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Staatsfonds als Ankerinvestoren: Eine Note zum Einstieg von Aabar bei Daimler
Abstract
The group of sovereign wealth funds (SWF) is gaining growing importance in the discussion on corporate governance quality as critical success factor for the long-run performance of exchange listed companies. These institutional investors mostly act as long-term oriented minority block holders (anchor investors) in international capital markets. We show for a specific case how capital market participants evaluate SWF investments in exchange listed companies. From the overall stock price reaction we can conjecture that investors expect from this investment of Aabar a positive impact on the corporate governance. However, there is also the alternative explanation that SWF have superior target selection abilities which allow them to detect undervalued companies in an inefficient capital market.
Sovereign Wealth Funds (SWFs) have steadily increased their importance in the global financial system in the last decade and especially during the financial crisis period. Although the objectives and investment strategies of SWFs are quite diverse, I propose to sort them into three main groups, depending on their sponsor countries’ endowment with resources and investment objectives. I present case studies and empirical analyses that reflect SWF investment activities and try to elaborate on the special role of each SWF group. Special emphasis is given to the recent financial crisis, where SWFs also acted as bailout investors by injecting substantial capital into global financial institutions, filling a financing gap that other institutional investors could not close
This paper initiates empirical research on the financial impact and wealth effects of Sovereign Wealth Fund (SWF) investments in the stock of listed companies around the world. SWFs have recently gained media attention because of concerns about their large size (USD 3.3 trillion), extremely rapid growth rates, and lack of transparency. We analyze asset allocation by fund and find a significantly positive 1% mean abnormal return upon announcement of 75 SWF acquisitions of equity stakes in publicly traded companies around the world. We note that SWFs are typically long term investors who, due to both political pressures and size of holdings, are often unwilling to quickly unwind their positions. However, two-year abnormal returns of SWFs average a significantly negative 41%, suggesting equity acquisitions by SWFs are followed by deteriorating firm performance.
We analyze the value creation of state funds acquiring minority stakes in exchange listed financial services firms – based on 35 transactions between 1995 and 2008. Several state fund investments in the financial services industry in times of financial crisis indicate the economic importance of these stake acquisitions. However, the value implications of this kind of investments remain unclear. While various empirical studies document the value destruction of M&A activity in the banking industry, there is also evidence on wealth creation by minority stake acquisitions by private equity funds in exchange-listed companies. There is a significant positive announcement effect of up to 5.66% but a long-run insignificant stock price reaction.
Sovereign Wealth Funds (SWFs) have become active investors on the financial markets. This working paper meets the increasing thirst for information on the investment activities of Sovereign Wealth Funds, their legal environment and the implications on German stock listed corporations. Thus, this paper examines the history of, and reasons for establishing SWFs. Furthermore, concerns regarding transparency and investment activities of SWFs are discussed. The authors find no evidence for politicaly motivated investments or massive market intervention by SWFs. Furthermore, the authors propose that the newly established Santiago Principles will build up trust in the financial markets. The empirical part of the working paper analyzes the impact of SWFs on German stock listed corporations. Main findings of the survey include that corporations lack information on SWFs and disagree with the planned change of the Au�enwirtschaftsgesetz. The Survey's results further indicate that participant corporations have no concerns about SWF investment activities. Only few SWFs were willing to participate in the survey and therefore information from the IMF was utilized to get an overview about the sector. --
Management of official holdings of foreign assets, in particular in sovereign wealth funds, has become a major focus of national and international economic and financial policy. The principal reasons are their size, lack of transparency, potential to disrupt financial markets, and the risk that political objectives might influence their management. Moreover, such large cross-border holdings in official hands are at sharp variance with today's market-based global economy and financial system. These investment activities of governments have become sufficiently significant that an internationally agreed standard should be established to guide these activities. The standard should apply to the gamut of international investments of governments, including traditional foreign exchange reserves, stabilization funds, nonrenewable resource funds, sovereign wealth funds, and government-owned or controlled entities such as pension funds. The standard should ensure that international investments of governments are based on clearly stated policy objectives and investment strategies. It should set out the role of the government and the managers of the investment mechanism/entity and ensure that the operations of the investment mechanisms are as transparent as possible. Depending on the type of mechanism, its size, and the scope of its activities, behavioral guidelines with respect to its management should be established. Such a standard would contribute not only to financial stability in the countries directly involved but also to international financial stability by increasing the transparency, accountability, and predictability of the operations of governments in managing their international investments and discharging their obligations to current and future generations.
The rationale for the lively interest in corporate governance is the belief that there is a relationship between corporate governance and firm performance. A "good" governance- system is supposed to have a positive impact on performance. This article provides a state-of- the-art review of empirical work on the link between corporate governance and firm perform- ance. It finds that there are neither clearly positive nor negative effects that can be identified. In the discussion, various reasons for the inconsistent findings are evaluated. Besides meth- odological problems and inadequate theoretical foundations, the neglect of institutional com- plementarities, demographic factors and group decision processes are considered. In conclu- sion, the relevance of structural elements of corporate governance appears to be overrated. The differences within and between highly developed governance-systems are too small to exert a significant impact on firm performance.
This paper analyzes market reactions triggered by announcements that hedge funds and private equity investors have purchased large blocks of voting rights. We argue that changes in shareholder wealth are related to the opportunity, possibility, and motivation of being an active blockholder who successfully reduces agency problems. We find positive abnormal returns following an announcement that an active shareholder has acquired at least 5% of a company's voting rights. Proxy variables for agency costs explain the market reaction only for investments of private equity funds. Considering the long-term stock price performance, we observe negative buy-and-hold abnormal returns especially for the hedge fund samples. We argue that this is because of the German corporate governance system, whereby hedge funds must align their interests with advisory board members. Therefore, we believe the distinct negative post-announcement stock performance of hedge fund targets may be a misinterpretation by the capital market of a hedge fund's abilities and motivations. It seems market participants do not believe hedge fund activism creates wealth effects in a manner comparable to private equity engagements.
This paper investigates the wealth effects of private equity (PE) investor purchases of shares in German quoted companies. It is the first study to analyze these effects for the German market which is particularly interesting due to its distinct characteristics with regard to the ownership structure of publicly listed companies and the protection of minority shareholders. We find that PE investors generate positive wealth effects for target shareholders of 5.90% around the event day (t = -1 to t = 0). In addition, we find that the wealth effects of PE investor involvement in Germany are positively related to the target's tax liabilities and degree of undervaluation and negatively related to the target's leverage and the shareholding of the second largest ownership block. The latter effect can be interpreted as a supplementary monitoring effect of the management or a monitoring effect of the largest shareholder through which private benefits of control are reduced.
This paper analyzes market reactions triggered by announcements that hedge funds and private equity investors purchase large blocks of voting rights. We argue that changes in share-holder's wealth are related to the opportunity, possibility and motivation of being an active blockholder, who successfully reduce agency problems. The investigation is based on a unique data set of German public listed companies and relates their short-term and long-term stock performance to several corporate and market variables. We find positive abnormal returns triggered by an announcement that an active shareholder acquired at least 5% of a company's voting rights. Interestingly, variables proxying for agency costs explain the market reaction for our private equity sample, only. Ownership characteristics provide only poor evidence for explaining the market reaction within our hedge fund sample; although they are important for the private equity sample. Considering the long-term market performance, we observe considerably negative benchmark adjusted buy-and-hold returns for both samples. However, our results indicate a misinterpretation by the capital market regarding a hedge fund's motivations and activities.
This Article considers the increasing impact of equity investments made by sovereign wealth funds. Observers have increasingly viewed sovereign investments with a high degree of suspicion due to the potential for the investments to be used as political tools rather than traditional investment vehicles. While this risk is considerable, much of the discussion surrounding sovereign investment ignores or minimizes the mitigating effect of a number of regulatory, economic, and political factors. This Article argues that continued vigilance, but not additional regulation, is necessary to ensure that U.S. interests are not jeopardized by sovereign investment in U.S. enterprises. While the United States is able to protect its interests in domestic markets, it is limited in the steps it can take to ensure that its interests are not harmed by politically-motivated sovereign investments in other countries. Many countries outside the United States do not have the regulatory structure or political power to adequately defend national interests. Due to the potential political harms associated with sovereign investing, this Article argues in support of the Santiago Principles, an international code of conduct for sovereign investments.
This paper presents evidence on changes in operating results for a sample of 76 large management buyouts of public companies completed between 1980 and 1986. In the three years after the buyout, these companies experience increases in operating income (before depreciation), decreases in capital expenditures, and increases in net cash flow. Consistent with the operating changes, the mean and median increases in market value (adjusted for market returns) are 96% and 77% from two months before the buyout announcement to the post-buyout sale. The evidence suggests the operating changes are due to improved incentives rather than layoffs or managerial exploitation of shareholders through inside information.
Sovereign wealth funds (SWFs) have emerged as among the most important players in global financial markets. With an estimated $3 trillion at present, the collective assets at their disposal are expected to reach or surpass $7.5 trillion by 2012.
SWFs have shown a wide range of investment objectives, along with continually evolving time horizons and risk appetites. For example, some SWFs have become increasingly active in corporate acquisitions and other strategic transactions. Though many of these funds prefer to invest in debt or non-controlling equity positions, a small but growing number are seeking substantial minority and controlling equity stakes.
SWFs have also recently become major participants in the financial institutions and alternative investment industries, with several high profile investments in well-known private equity firms and financial services companies. In certain corporate transactions, their longer time horizons and willingness to employ larger percentages of equity have made them attractive alternatives to established private equity.
At the same time, however, the rising prominence and perceived lack of transparency of SWFs have raised concerns among governments and other market participants in countries where companies have been targeted for investment. For this reason, companies intent on obtaining funding from or investing with SWFs are advised to prepare for media and regulatory scrutiny, particularly if a transaction is perceived to involve a country's strategic or security interests. Government policymakers are urged to balance the perceived threats of SWFs against their potential benefits, particularly their ability to provide a stabilizing source of global liquidity in the current economic environment.
By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack. Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a significant drop in operating performance after the laws' passage, firms in competitive industries experience no significant effect. When we examine which agency problem competition mitigates, we find evidence in support of a "quiet-life" hypothesis. Input costs, wages, and overhead costs all increase after the laws' passage, and only so in non-competitive industries. Similarly, when we conduct event studies around the dates of the first newspaper reports about the BC laws, we find that while firms in non-competitive industries experience a significant stock price decline, firms in competitive industries experience a small and insignificant stock price impact.
The author examines changes in the pricing and financial structure of large management buyouts in the 1980s. Over time, (1) buyout price to cash flow ratios rose in absolute terms (particularly in deals financed using public junk bonds); (2) required bank principal repayments accelerated, leading to sharply lower ratios of cash flow to total debt obligations; (3) private subordinated and bank debt were replaced by public junk debt; and (4) management teams and dealmakers took more money out of transactions up front. These patterns are consistent with an 'overheating' phenomenon in the buyout market. Preliminary post-buyout evidence lends some support to this interpretation. Copyright 1993, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
It is commonly thought that a widely held corporation that is not being run in the interest of its shareholders will be vulnerable to a takeover bid. We show that this is false, since shareholders can free ride on the raider's improvement of the corporation, thereby seriously limiting the raider's profit. We analyze exclusionary devices that can be built into the corporate charter to overcome this free-rider problem. We study privately and socially optimal corporate charters under the alternative assumptions of competition and monopoly in the market for corporate control.
This paper analyses the impact of sovereign wealth funds (SWFs) on global financial markets. It presents back-of-the-envelope calculations which simulate the potential impact of a transfer of traditional foreign exchange reserves to SWFs on global capital flows. If SWFs behave as CAPM-type investors and thus allocate foreign assets according to market capitalisation rather than liquidity considerations, official portfolios reduce their "bias" towards the major reserve currencies. As a result, more capital flows "downhill" from rich to less wealthy economies, in line with standard neoclassical predictions. More specifically, it is found that under the assumption of SWFs investing according to market capitalisation weights, the euro area and the United States could be subject to net capital outflows while Japan and the emerging markets would attract net capital inflows. It is also shown that these findings are sensitive to alternative assumptions for the portfolio objectives of SWFs. Finally, the paper discusses whether a change in net capital flows triggered by SWFs could have an impact on stock prices and bond yields. Based on an event study approach, no evidence can be found for a stock price impact of non-commercially motivated stock sales by Norway's Government Pension Fund.
We examine recent confrontational activism campaigns by hedge funds and other private investors. The main parallels between the groups are a significantly positive market reaction for the target firm around the initial Schedule 13D filing date, significantly positive returns over the subsequent year, and the activist's high success rate in achieving its original objective. Further, both activists frequently gain board representation through real or threatened proxy solicitations. Two major differences are that hedge funds target more profitable firms than other activists, and hedge funds address cash flow agency costs whereas other private investors change the target's investment strategies. Copyright (c) 2009 The American Finance Association.
This paper is a report on seventy-two firms that went public since 1983, but previously underwent a full or divisional levereged buy-out. Accounting measures of performance reveal significant improvements in profitability, which resulted mainly from these firms' ability to reduce costs. Firms experience dramatic increases in leverage at the levereged buyout, but the leverage ratios are gradually reduced. The evidence is consistent with the hypothesis that the change in the governance structure of these firms towards more concentrated residual claims created a new organizational structure that is more efficient than its predecessor. Copyright 1990 by American Finance Association.
The purpose of this paper is to assess the factors that affect the returns earned by investors in early trading of reverse LBOs and compare those results to factors affecting original IPOs which are matched by size, industry, and issue date. A mean excess return of 7.64% is observed for the sample of reverse LBOs during the period 1987 to 1998. This return is uniformly lower than returns earned by investing in original IPOs. These results support the information asymmetry hypothesis.
The results also show that factors such as number of months the LBO was privately held, the over-allotment, or greenshoe option, the size of the issue, insider ownership, and gross spread impact the returns earned by investors in reverse LBOs. Other factors which are known to affect returns on original IPOs, such as lead underwriter, whether the deal was syndicated, the number of managers, the listing exchange, lockup agreements, and auditor, are shown to have no impact on the returns in reverse LBOs for the sample in question. We find that the level of insider participation and the over-allotment option are more important to original IPOs than to reverse LBOs in explaining the excess returns earned by shareholders in early trading. We find, however, that the size of the offering has more impact on excess returns for reverse LBOs than for original IPOs.
Commodity and Non-commodity Sovereign Wealth Funds Deutsche Bank Research
- H Reisen
Reisen, H. (2008), Commodity and Non-commodity Sovereign Wealth Funds, Deutsche Bank Research, Working Paper Series, Research Notes 28.
The New Power Brokers: How Oil, Asia, Hedge Funds, and Private Equity Are Shaping Global Capital Markets
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- E. Gerlemann
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