Standard Chartered weighs private-equity investments

Standard Chartered, the UK bank reeling from losses in emerging markets, will seek to exit 70 per cent of its private-equity investments within 18 months as chief executive Bill Winters reduces risk, sources said.

Executives discussed the plans this week at meetings in Singapore after Mr 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 has missed bond repayments.

Losses

Mr Winters 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 email, referring to the division that houses SCPE. “We are committed to optimising 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 and Coller Capital, people familiar with the matter have said. Standard Chartered intends to manage these assets "to maximise returns," Mr Gamble said.

Mr 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, a children’s play centre 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. – (Bloomberg)