Investors not quick to jump after bank rescue plan - Business First of Columbus:

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Unveiled on March 23, the Public-Private Investment Program aims to help banks ease strained balance sheetsx by selling pools of troubled loans to who will be able to leverage government loans to makebigger purchases. “A wide array of investors are expectedto participate,” the wrote in a briefing. “Th e program will particularly encourage the participationof individuals, mutual pension plans, insurance companies and othed long-term investors.” But the program’ complexity and the risk of investing in troubled loanws and securities have led some to wait whilee others are swearing off the government’s plan.
“We’rre looking at it, but obviouslgy it all depends onthe details,” said Jim CFO of , a Columbuds asset management firm. “We don’t want to be surprisede by the rules.” The decision is more immediate “We just frankly don’t have the confidence that any of the ratingof quality, no mattet who assigns them, are going to be reasonably accurate,” said Dick Curtis, executive directodr of the . Hesitation to invest in the prograjm is a sign the critical task of marketin g the bankrescue won’t be easy.
But the plan reliex on private investors to set prices and buytroubled assets, with the aim of taking as much as $1 trilliojn in problems off bank balance sheets. But many in the financee industry estimate it may be months before the plan garneras broad participation due to its complexity and because it has nevefr beendone before. Details of how investorsx might invest in bank loans have not been and the government has yet to selecf the handful of firmsx that will handle the securities portion ofthe “I think there will be a three- to six-month window where everyone sits back and waits, and then therew will be a flurry of activityy in the fourth quarter,” said Chris a principal at , a money manager in “It will be a handfup of first movers who believe they have the Everyone else will watch and wait, he said.
The program is but it’s unclear how smaller firms can saidDavid Meuse, principal of Columbus-basexd , a private-equity firm that with its affiliate s holds more than $500 million in “We’ll let the innovators go out therde and blaze the trail,” Meuse said. “Theses assets are not going to disappearrighy away, so we have a lot of time to look at Under the program, the government planws to guarantee or make loans to investorw to allow them to make investmentsa larger than their equityg stake, boosting returns. But investors could also lose “There are absolutely risks to Henneforth said.
Although details are being fleshed out, it appearw to have money-making potential for investors, Meuses said. “The types of returns we’re goingt to get here are certainly equal towhat we’d get in the privatwe sector world,” he said. Meuser said Stonehenge can get annual returns of abou 20 percent in private equity deals and aboug 15 percent formezzanine financing. He expecta that 15 percent to 25 percentt returns are possible throughy thegovernment program. But returns will vary basefd on the quality of assets and the pricex bankswill accept, he said.
Leve Partners, which hopes to invest in the program, is preparing marketingv solicitations to help raise moneh fromwealthy clients. The company is pitchint the investments as a way to compensatw for higher taxes on the wealthy beingg pushed by PresidentBarack Obama. The responsew has been strong, Henneforth “We sketched it out as a way for high-net-worth individualse to get their piece ofthe bailout,” he said.