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THE 6AM CUT
A news by email service from FT.com's Alphaville
Today's Topics:

* Buy-out groups face $140bn sale
* Actis bucks the buyout downturn
* RBS promises mortgage respite
* Woolworths bid could come in a week
* Citi to sell Japanese unit
* Morgan Stanley revs up retail banking
* InBev ruling sparks M&A fears in China
* Concerns grow over state debt
* Japan housebuilder failure hits confidence
* Volvo and Saab ask Sweden for aid
* BarCap pushes into global equities
* Comeback for traditional equities business
* Derivatives to rise in popularity
* BayernLB set for €10bn bail-out
* German groups slash capex
* 'Black Friday' bargains lift US sales
* Weekend catch-up: Rubin, hedge funds, Turquoise, ABI
* Overnight markets: Mixed

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BUY-OUT GROUPS FACE $140BN SALE
Posted at 05:52 by Gwen Robinson

Investors are likely to sell about $140bn in private equity investments
– more than 10% of the total – in the next 18 months, with many of
them sustaining losses. Pension funds, endowments, banks and insurance
companies are poised to sell down their private equity portfolios just
as their value is falling. At the same time, new accounting rules will
this year require private equity funds to mark their investments to
market, driving a further likely year-end drop in value. David de Weese,
partner at buyout firm Paul Capital, foresees sales of $130bn-$140bn
from "motivated sellers" in the US and EU over next 18-24 months.
Other industry analysts suggest the figure could be higher. Private
equity sellers have in recent months gained only about 50 cents in the
dollar on the face value of their investments, according to a report by
investment bank Cogent Partners. That compares with more than $1 last
year and 84 cents in the first half of this year.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18865/buy-out-groups-face-

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ACTIS BUCKS THE BUYOUT DOWNTURN
Posted at 05:50 by Gwen Robinson

Actis will on Monday announce it has raised $2.9bn for its new private
equity fund to invest in companies across Africa, China, India, Latin
America and south-east Asia. The move underlines how emerging market
buyout groups are still able to raise cash from investors, while rivals
focused on the more troubled markets of the US and Europe are finding
fund-raising much tougher. The new fund cements Actis's place as one
of the world's biggest private equity groups focused exclusively on
emerging markets. It spun out four years ago from the UK's state-owned
CDC group, its biggest investor, which put $650m in the new fund. The
appeal of EM economies has grown for private equity as they have proven
less vulnerable to the credit crunch than the US and Europe. Buy-outs
also typically use less debt in emerging markets. But Paul Fletcher,
senior managing director at Actis, said his biggest worry was that banks
would pull back from emerging markets.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18864/actis-bucks-the-buyo

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RBS PROMISES MORTGAGE RESPITE
Posted at 05:50 by Gwen Robinson

The public campaign to force UK banks to do more to help customers will
gain impetus on Monday with a promise from Royal Bank of Scotland to
give at least six months' moratorium to homeowners who fall behind
with mortgage payments - double the minimum recommended by industry
guidelines. The pledge, which will put pressure on rival banks to make
similar commitments, comes amid government moves that could see
voluntary codes of practice for the banking industry placed on a
statutory footing. The pledge by RBS, which also owns NatWest, comes
days after the government took a 58% stake in the bank after
shareholders shunned the offer to buy new shares as part of the bank's
£20bn capital injection. Writing in Monday's FT, Stephen Hester,
RBS's new chief executive, explains RBS's decision. Separately,
Hector Sants, chief executive of the FSA watchdog body, warned that
banks will face more "intrusive" oversight as part of the FSA's
plans to redevelop the role of its supervisors.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18863/rbs-promises-mortgag

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WOOLWORTHS BID COULD COME IN A WEEK
Posted at 05:48 by Gwen Robinson

The Woolworths brand could be sold within a week as potential buyers
including Theo Paphitis, the entrepreneur and TV game show judge, line
up possible bids for the failed variety retailer. Neville Kahn, the
Deloitte partner who is leading the administration process, said Sunday
that he would meet interested parties on Monday and expected to have a
preferred bidder for the retailer's brand and a large number of stores
by the end of the week. The publicity surrounding the collapse of
Woolworths, which fell into administration last week, putting 30,000
jobs at risk, appears to have encouraged shoppers into its stores, with
like-for-like sales up 20% on the day after Deloitte was appointed
administrator. Paphitis, who owns the Ryman stationery chain, is known
to have expressed interest, as has Endless, the Leeds-based turnround
investor, while other private equity groups likely to consider a bid
include Cerberus, Sun European Capital and Alchemy Partners.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18862/woolworths-bid-could

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CITI TO SELL JAPANESE UNIT
Posted at 05:47 by Gwen Robinson

Citigroup is poised to sell NikkoCiti Trust and Banking Corporation, its
trust bank in Japan, as part of a global move to raise funds through
asset disposals and restructuring measures. The US bank, which is
expected to start receiving bids for its trust bank business this week,
could raise an estimated Y40bn ($420m) through the sale, which comes
amid intense pressure on Citi to cut costs after issuing preference
shares to the US government for much-needed capital. Citi last week
received $20bn from the US government, following an earlier injection of
$25bn to shore up its capital base. The US government also guaranteed
$306bn in Citi's domestic assets including commercial and residential
mortgages. NikkoCiti Trust and Banking is a relatively small business,
with just over Y6,000bn in trust accounts and 136 employees, but is
likely to draw rival Japanese trust banks eager to expand their client
base. In the first half to September, NikkoCiti Trust suffered a 69%
drop in net profits to Y152m on ordinary income of Y1.66bn.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18861/citi-to-sell-japanes

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MORGAN STANLEY REVS UP RETAIL BANKING
Posted at 05:45 by Gwen Robinson

Morgan Stanley is revving up its push into retail banking, two months
after converting to a bank-holding company, reports the WSJ. The bank is
considering various scenarios to increase deposits, including
acquisitions of regional banks with a customer base that overlaps with
Morgan Stanley's existing brokerage and asset-management clients.
Executives won't discuss specific targets or predict how quickly Morgan
Stanley might strike a deal. The firm already has about $36bn in
deposits, ranking it among the 50 largest US banks. A big chunk of that
comes from cheque accounts and other products sold to brokerage
customers. Those deposit levels are tiny compared with the roughly
$800bn in assets Morgan Stanley had as of Oct 31. To broaden its funding
base, however, it must rake in new deposits. Some growth will come from
existing Morgan Stanley offices in the US. But "turning stockbrokers
into pitchmen for money-market accounts and brokerage offices into bank
branches is logistically complicated and culturally fraught", notes
the Journal.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18860/morgan-stanley-revs-

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INBEV RULING SPARKS M&A FEARS IN CHINA
Posted at 05:44 by Gwen Robinson

The first published ruling by China's new antitrust regime has
triggered concern that authorities could use the laws to shield domestic
industry from foreign competition. In November China's commerce
ministry (Mofcom) – in the first publication of a merger decision
since anti-monopoly laws were tightened in August - waved through
InBev's $52bn acquisition of Anheuser-Busch saying it would not
adversely affect competition in the domestic beer market. The
high-profile global deal required Chinese approval because Belgium-based
InBev and Anheuser-Busch of the US generated large enough sales on the
mainland to warrant a probe. But, in a single-page ruling, Mofcom also
imposed restrictions that will prevent InBev acquiring further interests
in four key companies in the Chinese beer market. Lawyers said that, by
imposing future conditions on a deal that did not harm competition,
Mofcom had broken new ground in international antitrust decision-making
and thus, could alter the attitudes of overseas companies to M&A in
China.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18859/inbev-ruling-sparks-

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CONCERNS GROW OVER STATE DEBT
Posted at 05:42 by Gwen Robinson

Fears are rising over the ability of governments to raise the vast
amounts of debt they need to pay for economic stimulus packages and bank
bail-outs. Faced with the prospect of governments issuing more than
$2,535bn combined of bonds in the next year, bankers warn of potential
problems in meeting funding needs. The rush of bond issues comes against
a backdrop of record low yields in some countries amid recession and
fears of deflation. Last week, 10-year bonds in both the US and the UK
fell to 50-year lows. However, faced with contracting economies, lower
tax receipts, and rising benefit payments, countries could face higher
debt-servicing costs as overall debt levels rise. The UK and Italy may
face the greatest difficulties, with the UK expected to issue £10bn of
bonds in December compared to average monthly volumes previously of
about £2bn a month.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18858/concerns-grow-over-s

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JAPAN HOUSEBUILDER FAILURE HITS CONFIDENCE
Posted at 05:41 by Gwen Robinson

Morimoto, a Japanese condominium developer, was on the brink of collapse
Monday after it filed for protection from creditors with Y162bn ($1.7bn)
of debt, bringing the number of bankruptcies among publicly traded
companies in Japan to a postwar record, reports Bloomberg. The
company's filing late on Nov 28 pushed the total number of
bankruptcies among listed firms in 2008 to 30, the most since WWII,
according to research firm Teikoku Databank. The bankruptcy sent the
Topix Real Estate Index 5.4 points lower on Monday, the second-worst
performer on the Topix. Earlier, Japan's economy minister Kaoru Yosano
told the FT that Japan's economy is unlikely to respond to a planned
fiscal stimulus. Yosano said the country would have to endure higher
unemployment and possibly a return to deflation and shrinking output.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18857/japan-housebuilder-f

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VOLVO AND SAAB ASK SWEDEN FOR AID
Posted at 05:39 by Gwen Robinson

General Motors and Ford have approached Sweden's government about
financial aid for their lossmaking Saab and Volvo brands, reports the
FT. The two US automakers want to bolster the marques' finances with a
view to selling them as they grapple with a severe cash crunch. Stephen
Odell, Volvo's chief executive, and Saab's managing director Jan-Ake
Jonsson have spoken to Sweden's industry minister and other officials
about securing funds. After their initial requests for bail-out funds
were rebuffed last month, Ford and GM will tell the US Congress this
week they intend to dispose of the brands when they present detailed
plans to support their request for $25bn of emergency funding. Some US
lawmakers are likely to seek assurances that taxpayers' money will not
go to subsidising the automakers' overseas operations. Separately,
Reuters reports that GM's board met Sunday to review a restructuring
plan intended to cut costs and win support for up to $12bn in federal
emergency funding.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18856/volvo-and-saab-ask-s

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BARCAP PUSHES INTO GLOBAL EQUITIES
Posted at 05:37 by Gwen Robinson

Barclays Capital has embarked on a drive to build a global equities
operation in an effort to re-establish its position in a business that
it abandoned a decade ago. The UK bank is taking advantage of the
downturn to scoop up research analysts and traders, building on the
equities platform that it acquired as part of its take-over of the US
employees and operations of Lehman Brothers. The move is a reversal for
BarCap, which sold off most of its BZW stockbroking and investment
banking unit in Europe in 1997 to concentrate on high-end tailored
equity products and automated bulk trading. BarCap recently pounced on
60 former Lehman employees who were set to move to Nomura when the
Japanese bank bought parts of Lehman Europe, and earlier hired nearly
100 former Lehman people in Japan. However, its move comes as the
industry, amid declining trading commissions, also grapples with a
market slump and hedge funds unwinding client assets.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18855/barcap-pushes-into-g

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COMEBACK FOR TRADITIONAL EQUITIES BUSINESS
Posted at 05:33 by Gwen Robinson

Buying and selling shares for clients, dismissed as an increasingly
obsolete business in the days of more lucrative bespoke derivatives and
high-volume electronic trading, may be coming back into fashion.
Barclays' move to rebuild a European cash equities business, complete
with research analysts, sales people and traders, highlights the
attraction of relatively simple businesses after the bursting of a
bubble in complex investments that were hard to value and, latterly,
impossible to sell. Five years after Wall Street firms paid $1.4bn to
settle claims that they issued biased research to win investment banking
business, fund managers are turning back to the so-called sell-side for
advice and ideas, according to US research firm Tabb Group. Adding to
the trend, institutional investors have been forced to slash in-house
research staff after this year's 40% decline in the main indices.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18854/comeback-for-traditi

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DERIVATIVES TO RISE IN POPULARITY
Posted at 05:32 by Gwen Robinson

Traditional long-only houses and hedge funds in the UK expect to
increase their use of derivatives as they scramble to build capital
protection or guarantees into products to lure anxious investors back
into the market. Some 79% of traditional and alternative houses expect
to use more derivatives in the next 12-18 months according to a survey
by Protiviti, a consultancy, amid growing need demand for more downside
protection. A number of houses have rolled out lower risk offerings,
with some success. Data last week from the UK Investment Management
Association showed that the tiny Guaranteed Protected Funds sector,
accounting for just 0.4% of the UK industry, was the most popular sector
in terms of net flows into individual savings accounts in October,
attracting £18.2m. Separately, Arete Consulting said sales of
structured products rose 15% yoy in the 2008 first-half as investors
switched out of traditional equity funds to guaranteed and protected
products.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18853/derivatives-to-rise-

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BAYERNLB SET FOR €10BN BAIL-OUT
Posted at 05:30 by Gwen Robinson

The regional state of Bavaria is set to inject up to €10bn ($12.6bn)
into BayernLB, in another sign that Germany's ailing public sector
banks are seeking alternatives to the federal government's bail-out
plan to avoid a forced consolidation. Bavaria's government and
parliament are this week expected to decide on the capital injection
into BayernLB. About €7bn will be paid by the regional state. The rest
has been requested from Soffin, the federal government's stabilisation
fund. BayernLB previously asked for €5.4bn from the bank bail-out
fund, but has scaled its request back now the regional state is prepared
to step in. However, it is still unclear if Soffin is prepared to give a
capital injection without having a say in the bank's strategy –
which is what the Bavarian state is hoping. The bank is on Monday
expected to unveil an overhaul of its business model and a cost-cutting
programme.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18852/bayernlb-set-for-e10

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GERMAN GROUPS SLASH CAPEX
Posted at 05:29 by Gwen Robinson

Germany's industrial companies are cutting long-term investments, as
executives in Europe's biggest exporter prepare for a long global
recession. Leading industrial groups such as ThyssenKrupp, Continental
and Heidelberger Druckmaschinen plan to slash investments in machinery,
factories or R&D, as hopes fade for a rapid rebound in global economic
growth. The reduced investment plans will hit Germany's machine and
plant manufacturers, which employ more than 900,000 and form the
industrial backbone of Europe's economic powerhouse. Noting that
Germany "lives off of global capex", one analyst said such big
cutbacks in spending will severely hit the economy's industrial base.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18851/german-groups-slash-

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'BLACK FRIDAY' BARGAINS LIFT US SALES
Posted at 05:27 by Gwen Robinson

Aggressive price-cutting by US retailers over the Thanksgiving holiday
brought shoppers into stores in droves, according to spending estimates
for the weekend that marks the symbolic start of the US shopping season.
The National Retail Federation, which represents major stores, estimated
that the average US shopper spent $372.57, or 7.2% more than last year,
over the four days from Thanksgiving Thursday to Sunday. A survey for
the federation by BIG Research also estimated that the number of
shoppers visiting stores and online e-commerce sites rose more than 15%
yoy to 172m. The strong sales are a sharp reversal from the slump seen
in the first weeks of November when retailers' early promotions failed
to drive demand. US shoppers are also being helped by low petrol prices,
which have dropped below $1.80 a gallon in many areas after hitting $4
over the summer.

To see this article online and to comment:
http://ftalphaville.ft.com/blog/2008/12/01/18850/black-friday-bargain

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WEEKEND CATCH-UP: RUBIN, HEDGE FUNDS, TURQUOISE, ABI
Posted at 05:26 by Gwen Robinson

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