Underwriting: Q1- 08

Citigroup Inc missed its title as the world's largest underwriter of stocks and bonds for the first time in more than six years, said Thomson Financial.

According to Thomson, Securities underwriting volume fell by 45% from a year earlier to $1.27 trillion, and fees collected by I- banks fell 47% to $5.8 billion.

JPMorgan Chase & Co was the top underwriter in the first quarter. JPMorgan arranged $129.4 billion of offerings, winning a 10.2 percent share.

Citigroup followed with $94.7 billion of offerings and a 7.5 percent share.

Deutsche Bank AG was third, with $91.8 billion of offerings and a 7.2 percent share.

Reported fees fell by 7% to $3.38 billion from $3.65 billion.

Citigroup led in that area with a 15.6 percent share, followed by Bank of America Corp's 8.9 percent and Goldman Sachs Group Inc's 7.8 percent. JPMorgan was fourth.

Wall Street bankers said Citigroup's fall from first place partly reflected a change in strategy by its new management. Citigroup in a statement said it manages its business "for productivity and profitability rather than league table position."

Bear Stearns Cos, a fixed-income specialist that agreed to a takeover by JPMorgan following liquidity problems, ranked 18th in underwriting and 23rd in reported fees.

Merger volume, meanwhile, fell 41 percent worldwide and 56 percent in the United States, Dealogic said last week, suggesting lower need for future bond and loan offerings.

"There was a total contraction in credit," said Richard Peterson, director of capital markets at Thomson. "We don't know if there are more hidden time-bombs. The market is sensing there could be more."

News & Related Links

Reuters – Citigroup dethroned in dismal underwriting quarter

Financial Week – Citi finally knocked off its throne as top underwriter

Wall Street Journal – Debt Turmoil Hits Street Stock, Bond Sales

J.P. Morgan Still Biggest Hedge Fund

Assets at the largest US hedge funds grew by more than a third last year, even though three of the 10 largest funds lost a combined $24bn in assets. According to the biannual survey by Absolute Return magazine.

JPMorgan retained its position as the largest US hedge fund manager, with $44.7bn under management at yearend, even though it lost $8.5bn in assets over the course of the year. The losses were mainly due to redemptions and losses from a statistical arbitrage fund.

JP Morgan has a number of hedge funds under its management, including JP Morgan Asset Management and Highbridge Capital Management

The biggest loser of 2007 was Goldman Sachs Asset Management, which fell to seventh place from second as assets dropped 27% in the second half to end the year at $29.20 billion. D.E. Shaw fell to sixth place, from third.

Goldman Sachs also lost heavily as a result of problems at quant funds that fell victim to heightened market volatility.

The second-and third-placed firms were Bridgewater Associates and Farallon Capital Management, both of which now manage $36bn in assets.

Renaissance Technologies, which took a hit in its quant funds, recovered to rise to fourth place with $34bn.

Och Ziff Capital Management, which went public last year, rose to fifth place with $33.2bn.

Not surprisingly, the biggest winner in terms of asset growth last year was Paulson and Company, which entered the top 10 for the first time after its assets soared 306 per cent last year to $29bn as a result of its early and correct bet against the US subprime mortgage sector.

CNNMoney.com

JP Morgan Takes Stakes In Asia-Pacific

JP Morgan Chase is launching a private equity unit in the Asia-Pacific region with its own capital of $750 million and client funds.

JPMorgan is expanding its Asian operations by absorbing a Hong Kong-based firm called TVG Capital Partners.

TVG is a private-equity investment firm with offices in Hong Kong; Bangalore, India; and Sydney, Australia. Its Web site says it manages more than $700 million in capital. TVG had focused on the technology, communications and media sectors.

Varun Bery and John Troy, co-founders of TVG Capital Partners, who will join JPMorgan as managing directors, will head the expansion. The 10-person team is also joining from TVG.

Varun Bery was a telecom banker for Credit Suisse Group and a consultant for McKinsey & Co. John Troy worked at the Asian Infrastructure Fund since its inception in 1994 and was previously at several global telecom firms.

The team from TVG will be the Asian arm of JP Morgan's Private Equity Principal Investments business, which is headed by Bob Case in New York.

JP Morgan will take stakes in consumer, retail, industrial, health care, technology and natural resources in businesses in Asia-Pacific region, where buyouts are notoriously difficult.

JPMorgan said it would allow its corporate and financial sponsor clients to put their own capital together with that of the bank to "co-invest" in the opportunities it finds.

JP Morgan's investments are minority stakes of between $75m and $100m.

JPMorgan has invested in Asian private equity through its units One Equity Partners and Principal Investment Management.

Lets look at Good things in this

The move demonstrates JP Morgan's ability to finance new investments at a time when many of its rivals are seeking sovereign wealth funds and other outside investors to help shore up their balance sheets following massive losses related to the turmoil in credit markets.

It also indicates JP Morgan's desire to catch up with investment banks such as Morgan Stanley and Goldman Sachs that were quicker to commit a significant portion of their own money to Asia.

JP Morgan decision to hire TVG staff to run the fund will get new operation up and running faster than if it built a team from scratch. TVG is bringing in 10 people, and J.P. Morgan expects to add to that quickly.

The new fund will evaluate investments across many sectors, but has avoided the real estate and financial institutions.

IMF has forecasted that Asia-Pacific economic growth may outpace the USA during the current year. The developing Asian economies have been driving corporate profits higher during the recent years, with the annual growth of about 8.6 percent. In the USA the index could only reach 1.5 percent.

Difficult listing conditions in Asia due credit squeeze, may open new doors for principal investments by banks because many in Asia's huge pool are privately held or family companies that will not go ahead with IPOs amid such stock market volatility.

Companies faced with difficult market conditions are looking increasingly to private-equity funds as stakeholders. Recent declines in stock prices and a fallback in markets have led to more favorable investment conditions for private equity funds.