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Is Carlyle Failing at the Hedge Fund Game?

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The Carlyle Group is fiercely competing against the Blackstone Group on creating the largest alternative investments powerhouse. Both firms are publicly traded. Founded as a firm purely focused on private equity buyouts, Carlyle has evolved, creating business lines in hedge funds, credit and real estate to serve its massive customer base of institutional investors. Many of the successes have fallen short in Carlyle’s numerous attempts at managing hedge funds. In July 2008, the credit crisis played a spotlight roll in generating losses for the firm’s Blue Wave hedge fund. Years later, Carlyle began investing and acquiring boutique hedge funds like Claren Road Asset Management LLC and Vermillion Asset Management LLC.

Founded in July 2005, Claren Road focuses on liquid credit investments, putting money to work in all types of assets such as distressed debt. The hedge fund was founded by former Citigroup Inc. credit traders John Eckerson, Sean Fahey, Brian Riano and Albert Marino. Carlyle then ended up buying 55% of Claren Road, which had US$ 4.5 billion in assets, to reignite its move into hedge funds. Goldman Sach’s Petershill Fund and Citigroup sold their stake in Claren Road to Carlyle. The credit hedge fund moved up in terms of assets under management. In September 2014, Claren Road’s assets peaked at US$ 8.5 billion. The fund attracted marquee U.S. institutional investors from New Jersey State Investment Council, North Carolina Retirement Systems, New Mexico Public Employees Retirement Association and Rhode Island’s pension.

Fund Name Manager Total Assets – Billions USD – June 30, 2015 Founded
Claren Road Opportunities Fund Claren Road Asset Management 1.5 2008
Claren Road Master Fund Claren Road Asset Management 3.1 2006
ESG Cross Border Equity Master Fund Ltd. Emerging Sovereign Group 3.2 2002
ESG Domestic Opportunity Master Fund Ltd Emerging Sovereign Group 1.2 2011
Emerging Sovereign Group – Various Funds Emerging Sovereign Group 0.4 2002
Various Vermillion Funds Vermillion Asset Management 1.4 2005-2015

Source: Company filings and other sources 

Bad Bet on Fannie Mae and Freddie Mac

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Anne Sheehan to Retire, CalSTRS 1st Corp Gov Director

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Anne Sheehan, the first Corporate Governance Director at California State Teachers’ Retirement System (CalSTRS) and the current one, plans to retire March 30, 2018. Sheehan’s team manages an activist portfolio worth around US$ 4.1 billion, seeking to influence and help turnaround its large portfolio holdings in select public companies. Sheehan was hired back in 2008.

Christopher J. Ailman, CalSTRS’ chief investment officer, said in a organization release, “Anne has been my most unconventional, best hire.”

A replacement search is underway.

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Temasek Rides with Google on Go-Jek

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Singapore’s Temasek Holdings has reportedly joined forces with Google LLC and Chinese on-demand service provider Meituan-Dianping as part of a US$ 1.2 billion fundraising effort for Indonesian ride-hailing startup Go-Jek that has put regional rivals like Uber and Singapore-based Grab on notice.

Screen Shot Go-Jek, January 19, 2018

Although exact figures for individual stakes have so far been kept secret, the new infusion of capital puts Go-Jek, incorporated as PT Aplikasi Karya Anak Bangsa, at a valuation of roughly US$ 4 billion. Samsung Venture Investment Corporation also participated in funding, as well as existing private equity investors KKR & Co. LP and Warburg Pincus LLC.

Google’s direct involvement in Go-Jek’s growth – rather than through its Google Ventures unit – highlights its faith in the latent potential of ride-sharing services – and the tech-enabled consumer services sector as a whole – in Southeast Asia. Home to more than 640 million potential customers, the region was identified as the fastest growing emerging market for e-commerce globally in an industry report published jointly by Google and Temasek last December. According to data compiled by the internet-giant and the Singaporean sovereign wealth fund, ride-sharing in Southeast Asia is expected to grow into a US$ 20.1 billion industry by 2025, compared to US$ 5.1 billion in 2017.

2011 Origin Story

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Temasek Leads Series B Round for Chinese Robo Startup Rokid

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Rokid Corporation Limited, a Chinese robotics startup that specializes in smart devices assisted by artificial intelligence (AI), announced the closing of a Series B extension round through its WeChat account on January 18, 2018. The capital-raising effort was led by Singapore’s Temasek Holdings, with additional contributions from Credit Suisse Group, China Development Bank’s overseas investment arm CDIB Capital International, and existing investor IDG Capital. Although Rokid did not disclose the size or terms of the deal in its announcement, the technology company reportedly secured US$ 100 million in funding.

Founded in 2014 by chief executive Mingming Zhu and chief financial officer Eric Wong, Rokid’s core products consist of its smart speakers, the Rokid Pebble and Alien, as well as the newly debuted Rokid Glass augmented reality spectacles. The company’s most exciting offering, however, is its Full Stack Open Platform, a collaborative effort made in partnership with Alibaba that gives third-party developers backdoor access Rokid’s software suite and hardware integration and will – it hopes – help give its offerings the accessibility and recognition they need to thrive outside its home market of China.

Rokid is particularly keen on bringing its products to the U.S., where it believes it can challenge Google and Amazon’s dominance in the smart home arena. Amazon makes the Amazon Echo, while Google has Google Home.

The Series B

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