| HONG KONG
HONG KONG Dec 7 Three ex-Citigroup
bankers who raised $1 billion to invest in pan-Asia financial
services have closed the fund after a string of setbacks and the
region's failure to deliver hoped-for bargains in the aftermath
of the global financial crisis.
Robert Morse, Wing-Fai Ng and Guocang Huan - all with long
experience in Asia financial M&A - launched Primus Financial
Holdings in Hong Kong in 2009, but found investment
opportunities were limited, and their highest-profile deal fell
foul of regulators. A spokesperson for Primus Financial Holdings
confirmed the fund's closure, but declined further comment.
Primus Financial Holdings did not record a single publicly
disclosed successful investment, although a person familiar with
the fund's activities said it made several hundred million
dollars' worth of private investments that were sold before the
fund was shut down.
Morse and Huan have left the firm, selling what assets the
fund had invested in and returning the rest of the capital
raised to the company's investor - described by Primus at the
launch as "a prominent wealthy family in Asia."
Primus Financial planned to buy assets in regional wholesale
banking, insurance and asset management, but the fund's demise
has prompted some rivals and former colleagues to question the
approach of the prominent bankers.
Morse was Citi's Asia head of global investment banking and
led the institutional client group in Asia until 2008. Huan ran
HSBC's Asia-Pacific investment banking unit after a
stint at Citi, and Ng left Citi's Salomon Smith Barney to join
Fubon Financial as head of corporate strategy in 2000.
One private equity investor, who spoke on condition of not
being named, said the Primus plan was sector-specific and
region-wide - in contrast to a trend for private equity to
launch country-specific firms that allow dealmakers and
investors to seize local opportunities. This 'regional versus
local' debate is a common topic at Asian investment conferences.
Also, the strategy of focusing on financial services and on
seeking controlling stakes made life difficult in Asia, where
such opportunities are fewer than in developed markets.
"Given the fluctuations in deal opportunities in Asia and
the challenge of converting those into deals, funds specialized
in specific sectors or smaller geographies tend to be riskier,"
said Michael Prahl, centre director for the Global Private
Equity Initiative at Singapore-based business school INSEAD. "We
therefore see more pan-regional and sector-agnostic funds in
Asia than in more mature and deeper markets like the United
Morse has now moved to head up the investment management
committee at U.S. real estate investment fund ROC Bridge
Partners LLC, while Huan is CEO of GCS Capital, a new private
equity fund which this week said it was in talks to buy the
asset management arm of bailed-out Franco-Belgian group Dexia SA
. Ng has also raised new capital, said
the person familiar with the situation.
Morse declined to comment on the fund's closure, citing
investor confidentiality. Ng could not be reached by email to
his Primus address or on a mobile phone number provided by a
source, and Huan did not return calls to his office or reply to
a message left with a colleague.
Both Morse's personal information on the ROC Bridge website,
and Huan's biography on the GCS Capital site, detail their
banking careers, but don't mention Primus Financial Holdings -
where setbacks included a blocked attempt in 2010 to buy AIG's
Taiwan insurance unit Nan Shan, and an abandoned bid a
year later for struggling U.S. municipal bond broker
Ng and Huan also suffered a court defeat in Malaysia in 2010
with the legally separate Primus Pacific Partners fund - which
pre-dated their involvement in Primus Financial - and were named
in a legal dispute over unpaid rent on a house owned by
Singapore state investor Temasek Holdings.
Primus Pacific Partners did enjoy some success investing in
Chinese insurer New China Life. Company filings show it bought a
4.5 percent stake in May 2006 for around $26 million, which was
sold in November 2010 for $290 million.
In October 2009, AIG agreed to sell Nan Shan for $2.15
billion to Primus and China Strategic, a $111 million holding
company previously known for making batteries, but local
regulators sensed mainland Chinese backing for the bid, a
politically sensitive issue in Taiwan.
Nine months later, the Taipei City Office of Commerce
blocked Ng and three others from registering as directors of the
company set up to buy Nan Shan, citing their failure to prove
they were not residents of mainland China. Primus insisted no
mainland money was involved, but the deal was blocked and Nan
Shan was later sold to a local group for $2.16 billion.
Late last year, Primus' attempt to buy Chapdelaine also
collapsed, with the U.S. broker instead being sold to Tullett
Prebon Plc, a London-headquartered interdealer broker.
Primus Ventures, a Singapore unit of Primus Pacific
Partners, was sued in 2011 by Temasek President Lee Theng Kiat
and his wife for more than $111,000 in unpaid rent and real
estate agent fees on a house they leased to the fund, according
to court documents reviewed by Reuters. Those papers also cited
more than 45 instances of damage to the property. Primus paid
around half of that amount, before an out-of-court settlement
resolved the dispute.
In Malaysia, Ng and Huan locked horns with the central bank
over a 20 percent stake in EON Capital Bank held by Primus
Pacific Partners. Primus sued EON's directors in 2010, saying
they had accepted too low a price in a $1.7 billion takeover bid
by rival Hong Leong Bank Bhd. Malaysia's central bank
later rejected without explanation the reappointment of Ng as a
director of EON Capital, and a court then dismissed the Primus
lawsuit, paving the way for a deal creating the country's
At its 2009 launch, Primus Financial Holdings was not alone
in sensing cheap, post-crisis bargains in the financial sector.
"We don't anticipate buying a bank, fixing it up and selling
it," Morse told Reuters in an interview then. "We anticipate
buying a number of entities and integrating them and maybe later
taking it public or selling the whole lot.
"But we hope to build an institution that lasts through the
The office space that Primus Financial Holdings leased on
the 34th floor of a tower in Hong Kong's Central district is now
an outlet for the fashion brand Chanel.