bloggingbuyouts

Senior officials of the US Treasury have been spanning the globe to meet with heads of sovereign funds, starting with Singapore and Abu Dhabi. They want the funds to sign a Boy Scout oath which says that they will not use their investments in big US companies, particularly banks and brokerage companies, to push political agendas.

According to The Wall Street Journal, sovereign fund investments "have raised concerns in Washington and in European capitals that the funds may be gaining political clout."

Trying to get the funds to sign up for more disclosure is pointless. If US companies want to limit the voting power of these funds, such constraints should go in the provisions of the investments. Non-voting shares will do in most cases. If a company is in such bad shape that outside investors want a say in management, how are sovereign funds different from Carl Icahn or Nelson Peltz? Most companies would rather have the overseas money. The Icahn policy is clear at the beginning: dump management and the board. Singapore may be more patient.

For the entire story go to 24/7 Wall St.

There's been a lot of talk about investments by sovereign wealth funds in the U.S. Some of the headline-grabbing deals have not worked out very well for the foreign buyers, at least in the short run. Abu Dhabi's investment in Citigroup (NYSE: C) a few weeks ago has been a loser so far, and it doesn't look any better for investment by various sovereign wealth funds in Merrill Lynch (NYSE: MER).

Many analysts are worried that the sale of chunks of U.S. corporations will hurt the country. Peter Cohan of BloggingStocks recently wrote that he is worried that "that the U.S. economy is at risk if these foreign investors use the power of their capital to sway U.S. policy in a way that weakens us politically or economically." This echoes widespread anxiety about American being 'for sale.'

In an interview with the The New York Times, famed banker Felix Rohatyn argues that the real driving force behind investments by sovereign wealth funds in the U.S. is indeed political. Short term economic results are secondary to questions of power and policy. While many of these investments will likely make sense economically in the long run, the real benefit for foreign investors is the growing power of their governments in determining the course of the global economy.

This increase in power of foreign governments frightens many Americans. And it's true that many of the foreign funds are owned by countries that could come into conflict with the U.S., including China and Russia, though probably not Norway and Singapore (click here for a list of the largest funds). But it's not clear that this will be a loss for the global economy, or even for the U.S. Much of the current market turmoil is driven by poor decisions by American bankers, and it's possible that outside influence could improve the performance of American banks. And since most of the large sovereign funds hold petrodollars -- the largest, in Abu Dhabi, holds $1.3 trillion -- it stands to reason that these investors want the same thing as American investors: solvent banks and a healthy economy that can keep those petrodollars moving.

The New York Times [registration] reports that the Carlyle Group and the NASDAQ Stock Market, Inc. (NASDAQ: NDAQ) are selling out to one of the countries -- United Arab Emirates -- from which two 9/11 hijackers -- Marwan al-Shehhi and Fayez Benihammad -- hailed.

Specifically, the government of Abu Dhabi, United Arab Emirates' capital, will buy 20% of Carlyle Group, valuing it at $20 billion. While yesterday, NASDAQ announced that is was selling 19.9% of itself to Borse Dubai, the Dubai government-controlled exchange.

But not a peep of protest is emerging from the White House. And why should it protest? This is the decade where it's better to be a barrel of oil -- or a country that sits on oil -- than to be an American. After all, the price of oil is up 242% to a record $82 a barrel since its January 2001 price of $24 a barrel. Meanwhile, since 2001, the median family income adjusted for inflation has stagnated. Bernanke's bailout has slashed the dollar to record low levels against the euro -- and since oil is traded in dollars -- that means people who drive will be paying more than ever.

Fortunately, in the case of NASDAQ, there is some rising anger in Congress akin to the successful effort to stop the sale of a company that managed U.S. port operations to a Dubai-controlled company. The administration's drive to sell our infrastructure to the enemy seems more consistent with its War on the American Middle Class than its so-called War on Terror.

I'm not surprised that Carlyle would sell out to the enemy since its senior advisers are so deeply embedded in the oil industry. But selling the stock exchange that takes technology companies public points another dagger at our economic jugular.

Peter Cohan is president of Peter S. Cohan & Associates,. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in NASDAQ.

Blackstone Group (NYSE: BX), a global alternative asset manager and provider of financial advisory services, closed at $25.95 Thursday. BX priced 133.33 million shares at $31 on 6/21. BX traded at its record high of $38 on its first day of trading on 6/22. The Carlyle Group LP, a global alternative asset manager, sold a 7.5% stake to an investment arm of the Abu Dhabi government for $1.35 billion, indicating Carlyle might be institutionalizing in an attempt to reach out to public investors. BX October option implied volatility of 39 is below its 10-week average of 45 according to Track Data, suggesting decreasing risk.

Fortress Investment (NYSE: FIG), a global alternative asset manager with approximately $43.3 billion in assets under management, closed at $20.67 Thursday. FIG will pay a cash dividend of $0.225 per class A share for the quarter ending 9/30/07. FIG October option implied volatility of 55 is above its 26-week average of 49 according to Track Data, suggesting larger risk.

Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

At the Private Equity Analyst Conference in New York yesterday, the co-founder of the Carlyle Group, David Rubenstein, has continued to be oblique on the question of going public. Hey, in light of the Blackstone (NYSE: BX) debacle, I can understand why.

Well, according to the Wall Street Journal [a paid service], Carlyle is taking another approach (at least for now). That is, the firm has snagged a $1.35 billion private investment from Mubadala Development Company, which is part of Abu Dhabi. Essentially, this places a hefty $20 billion valuation on Carlyle.

It's an important move. Carlyle wants to have a permanent source of capital, which can help with minority investment opportunities and even buying up other private equity firms.

Plus, in order to keep up the growth momentum, Carlyle needs to expand into new markets, such as the Middle East.

The investment points out something else: Abu Dhabi is quite bullish on the global financial markets. Besides its Carlyle investment, the government (which controls the United Arab Emirates) is also taking a large position in the NASDAQ as well as the London Stock Exchange.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements

With Blackstone Group LLC (NYSE: BX) already public and KKR on its way to the NYSE exchange, there is lots of chatter about the next candidates. Well, according to a recent report in the Wall Street Journal [a paid service], it looks like Apollo Management may be trading soon.

Interestingly enough, the firm's founder -- Leon Black -- took a trip to Abu Dhabi. Yes, there's a ton of money there and I'm sure some eager investors who would want to be a part of Apollo. Although, it looks like there are some issues on valuation.

An investment from Abu Dhabi would likely mean a boost for Apollo's efforts in emerging markets. As the dealmaking gets crowded in the U.S. and Europe, private equity needs to find new frontiers of opportunity.

So, with a slug of capital from Abu Dhabi, Apollo might then file for an IPO and get even more money from U.S. public investors.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements