StanChart Is Said to Market $1.5 Billion of Buyout Deals

(Bloomberg) -- Standard Chartered Plc’s three-year saga to exit its loss-making private equity business, which has investments ranging from Jordanian poultry to a Korean restaurant specializing in garlic, has finally reached the endgame.

The bank is seeking investors to purchase the remaining $1.5 billion of private equity assets and back a spinoff of the 55-strong team running the buyout business, according to people with knowledge of the deal, who asked not to be identified as the details are private.

Code-named ‘Project Augusta,’ Standard Chartered is proposing existing managers led by Singapore-based Nainesh Jaisingh, be set up as an independent entity that would run the bank’s own private equity portfolio as well as an additional $2.1 billion of third-party money, said the people. Credit Suisse Group AG has started pitching the transaction to potential suitors, including other buyout firms in Asia, after they were sent teaser documents in March, they said.

A London-based representative for Standard Chartered declined to comment.

Standard Chartered Private Equity has long been a burden for Chief Executive Officer Bill Winters, losing about a billion dollars since he was brought in to turnaround the struggling lender three years ago. While initially profitable, SCPE’s fortunes started to turn in late 2015, partly because of the plunge in the price of oil. Former boss Joseph Stevens left the bank the following year after falling to negotiate a management buyout, leading Winters to pledge an exit from most of the business by the end of this year.

Eclectic collection

SCPE’s investments are an eclectic collection. They include a Jordanian chicken producer Al Jazeera Agricultural Company, Korea’s "Mad For Garlic" restaurant chain, shopping malls in Botswana, a Vietnamese ‘edutainment’ kids’ play-center operator and an Australian cattle firm. More recently, it’s proposed to buy shares of a Singapore crane firm and is considering acquiring a Ugandan manufacturer of soft drinks and biscuits.

Financial Details

  • Many of the assets spread across Asia, the Middle East and Africa are ready to be sold, should generate a gross IRR of more than 25% over 3-to-5 years : sources say

  • The bank also has eight buyouts worth about $400 million close to completion: sources

‘Project Transformer’

It’s possible Jaisingh and other current management of SCPE will team up with other companies to buy the assets, Bloomberg News reported in March.

SCPE is all that remains of the principal finance division at Standard Chartered, which used to have teams investing in energy, resources and infrastructure, Indian small businesses, mezzanine debt and real estate. All have been closed down or sold.

Chief Financial Officer Andy Halford said in March it had a provisional agreement to sell $700 million of real estate assets to Actis LLP. Code-named ‘Transformer,’ the sale should be completed this year, the bank told potential investors in SCPE, the people familiar said.

Halford defended the progress of the sale of its private equity business on an earnings call earlier this month, saying “there is not a rush,” to divest the unit.

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