Welspun Approached to Sell Security Backed by Solar Revenue

December 30, 2011, 4:00 AM EST By Natalie Obiko Pearson

(Updates with Welspun Corp. shares in last paragraph.)

Dec. 29 (Bloomberg) -- Welspun Energy Ltd., India’s biggest solar photovoltaic developer, was approached by a bank proposing to use revenue from its first plant to create a security of the kind often used to raise funds for projects such as toll roads.

“While solar energy generation is a relatively new sector for banks, they’re interested in lending to those who have established credibility and lived up to their commitments,” said Vineet Mittal, managing director of Welspun Energy.

The energy unit of Welspun Group, which is backed by Apollo Global Management LLC co-founder Leon Black, gained interest to securitize revenue from its 15-megawatt unit in Gujurat after three months of operation, Mittal said, declining to identify the bank. Investors would be paid income from the solar revenue.

The first main batch of solar plants in India are nearing completion, spurring banks to explore ways to securitize their cash flows as they do with tolls from infrastructure projects such as roads, Mittal said in an interview in Mumbai.

First Solar Inc. and Suntech Power Holdings Inc. are among companies expecting India to become one of the fastest growing markets, countering faltering demand and shrinking clean-energy subsidies in a Europe weakened by a sovereign debt crisis. The banks’ increased interest would help overcome one of the biggest challenges for Indian solar developers, who last year struggled to win over lenders to an industry still in its infancy.

Solar Like Highways

Solar plants, like other infrastructure, lend themselves to securitization as cash flows are steady and predictable, said Vinayak Mavinkurve, project finance group head at Infrastructure Development Finance Co., which funds Indian power stations.

“When you compare a wind, solar or road asset, you know what the toll is if your car passes through, you know what the solar or wind price is for every unit that’s delivered,” he said in July. “It’s like an annuity. What’s your variable? It’s the amount of wind or sun or traffic flow on a highway.”

Private equity also has a “huge interest” in renewables in India, especially solar and wind, Mittal said. Apollo Global in August bought a 22.5 billion rupee ($424 million) stake in Welspun Group, in the private-equity firm’s biggest Indian deal.

Welspun Energy is planning its first wind farm investments, with sites obtained in Karnataka, Rajasthan and Gujarat states, and is targeting 500 megawatts of solar and wind capacity in India by 2014, Mittal said. It also signed an agreement with Gujarat to build as much as 100 megawatts of solar plants and will bid for projects in Karnataka, Rajasthan and Orissa.

Wind Foray

The company, which won bidding for 55 megawatts of solar photovoltaic capacity in two central government auctions, more than any other company, completed its first 15-megawatt plant in Gujarat in October with financing from ICICI Bank Ltd.

It also expects to complete a 5-megawatt project in Andhra Pradesh this week that’s financed by the Indian Overseas Bank.

Welspun Energy has used thin-film panels supplied by German, Japanese and U.S. manufacturers, Mittal said. It may use thin-film or crystalline panels for its next 50 megawatts of plants, scheduled to be built by January 2013 in Rajasthan.

Traditional crystalline panels are silicon-based. Thin-film technology coats panels with materials including cadmium telluride, copper indium gallium selenide and amorphous silicon.

Welspun Corp., the group’s main company and a supplier of oil pipelines for Exxon Mobil Corp. and Saudi Aramco, rose 0.8 percent to close at 87.55 rupees, the highest in six weeks.

--Editors: Tony Barrett, Amanda Jordan

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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2012: Don't Predict, Influence

By Joseph Grenny

It’s hard enough to explain the past. But predicting the future? The older I get, the less I bother listening to anyone who claims to know what stock markets, world politics, or even the weather will be like more than an hour in advance. (I still do carry a naive belief that sometime in the future, the Cubs will win a World Series, but we all need religion.)

That said, I am highly confident that one thing will demand more and more of our attention in 2012 and beyond: human behavior. Our economic, planetary, and even personal well-being rely more heavily on our everyday actions than on advances in science and technology. The most critical need today is what I call “accelerated diffusion of competence” to influence human behavior. In other words, we need many more people who are much better at helping people change for good. Consider the following indisputable trends and what role our behavior can play in influencing them.

1. Economic growth in mature economies will be sluggish. This comes as bad news for business owners and leaders who depend on a rising tide to lift their individual boats. But it presents a huge opportunity for those who know how to engage employees in ways that differentiate their enterprises from those of competitors.

For example, a custom-software house we’ve worked with in Detroit is growing at double-digit rates, while others in the area are declining just as fast. The key to its success? The founder created a culture of unsurpassed quality and customer intimacy from the ground up. The culture-shaping starts with interviewing job candidates in teams. Once aboard, employees don’t even get their own computers; management assigns them to work in twos; each pair shares a computer. Employees are also trained to raise sensitive issues with teammates and to hold others accountable. This distinct culture enables the company to surpass customer requirements, on time and on budget.

2. Chronic health problems will keep driving up health-care costs. Heart disease, obesity, diabetes, addictions, and a host of other conditions will afflict an ever-greater percentage of the population. Research will make it more obvious that while therapies can mitigate some of these problems, our capacity to shape our health habits offers the greatest promise of well being.

We’ve known for years that as much as half of what determines our health status lies in our own hands. Maintaining strong relationships, for example, inoculates against disease, strengthening our immune systems. Diet and exercise also serve as major predictors of acquisition and recovery from disease. While we thrill at the discovery of a new pill that might benefit 10 percent to 20 percent more patients than a placebo does, we stare at our feet (if we can see still them) when reminded that influencing our own behavior can have two to three times that effect. We’ll never improve our level of personal well-being—and subsequently reduce health-care costs—until we gain greater competence at influencing our own choices.

3. Technology will continue to feed impulses more than values. Smartphones, tablets, MP3 players, GPS-enabled gadgets, and ubiquitous Internet access will continue to feed and exploit the natural human proclivity toward immediate gratification. In 2012, we’ll become more acutely aware of the degree to which our lives feel more virtual than real—and our relationships, pleasures, and aspirations seem shorter-term and shallower.

While some will try to stave off these effects by taking Luddite oaths to eschew technology, others will create solutions that help us make electronic tools our slaves, not masters. Offerings that allow us to shut off texting in moving cars (Text Zapper, for one) or voluntarily block our own impulsive access to IMs and Internet surfing (Freedom and Anti-Social, for example) signify our realization that we are behaving in ways we don’t like. As the gap between gratification and happiness gets larger, entrepreneurs will step in and provide solutions.

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Oscar, Tony—and Now Drucker

By Rick Wartzman

Peter Drucker claimed a boatload of honors over the course of his career: the Presidential Medal of Freedom, the Order of the Sacred Treasure from the Emperor of Japan, and a huge assortment of other bronze busts, crystal statuettes, and filigreed scrolls. So it seems fitting to end the year by handing out 10 Drucker-inspired awards.

Every winner taught us something about running an organization in 2011 (whether he intended to or not). An actual Drucker quote (drawn from his books, articles, and interviews) follows each bestowal—something that perhaps the late management teacher and writer would have said before handing over the hardware. And now the envelopes, please.

The Looking Toward the Long Term Laurel
To Jeff Bezos, the founder and chief executive of Amazon.com, for his steadfast willingness to peer past quarterly results and make the investments his company will need to succeed far down the line—or, as he has put it, “to plant seeds” and “let them grow.”

“To be sure, every company has to produce short-term results. But in any conflict between short-term results and long-term growth, each company will determine its own priority. This is not primarily a disagreement about economics. It is fundamentally a value conflict regarding the function of a business and the responsibility of management.”

The Sincerest Form of Flattery Seal
To Google CEO Larry Page, for getting off to a hot start with the company’s Google+ social networking service, which seems to have unabashedly borrowed from—and yet sought to improve upon—what rival Facebook offers.

“The creative imitator exploits the success of others. … The creative imitator does not invent a product or service; he perfects and positions it.”

The Truly Treasuring Time Trophy
To Atos CEO Thierry Breton, for his plan to eliminate all e-mail between company employees after deciding that his people were “spending too much time” responding to unproductive messages in their inboxes and “not enough time on management.”

“It is amazing how many things busy people are doing that never will be missed.”

The Service With the Mostest Citation
To the country’s credit unions, for providing an all-time-high level of value to their patrons, according to the latest American Customer Satisfaction Index. By comparison, giant financial institutions such as Bank of America, which have infuriated customers by trying to impose new fees, scored very low.

“A company is not necessarily better because it is bigger any more than the elephant is better because it is bigger than the honeybee.”

The Capitalism Has Gone Off Course Cup
To anthropologist David Graeber and others behind the Occupy Wall Street movement, for sparking an essential national conversation about how things are going—and why—for the 1 percent compared with the 99 percent.

About 175 years ago, “an epidemic in London’s poor East End made the wealthy in the West End realize for the first time that typhoid among the poor threatened them, too.”

The Customer Will Love It! Commendation
To Reed Hastings, the chief executive of Netflix, whose company declared in July that a fee increase and new movie-delivery plan was a “terrific value” for customers, only to see those customers stage a major revolt from which the business is still struggling to recover.

“To start out with the customer’s utility, with what the customer buys, with what the realities of the customer are and what the customer’s values are—this is what marketing is all about. But why after 40 years of preaching marketing, teaching marketing, professing marketing, so few suppliers are willing to follow, I cannot explain.”

The Profits Go Poof Prize
To Groupon CEO Andrew Mason for announcing, “We don’t measure ourselves in conventional ways,” as his company indicated that it had earned more than $80 million in the first quarter. Of course, Groupon had used a funky financial metric that it called “adjusted consolidated segment operating income” (which basically amounted to “profits” before subtracting expenses). Groupon was later forced to use more conventional accounting methods, which showed that the company had actually racked up a loss of nearly $100 million.

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That's Why They Call It Work?

By Liz Ryan

I hear from a lot of readers, and a decent-size chunk of them are retired CEOs. I guess that makes sense. It could be fun and satisfying to read business advice once you have time to think about workplace topics in the abstract, vs. having dozens of priorities to juggle every day and precious little energy left over to devote to leadership and talent management and the other things I write about.

A great deal of my retired-CEO mail floods in when I write about leadership. The retired-CEO population (or at least the subset of it that writes to me) is split roughly down the middle in its views on the employer-employee relationship. When I write something like, “An employee’s job is to give 100 percent at the job every day, and an employer’s job is to give the employee a reason to come back to work tomorrow,” half of my retired-CEO correspondents say, “Hear, hear!” The other half write, “That’s horrible of you. What’s happened to the American work ethic? You should be telling people to knuckle down and make money for their employers.”

I chuckle at the second set of letters. What has happened to the American work ethic, after all? I remember hearing about the American work ethic when I was a little kid. My dad worked at the same company for 35 years. That company’s name reverberated in our household like an overarching good presence, the place where Dad went every day and where our day-to-day sustenance and college funding originated. I don’t think I questioned (nor did my parents, as far as I know) the stability of the family income during the whole of my childhood. It was a non-issue. Same for my friends’ parents. (And if someone lost his job, it was a neighborhood event, a semi-tragedy that moms spoke about quietly with one another or with their husbands when out of earshot of the kids.)

My dad had that true-blue work ethic, and I don’t blame him. It’s part of who he was, but he also had every good reason to believe his employer would do the right thing by him year in and year out, and it did. It was a different time. Who would take an entry-level sales job out of college and go on to have eight kids under the assumption that more and more responsible and lucrative work would emerge in time to sustain the growing family? That wasn’t a bad bet in 1950. It would be financial folly today.

The old saw, “It’s not supposed to be fun—that’s why they call it work,” is one of my grumpy former-CEO pen pals’ favorite rants. The crazy part is, I don’t believe for one second any one of those guys (all guys, so far, in my retired-CEO fan club) actually managed that way during his corner-office days. My take is that when I talk about the non-Scroogey, humanistic leadership style on paper, it looks wimpy and communist. (These aren’t my adjectives—they come from my curmudgeonly CEO homies.) Any CEO who managed a company like a Theory X autocrat for years on end would probably have dropped dead of a heart attack long before retirement. But who knows? I’m not sure anyone has looked at the correlation. Still, I don’t believe that the crustiest of my online critics really managed people through the lens of, “It’s a job—just do it.” That would be really foolish of them if they did.

“It’s not supposed to be fun—that’s why they call it work” makes no sense at all from a management perspective. If you take apart the logic for one second, it falls completely apart. No CEO would knowingly keep someone in his shop who came to work every day and slogged through his or her duties because of the paycheck, would he? Work has to be fun. If it isn’t fun, the CEO so quick to say, “That’s why they call it work,” is screwing himself over.

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New Career After 50 - Plan Your Way to Success!

Cutting Buffett Helps Sequoia Fund Top Value Investor Rankings

December 30, 2011, 3:35 PM EST By Charles Stein

Dec. 29 (Bloomberg) -- Sequoia Fund Inc., recommended by Warren Buffett when it opened, beat the U.S. stock market over the past four decades, in part because a large piece of the fund was invested in his company, Berkshire Hathaway Inc.

Heeding Buffett’s warning that Berkshire wouldn’t grow as fast as it once did, the managers of the $4.7 billion fund cut their reliance on the stock almost in half in 2010 and put the cash into companies such as Valeant Pharmaceuticals International Inc., a drug distributor. Sequoia is beating the pack again this year, gaining 14 percent through Dec. 27, better than 99 percent of value stock funds, according to data compiled by Bloomberg.

“They have the kind of portfolio Buffett might have if he ran a mutual fund,” Steven Roge, a portfolio manager with Bohemia, New York-based R.W. Roge & Co., said in a telephone interview. His firm, which oversees $200 million, holds shares in Sequoia.

Like Buffett, the managers of Sequoia look for high-quality companies with competitive advantages that the fund can hang onto for long periods. While the scale of Buffett’s $68 billion stock portfolio forces him to buy mainly the largest companies, Sequoia is small enough to benefit from investments in mid-sized businesses.

The fund beat 97 percent of peers over the past 10 and 15 years, according to Morningstar Inc. in Chicago. From 1970 to 2010 the fund returned 14 percent annually, compared with 11 percent for the Standard & Poor’s 500 Index. In its best year, 1976, the fund gained 72 percent, according to “The Warren Buffett Way” (John Wiley & Sons, 1994) by Robert Hagstrom. It lost 27 percent in its worst year, 2008.

Buffett’s Praise

Sequoia Fund was co-founded in 1970 by Richard Cunniff and William Ruane, a friend of Buffett since both studied under legendary value investor Benjamin Graham at Columbia University in 1951. When Buffett shut down his investment partnership in 1969 to concentrate on Berkshire Hathaway, he recommended that his clients invest with Ruane.

“Bill formed Sequoia Fund to take care of the smaller investor,” Buffett wrote in an e-mailed response to questions. “A significant percentage of my former partners went with him and many of those still living have their holdings of Sequoia.”

Ruane ran an unconventional fund, closing Sequoia to new investors in 1982 because he didn’t want its size to limit what the fund could buy. It opened again in 2008, three years after Ruane’s death.

Ruane also held a concentrated portfolio. In 2003, Sequoia had 75 percent of its money in its top six holdings, according to a regulatory filing.

‘Six Best Ideas’

Ruane believed that “your six best ideas in life are going to do the best,” David Poppe, who now runs the fund together with Robert Goldfarb, said at a May 2011 investor day for Ruane, Cunniff & Goldfarb Inc., the New York firm that advises Sequoia.

Poppe and Goldfarb didn’t respond to a request to be interviewed. The two were named domestic stock managers of the year for 2010 by Morningstar. They are finalists for the same award for 2011.

Since Ruane’s death, the firm has hired more analysts and added more holdings to the portfolio. At the end of 2010, Sequoia held 34 stocks, an all-time high, according to a letter to shareholders in the fund’s 2010 annual report. The same letter explained why Sequoia reduced its stake in Berkshire Hathaway.

Cutting Berkshire

“When Warren Buffett tells the public that Berkshire’s growth rate will slow in the future, it behooves one to listen,” the fund’s managers wrote. Buffett has said on a number of occasions that a company of Berkshire’s size can’t grow at the pace it did when it was smaller.

“We know we can’t do remotely as well in the future as we have in the past,” Buffett said on April 30 at Berkshire’s annual meeting in Omaha.

Berkshire represented 11 percent of Sequoia’s holdings as of Sept. 30, down from 20 percent at the end of 2009 and 35 percent in 2004, according to fund reports.

Sequoia’s Berkshire stake has been a drag on the fund’s returns in recent years, said Kevin McDevitt, an analyst for Morningstar. Over the past five years, Sequoia rose 4.3 percent a year compared with an annual gain of 1 percent for Berkshire. Over 20 years through November, Berkshire outperformed Sequoia by 2.6 percentage points a year.

“There was a time when you could have said they were riding Buffett’s coattails,” McDevitt said in a telephone interview. “That’s not the case anymore.”

Long-Term Investor

A reduced Berkshire stake hasn’t stopped the fund from investing in a style similar to Buffett’s. In 2011, Buffett bought shares of MasterCard Inc. and International Business Machines Corp., two companies Sequoia already owned.

Buffett’s portfolio contains stocks, such as Coca-Cola Co. and Wells Fargo & Co., that he has owned for more than 20 years. Sequoia has holdings, including TJX Cos. and Fastenal Co., that have been in the fund for at least 10 years, regulatory filings show.

TJX, a Framingham, Massachusetts-based discount retailer, has appreciated at a rate of 14 percent a year in the 10 years ended Nov. 30, compared with 2.9 percent for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. Fastenal, an industrial supplier based in Winona, Minnesota, gained 20 percent a year.

“As an investor, if you get the people and the business right, you can let a company do the hard work for you for a long time,” Thomas Russo, a partner at Lancaster, Pennsylvania-based Gardner Russo & Gardner, said in a telephone interview. Russo, who worked at Ruane’s firm from 1984 to 1989, manages $4 billion.

‘Good and Bad’

Sequoia’s patience hasn’t always paid off. Mohawk Industries Inc., a carpet maker based in Calhoun, Georgia, and a longtime Sequoia holding, lost 19 percent of its value in the past five years as the housing slump depressed carpet sales.

“In the short term, holding Mohawk has been a really poor decision,” Poppe said at the 2009 investor meeting.

Such self-criticism is common at the meetings. At one session, an investment in Porsche Automobil Holding SE, the German automaker, was described as a “disaster.” At another, a manager admitted the firm was too timid about buying MasterCard after it went public in 2006.

“They give you the good and the bad,” said Roge, who has attended several of the firm’s investor meetings.

Sequoia’s managers don’t buy many of the largest stocks because the companies are too well-known and too heavily followed on Wall Street. Their preference is to own businesses “where we believe, not always correctly, that we have an edge in information,” they wrote in their 2009 letter to shareholders.

Valeant Stake

Valeant Pharmaceuticals, the fund’s largest holding, had a market value of less than $7.5 billion when Sequoia purchased it in the third quarter of 2010, Bloomberg data show. The Mississauga, Ontario, drug company gained 62 percent this year.

At the 2011 investor meeting, the fund’s managers emphasized Valeant’s unusual business model, which focuses on acquiring drugs with a proven track record rather than spending money on research and development. They also praised the firm’s chief executive officer, J. Michael Pearson.

Goldfarb told investors that over time he has become convinced that the right executive is crucial to a business’s success. “We’re betting more on the jockey and a little less on the horse,” he said in May at the fund’s annual meeting.

Sequoia typically has far more cash than the 3.7 percent held by the average U.S. domestic stock fund. At the end of the third quarter, cash represented 27 percent of the fund’s assets, according to data compiled by Bloomberg.

Holding Cash

Other well-known value investors, such as Seth Klarman, founder of Baupost Group LLC, a Boston-based hedge fund, and Robert Rodriguez, the longtime manager of FPA Capital Fund and current CEO of Los Angeles-based First Pacific Advisors, let cash build up when they can’t find enough attractive investments.

“In good markets cash can be a drag, but we have not had many good markets lately,” Dan Teed, president of Wedgewood Investors Inc. in Erie, Pennsylvania, said in a telephone interview. Teed, whose firm manages more than $100 million, including shares of Sequoia, said the fund’s cash was a plus because it means they “aren’t afraid to take a defensive position.”

Debt Dangers

Klarman and Rodriguez have written about the dangers of the increase in U.S. government debt, warning that it could pose a threat to the economy and the stock market if it is not whittled down.

Goldfarb normally ducks questions about macroeconomic issues at annual meetings, saying he has no special insight into the future of the economy, interest rates or the prices of oil and gold.

At the 2011 annual meeting, in response to an investor question, he sounded a gloomy note about deficits.

“My own feeling is that we’re just repeating the housing bubble in a different form,” he said. “We’ve substituted an unsustainable buildup of government debt for what is an unsustainable buildup of consumer debt. This one really feels worse to me and more dangerous. I think we’re living in a time of false prosperity.”

--Editors: Christian Baumgaertel, Josh Friedman

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel in Boston at cbaumgaertel@bloomberg.net

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Ackman’s Pershing Said to Urge Canadian Pacific CEO Switch

December 30, 2011, 4:55 PM EST By Natalie Doss

(Updates with closing share price in seventh paragraph.)

Dec. 30 (Bloomberg) -- William Ackman’s Pershing Square Capital Management LP, the largest shareholder in Canadian Pacific Railway Ltd., urged the carrier to hire the former chief executive officer of rival Canadian National Railway Co., a person familiar with the matter said.

Some directors are eager to meet with Hunter Harrison, who led Canadian National from 2003 through 2009, after Pershing recommended him as a replacement for CEO Fred Green, said the person, who asked not to be identified because the details are private. The U.S. shares rose the most in a month.

A CEO switch would follow the strategy Ackman pursued at J.C. Penney Co., which brought in Apple Inc.’s retail chief, Ron Johnson, this year after Pershing became the department-store chain’s biggest investor. Canadian National’s net income more than tripled during Harrison’s tenure.

The retired CEO, 67, enjoys “celebrity-like status among investors,” and hiring him probably would boost the stock, Jason Seidl, a Dahlman Rose & Co. analyst in New York, wrote in a note today. He rates Canadian Pacific as “hold.”

Harrison has postponed any meetings with Canadian Pacific until after tomorrow, the date through which he is barred from working for a Canadian National competitor, the person said. Harrison has spoken with Pershing and is interested in returning to work, the person said.

Seeking Value

Ackman, 45, invests in companies he deems undervalued and pushes changes he says will improve shareholder returns. The U.S. shares of Calgary-based Canadian Pacific fell 31 percent this year through Sept. 22, a day before Pershing began buying shares, dwarfing the 3.8 percent drop for Canadian National.

Canadian Pacific gained 4.1 percent to $67.67 at 4 p.m. in New York, the biggest advance since Nov. 28.

Ed Greenberg, a spokesman for Canadian Pacific, declined to comment. Jennifer Burner, a spokeswoman for New York-based Pershing, couldn’t immediately comment, and Harrison didn’t return a telephone call.

Pershing disclosed its initial stake in Canadian Pacific on Oct. 28, and has expanded that holding to 14.2 percent. The New York-based hedge fund said Dec. 1 that talks with Canada’s second-largest railroad on changes to operations and management had been “productive.”

Canadian Pacific has been run by Green, 55, since May 2006, and the board is led by Chairman John Cleghorn.

New Directors

Two Canadian Pacific directors added this month both were suggested by Pershing, the person said. One of them, Edmond Harris, worked for Montreal-based Canadian National under Harrison and later was Canadian Pacific’s chief operating officer.

Earnings at Canadian Pacific rose about 11 percent during the years that Harrison was boosting net income at Canadian National, the country’s biggest railroad.

Canadian Pacific’s ratio of operating expenses to sales is the highest among the major North American carriers and has been equal to or exceeded the average among its peers since 2008, according to Bloomberg Industries data.

The Globe & Mail reported on Pershing’s discussions about a CEO change earlier today.

--With assistance from Hugo Miller in Toronto. Editors: Ed Dufner, Cecile Daurat

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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MetLife Awards Mullaney Cash Bonus of $1.5 Million as He Exits

December 30, 2011, 5:17 AM EST By Andrew Frye

Dec. 29 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, said it plans to award William Mullaney, the former head of its U.S. business, cash-incentive compensation of $1.5 million for 2011 as the company prepares for his departure.

Mullaney is also scheduled to receive $1.8 million in long- term stock-based compensation, New York-based MetLife said today in a regulatory filing. Mullaney will also get $650,000 in exchange for his cooperation with the company and a pledge not to “make statements that damage, disparage, or otherwise diminish MetLife’s reputation and business,” MetLife said.

MetLife Chief Executive Officer Steven Kandarian eliminated Mullaney’s job in November when he placed the U.S. business in a larger Americas division under the supervision of William Wheeler. Kandarian is reorganizing the insurer since his promotion to CEO in May.

Mullaney will be a consultant to Kandarian until March 31, MetLife said. The company will provide Mullaney with outplacement services and it agreed not to disparage him, MetLife said.

--Editors: Dan Reichl, William Ahearn

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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Welspun Approached to Sell Security Backed by Solar Revenue

December 29, 2011, 9:36 PM EST By Natalie Obiko Pearson

(Updates with Welspun Corp. shares in last paragraph.)

Dec. 29 (Bloomberg) -- Welspun Energy Ltd., India’s biggest solar photovoltaic developer, was approached by a bank proposing to use revenue from its first plant to create a security of the kind often used to raise funds for projects such as toll roads.

“While solar energy generation is a relatively new sector for banks, they’re interested in lending to those who have established credibility and lived up to their commitments,” said Vineet Mittal, managing director of Welspun Energy.

The energy unit of Welspun Group, which is backed by Apollo Global Management LLC co-founder Leon Black, gained interest to securitize revenue from its 15-megawatt unit in Gujurat after three months of operation, Mittal said, declining to identify the bank. Investors would be paid income from the solar revenue.

The first main batch of solar plants in India are nearing completion, spurring banks to explore ways to securitize their cash flows as they do with tolls from infrastructure projects such as roads, Mittal said in an interview in Mumbai.

First Solar Inc. and Suntech Power Holdings Inc. are among companies expecting India to become one of the fastest growing markets, countering faltering demand and shrinking clean-energy subsidies in a Europe weakened by a sovereign debt crisis. The banks’ increased interest would help overcome one of the biggest challenges for Indian solar developers, who last year struggled to win over lenders to an industry still in its infancy.

Solar Like Highways

Solar plants, like other infrastructure, lend themselves to securitization as cash flows are steady and predictable, said Vinayak Mavinkurve, project finance group head at Infrastructure Development Finance Co., which funds Indian power stations.

“When you compare a wind, solar or road asset, you know what the toll is if your car passes through, you know what the solar or wind price is for every unit that’s delivered,” he said in July. “It’s like an annuity. What’s your variable? It’s the amount of wind or sun or traffic flow on a highway.”

Private equity also has a “huge interest” in renewables in India, especially solar and wind, Mittal said. Apollo Global in August bought a 22.5 billion rupee ($424 million) stake in Welspun Group, in the private-equity firm’s biggest Indian deal.

Welspun Energy is planning its first wind farm investments, with sites obtained in Karnataka, Rajasthan and Gujarat states, and is targeting 500 megawatts of solar and wind capacity in India by 2014, Mittal said. It also signed an agreement with Gujarat to build as much as 100 megawatts of solar plants and will bid for projects in Karnataka, Rajasthan and Orissa.

Wind Foray

The company, which won bidding for 55 megawatts of solar photovoltaic capacity in two central government auctions, more than any other company, completed its first 15-megawatt plant in Gujarat in October with financing from ICICI Bank Ltd.

It also expects to complete a 5-megawatt project in Andhra Pradesh this week that’s financed by the Indian Overseas Bank.

Welspun Energy has used thin-film panels supplied by German, Japanese and U.S. manufacturers, Mittal said. It may use thin-film or crystalline panels for its next 50 megawatts of plants, scheduled to be built by January 2013 in Rajasthan.

Traditional crystalline panels are silicon-based. Thin-film technology coats panels with materials including cadmium telluride, copper indium gallium selenide and amorphous silicon.

Welspun Corp., the group’s main company and a supplier of oil pipelines for Exxon Mobil Corp. and Saudi Aramco, rose 0.8 percent to close at 87.55 rupees, the highest in six weeks.

--Editors: Tony Barrett, Amanda Jordan

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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Hedge-Fund Millionaire Diggle Bets on Farms, Life Sciences

December 30, 2011, 12:28 AM EST By Netty Ismail

(Updates with assets under management in ninth paragraph.)

Dec. 28 (Bloomberg) -- Stephen Diggle, who co-founded a hedge fund that made $2.7 billion in 2007 and 2008, plans to open his personal farmland portfolio to investors and start a fund that will trade life-sciences companies.

Diggle will transfer the farm assets from his family office to Singapore-based Vulpes Investment Management, which he set up in April after liquidating his previous firm’s volatility funds. Diggle’s family also holds “significant stakes” in life sciences, including biotechnology companies, which will be moved to a fund he plans to set up next year, the 47-year-old said.

“Everything that we are investing in personally is available to investors,” Diggle said in an interview. “We have got capital committed, we are focused on a number of things where we think there’s a compelling opportunity to make money.”

Diggle is widening his new firm’s investments after starting a volatility fund in May and taking over the Russian Opportunities Fund and Testudo Fund from Artradis Fund Management Pte, which he and co-founder Richard Magides closed in March. Once Singapore’s biggest hedge-fund manager, Artradis’s funds, which sought to profit from price swings, lost $700 million as volatility declined in 2009 and 2010.

“The one thing I didn’t want to do was to spend the rest of my life talking about how great 2008 was,” Diggle said. “You have to move on and find new challenges. That’s what gets you up in the morning.”

Volatility Cost

Vulpes, which focuses on alternative investments, started its long Asian volatility and arbitrage fund, LAVA, on May 1 with $30.5 million, of which $30 million was the founding partners’ money. The fund size has increased to about $50 million after some of Artradis’s former clients returned to invest Diggle. The fund has gained 6 percent since May, he said.

LAVA seeks to produce returns that aren’t correlated with the market by trading instruments that thrive on volatility, such as options, warrants, and convertible bonds. The fund uses strategies such as arbitraging or profiting from disparities in the price of similar securities simultaneously traded on more than one market, and tends to work well when markets go down.

“The cost of being long volatility on a daily basis as a buy and hold strategy is not going to make money in the next few years,” Diggle said. “You have to be more deft in your timing and more selective in what you own.”

Farmland Transfer

Diggle plans to transfer ownership of his farmland into a holding company, in which outside investors can hold shares, he said. Vulpes, which currently manages about $200 million, will own and operate the company. After buying farms in Uruguay and Illinois, as well as a kiwi-and-avocado orchard in New Zealand, he plans to pour money into Africa and eastern Europe as global food prices soar.

The value of farmland in the U.S. has probably gained 20 percent to 30 percent in the last two years, while Diggle’s investments in Uruguay may have risen 50 percent as sheep and cattle prices almost doubled in Latin America this year, he said.

Agriculture would be the “single most interest opportunity over the next 10 to 20 years,” Diggle said.

Vulpes favors investments in metals, energy and food, and “dislikes” government bonds, he said.

“Being long stuff in the ground is going to be a better place to be than holding pieces of paper,” Diggle said.

The firm’s Testudo Fund, which is heavily invested in precious metals and the mining industry, has gained 2.5 percent this year. The Russian Opportunities Fund has declined about 10 percent in the same period.

‘Biggest Risk’

Governments and their policies represent the biggest threat to investors, he said. “The biggest risk will come from governments: government interference in markets, government debt and government manufacturing of paper money to pay off the debt,” he said.

Diggle said he’s focusing on “new exciting commercially viable technology” in the life sciences industry that will find cures for illnesses including cancer and Parkinson’s disease.

“We certainly see a lot of interest by big pharma in small innovative biotechnology,” Diggle said. “If we can find those small new exciting biotechnology companies before big pharma gets to them, there’s a big uptick in terms of valuation if they can prove their work.”

--Editors: Linus Chua, Andreea Papuc

To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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Changing Careers After 50 - Five Mistakes That Doom a Career Change!

Sears as Lampert’s ‘Mismanaged Asset’ Loses Customers to Macy’s

December 30, 2011, 12:28 AM EST By Cotten Timberlake and Miles Weiss

Dec. 28 (Bloomberg) -- When Kmart acquired Sears in 2005, Chairman Edward Lampert said the new company would have the geographic reach and scale to compete with Wal-Mart Stores Inc.

The billionaire hedge fund manager has since presided over 18 consecutive quarters of declining sales. He’s on his fourth chief executive. While Sears Holdings Corp. shares soared in the first few months after the merger, they’ve fallen 55 percent in 2011 alone.

Sears “has been a mismanaged asset,” Gregory Melich, an analyst at International Strategy & Investment, said in a Bloomberg Television interview yesterday. “A lot of traditional department stores have reinvigorated themselves through merchandising, through changing their locations; you think of Macy’s. You haven’t seen that from Sears.”

Yesterday, the largest U.S. department store chain reported that it would close as many as 120 locations after same-store sales fell 5.2 percent in the eight weeks ended Dec. 25. By contrast, such sales in the department-store sector will climb an estimated 4 percent in November and December, compared with the same period a year ago, according to the International Council of Shopping Centers, a New York-based trade group.

The shares plunged, falling 27 percent to $33.38 yesterday in New York, the largest drop since April 29, 2003.

Since becoming chairman in 2005, Lampert, 49, has reduced costs, closing 171 large U.S. stores and cutting the headcount by about 12 percent. Sears employed 312,000 people as of January, down from 355,000 in June 2006, according to data compiled by Bloomberg. Meanwhile, his hedge funds have made money on the original investment.

Ceding Customers

He has tried one strategy after another. An initial push involved converting 400 Kmart stores to a format called Sears Essentials with grocery and convenience items. Sears Grand, another concept, hewed to a superstore model. All have failed to reverse falling sales and ceded customers to the likes of Wal- Mart and Macy’s.

“At Sears, a lot of what we sell is tied to housing,” Chris Brathwaite, a Sears Holdings spokesman, said in a telephone interview yesterday. “The recession has had an impact on our company, like most retailers.” The closings will allow the Hoffman Estates, Illinois-based company to focus on “better-performing stores,” he said.

Steve Lipin, a spokesman for Lampert, didn’t return a call seeking comment.

Under-Investing

Lampert founded his hedge fund ESL Partners in 1989, taking inspiration for his approach to finding undervalued stocks from the shareholder letters of Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. Lampert has specialized in buying stakes in beaten-down retailers, some of which he helped turn around by either collaborating with or shaking up management.

Lampert’s hedge funds bought Kmart Corp. bonds and bank loans and then swapped the debt for stock in a bankruptcy reorganization in 2003. At the same time, Lampert’s funds were also building a 15 percent stake in Sears, Roebuck & Co. by purchasing shares on the open market.

When Kmart acquired Sears in 2005 to form Sears Holdings Corp., Lampert and his funds initially held a 39.4 percent stake, comprised of about 64.6 million shares. Based on what the funds paid for their Kmart stake, as well as the average trading price during the quarters that they bought Sears stock, the funds spent an estimated $1 billion on the investment.

Profitable Investment

Even after this year’s slump in the stock, Sears has been a profitable investment for Lampert. His hedge funds paid about $16 a share for the stake in the chain, based on regulatory filings and Bloomberg calculations.

When Lampert announced his plan to buy the department store chain in November 2004, he said Sears’s service and products were “every bit as good as any of the competition.”

Both Sears and Kmart were struggling at the time. Sears’s annual sales were stuck at $41 billion in each of the four years ending in 2003. Kmart had emerged from bankruptcy after failing to compete with Wal-Mart’s lower prices.

Now Sears is turning upside down a strategy that has prevailed for most of its 118-year history. It’s accelerating franchising efforts -- including Sears Hometown and Sears Auto stores. It’s leasing space to such retailers as Forever 21. And it’s allowing other retailers to sell the popular DieHard, Craftsman and Kenmore products and licensing those brands.

Capital Starved

In the meantime, the larger stores have been starved of capital investment and customers have defected, according to Gary Balter, an analyst with Credit Suisse Group AG in New York.

Sears is spending less than a quarter of the $8 a square foot that retailers typically invest to maintain stores, according to International Strategy & Investment Group. In an August report, the New York-based firm put Sears and Kmart at the bottom of the list of a dozen retailers ranked by sales per square foot and operating profitability.

Earnings before interest, taxes, depreciation and amortization in the fourth quarter will be less than half of last year’s $933 million, Sears said yesterday.

Lampert is a self-styled merchant who has found it difficult to cede managerial control to experienced retail managers, said Jay Margolis, a former executive with Limited Brands Inc. and Reebok International Ltd.

“Sears has just lagged way behind,” Margolis said yesterday on Bloomberg Television. “There is no energy there. We have not seen the results. We have not seen the change in the product. He has found it difficult to let go.”

Dwindling Cash

Cash had dwindled to $624 million at the end of the third quarter, compared with $790 million a year earlier.

“If the vendors are comfortable shipping to them, they could go on for years,” Balter said. “Their balance sheet is fine. But it’s usually vendors who decide and if they pull the plug, then the company has no choice and they have to file” for bankruptcy protection.

Closing the Kmart and Sears stores will generate $140 million to $170 million of cash from inventory sales and leasing or sales of the locations, Sears said yesterday. The chain plans to reduce fixed costs by $100 million to $200 million.

The company will incur non-cash expenses of as much as $2.4 billion in the fourth quarter to write down the value of potential tax benefits and goodwill.

Sears didn’t specify which stores will be closed. In his annual investor letters, Lampert has identified the smaller Hometown and Sears Outlet stores as sources of growth and profit. The company opened 122 of those “specialty” stores last year, he said in his 2011 letter, and now has 945 -- less than a quarter of the total.

Web Operations

New CEO Lou D’Ambrosio, hired in February, is ramping up Web operations. Online sales via Sears’s various websites grew 30 percent year-over-year in the second quarter of this year, and 22 percent in the first quarter. To jog that growth, Sears has given salesmen in 450 of its stores more than 5,000 iPads and 11,000 iPod Touches to help them track inventory and customer orders, and added free wireless access.

“If they can just create enough cash flow to get through the downturn, at some point there is going to be a huge uptick in appliance sales,” Paul Swinand, an analyst with Morningstar Inc. in Chicago, said in a telephone interview. “They just have to make sure that when that happens they are not cut off at the knees, and that it doesn’t all go to Home Depot and Best Buy.”

Sears is to report fourth-quarter earnings on Feb. 23.

“The market is assuming there’s more bad news to come,” Swinand said.

--With assistance from Lauren Coleman-Lochner, Pimm Fox and Betty Liu in New York. Editors: Robin Ajello, Stephen West

To contact the reporters on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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Uber CEO Say App Offers On-Demand Town Car Service

Zynga IPO Outlook July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at

July 7 (Bloomberg) -- Michael Yoshikami, chief investment strategist at YCMNet Advisors, Bob Rice, general managing partner at Tangent Capital Partners LLC, Paul Martino, managing director at Bullpen Capital, and Paul Bard, director of research at Renaissance Capital LLC, talk about Zynga Inc.'s plan to raise $1 billion in an initial public offering and the outlook for the company. (Excerpts. Source: Bloomberg)

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Career Change After 50 - 7 Mistakes You Should Avoid!

Career Change After 50 - Reenergize Your Career!

Cutting Buffett Helps Sequoia Fund Top Value Investor Rankings

December 29, 2011, 6:15 AM EST By Charles Stein

Dec. 29 (Bloomberg) -- Sequoia Fund Inc., recommended by Warren Buffett when it opened, beat the U.S. stock market over the past four decades, in part because a large piece of the fund was invested in his company, Berkshire Hathaway Inc.

Heeding Buffett’s warning that Berkshire wouldn’t grow as fast as it once did, the managers of the $4.7 billion fund cut their reliance on the stock almost in half in 2010 and put the cash into companies such as Valeant Pharmaceuticals International Inc., a drug distributor. Sequoia is beating the pack again this year, gaining 14 percent through Dec. 27, better than 99 percent of value stock funds, according to data compiled by Bloomberg.

“They have the kind of portfolio Buffett might have if he ran a mutual fund,” Steven Roge, a portfolio manager with Bohemia, New York-based R.W. Roge & Co., said in a telephone interview. His firm, which oversees $200 million, holds shares in Sequoia.

Like Buffett, the managers of Sequoia look for high-quality companies with competitive advantages that the fund can hang onto for long periods. While the scale of Buffett’s $68 billion stock portfolio forces him to buy mainly the largest companies, Sequoia is small enough to benefit from investments in mid-sized businesses.

The fund beat 97 percent of peers over the past 10 and 15 years, according to Morningstar Inc. in Chicago. From 1970 to 2010 the fund returned 14 percent annually, compared with 11 percent for the Standard & Poor’s 500 Index. In its best year, 1976, the fund gained 72 percent, according to “The Warren Buffett Way” (John Wiley & Sons, 1994) by Robert Hagstrom. It lost 27 percent in its worst year, 2008.

Buffett’s Praise

Sequoia Fund was co-founded in 1970 by Richard Cunniff and William Ruane, a friend of Buffett since both studied under legendary value investor Benjamin Graham at Columbia University in 1951. When Buffett shut down his investment partnership in 1969 to concentrate on Berkshire Hathaway, he recommended that his clients invest with Ruane.

“Bill formed Sequoia Fund to take care of the smaller investor,” Buffett wrote in an e-mailed response to questions. “A significant percentage of my former partners went with him and many of those still living have their holdings of Sequoia.”

Ruane ran an unconventional fund, closing Sequoia to new investors in 1982 because he didn’t want its size to limit what the fund could buy. It opened again in 2008, three years after Ruane’s death.

Ruane also held a concentrated portfolio. In 2003, Sequoia had 75 percent of its money in its top six holdings, according to a regulatory filing.

‘Six Best Ideas’

Ruane believed that “your six best ideas in life are going to do the best,” David Poppe, who now runs the fund together with Robert Goldfarb, said at a May 2011 investor day for Ruane, Cunniff & Goldfarb Inc., the New York firm that advises Sequoia.

Poppe and Goldfarb didn’t respond to a request to be interviewed. The two were named domestic stock managers of the year for 2010 by Morningstar. They are finalists for the same award for 2011.

Since Ruane’s death, the firm has hired more analysts and added more holdings to the portfolio. At the end of 2010, Sequoia held 34 stocks, an all-time high, according to a letter to shareholders in the fund’s 2010 annual report. The same letter explained why Sequoia reduced its stake in Berkshire Hathaway.

Cutting Berkshire

“When Warren Buffett tells the public that Berkshire’s growth rate will slow in the future, it behooves one to listen,” the fund’s managers wrote. Buffett has said on a number of occasions that a company of Berkshire’s size can’t grow at the pace it did when it was smaller.

“We know we can’t do remotely as well in the future as we have in the past,” Buffett said on April 30 at Berkshire’s annual meeting in Omaha.

Berkshire represented 11 percent of Sequoia’s holdings as of Sept. 30, down from 20 percent at the end of 2009 and 35 percent in 2004, according to fund reports.

Sequoia’s Berkshire stake has been a drag on the fund’s returns in recent years, said Kevin McDevitt, an analyst for Morningstar. Over the past five years, Sequoia rose 4.3 percent a year compared with an annual gain of 1 percent for Berkshire. Over 20 years through November, Berkshire outperformed Sequoia by 2.6 percentage points a year.

“There was a time when you could have said they were riding Buffett’s coattails,” McDevitt said in a telephone interview. “That’s not the case anymore.”

Long-Term Investor

A reduced Berkshire stake hasn’t stopped the fund from investing in a style similar to Buffett’s. In 2011, Buffett bought shares of MasterCard Inc. and International Business Machines Corp., two companies Sequoia already owned.

Buffett’s portfolio contains stocks, such as Coca-Cola Co. and Wells Fargo & Co., that he has owned for more than 20 years. Sequoia has holdings, including TJX Cos. and Fastenal Co., that have been in the fund for at least 10 years, regulatory filings show.

TJX, a Framingham, Massachusetts-based discount retailer, has appreciated at a rate of 14 percent a year in the 10 years ended Nov. 30, compared with 2.9 percent for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. Fastenal, an industrial supplier based in Winona, Minnesota, gained 20 percent a year.

“As an investor, if you get the people and the business right, you can let a company do the hard work for you for a long time,” Thomas Russo, a partner at Lancaster, Pennsylvania-based Gardner Russo & Gardner, said in a telephone interview. Russo, who worked at Ruane’s firm from 1984 to 1989, manages $4 billion.

‘Good and Bad’

Sequoia’s patience hasn’t always paid off. Mohawk Industries Inc., a carpet maker based in Calhoun, Georgia, and a longtime Sequoia holding, lost 19 percent of its value in the past five years as the housing slump depressed carpet sales.

“In the short term, holding Mohawk has been a really poor decision,” Poppe said at the 2009 investor meeting.

Such self-criticism is common at the meetings. At one session, an investment in Porsche Automobil Holding SE, the German automaker, was described as a “disaster.” At another, a manager admitted the firm was too timid about buying MasterCard after it went public in 2006.

“They give you the good and the bad,” said Roge, who has attended several of the firm’s investor meetings.

Sequoia’s managers don’t buy many of the largest stocks because the companies are too well-known and too heavily followed on Wall Street. Their preference is to own businesses “where we believe, not always correctly, that we have an edge in information,” they wrote in their 2009 letter to shareholders.

Valeant Stake

Valeant Pharmaceuticals, the fund’s largest holding, had a market value of less than $7.5 billion when Sequoia purchased it in the third quarter of 2010, Bloomberg data show. The Mississauga, Ontario, drug company gained 62 percent this year.

At the 2011 investor meeting, the fund’s managers emphasized Valeant’s unusual business model, which focuses on acquiring drugs with a proven track record rather than spending money on research and development. They also praised the firm’s chief executive officer, J. Michael Pearson.

Goldfarb told investors that over time he has become convinced that the right executive is crucial to a business’s success. “We’re betting more on the jockey and a little less on the horse,” he said in May at the fund’s annual meeting.

Sequoia typically has far more cash than the 3.7 percent held by the average U.S. domestic stock fund. At the end of the third quarter, cash represented 27 percent of the fund’s assets, according to data compiled by Bloomberg.

Holding Cash

Other well-known value investors, such as Seth Klarman, founder of Baupost Group LLC, a Boston-based hedge fund, and Robert Rodriguez, the longtime manager of FPA Capital Fund and current CEO of Los Angeles-based First Pacific Advisors, let cash build up when they can’t find enough attractive investments.

“In good markets cash can be a drag, but we have not had many good markets lately,” Dan Teed, president of Wedgewood Investors Inc. in Erie, Pennsylvania, said in a telephone interview. Teed, whose firm manages more than $100 million, including shares of Sequoia, said the fund’s cash was a plus because it means they “aren’t afraid to take a defensive position.”

Debt Dangers

Klarman and Rodriguez have written about the dangers of the increase in U.S. government debt, warning that it could pose a threat to the economy and the stock market if it is not whittled down.

Goldfarb normally ducks questions about macroeconomic issues at annual meetings, saying he has no special insight into the future of the economy, interest rates or the prices of oil and gold.

At the 2011 annual meeting, in response to an investor question, he sounded a gloomy note about deficits.

“My own feeling is that we’re just repeating the housing bubble in a different form,” he said. “We’ve substituted an unsustainable buildup of government debt for what is an unsustainable buildup of consumer debt. This one really feels worse to me and more dangerous. I think we’re living in a time of false prosperity.”

--Editors: Christian Baumgaertel, Josh Friedman

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel in Boston at cbaumgaertel@bloomberg.net

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Career Exploration - Career Change Done Right!

Billionaire Ambanis Dancing at Ancestral Home Signals Thaw

December 29, 2011, 6:16 AM EST By Siddharth Philip, Ketaki Gokhale and Rakteem Katakey

(Adds closing share prices in 12th paragraph.)

Dec. 29 (Bloomberg) -- Billionaires Mukesh and Anil Ambani danced and prayed in their ancestral village on the eve of their father’s 80th birth anniversary in the strongest display of bonhomie since ending a feud that split the Reliance empire.

The brothers, who have a combined wealth of $28.5 billion and control the world’s biggest oil refining complex and India’s second-largest phone company, were seen together on Dec. 27 for the first time since they pledged harmony in May 2010. Yesterday, they inaugurated a memorial to the late Dhirajlal Ambani in Chorwad in the western state of Gujarat.

Reliance Communications Ltd., controlled by 52 year-old Anil, climbed to a two-week high on Dec. 27 on speculation that improved sibling relations may help the company clinch a deal to lease mobile-phone towers to Reliance Industries Ltd., run by Mukesh, 54. The elder Ambani operates India’s biggest natural gas field, while Anil needs the fuel for his power plants.

“It will matter to shareholders if it is a business reunion,” said Jagannadham Thunuguntla, strategist at SMC Global Securities Ltd. in New Delhi. “That would be a huge positive rerating opportunity for Anil Ambani group stocks. From Reliance Industries’ perspective, it would be an opportunity to expand their dream of entering into telecom.”

When India’s second-largest business group split in 2005, Mukesh got the Reliance group’s petrochemicals, oil and gas units, while Anil took the power, financial services, telecommunications, and entertainment businesses. Both retained rights to the Reliance name.

Last year the brothers scrapped agreements that prevented them from competing in similar businesses.

Dandiya Dance

Mukesh Ambani and Anil yesterday traveled in separate Mercedes-Benz cars to pray and have breakfast at the local Ambaji Mata temple after spending the previous evening performing the dandiya, a traditional Gujarati folk dance, along with their wives, mother and sister, Bloomberg UTV showed.

The Ambanis attended a discourse on the importance of family values and harmony by Rameshbhai Oza, their spiritual adviser, the Economic Times reported today.

Anil flew in a Reliance Industries helicopter yesterday morning to offer prayers at the ancient Hindu temple of Somnath, Parimal Nathwani, group president for corporate affairs at Reliance Industries, said in an interview in Chorwad yesterday. Security arrangements in the village were managed by the officials from the company’s refinery complex at Jamnagar and 60 local volunteers, he said.

Daljeet Singh, a spokesman for Anil Ambani-controlled Reliance ADA Group, declined to comment.

Brotherly Love

Mukesh and Anil visiting their ancestral home together shows “there is love among the brothers,” the Economic Times cited their mother, Kokila Ambani, saying in Chorwad. The family is “united,” she said, according to a Dec. 27 report.

Reliance Industries shares fell 3.7 percent to 711.9 rupees in Mumbai trading, the lowest since March 20, 2009. Reliance Infrastructure Ltd., the Anil Ambani-controlled builder of a mass rapid transit system in Mumbai, dropped 4 percent to 344.15 rupees and Reliance Communications lost 5.3 percent to 68.1 rupees. the benchmark Sensitive Index declined 1.2 percent.

Shares of Reliance Industries have more than tripled in value since the brothers divided the family business in June 2005. Anil’s flagship Reliance Communications has slumped 78 percent since it started trading in 2006.

$1 Billion Home

Chorwad, a coastal fishing village where Dhirajlal Ambani, known as Dhirubhai, grew up, lies 855 kilometers (530 miles) northwest by road from Mumbai, where Mukesh has built a skyscraper home. The building equipped with helipads and a movie theater cost $1 billion, according to Forbes.

Dhirubhai founded Reliance Commercial Corp. to trade spices and yarn in 1959, the year Anil was born, and built an empire with businesses ranging from textiles to petrochemicals. His two sons fought for control of the group after he died in 2002 without leaving a will. They split the family business three years later in a settlement brokered by their mother.

In the following five years their battle over the price and supply of natural gas from Reliance Industries’ assets halted plans for a north Indian power plant, while a merger between Anil’s Reliance Communications and South Africa’s MTN Group Ltd. was scuttled after Mukesh said he had the first right to buy shares in his brother’s company.

“It looks like they’ve reconciled to working together, and that could be the best thing for them individually,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “Old wounds can’t completely be healed, but they can be stitched. There’s a scar nevertheless.”

--With assistance from Mark Williams in New Delhi. Editors: Amit Prakash, Abhay Singh

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Arijit Ghosh at aghosh@bloomberg.net

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Wendy’s Adds $16 Foie Gras Burger in Second Bet on Japan

December 29, 2011, 5:36 AM EST By Cheng Herng Shinn

(Updates with analyst comments in eighth paragraph.)

Dec. 28 (Bloomberg) -- Wendy’s Co., the third-biggest U.S. fast-food chain, added goose-liver pate and truffles to burgers as it invests as much as $200 million on a return to Japan two years after leaving the country.

The Japan Premium sandwich sells for 1,280 yen ($16) at Wendy’s in Tokyo’s Omotesando luxury shopping district, the first of a targeted 100 shops. “We think the fast-food market here is ready for something different,” Ernest Higa, chief executive officer of Wendy’s Japan LLC, said in an interview at the restaurant’s opening yesterday.

Wendy’s is re-entering Japan under a plan to expand outside the U.S., where it got 92 percent of revenue in 2010, after posting losses in six of the past eight quarters. The Dublin, Ohio-based chain is focusing on the world’s second-biggest fast- food market first as it looks for operating partners in China and Brazil.

“Japan is the most important of the three to me, because we are actually selling burgers here today,” Darrell Van Ligten, international division president, said in an interview in Omotesando. The company expects to eventually expand to about 700 restaurants in Japan, compared with about 3,300 for McDonald’s Corp.’s local unit, the nation’s biggest fast-food burger chain.

Competitive Environment

Wendy’s ended a 30-year run in Japan in 2009 after its partner Zensho Holdings Co. declined to renew the agreement, saying it would focus on building its main Sukiya chain of beef- bowl restaurants.

“Our partner had a pretty significant business which was their primary focus,” Van Ligten said. “Given the size of the different businesses, Wendy’s wasn’t as much of a focus area as we would have liked it to be.”

In coming back to Japan, the burger chain is counting on its premium menu to lure customers in a “very, very competitive” environment, Higa said.

“This is an aging society which has more single people who just want a meal fast, but restaurants are too expensive so fast food is the correct sector to be in,” Kyoichiro Shigemura, a Tokyo-based senior analyst at Nomura Holdings Inc., said by telephone today.

Wendy’s menu pits it against Japanese rivals including Mos Food Services Inc.’s Mos Burger in terms of taste and Lotteria Co., which has a 1,800 yen Matsuzaka beef burger, for premium items, Shigemura said. “The competition is really stiff,” he said.

Slowing Growth

Japan’s outlook for slow economic growth adds to the pressure on Wendy’s to find a new niche in the industry.

The Bank of Japan last week said the economy’s rebound from the March 11 earthquake has come to a pause, lowering its evaluation for a second straight month because of the local currency’s strength and a cooler global expansion.

McDonald’s Holdings Co. Japan forecasts sales of 304.5 billion yen this year, a third straight annual decline and 25 percent less than 2008 revenue.

“With the economic situation, you need to bring something that is unique and exciting,” Higa said. The “new fashion” of high-end fast food will give the chain what it needs to thrive, he said.

Wendy’s Japan is a joint venture between Wendy’s Co., which owns 49 percent, and closely held Higa Industries Co., with 51 percent.

Wendy’s intends to triple the number of restaurants outside the U.S. to about 1,000, Chief Executive Officer Emil Brolick said on a conference call last month, without giving a time frame.

--With assistance from Subramaniam Sharma in New Delhi and Shunichi Ozasa in Tokyo. Editors: Dave McCombs, Garry Smith

To contact the reporter on this story: Cheng Herng Shinn in Tokyo at hcheng52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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SAC’s Steve Cohen Is Said to Be Bidding for Los Angeles Dodgers

December 29, 2011, 6:15 AM EST By Katherine Burton

Dec. 28 (Bloomberg) -- Billionaire hedge-fund manager Steve Cohen is bidding for the Los Angeles Dodgers, according to a person familiar with the effort, his second try this year to buy at least a piece of a Major League Baseball team.

Cohen, 55, who runs the $14 billion SAC Capital Advisors LLC in Stamford, Connecticut, is working with Steve Greenberg, a managing director at Allen & Co., and has hired the architectural firm Populous to look at the possible renovation of Dodger stadium, said the person, who was granted anonymity because the sale process is confidential. He’s also met with sports agent Arn Tellem, the person said.

Tellem may end up running the team if Cohen is successful in his bid, according to the Los Angeles Times, which reported the story earlier.

Jonathan Gasthalter, a spokesman for Cohen, declined to comment. Tellem and Greenberg didn’t return e-mails seeking a comment. Executives of Kansas City, Missouri-based Populous, whose offices are closed for the holidays, couldn’t be reached.

Cohen isn’t the only bidder said to be eyeing the Dodgers. Guggenheim Partners Chief Executive Officer Mark Walter said this month than he was joining with Basketball Hal of Fame member Magic Johnson to bid for the team.

The Dodgers, who have won six World Series championships, filed for bankruptcy on June 27. Last month, Frank McCourt, the team’s owner, agreed to sell. Bids are due on Jan. 13. At the time of the bankruptcy, sports bankers said the Dodgers may fetch up to $1 billion.

Mets Bid

Cohen bid this year for a minority stake in the New York Mets. Another hedge-fund manager, David Einhorn of Greenlight Capital Inc., won the bid, but the two parties later walked away from the deal.

The Mets’ principal owners, Fred Wilpon and Saul Katz, are in a legal battle with the trustee in charge of recovering money for investors in Bernard Madoff’s Ponzi scheme. The team got a $25 million loan from Major League Baseball a year ago, and the New York Times said this month that the franchise received a $40 million bridge loan made available through Bank of America Corp.

The Mets lost $70 million in 2011, General Manager Sandy Alderson told reporters at baseball’s Winter Meetings this month.

--with reporting by Erik Matuszewski and Scott Soshnick in New York and Rob Gloster in San Francisco. Editors: Larry Siddons, Jay Beberman

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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Change Careers After 50 - 10 Tips for Success!

You Deserve the Team You Get

By G. Michael Maddock and Raphael Louis Viton

Whoa.

We have received thousands of comments, scores of e-mails, and a bunch of phone calls in response to our last two columns, Three Kinds of People to Fire Immediately and Three Types of People to Hire Today.

So, what are the takeaways?

The biggest one is this: Whether you are a happy or unhappy worker, a good or bad manager, an enlightened or naive leader, you deserve the team you get. Said differently, we all play a role in what our teams and companies become. We must choose to take control of the results or risk making ourselves victims of the situation.

Either way, we must live with the results of our choices. For some, this means complaining more; for others, it means leaving for another opportunity, and for others still, it means creating a different reality.

Your authors aspire to be creators and prefer to hire and inspire creators as well. If you’ve built a culture of innovation, we presume you agree and act in kind.

The next biggest insight was this: People want to create new products and services because it is rewarding, but it is one of the hardest things for a culture to do.

And what follows from that insight is this one: You want to make your company a safe place for everyone, because fear is the enemy of invention. To do that requires the right kind of colleagues.

More specifically, you want to hire people who:
1. Challenge themselves and everyone around them to co-create the best ideas. “Good enough” never is.

2. Have an entrepreneurial mindset. No, they don’t need to have started a company in their past or even have had a lemonade stand as a kid. Entrepreneurs—and people who think like them—love solving challenges. The tougher the better. The entrepreneurial mind leads to creation. It reveals opportunities where others see problems. Show us someone with an entrepreneurial bent, and we’ll show you a person who feels completely in control of his or her choices and the outcome.

3. Complement one another. An organization filled with right-brained, divergent people will probably come up with an endless string of new ideas but lack the discipline to carry them to fruition. A left-brain-dominated, convergent culture will execute well, but the quality of the ideas could be lacking. In our experience, the most innovative companies and the most enlightened leaders have found a balance that allows the team to identify and focus on the most important insights, create differentiated ideas to meet them, and execute the ideas with precision. Is your team in balance? How about your leadership style? Does it create imbalance?

And as team captain, you want to make sure you do those three things yourself. We cannot stress that enough.

And now, at the risk of triggering hate mail again, let us underscore whom you simply have to fire if innovation is your charge. When faced with any of the following three types of destructive and consistent behavior—and you have found it impossible to change the chosen mindset that produces it—say goodbye. Quickly.

But first a disclaimer: We hate letting people go. We think you should, too. A termination often indicates that the company has failed the person. So we agree with the many angry readers who have suggested that you must strive to hire only people with the right DNA and then surround them with managers who make them even better. Then and only then, do you fire them if they don’t improve.

Now on with whom you should terminate:

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Hedge-Fund Millionaire Diggle Bets on Farms, Life Sciences

December 28, 2011, 6:12 AM EST By Netty Ismail

(Updates with assets under management in ninth paragraph.)

Dec. 28 (Bloomberg) -- Stephen Diggle, who co-founded a hedge fund that made $2.7 billion in 2007 and 2008, plans to open his personal farmland portfolio to investors and start a fund that will trade life-sciences companies.

Diggle will transfer the farm assets from his family office to Singapore-based Vulpes Investment Management, which he set up in April after liquidating his previous firm’s volatility funds. Diggle’s family also holds “significant stakes” in life sciences, including biotechnology companies, which will be moved to a fund he plans to set up next year, the 47-year-old said.

“Everything that we are investing in personally is available to investors,” Diggle said in an interview. “We have got capital committed, we are focused on a number of things where we think there’s a compelling opportunity to make money.”

Diggle is widening his new firm’s investments after starting a volatility fund in May and taking over the Russian Opportunities Fund and Testudo Fund from Artradis Fund Management Pte, which he and co-founder Richard Magides closed in March. Once Singapore’s biggest hedge-fund manager, Artradis’s funds, which sought to profit from price swings, lost $700 million as volatility declined in 2009 and 2010.

“The one thing I didn’t want to do was to spend the rest of my life talking about how great 2008 was,” Diggle said. “You have to move on and find new challenges. That’s what gets you up in the morning.”

Volatility Cost

Vulpes, which focuses on alternative investments, started its long Asian volatility and arbitrage fund, LAVA, on May 1 with $30.5 million, of which $30 million was the founding partners’ money. The fund size has increased to about $50 million after some of Artradis’s former clients returned to invest Diggle. The fund has gained 6 percent since May, he said.

LAVA seeks to produce returns that aren’t correlated with the market by trading instruments that thrive on volatility, such as options, warrants, and convertible bonds. The fund uses strategies such as arbitraging or profiting from disparities in the price of similar securities simultaneously traded on more than one market, and tends to work well when markets go down.

“The cost of being long volatility on a daily basis as a buy and hold strategy is not going to make money in the next few years,” Diggle said. “You have to be more deft in your timing and more selective in what you own.”

Farmland Transfer

Diggle plans to transfer ownership of his farmland into a holding company, in which outside investors can hold shares, he said. Vulpes, which currently manages about $200 million, will own and operate the company. After buying farms in Uruguay and Illinois, as well as a kiwi-and-avocado orchard in New Zealand, he plans to pour money into Africa and eastern Europe as global food prices soar.

The value of farmland in the U.S. has probably gained 20 percent to 30 percent in the last two years, while Diggle’s investments in Uruguay may have risen 50 percent as sheep and cattle prices almost doubled in Latin America this year, he said.

Agriculture would be the “single most interest opportunity over the next 10 to 20 years,” Diggle said.

Vulpes favors investments in metals, energy and food, and “dislikes” government bonds, he said.

“Being long stuff in the ground is going to be a better place to be than holding pieces of paper,” Diggle said.

The firm’s Testudo Fund, which is heavily invested in precious metals and the mining industry, has gained 2.5 percent this year. The Russian Opportunities Fund has declined about 10 percent in the same period.

‘Biggest Risk’

Governments and their policies represent the biggest threat to investors, he said. “The biggest risk will come from governments: government interference in markets, government debt and government manufacturing of paper money to pay off the debt,” he said.

Diggle said he’s focusing on “new exciting commercially viable technology” in the life sciences industry that will find cures for illnesses including cancer and Parkinson’s disease.

“We certainly see a lot of interest by big pharma in small innovative biotechnology,” Diggle said. “If we can find those small new exciting biotechnology companies before big pharma gets to them, there’s a big uptick in terms of valuation if they can prove their work.”

--Editors: Linus Chua, Andreea Papuc

To contact the reporter on this story: Netty Ismail in Singapore nismail3@bloomberg.net.

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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Mizuho Mulls Buying Asia Investment Bank to Boost Fee Income

December 28, 2011, 4:50 AM EST By Takahiko Hyuga and Takako Taniguchi

(Updates closing share price in sixth paragraph.)

Dec. 28 (Bloomberg) -- Mizuho Financial Group Inc., Japan’s second-largest lender by assets, is considering buying an investment bank in Asia to help improve slow growth in winning equity and debt offerings in the region.

The lender’s expansion plans may also include allying with an investment bank, and purchasing asset managers and hedge funds in Singapore, India and Indonesia, Chief Executive Officer Yasuhiro Sato said in an interview. He also plans to increase the branches in Asia outside of Japan to 50 from 33 within five years for its corporate banking unit. Mizuho isn’t currently in talks with any banks for an acquisition or investment, he said.

Mizuho, ranked No. 22 in Asian equity underwriting this year, aims to tap corporate banking clients to boost fee income from advisory and underwriting as the domestic economy slows and loan demand slumps. The bank is yet to break into the top 10 for equity deals in the region since listing in the U.S. in 2006 in a bid to win more investment banking businesses.

“Our power to originate deals currently is still far from enough,” Sato, 59, said in an interview on Dec. 6. “We have to strengthen our capability in capital markets. It will be a big challenge to do it alone.”

Sato added he has no plan to sell Mizuho’s stake in Bank of America Corp., the second-largest U.S. lender by deposits, or add to its stake of BlackRock Inc., the world’s biggest asset manager.

Climbing the Ranks

Mizuho’s shares fell 1 percent to 103 yen at the 3 p.m. close of Tokyo Stock Exchange trading. The stock has lost 33 percent this year.

Mizuho sank to 22nd in equity underwriting this year, excluding self-led transactions, from No. 13 last year and jumped to Asia’s No. 5 bond underwriter this year from No. 7. The bank this year climbed to No. 11 in Asian merger and acquisition advising with deals valued at $44.6 billion, including a merger between Sumitomo Metal Industries Ltd. and Nippon Steel Corp. That compares with ranking 38th last year, data compiled by Bloomberg show.

The bank’s first-half profit fell 25 percent on “persistently sluggish” spending by Japanese companies, Sato said last month as he announced plans to cut 3,000 jobs. Fees and commissions had also declined.

Mizuho Securities Co., its investment banking unit, had a loss of 26.7 billion yen for the six months ended Sept. 30, compared with a profit of 6.4 billion yen a year earlier. The unit earlier this year hired Yasuo Agemura from Nomura Holdings Inc. as a managing director and head of its global markets business to help bolster its investment banking operations.

Business Abroad

Mizuho Financial’s net income for the six months ended Sept. 30 fell to 254.7 billion yen. It had 6.2 trillion yen of cash at that time, compared with 9.7 trillion yen at larger rival Mitsubishi UFJ Financial Group Inc. and 6.7 trillion yen at Sumitomo Mitsui Financial Group Inc.

Since signing a business partnership with India’s Tata Group earlier this year, Mizuho has arranged meetings for about 200 of its corporate clients with Tata-affiliated companies, Sato said. More than 20 Mizuho clients are now in talks for alliances with whose companies, possibly generating fees for the Tokyo-based bank, he said, declining to comment on the companies.

Mizuho Corporate Bank Ltd., which has 13 branches and offices in China, plans to increase them to 20 in four or five years, while it also plans to add offices in India, Turkey and Myanmar, the CEO said.

The bank in September agreed to buy a 15 percent stake in Joint-Stock Commercial Bank for Foreign Trade of Vietnam, the state-owned lender known as Vietcombank, for about $570 million. Vietcombank is the country’s fourth-biggest bank by assets.

BofA, BlackRock

Mizuho will also keep its stake in Bank of America, Sato said. The lender acquired the holding through its 2008 investment of $1.2 billion in Merrill Lynch & Co., before the New York-based investment bank was taken over by Bank of America.

Sato said in an interview on Feb. 8 that the bank would take time to determine whether to maintain its 0.3 percent stake in the U.S. bank or sell the shares. Since then, the stock has declined 62 percent.

Mizuho bought a 2 percent stake in BlackRock for $500 million in November 2010 to compete with larger rival Sumitomo Mitsui, which tied up with Barclays Plc in wealth management. In the February interview, Sato said he planned to leverage the stake to buy investment advisory firms in Asia with BlackRock.

--Editors: James Gunsalus, Chitra Somayaji

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Takako Taniguchi in Tokyo at ttaniguchi4@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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Careers After 50 - Build Your Career Options!

Wendy’s Adds $16 Foie Gras Burger in Second Bet on Japan

December 28, 2011, 3:54 AM EST By Cheng Herng Shinn

(Updates with analyst comments in eighth paragraph.)

Dec. 28 (Bloomberg) -- Wendy’s Co., the third-biggest U.S. fast-food chain, added goose-liver pate and truffles to burgers as it invests as much as $200 million on a return to Japan two years after leaving the country.

The Japan Premium sandwich sells for 1,280 yen ($16) at Wendy’s in Tokyo’s Omotesando luxury shopping district, the first of a targeted 100 shops. “We think the fast-food market here is ready for something different,” Ernest Higa, chief executive officer of Wendy’s Japan LLC, said in an interview at the restaurant’s opening yesterday.

Wendy’s is re-entering Japan under a plan to expand outside the U.S., where it got 92 percent of revenue in 2010, after posting losses in six of the past eight quarters. The Dublin, Ohio-based chain is focusing on the world’s second-biggest fast- food market first as it looks for operating partners in China and Brazil.

“Japan is the most important of the three to me, because we are actually selling burgers here today,” Darrell Van Ligten, international division president, said in an interview in Omotesando. The company expects to eventually expand to about 700 restaurants in Japan, compared with about 3,300 for McDonald’s Corp.’s local unit, the nation’s biggest fast-food burger chain.

Competitive Environment

Wendy’s ended a 30-year run in Japan in 2009 after its partner Zensho Holdings Co. declined to renew the agreement, saying it would focus on building its main Sukiya chain of beef- bowl restaurants.

“Our partner had a pretty significant business which was their primary focus,” Van Ligten said. “Given the size of the different businesses, Wendy’s wasn’t as much of a focus area as we would have liked it to be.”

In coming back to Japan, the burger chain is counting on its premium menu to lure customers in a “very, very competitive” environment, Higa said.

“This is an aging society which has more single people who just want a meal fast, but restaurants are too expensive so fast food is the correct sector to be in,” Kyoichiro Shigemura, a Tokyo-based senior analyst at Nomura Holdings Inc., said by telephone today.

Wendy’s menu pits it against Japanese rivals including Mos Food Services Inc.’s Mos Burger in terms of taste and Lotteria Co., which has a 1,800 yen Matsuzaka beef burger, for premium items, Shigemura said. “The competition is really stiff,” he said.

Slowing Growth

Japan’s outlook for slow economic growth adds to the pressure on Wendy’s to find a new niche in the industry.

The Bank of Japan last week said the economy’s rebound from the March 11 earthquake has come to a pause, lowering its evaluation for a second straight month because of the local currency’s strength and a cooler global expansion.

McDonald’s Holdings Co. Japan forecasts sales of 304.5 billion yen this year, a third straight annual decline and 25 percent less than 2008 revenue.

“With the economic situation, you need to bring something that is unique and exciting,” Higa said. The “new fashion” of high-end fast food will give the chain what it needs to thrive, he said.

Wendy’s Japan is a joint venture between Wendy’s Co., which owns 49 percent, and closely held Higa Industries Co., with 51 percent.

Wendy’s intends to triple the number of restaurants outside the U.S. to about 1,000, Chief Executive Officer Emil Brolick said on a conference call last month, without giving a time frame.

--With assistance from Subramaniam Sharma in New Delhi and Shunichi Ozasa in Tokyo. Editors: Dave McCombs, Garry Smith

To contact the reporter on this story: Cheng Herng Shinn in Tokyo at hcheng52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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Billionaire Ambanis Dance, Pray at Ancestral Home Signaling Thaw

December 28, 2011, 5:45 AM EST By Siddharth Philip, Ketaki Gokhale and Rakteem Katakey

Dec. 28 (Bloomberg) -- Billionaires Mukesh and Anil Ambani danced and prayed in their ancestral village on the eve of their father’s 80th birth anniversary in the strongest display of bonhomie since ending a feud that split the Reliance empire.

The brothers, who have a combined wealth of $28.5 billion and control the world’s biggest oil refining complex and India’s second-largest phone company, were seen together yesterday for the first time since they pledged harmony in May 2010. Today, they inaugurated a memorial to the late Dhirajlal Ambani at their family home in Chorwad in the western state of Gujarat.

Reliance Communications Ltd., controlled by 52 year-old Anil, climbed to a two-week high yesterday on speculation that improved sibling relations may help the company clinch a deal to lease telecom towers to Reliance Industries Ltd., run by Mukesh, 54. The elder Ambani’s group operates India’s biggest natural gas field while Anil needs the fuel for his power plants.

“It will matter to shareholders if it is a business reunion,” said Jagannadham Thunuguntla, chief strategist at SMC Wealth Management Services Ltd. in New Delhi. “That would be a huge positive rerating opportunity for Anil Ambani group stocks. From Reliance Industries’ perspective, it would be an opportunity to expand their dream of entering into telecom.”

When India’s second-largest business group split in 2005, Mukesh got the Reliance group’s petrochemicals, oil and gas units, while Anil took the power, financial services, telecommunications, and entertainment businesses. Both retained rights to the Reliance name.

Last year the brothers scrapped agreements that prevented them from competing in similar businesses.

Dandiya Dance

Mukesh Ambani and Anil today traveled in separate Mercedes- Benz cars to pray and have breakfast at the local Ambaji Mata temple after spending the previous evening performing the Dandiya, a traditional Gujarati folk dance, along with their wives, mother and sister, Bloomberg UTV showed.

Anil flew by helicopter this morning to offer prayers at the ancient Hindu temple of Somnath, Parimal Nathwani, group president for corporate affairs at Reliance Industries, said in an interview in Chorwad. Security arrangements in the village were managed by the officials from the company’s refinery complex at Jamnagar and 60 local volunteers, he said.

Share Performance

Reliance Industries shares fell 1.7 percent to 740.20 rupees at 3:14 p.m. in Mumbai, compared with the benchmark Sensitive Index’s 0.9 percent decline. Reliance Infrastructure Ltd., the Anil Ambani-controlled builder of a mass rapid transit system in Mumbai, dropped 2.8 percent to 359.2 rupees and Reliance Communications lost 1.1 percent to 71.80 rupees.

Shares of Reliance Industries have more than tripled in value since the brothers divided the family business in June 2005. Anil’s flagship Reliance Communications has slumped 76 percent since they started trading in 2006.

Chorwad, a coastal fishing village where Dhirajlal Ambani, known as Dhirubhai Ambani, grew up, lies 855 kilometers (530 miles) northwest by road from Mumbai, where Mukesh has built a skyscraper home. The building equipped with helipads and a movie theater cost $1 billion, according to Forbes.

Dhirubhai founded Reliance Commercial Corp. to trade spices and yarn in 1959, the year Anil was born, and built an empire with businesses ranging from textiles to petrochemicals. His two sons fought for control of the group after he died in 2002 without leaving a will. They split the family business three years later in a settlement brokered by their mother, Kokila Ambani.

‘Old Wounds’

In the following five years their battle over the price and supply of natural gas from Reliance Industries’ assets halted plans for a major north Indian power plant, while a merger between Anil’s Reliance Communications and South Africa’s MTN Group Ltd. was scuttled after Mukesh said he had the first right to buy shares in his brother’s company.

“It looks like they’ve reconciled to working together, and that could be the best thing for them individually,” said U.R. Bhat, managing director of Dalton Capital Advisors India Pvt. in Mumbai. “Old wounds can’t completely be healed, but they can be stitched. There’s a scar nevertheless.”

--With assistance from Abhay Singh and Mark Williams in New Delhi. Editors: Amit Prakash, Anand Krishnamoorthy

To contact the reporters on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net; Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editors responsible for this story: Amit Prakash at aprakash1@bloomberg.net; Arijit Ghosh at aghosh@bloomberg.net

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Hitachi Construction Says China First-Half Sales to Disappoint

December 26, 2011, 7:03 PM EST By Masumi Suga

Dec. 26 (Bloomberg) -- Hitachi Construction Machinery Co., Japan’s second-largest heavy-equipment maker, said Chinese demand for excavators will decline in the first half of next year as monetary tightening slows construction projects.

The sales downturn in China, the world’s biggest market for construction equipment, “will continue after the Lunar New Year” next month, Chief Executive Officer Michijiro Kikawa said in an interview at the company’s headquarters in Tokyo. “I had expected Chinese demand to come back sooner.”

Kikawa expects industry-wide sales of excavators in China to decrease by 30 percent in the year to March 31, compared with a forecast of a 20 percent decline two months ago. China will probably see no growth until June or July, Kikawa said.

Hitachi Construction Machinery gets as much as 40 percent of its annual sales in China in the first three months of the Lunar New Year, which starts on Jan. 23 next year. The company and competitors including Komatsu Ltd. are counting on coal and gas development projects in Indonesia and the U.S. and post- quake rebuilding in Japan for orders as Chinese demand slows.

Europe’s sovereign debt crisis also raises the threat of the turmoil spreading to Asia, Kikawa said. Europe’s woes “haven’t impacted demand for our machinery, though we’ll need to keep the risk in mind,” Kikawa said in the Dec. 22 interview.

China’s government has curbed lending and restricted home purchases to rein in inflation and asset bubbles. The government may next year start easing and increase spending on stimulus measures to boost the economy before the appointment of a new leadership, helping demand after mid-2012, Kikawa said.

Switching Focus

Hitachi Construction Machinery is focusing on mining- equipment, a market that’s less competitive than construction machinery because of the smaller number of makers, he said.

The company set a target to capture a 30 percent share of the global market for large mining trucks by 2018 to challenge Komatsu and Peoria, Illinois-based Caterpillar Inc. Hitachi Construction Machinery now has a 10 percent share for dump trucks that can carry at least 190 metric tons. It has a 40 percent market share in mining excavators weighing at least 190 tons.

Kikawa plans to boost annual capacity for mining excavators by 60 percent and three times for dump trucks by March 2014 at plants in Ibaraki prefecture, northeast of Tokyo. The expansion is part of a 187 billion yen ($2.4 billion) growth plan unveiled June 23.

Currency Forecast

Hitachi Construction Machinery rose 1.8 percent to 1,311 yen as of 9:02 on the Tokyo Stock Trading. The stock has fallen 33 percent this year, while the Nikkei 225 Stock Average is down almost 20 percent.

Kikawa forecast the Japanese currency will stay high next year in a range of between 75 yen and 80 yen to the dollar. The company will need to source more components outside Japan to counter currency strength that has domestic products more expensive overseas, he said. Purchases from other countries will probably account for 45 percent of procurement costs by March 2014, up from 35 percent now, he said.

“What measures can we take to to survive at these levels?” the CEO said. “We have no choice but to produce products in the regions where they are sold.”

Hitachi has also started using cheaper steel supplied by Chinese and South Korean mills to build excavators at home as it cuts costs, he said.

The yen, which rose to a postwar record on Oct. 31, traded at 78.09 yen per dollar as of 9:04 in Tokyo.

--Editor: Aaron Sheldrick

To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net

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