Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen LinkedIn Profile

July 28, 2008

Carlyle Learns Bitter Chinese Lesson

In 2005, the Carlyle Group agreed to pay $375 million for Xugong Group Construction Machinery, however, according to the Financial Times report, it soon became a contentious issue that the Chinese government was pressured to block by nationalistic groups.  The asset was considered a strategic asset that was being sold at a bargain price.  The deal fell through this week, in what many consider a culmination of the difficulties of doing business in China.

Private Equity Hot for Infrastructure

In 2005, there were four infrastructure-focused private equity firms in the market looking to raise $US 1.8-billion, this year there are a record 71 such funds.  An article in The Globe and Mail reports, these funds have emerged as a result of the recent volatility in the market, energy infrastructure companies and power utilities have become highly valued for their stability, long-term cash flow, and lack of correlation to other investments including equities and bonds, according to this report.

Hudson's Bay Acquired by NRDC Equity Partners

Established in 1670, Hudson’s Bay, North America’s oldest name in retailing, is now one of its newest private equity acquisitions.  The company was acquired this week by NRDC Equity Partners for an undisclosed amount, according to The New York Times.  A significant change initiated by the private equity firm will be to reduce the flagship store in downtown Toronto from 900,000 sq. ft. to 300,000 to 400,000 sq. ft.  

July 23, 2008

Oh no - not another crisis

"Warding off the next wave of banking crisis is the incoming challenge," says John Loewen of Loewen Partners. Top financial companies are stepping forward and not waiting for government to try to restore investors' brittle faith in global markets.
The Globe & Mail reports the financial leaders met in Washington to draw up recommendations that seemed pretty basic such as have a risk committee that understands the parameters of acceptable risk.
"Another point that rather floored me," said Jacoline Loewen, author of Money Magnet, was to do your due diligence. I guess with these "pass the parcel" debt structures which sent off the loans to other financial institutions, employees got lax because they didn't think the parcel would land back in their lap and blow up.
I am glad to see that business is getting ahead of the regulators because Sar-Ox has meant that the New York Stock Exchange plummeted in IPOs listings while London's AIM rocketed. Here's more:

Although some have interpreted the report as a pre-emptive move to avoid the burden of more regulation, he IIF was quick to insist that this was not an effort in self-policing, and promised to work with regulators on new rules to benefit the industry.
But there are limits to what central banks and market officials can do, Mr. Waugh said in an interview. “Prescribed regulation hasn't been very successful in averting crises and probably never will be.”

July 18, 2008

Outdoor Living Builds Business Skills

The definition of a Canadian, according to the late Pierre Berton, was "somebody who knows how to make love in a canoe." That confidence in managing the outdoors so as to achieve a desired goal is also an enduring characteristic of great leaders.
The CEO of a large construction firm told me about his travails in hiring the right CFO for his high growth business. “Once I know they can do the finance requirements, then I want to take them outside and back up a tractor trailer or get them in a canoe and capsize it in the middle of the lake.”
“Why on earth would that add to the skills of a CEO?” I asked.
“Because that is about being able to cope when suddenly pushed out of your comfort zone,” he said. “How do you react? Do you freeze and avoid? Or can you calm yourself and decide on a rapid course of action where you might not have all the answers? Are you willing to try the untried but keep your head?” Someone who has done outdoor living – camping, fishing, hiking – is used to planning, organizing and doing. There is also the confidence that they can manage if they run into an unknown situation. To head off into the outdoors, you can not help but develop these qualities.
Interesting enough, out of the 294 candidates selected to be NASA astronauts between 1959 and 2003, over 200 had been active in Scouting (and 11 of the 12 astronauts to moonwalk were scouts). A key goal of scouting is to develop confidence with being outdoors. The majority of the team of NASA astronauts in the early years were also from farming backgrounds. A farmer deals constantly with big weather pattern changes and incoming disasters. They have to be able to make a plan even when threatened with ruin.
The most famous Eagle Scout was the first man on the moon, Neil Armstrong. His ability to manage looming disaster came during his historic landing on the moon. As the spacecraft headed for the Tranquility Base landing site, Armstrong saw they were on crash course with a boulder that had not shown up on the surveillance photographs. The computer had 2K of computer power and was unable to manage the change. Armstrong had to recalculate (with a slide rule, sans calculator), flip off the computer and land the capsule himself. It was Neil Armstrong – calm and capable of dealing with difficulties – who saved the situation.
Even if your sons can not join the Scouts, we are fortunate in Canada to have such easy access to the great outdoors. There are fully guided canoe trips given through community centers for those parents not comfortable going to Algonquin Park on their own. Fishing trips with overnight stays are also a great family vacation sure to be remembered.
Many schools are making outdoor camps part of their curriculum. Some MBA schools run leadership programs using outdoor experiences to remedy the common complaint of the risk adverse attitude of graduates by beefing up “take action” skills.
Maybe it is not such a crazy idea to ask your potential new hire, “Have you ever been in a canoe?”

July 2, 2008

Eddie Weinstein Does Green

Have you seen Home Depot’s latest newspaper advertisement? It’s a cartoon of a big box looking at an almost-weepy planet Earth and saying, “We’re not going to use pesticides anymore.” It took me a few seconds to get it; there is extraordinary power when the message coming down from the big box store is that green is “in”.
Generally speaking, entrepreneurs are at the top of the heap in the world of business (yes, above all the investment bankers and government officials who think they are in business but have never had a paying customer in their lives). Being ahead of the crowd is the small to medium enterprise’s business and many have been living green for decades – because they like it and it makes good sense for the future.
Eddie Weinstein runs Globe Electric, a family business that manufactures light bulbs for green living, and supplies big box businesses such as Wal-Mart. He says that as these enormous retailers choose to go green, they will change consumer lifestyles dramatically. When Wal-Mart asked Eddie for green bulbs, he had been working on building a green lifestyle for more than three decades, and therefore had the ability to manufacture enough product.
Like so many of the entrepreneurs I meet, Eddie is someone who gives back every chance he gets. Last year, he invited David Suzuki to speak at a large function, and he chuckles when he recalls how David shook his hand and said, “So you’re the guy who’s been getting rich from green.”
Eddie is gracious enough not to blast Suzuki, but I shall.
Eddie has a tough business and serious competition. He has worked at it since the age of 18 by getting out there himself and building relationships with retailers, both small and large. He chose to reinvest his own money in his business when he probably could have slept better by putting that cash into Albertan oil stocks or Research In Motion. Contrary to Suzuki’s thinking, getting rich quickly does not happen easily in business; even RIM endured a 20-year uphill ride, and was not generally supported by Canadian investors until Americans noticed the company.
Entrepreneurs live green, not because it is legislated, or because activist customers yell, but because they like it and tend to be decades ahead in their thinking. Back in the 90s, one of my clients, Spiros Pantziris, rebuilt Spintex, his second generation family business of yarn manufacturing, to be green. Spintex takes factory floor clippings of cotton T-shirts and strips them back down to base fibres to be spun again into coloured yarns. This means less dye and less cotton wastage. The factory even captures the waste wisps and clumps them into something that looks like what my cat coughs up. Except they are pellets the size of hockey pucks. These are shipped to local farms.
“Cows eat this stuff?” I asked, anxiously.
“It is cotton – a plant,” Spiros gently reminded me with a smile. When the call came from Target that they wanted green yarn for fishermen’s sweaters, Spintex was ready.
The maharishi of green entrepreneurs, Michael de Pencier, bases his business philosophy on the concepts outlined in a book by Jared Diamond, Collapse: How Societies Choose to Fail or Succeed. One of his companies is a green fund called Investeco, which acts as a private-equity partner in companies such as Eco Drycleaners, a user of environmentally-friendly chemicals. As de Pencier says, “Green living makes sense and smart businesses get green.” Thank you, David Suzuki.