $40 billion. These Funds provide long-term equity financing to build and strengthen world-class companies.  Apax Partners Funds invest in companies across its global sectors of Tech & Telecom, Retail & Consumer, Media, Healthcare and Financial & Business Services.  For more information visit:

About Psagot

Psagot is the largest investment house in Israel with managed assets of 121 billion NIS. The investment house has long term and short term investment services. For more information please visit:

S&P Raises Rating on Clear Channel

NEW YORK (Reuters) - Standard & Poor’s on Friday raised its ratings on Clear Channel Communications and gave it a positive outlook, indicating further upgrades could be on the cards, citing the planned debt sale at its advertising unit.

A unit of Clear Channel Outdoor Holdings Inc (CCO.N) plans to sell $750 million in new bonds to raise funds to refinance part of an $2.5 billion loan to Clear Channel Communications.

Clear Channel Communications’ liquidity will improve by terming out the debt to the new maturity of 2017, S&P said in a statement.

The company’s cash balance will also improve, giving it better intermediate-term liquidity to meet its covenants and repay debt maturities over the coming years, S&P said.

High leverage at the company, which was taken private last July in a $17.9 billion takeover by private equity funds Thomas H. Lee Partners [THL.UL] and Bain Capital, has raised concerns that it would breach its debt covenants.

S&P raised Clear Channel Communication’s rating one notch to CCC-plus, seven steps below investment grade and still a very distressed rating, from CCC.

The rating agency also rated Clear Channel Outdoor’s new bond sale B, five levels below investment grade.

Clear Channel Communications still faces a number of challenges, S&P said.

“Despite the improved liquidity and maturity profile, we are still concerned about the longer-term viability of the capital structure–in particular, unsecured debt maturities in 2013 and beyond, as well as the senior secured debt that begins coming due in 2014,” S&P said.

Subsequent unsecured debt sales made by Clear Channel Outdoor will need to be used to repay the senior secured debt at Clear Channel Communications, which could leave the company challenged to meet unsecured debt maturities, S&P said.

“Unsecured debt maturities beyond 2012 will have to be repaid by cash or refinanced at Clear Channel Communications, which could pose a formidable challenge depending on the overall business outlook for the company, including trends at the radio division,” the rating agency said. (Reporting by Karen Brettell; Editing by Padraic Cassidy)

Dishwashers, and How Google Eats Its Own Tail

Over the weekend I tried to buy a new dishwasher. Being the fine net-friendly fellow that I am, I  began Google-ing for information. And Google-ing. and Google-ing. As I tweeted frustratedly at the tend of the failed exercise, "To a first approximation, the entire web is spam when it comes to appliance reviews".

This is, of course, merely a personal example of the drive-by damage done by keyword-driven content -- material created to be consumed like info-krill by Google's algorithms. Find some popular keywords that lead to traffic and transactions, wrap some anodyne and regularly-changing content around the keywords so Google doesn't kick you out of search results, and watch the dollars roll in as Google steers you life-support systems connected to wallets, i.e, idiot humans.

Google has become a snake that too readily consumes its own keyword tail. Identify some words that show up in profitable searches -- from appliances, to mesothelioma suits, to kayak lessons -- churn out content cheaply and regularly, and you're done. On the web, no-one knows you're a content-grinder.

The result, however, is awful. Pages and pages of Google results that are just, for practical purposes, advertisements in the loose guise of articles, original or re-purposed. It hearkens back to the dark days of 1999, before Google arrived, when search had become largely useless, with results completely overwhelmed by spam and info-clutter.

Google has to know this. The problem is too big and too obvious to miss. But it's hard to know what you can do algorithmically to solve the problem. Content creators are simply using Google against itself, feeding its hungry crawlers the sort of thing that Google loves to consume, to the detriment of search results and utility.

For my part it has had a number of side-effects. One, I avoid searching for things that are likely to score high in Google keyword searches. Appliances are an example, but there are many more, most of which I use mechanisms other than broad search. Second, it has made me more willing to pay for things. In this case I ended up paying for a Consumer Reports review of dishwashers -- the opportunity cost of continuing to try to sort through the info-crap in Google results was simply too high.  

Something has to give, but I wonder what will -- the snake, its tail, or us?

More reading:
  • The end of hand-crafted content (Arrington)
  • The answer factory: Demand Media and the fast, disposable, and profitable as hell media model (Wired)
  • Content farms: Why media, blogs and Google should be worried (RWW)

China Stocks Rise; ICBC Acquires 10% in HKME

Hong Kong index of industrial production falls 8.6% in the third quarter. Hong Kong and Chinese stocks rise after markets in Asia and Australia gain on the Abu Dhabi bailout of Dubai World. ICBC acquired 10% stake in Hong Kong Mercantile Exchange.

Tokyo Indexes Fall; Weak Banks, Business Climate

New condo for sales in Tokyo increased 10.8% in November. Japan’s business conditions dropped in December according to the latest data from the Bank of Japan. Banks and ocean freight transportation carried led the decliners in Tokyo trading.

HarperCollins & Friends: In the Footsteps of Dinosaurs

“I’ve got this wonderful idea: we’re going to chop down some trees up in Canada and we’re going to ship them to a paper mill…and then we’ll ship that down to some newspaper and we’ll have a whole bunch of people staying up all night writing things….”

—Warren Buffett, explaining the death of newspapers, May 4, 2009

Buffett was talking about the newspaper business, but he may as well have been describing the book publishing business, too.

Having had some experience in dealing with book publishers (i.e. “Pilgrimage to Warren Buffett’s Omaha,” McGraw Hill, 2008), your editor can confirm that the book publishing business is doing its best to follow the newspaper publishing business into the La Brea Tar Pits, as quickly as possible.

Now, for the record, book publisher are full of very intelligent people who work hard doing the best they can to publish quality printed material. And they’re nice people to be around, too—at least, for a writer—because they really like books. T
hey obsess not only about the words inside each book, but they take enormous pains to get the cover artwork and the jacket design and even the physical look and feel of each book just right.

And they do all that not only for the U.S. versions of their catalogue: when the Japanese edition of “Pilgrimage” came out this past summer, our publisher raved about the finished product. “It looks gorgeous,” she said.

And indeed it did—although certainly nothing like the English version of our journey to the heart of Berkshire Hathaway.

Instead of pictures of Warren Buffett on the cover, and the use of bold colors along the borders to attract the eye (as in the photo to the right of this virtual column), the Japanese book cover was pure white and somewhat compact. Inside were thick rich pages covered with beautiful, black-typed ideographic characters printed in columns running right to left.

It even had—and we are not making this up—a silk-tasseled book marker worked into the binder.

It was like holding the Beatles’ White Album for the first time.

And we mean the White Album, not the CD version of the Beatles classic. “Gorgeous” though it was, the book seemed like something out of the 60s: thick, costly and a relic of the past.

After all, the world is awash in “gorgeous” printed material.

Last year alone, 275,000 new books were published in the United States alone. (That’s 5,288 a week, for those of you who think you might want to write a book some day.)

Meanwhile, simple economics are compelling the book world to move online, and those simple economics are as compelling as they were for the newspaper world a few years back.

To explain them, we’ll paraphrase Buffett’s remarks about the newspaper model thusly:

“I have a great idea: physical books!

“All we have to do is pick a topic today for a book that we hope will still be timely a year and a half from now, when it’s actually published. Of course, we’ll have to pay the author in advance for work that might or might not be any good, and also hope the author gets it done in time…

“Meanwhile we’ll design a book cover that might or might not be attractive when the book comes out; cut down a bunch of trees, turn them into paper, line up a printer for the cover, line up a printer for the book, estimate how many copies we might possibly sell if everything goes just right, print that many copies of the book, and ship them in big heavy trucks to distributors and booksellers while hoping that somebody influential reviews the book.

“Then we’ll pray enough people buy the book so that there aren’t any books we need to take back.”

You might think—given the hit-and-miss, but mostly miss, nature of this so-called business model—that a rational book publisher would gravitate swiftly to the online business model in order to eliminate the monstrous waste that goes on at every stage of the book publishing business—i.e. printing and shipping millions of books each year that are highly likely to be irrelevant by the date they reach the stores, and having to take them back.

But you would be wrong. The book publishers are fighting the online delivery of books.

Here’s how HarperCollins’ CEO Brian Murray has reacted, according to the Wall Street Journal:

Mr. Murray said that if new hardcover titles continue to be sold as $9.99 e-books, the eventual outcome will be fewer literary choices for customers, because publishers won't be able to take as many chances on new writers.

Mr. Murray is pursuing the absolutely correct—but fatally flawed—understanding that a $9.99 e-book will not cover the cost of a manufacturing and distribution system built around $30 hardcover books, i.e. his system.

What he does not grasp is this: if he doesn’t offer the books at that price, any number of virtual book publishers will rise up and take chances on precisely those authors Mr. Murray thinks will not be chanced on any more, and his model will disappear as swiftly as that which produced the original White Album.

Alas, Mr. Murray is not alone among his La Brea Tar Pit-marching brethren: Simon & Schuster and the Hachette Book Group also recently announced they would delay offering e-books in an effort to avoid cannibalizing new hardcover editions.

But the ground is shifting beneath their feet, and the book publishers find themselves stuck in something that seems to grip them tighter the more they struggle. Ahead they can see the newspaper companies, encased in the black bubbly, gasping for air and barely able to breathe.

The tar pits beckon, but HarperCollins & Friends march on.

Jeff Matthews
I Am Not Making This Up

© 2009 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews, who also acts as an advisor: clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.