StanChart mulls spinning out private equity business to its fund managers

Bill Winters. Photo: Bloomberg

Standard Chartered Plc is considering spinning out its private-equity business to its managers, as Chief Executive Officer Bill Winters continues efforts to simplify the bank and reduce the amount of risk it takes, according to two people familiar with the matter.

The London-based lender may exit Standard Chartered Private Equity, or SCPE, as it faces tougher capital rules and losses from the unit, said the people, who asked not to be identified because no decision has been reached. The unit’s managers, led by Joseph Stevens, would take control of a business that oversees about $5 billion of assets, including stakes in a Nigerian bank and a Singaporean chain renowned for spicy noodles, said the people.

Winters, who took charge of Standard Chartered last year, is seeking to help the bank recover from losses on soured loans by exiting and restructuring $100 billion of risky assets. The Principal Finance unit that houses SCPE posted $167 million losses in the first half of 2016, after losing $105 million in the second half of 2015.

“It’s been a more difficult business to carry from a regulatory perspective, and we’re looking at ways that we can effectively reposition the funding of that business,” Winters said of Principal Finance on a conference call last month. “It’s not surprising that it’s part of the cycle where we’re experiencing some pain.”

‘Tightened Risk’

Regulators in Europe and the U.S. have made it harder for banks to invest shareholders’ cash in illiquid funds since the financial crisis, leading to a series of so-called spin-outs where employees become owners of newly independent firms.

The SCPE business manages more than $2 billion of Standard Chartered’s cash and another $3 billion for third-party investors, the people said. The bank has reduced its investment over the past three years, one of the people said.

The company “is looking at non-core businesses, or those that do not sit within our tightened risk tolerance,” Simon Kutner, a spokesman for Standard Chartered, said in an e-mailed statement.

SCPE has been involved in deals worth at least $1.5 billion since the start of 2015, according to data compiled by Bloomberg. Acquisitions include stakes in Singaporean companies Phoon Huat & Co., a vendor of baking ingredients such as pie fillings and confectioners’ sugar, and Crystal Jade Culinary Concepts Holding Pte, a restaurant chain known for its steamed dumplings and spicy noodles. SCPE is also among the biggest shareholders in Union Bank of Nigeria Plc, a lender whose stock has plunged 35 percent so far this year.

The Principal Finance division has made “good returns” for Standard Chartered in the past, Winters said in August. The operation had more than $600 million of revenue for 2013 and 2014 combined. The business has been loss-making since last year amid “weaker equity market valuations,” the bank said as it reported first-half results.

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Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.