Friday, June 08, 2007

On private equity, the carrier trade and ‘cheap money'

"If everyone knows where the cheap money is, they are all going to go to the same place to get the cheap money. Until it runs out.
And how will it run out?
When the Bank of Japan increases interest rates. Then global liquidity dries up.

There’s a wonderful story about a village where there’s only one pig. One guy sells the pig to the neighbour at one price and the neighbour sells it to another guy at another price and the pig keeps circulating around town and everyone’s making money off the pig. And then one guy doesn’t quite understand. He buys the pig and kills it. Everyone's mad at him. "Don’t you know this is how we make money?" they say. He says, "I was hungry, I thought we were supposed to eat this pig."

And that’s what’s happening with private equity now.
There’s a pig going around the world and one day, Japan’s going to kill it."

Hlelo Giyose, Fund Manager, Stanlib
Speaking at Wits Business School's panel debate on “The Rise of Private Equity. Is South Africa a new target?”
May 30, 2007

7 comments:

Muhammad said...

brilliant analogy.

Would've worked as a cool metaphor as well when compared to what they do with their money :)

M.

Ta^KiLLa said...

LoL.. Did u even recognise the humour there.. The Christian living among the Jews killed the pig..He's the only one that could eat it.. And typical Jewish analogy of making a buck of things that is ofno use to them..

saaleha said...

er no.

SingleGuy said...

Interesting. As a scientist, I have no idea what private equity really is...I'm used to dealing with stuff I can see, or logical think...but this making money from nothing is very weird to me...What do people who deal with private equity sell? What do they make? How can we use it? I don't see it...so i suppose japan killing it could very well be doing us all a favour...and levelling the field once again.

MMM...can you even kill something that doesn't really exist?

Rasheed bhai said...

Now we know why pigs are haraam...

irshaad said...

ah the japanese. gta love them...i really dont think its accurate to place the fortunes of private equity so firmly in the hands of those japs...there are other factors i think...

ilanit said...

Teva's long-held practice is to only pursue transactions that fit our long-term strategy of delivering profitable growth and enhancing our global leadership position while meeting our stringent financial criteria. While Merck's generics business would have been a strategic fit for Teva, the terms of this opportunity did not fully meet our San Diego investment criteria "

Profane. Profound. What's your poison?