Extremely cheap business:
With poor profitability metrics:
But which could be well turned around if unprofitable divisions (e.g. IB) got spin-off and management focused on core business (e.g. Swiss Bank & WM):
My thoughts and prayers to the associates who will end up on the deal team though.
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I remain skeptical… here are some pushbacks:
Why would Apollo want to purchase a business that potentially could lead to regulatory scrutiny over their investment activities? What value does the IB segment provide to rest of CS that would be lost upon spin? Why would a PE sponsor whose cost of capital is even greater make sense to own CS? How could any financial leverage be used or even underwritten given where CS CDS has widened? What is driving the negative income for IB segment: opex/bloated overhang or just too much deal loss from poor underwriting + impairment generation? Where are we in the cycle and is financial services a pro- or anti-cyclical bet?
I believe the conclusion is that CS will continue to be a public company. Not every troubled asset is a simple switch-flip turnaround LBO candidate; the majority are cigar butts or value traps.
The more challenging and complex the deal, the more Apollo-like it is.
Sounds exactly what a PE koolaid drinking guy would say. I suggest you read my response above and actually think about if your idea makes any sense.
I agree with the poster above, while this is a cluster fuck it looks like the kind of thing that fits Apollo. Distressed asset which contains some gems hidden under the layers of shit. Could there potentially be value unlocked if hundreds of hours are spent unravelling it? Perhaps, thank fuck I don’t work there and potentially have to try figure it out.
https://www.bloomberg.com/news/articles/2022-10-26/apollo-group-said-in…
you were saying?
Lol, too funny
Sorry I should have been a bit more specific in what I meant…
The article mentions just a strip-off of the profitable securitized products unit which trades MBS/ABS, etc. for a good ROE. Proforma for the SPG sale Credit Suisse remains public and is raising more equity share capital.
This is not Apollo going in and LBO'ing the entire business or even the investment bank division which is what you had suggested. My whole point is that I would not be surprised that a deep value investor like Apollo would bid for divested segments but there was no way they would take the whole thing private. Good luck to Apollo and PIMCO though!
check news
IB division is unprofitable because of Archegos and goodwill impairment (non-cash expense).
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