凯雷对于金融服务业看法.ppt

overview: financial services industry - what went wrong & what does it mean?,p. olivier sarkozy managing director & financial services group head october 3, 2008,important information,this presentation is made available on a confidential basis to sophisticated investors for the purpose of providing certain information about tc group, l.l.c. and its affiliates (“carlyle”) and carlyle-sponsored investment funds (each, a “fund”). this presentation does not constitute an offer to sell or a solicitation of an offer to purchase interests in any fund. any such offer or solicitation shall only be made pursuant to a confidential private placement memorandum of fund, which qualifies in its entirety the information set forth herein and which should be read carefully prior to investment in any fund for a description of the merits and risks of an investment in the fund. an investment in a fund entails a high degree of risk and no assurance can be given that a funds investment objective will be achieved or that investors will receive a return of their capital. as used throughout this document, and unless otherwise indicated, “gross irr” shall mean an aggregate, annual, compound, gross internal rate of return on investments. in the case of portfolios of realized and unrealized investments, the gross irrs are based on realizations and internal valuations of carlyle as of the applicable date. gross irrs do not reflect management fees, carried interest, taxes, transaction costs and other expenses to be borne by investors in the fund, which will reduce returns and in the aggregate are expected to be substantial; for a description of such management fees and carried interest, please see the final confidential private placement memorandum. while carlyle believes that projected returns for unrealized investments are based on assumptions and valuation methodologies that are reasonable under the circumstances, the actual realized returns on carlyles unrealized investments will depend on, among other factors, future operating results, the value of the assets and market conditions at the time of disposition, any related transaction costs and the timing and manner of sale, all of which may differ from the assumptions on which the valuations used in the prior performance data contained herein are based. accordingly, the actual realized return on these unrealized investments may differ materially from the projected returns indicated herein. investors are encouraged to contact carlyle representatives to discuss the procedures and methodologies used to calculate the investment returns and other information provided herein, and may upon request obtain an illustration of the effect of fees, expenses and other charges in the gross irrs presented. past, targeted or projected performance is not necessarily indicative of future results and there can be no assurance that targeted or projected returns will be achieved or that the fund will achieve comparable results. references to portfolio companies are presented to illustrate the application of carlyles investment process only and should not be considered a recommendation of any particular security or portfolio company. information about recommendations over the last year is available upon request. it should not be assumed that recommendations made in the future will be profitable or will equal the performance of past recommendations. certain information contained in this presentation, including the values given for some assets, is non-public, proprietary and highly confidential information. accordingly, by accepting and using this presentation, you will be deemed to agree not to disclose any information contained herein except as may be required by law. in addition, certain information contained in this presentation has been obtained from published and non-published sources prepared by other parties, which in certain cases have not been updated through the date hereof. while such information is believed to be reliable for the purpose used in this presentation, carlyle does not assume any responsibility for the accuracy or completeness of such information and such information has not been independently verified by carlyle. except where otherwise indicated herein, the information provided in this presentation is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue,” “target” or “believe” (or the negatives thereof) or other variations thereon or comparable terminology. due to various risks and uncertainties, actual events or results or actual performance of the fund may differ materially from those reflected or contemplated in such forward-looking statements. as a result, investors should not rely on such forward-looking statements in making their investment decisions. no representation or warranty is made as to future performance or such forward-looking statements.,executive summary,what happened? what role will private equity play?,i. what happened? a crisis by many names,august 2007,today,to come,money market funds auto loans credit card lending commercial real estate liquidity,and one underlying common theme,leh aig wamu,wachovia hypo re fortis b&b dexia,tarp?,leverage!,reversal of glass-steagall in 1999 set off a leverage race on wall street leverage outside the banking system largely unregulated / misunderstood explosion of credit markets allowed each segment of risk to be isolated and further leveraged tiering of risk allowed for multiple layers of leverage with limited transparency investors became complacent while regulators became overwhelmed,while current crisis in many ways mirrors past credit cycles,inflated housing & real estate values lax monetary policy that lasted too long flat yield curve cheap credit compounded by loss of investor discipline weak regulatory framework,loss of confidence,extent of leverage is a differentiating feature of this particular cycle,government debt 1,federal and consumer debt as % of gdp 2,(1) office of management and budget, budget of the united states, fy 2007 (2) u.s. chamber of commerce as of 8/27/08,bank leverage 2,%,extent of leverage is a differentiating feature of this particular cycle,share of intermediation through banks & securities markets 1,(1) morgan stanley. “levered losses: lessons learned from the mortgage market meltdown” 2/08 (2) snl financial. data as of 7/31/08,total assets of top 5 brokers 1 ($ tril),6% cagr,16% cagr,(1) snl financial. top brokers traded on the nyse and nasdaq (2) source: lehman brothers. data provided 8/28/08,global issuance of structured finance products 2,extent of leverage is a differentiating feature of this particular cycle,anecdotes of leverage,$2.3 tril in “aaa” guarantees supported by six monolines with less than $20 bil in equity (0.8%)(1) in june 2007, financials made up 20.9% of s&p 500 implies that approximately 30% of every dollar earned by an s&p 500 company was earned by a financial services firm total assets of the top 5 brokerage houses in the u.s. equaled approximately 35% of the total u.s. annual gdp. balance sheets were levered on average 30:1(3) in 1998, failure of long term capital brought markets to their knees, based on a loss of $4.6 bil.(4) to-date system has incurred approximately 75x(5) this amount. industrys capital base increased by only 2.5x that during this time(6),pershing square capital management. “how to save the bond insurers,” 11/07 company reports. data as of q4 2007 snl financial. data as of q4 2007 financial times. “bank bailout shows need to intervene,” 6/08 loss estimate to-date of $460 bil provided by goldman sachs. data provided on 8/28/08. inflation data provided by the u.s. department of labor. snl financial. as measured by tangible capital base of top 25 u.s. financial institutions (excluding insurance companies, from 1998 to q2 2008),mortgages,mortgages,mortgages,cash,cash,cash & fees,aaa,cash,cash,aa below,notes,cash,10 to 1,50 to 1 (warehouse),50 to 1,15 to 1,30 to 1,consumer,loan origination,wall street,structured abs ratings agencies,70% fnma fhlmc,30% bank insurance companies,cdos,aaas, aa, a, bbb, bb,equity,wall street,source: wachovia securities, “lifestyles of the rich and living rich, a tale of two consumers,” 2005,400 to 1 leverage,the leverage game,notwithstanding the existing underlying leverage, banks could lever aaa securities by over 100:1!,risk vs. information,originator,warehouse provider,senior bonds,mezzanine bonds,sub bonds,residual notes,cdo equity,performance risk,underlying collateral knowledge,least,most,efficient frontier,source: wachovia securities, “lifestyles of the rich and living rich, a tale of two consumers,” 2005,those who knew the most held the least amount of the risk,while those who knew the least ended up holding the most risk,as shown by the inability of the nations 10 largest banks to deleverage, transition will take time,make no mistake we are at the beginning of this crisis,credit markets point towards significantly more pain to come consumer slow to react & has yet to adjust to new realities we are not even talking about large looming issues: autos, credit card & commercial re weak political leadership will prolong recovery,total assets of top 10 banks$ (tril),source: snl; top banks traded on the nyse and nasdaq,$,still in early innings,industry has taken less than 50% of losses estimated by most responsible analysts imf $0.9 tril(1) pimco 1.0(2) federal reserve 1.2(3) paulson & co. 1.3(4),international monetary fund, “global financial stability report,” 4/08 bill gross of pimco. “investment outlook: mooooooo!” 7/08 federal reserve board, “foreign exposure to asset-backed securities of u.s. origin” 8/08 bloomberg, “paulson & co. says writedowns may reach $1.3 trillion,” 6/08,source: goldman sachs research. data provided 9/26/08,losses realized to-date,loss estimates,(,figures in $bil),u.s.,europe,rest of,world,total,brokers,93,76,1,170,banks,97,109,14,221,specialty finance,37,-,-,37,insurance & asset,mgr,39,7,-,45,total,266,191,15,473,housing market weakness to persist,duration of housing downtown from peak to trough as measured by housing starts,with demand dropping off faster than production, the number of vacant units ballooned,?,housing market still materially weak due to significant over-supply resets have yet to impact numbers (2009 / 2010 issue) nor has the full impact of foreclosures been built into supply projections vacant-for-sale homes are near a record-high share of the housing stock foreclosures at their highest levels since recordkeeping began in 1974 & likely to increase(1) mortgage rates have not fallen, contributing to continued softness,source: u.s. census bureau. data as of july 2008,(1) nouriel roubini, “prospects for the u.s. and global economy in 2008 and implications for financial markets” 4/08,%,note: new home sales and housing completions include single-family units only. sources: u.s. census bureau, new residential construction & housing vacancy survey,% change 2005-2007,housing completions,vacant held off market,vacant for sale,new home sales,government intervention is increasing,macro measures: monetary & fiscal policy fed funds: 5.25% to 2.0% discount rate 5.75% to 2.25% bush stimulus plan / tax rebate: $168b liquidity new / expanding liquidity facilities expanding collateral categories regulatory paulson plan ad hoc responses bear stearns fannie mae / freddie mac aig wamu wachovia,purchase $700b of troubled assets remove toxic / illiquid assets from system focus on residential and commercial real estate mbs and whole loans expanding to include several additional asset classes pricing mechanism will be key reverse auction likely tool primarily targeting us financial firms,previous actions,proposed treasury bailout (tarp),additional measures,money market fund guarantee short-selling ban increasing pe ownership limits to attract additional capital into banks,unintended consequences,gses takeover lehman brothers wamu tarp,while dollar has been strong in the short term, have we created a longer term problem by doubling the size of the national debt? by focusing on avoiding the “moral hazard,” did we inadvertently create a run on the money market funds? eradication of bank company debt forced wachovia transaction and increased cost of funding system-wide to be determined, but outlook is not good,landscape of the financial services industry will look markedly different,financial services industry will unwind, slowly and painfully investment banks, specialty finance companies and rating agencies have the most to lose non-traditional consumer borrowing will largely disappear wholesale funding models may never come back sector will shrink to be approximately 10% of the s&p 500 disintermediation will allow the banking industry to grow consumer and commercial finance rates will rise flight to quality will (has) force(d) high level of consolidation heightened levels of receivership those without differentiation will merge,ii. what role will private equity play?,a unique role in the recapitalization of the industry high volatility / low transparency limits the role of the public markets equivalent of buying a lottery ticket absent an ability to complete significant due diligence private equity has the capacity, competency and mandate to undertake due diligence & evaluate / structure transactions however, limited financial services expertise currently exists in the industry,private equity to play a unique role,supply / demand imbalance to allow for outsized returns industry likely to need close to $500 bil in new equity top 3 pe funds dedicated to financial services have less than $20 bil in capacity while co-investment by lps could increase available capital by 2-3x, lack of available / advisable leverage limits available capital should allow pe to be thoughtful and demanding (has not been the case to date) importantly, pe shops able to instill confidence (in addition to injecting capital) will be able to charge dearly for their capital,private equity to play a unique role,anatomy of successful investments relatively straight forward recapitalization must solve the problem subsequent dilution too expensive / onerous in order to ensure that new capital solves the prob