StanChart Said to Seek Exit From Most of PE Unit Assets by 2018by and
CEO wants to divest 70% of SCPE investments within 18 months
SCPE unit to proceed with $100m deals in Vietnam, India firms
Standard Chartered Plc, the U.K. bank reeling from losses in emerging markets, will seek to exit 70 percent of its private-equity investments within 18 months as Chief Executive Officer Bill Winters reduces risk, people familiar with the matter said.
Executives discussed the plans this week at meetings in Singapore after Winters, 55, decided against selling the Standard Chartered Private Equity unit, or SCPE, to its managers, said the people, who requested anonymity because the talks were private. The business has invested about $2 billion in companies across emerging markets, from a Singaporean vendor of baking ingredients to a Nigerian energy producer that’s missed bond repayments.
Winters, 55, has been weighing options for the SCPE unit as he pushes through an overhaul to reduce risks at Standard Chartered after the commodities crash saddled the lender with losses in 2015. While the private-equity business has made money in the past, the “principal finance” unit that houses it lost $197 million in the nine months through September.
“We have decided to reduce the group’s balance sheet exposure to principal finance, streamlining the business over time,” Shaun Gamble, a spokesman for Standard Chartered, said in an e-mail, referring to the division that houses SCPE. “We are committed to optimizing or restructuring businesses and assets that are not generating sufficiently good financial returns.”
The SCPE unit also manages about $3 billion for third-party investors including Goldman Sachs Group Inc. and Coller Capital Ltd., people familiar with the matter have said. Standard Chartered intends to manage these assets “to maximize returns,” Gamble said.
Winters had discussed selling SCPE to its managers before the sale talks fell apart and the bank ousted the head of the unit, Joseph Stevens, Bloomberg reported last week. Nainesh Jaisingh, a senior executive at the division, will lead the business, according to the bank.
The SCPE unit will push ahead with plans to invest a combined $100 million in two companies -- N Kid Corp., a children’s play center operator in Ho Chi Minh City, and Chennai-based finance firm IFMR Capital, said the people. Managers approved the deals before their talks to buy out the unit foundered, the people said.
N Kid is a “leading player in the kids’ lifestyle market,” according to its LinkedIn page. The company operates children’s play centers with a focus on education, known as “edutainment,” the page shows. The company didn’t respond to e-mailed requests for comment.
IFMR invests in institutions that lend to Indian small- and medium-sized institutions, according to its website. The firm also seeks to connect SME lenders to “capital market investors,” the website shows. CEO Kshama Fernandes didn’t respond to e-mailed requests for comment.