A sordid tale of the Blackstone IPO and a jailed NRI private bankster!
Matein Khalid
I have had a neurological soft corner for Wall Street's alternative asset manager stocks ever since I resisted the come hither importunings of multiple Morgan Stanley (MS) managing directors before the firm sold its private wealth division in the DIFC to Credit Suisse. Everyone of these MS honchos wanted me to subscribe to the Blackstone IPO in the summer of 2007 at $32. They assured me that the biggest institutional investors in the UAE had all subscribed to the IPO and I was even excluded from a dinner with Stephen Schwartzmann, Blacktone's founder and chairman, since I refused to give MS an order for a $50 million IPO bid.
By the summer of 2007, I was convinced that the world was headed into a traumatic global recession and even published an article in English which would have saved my fellow Dubai investors billions of dollars had they bothered to read it for free in the Khaleej Times as far back as January 2007. This article accurately predicted the global financial meltdown a year before it happened and is uploaded above.
ADVERTISEMENT
Naturally, these Morgan Stanley private bankers despite their fancy titles of MD, Imperial Wizards, King of Kings and Chief Concubine were clueless about the nuances of the global capital markets. I have learnt the hard way that the private banking and wealth business in the Middle East is really the blind leading the blind to the slaughterhouse, invariably with high octane leverage and absurdly high fees for the privileges of helping you gut your financial net-worth in the capital markets they barely understand. I sealed my unpopularity with Morgan Stanely's pinstriped bureaucrats in Dubai when I wrote successive articles, listing myriad reasons why I wanted to short both Morgan Stanley and Blackstone at 32. History or a cursory look at your smartphone will record that MS almost failed in the post Lehman Wall Street panic and the Blackstone IPO plunged from 32 to 4.
To compound the insult that Dubai's top NRI investors faced as they haemorrhaged money on the advice of the MS clowns, the top Indian broker on the MS bench (Manoj Prasad) was jailed for fraud, money laundering and trying to bribe a CBI officer in India. So much for Wall Street/Swiss due diligence/ethics when it comes time to fleece the leveraged NRI lambs in the Gulf.
My readers know I wrote successive columns in the UAE/British media recommending investors buy Blackstone (BX) shares at 10-12 when the distribution yield was 9%. I even recommended in writing to the chairman of the royal investment office where I was CIO not to allocate $25 million to Abraaj Capital for a board seat that meant squat at 3.5X book value when he could invest in Blackstone at $10 a share, way below book value. That $25 million went to money heaven when Abraaj failed in 2018 after Arif Naqvi's criminal fraud. Blackstone shares I recommended rose from $10 in 2010 to as high as $200. So that $25 million in Abraaj's eternal money heaven would be valued at $500 million if my poor chairman who had never heard of Steve Schwarzman but Magu, our Group CFO, a Karachi accountant, was dazzled by the intellectual brilliance of Arif Naqvi, the Gulf media's financier of the millennium. Moral of the story? If you think Wharton is expensive, try ignorance!
Blackstone is now the planet's biggest alt asset manager with $1.2 trillion AUM and is valued at $167 billion on the NYSE. I am a nervous long at $136 since I believe the US private credit market will be gutted in a recession that is now inevitable in Q3, the reason why I went long up the wazoo on TLT at 84 as I expect JayPo to capitulate on rate cuts at the September FOMC. I want to exit my BX long via a covered call strategy before July 4th, our Independence Day.
I am pretty sure I will be able to buy BX below 100 when the macro wolf finally swallows Grandma Goldilocks. We saw this movie before in the autumn of 2008
ADVERTISEMENT
Also published on Medium.
Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com. We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arabian Post
6 hours ago
- Arabian Post
RBI's Latest Monetary Policy Exudes Over Confidence And High Optimism
By Anjan Roy The new governor of the Reserve Bank, Sanjay Malhotra, has taken to monetary policy formulation and the world of finance like fish to water. Within a short period of his taking over, Malhotra has got into his charge with a refreshing confidence. RBI's monetary policy, announced on Friday June 6, is surprisingly breezy and introduces a reset policy with aplomb. He says he has worked on the basis of a 5x3x3 matrix. That starts on a new and quite optimistic note. He states: 'This 5x3x3 matrix of fundamentals provides the necessary core strength to cushion the Indian economy against global spillovers and propel it to grow at a faster pace.' The fundamental point is that the Indian economy presents 'a picture of strength, stability and opportunity'. What are these. First, according to RBI, the strong balance sheets of five sectors, namely, corporates, banks, households, government and external sector. Second, there is stability on all three fronts – price, financial, and political – providing policy and economic certainty in this dynamically evolving global economic order. Third, the Indian economy offers immense opportunities to investors through 3Ds – demography, digitalisation and domestic demand On the basis of these fundamentals, Malhotra has delivered a blockbuster combination of a 50 basis point reduction in repo rate and 100 bps reduction in CRR. With the back to back reductions in repo rates since February 2025, the total cut in repo rate would be 1.50 per cent. The cut in CRR would release primary liquidity of about ₹2.5 lakh crore to the banking system by December 2025. Besides providing durable liquidity, it will reduce the cost of funding of the banks, thereby helping in monetary policy transmission to the credit market. No finance minister could have expected a more helpful monetary policy move for easing his burden. Currently, the US president is fighting a daily battle with the US Federal Reserve chairman asking for a cut in interest rates. Donald Trump had often talked of even sacking the Federal Reserve chairman. An earlier finance minister had asked for cuts in interest rates for providing fresh impetus to the economy. However, the RBI governor, Subba Rao, had then refused to yield and there ensued a tussle between the finance minister and the RBI governor. For now, with so many upfront concessions, Reserve Bank seems to have exhausted its arsenal of policy tools. In case, things go a little wrong, the RBI would not be in a position to directly intervene with fresh policy tinkering. RBI has admitted its helplessness in an unforeseen emergency. The governor has admitted that 'under the current circumstances, monetary policy is left with very limited space to support growth.' Hence, the MPC also decided to change its stance from accommodative to neutral. From here onwards, the MPC will be carefully assessing the incoming data and the evolving outlook to chart out the future course of monetary policy in order to strike the right growth-inflation balance. In a way, the Reserve Bank seems to have disregarded one of the received wisdoms of traditional macroeconomics — the so-called Philips' Curve. That is, the growth (employment) inflation dynamics where the two does not go in tango mostly. To maintain high growth, you might be compromised with some faster inflation and vice versa. Malhotra seems to have taken his position that in India, you can have faster growth at the same time with stable or low inflation. Listen to Malhotra's position on the growth-inflation dynamics: 'I would like to highlight that there is no tussle between price stability and growth in the medium and long term. Price stability preserves purchasing power, imparts certainty to households and businesses in their savings and investment decisions and ensures congenial interest rate and financial conditions, all of which foster consumption, investment and overall activity.' We hope to be in a virtuous circles of demand, investment, growth and ever expanding supply line for maintaining a sable price level. I case of a sudden break in the cycle and then a flagging one of in the chain, the virtuous cycle can get reversed when corrective measures would be needed. It will be then the responsibility of the government to step in rather than expect the RBI to do the heavy-lifting. These thoughts would admittedly be those of a nay-sayer, who would be the unwelcome guest in the room. But some such possibilities shouldn't be altogether ruled out in an uncertain world like ours, particularly when you have Donald Trump as the president of the United States, which is the largest economy and sets the tone for the global economy. Such a situation would really transfer the responsibility of further encouraging growth to the fiscal sector. That is, the government would be required to move in quickly to further encourage growth and buoyancy. Will the next budget be synchronised with the current monetary policy stance and introduce at least some measures for a leg up to growth. (IPA Service)
Gulf Today
10 hours ago
- Gulf Today
Dubai-based Indian karting prodigy Atiqa joins professional motorsport programme
Atiqa Mir, a 10-year-old Dubai-based Indian karting prodigy has become the youngest driver from the region to secure a place in a professional motorsport development programme, following her signing as an official AKCEL GP Academy driver. This landmark move signals a powerful shift in motorsport accessibility and diversity, reinforcing the UAE's commitment to nurturing next-generation talent and establishing itself as a global hub for motorsport excellence. A rising star in the karting circuit, Atiqa has already made a name for herself with her fearless driving, consistent podium finishes, and an unwavering passion for racing. She has competed in some of the world's most prestigious karting championships, including the Rotax Euro Trophy, Rotax International Trophy, IAME Series (UAE and Europe), WSK Euro Series, WSK Super Master Series, and the Champions of the Future Academy. The timing of this partnership aligns with the official launch of the AKCEL GP Academy—the cornerstone development initiative of AKCEL GP, the UAE-based high-performance motorsport team competing in FIA F4, Formula Regional Middle East Championship, and FIA F3. Opening in Abu Dhabi in August 2025, the Academy will serve as a cutting-edge training ground for the next generation of racing talent from the UAE and abroad. The Academy's inaugural batch will feature 15 promising young drivers and is committed to offering a structured and competitive pathway beginning with elite karting championships and advancing through the ranks of single-seater racing. Speaking on Atiqa's signing, Amit Kaushal, Group Chairman of AKCEL Group, said, 'Atiqa's talent, focus, and composure on track are well beyond her years. We're proud to welcome her to the AKCEL GP family and support her long-term journey toward Formula 1. Over the next 15 years, we're committed to guiding her development from karting to single-seaters as she grows into a world-class racer and future F1 contender.' As Atiqa begins her training in Abu Dhabi, she will follow a carefully structured development program designed to prepare young drivers for the demands of professional motorsport. Her training will combine simulator sessions, physical conditioning, mental coaching, race craft development, and in-depth performance analysis. A key focus of her time with AKCEL GP Academy will be competing in championships across the UAE and Europe, providing her with essential on-track experience and exposure to high-level competition early in her career. The goal is to lay a strong foundation of skills, discipline, and racecraft with a clear vision: Formula 1 as the ultimate destination. Reflecting on this new chapter in her journey, Atiqa said, 'Racing is everything to me. It's where I feel strong, fast, and free. Joining AKCEL GP Academy is a dream come true, and I want to show young girls like me from Dubai and India that we can compete at the highest levels. One day, I hope to race in Formula 1, and I'm ready to work hard to get there.' The UAE's support for motorsport development has grown rapidly over the past decade. The nation is home to internationally acclaimed circuits such as Yas Marina in Abu Dhabi and Dubai Autodrome and hosts one of the most prestigious events on the racing calendar, the Formula 1 Abu Dhabi Grand Prix.
Dubai Eye
a day ago
- Dubai Eye
Swiss National Bank denies currency manipulation after being put on US watch list
The Swiss National Bank (SNB) said on Friday it would intervene in foreign currency markets where necessary to keep inflation on track after the US added Switzerland to a list of countries being monitored for unfair currency and trade practices. The SNB denied being a currency manipulator after the publication of the US Treasury Report on Thursday, but said it would continue to act in Switzerland's interests as the strong franc helped push inflation into negative terrain last month. "The SNB does not engage in any manipulation of the Swiss franc," it said. "It does not seek to prevent adjustments in the balance of trade or to gain unfair competitive advantages for the Swiss economy." The SNB said it was in contact with US authorities to explain Switzerland's economic situation and monetary policy, and would continue to use interest rates and forex market interventions if necessary to pursue its inflation target of 0-2 per cent. Swiss inflation hit a four-year low in May, with prices falling by 0.1 per cent. The SNB declined to say whether further talks with the United States were planned, but said its monetary policy was "geared towards the needs of Switzerland". Switzerland met two of the US Treasury's concerns regarding trade flows and its current account, but not on foreign currency interventions. SNB forex exchange purchases in 2024 were "minimal," Treasury said. In 2024, the SNB bought only $1 billion in foreign currencies, equivalent to only 0.1 per cent of Swiss GDP, well below the Treasury's threshold of 2 per cent of economic output. The US has also added Ireland to the list, along with previous countries, including Germany, China, Japan, South Korea, Singapore, Taiwan and Vietnam, already being monitored at the time of the November report from the Biden administration.
