Chapter 584 British Energy Group

By the end of January, Merrill Lynch was seeking capital injection again.

According to the announcement released by Merrill Lynch, in order to alleviate the "anemia" caused by the huge losses related to subprime mortgages, they were preparing to issue preferred shares worth $6.6 billion to a group of investors, including three powerful Asian investors, Korea Investment Corporation (KIC), Kuwait Investment Authority and Mizuho Corporate Bank under Japan's Mizuho Financial Group.

Prior to this, Merrill Lynch had announced that it had written off $8.4 billion in losses related to mortgage business in the third quarter, and the outside world expected that similar losses would be written off in the fourth quarter.

At the end of last year, Caesar Fund under DS Group invested $5 billion in Merrill Lynch and acquired 9.9% of their shares.

In addition, with the $1.2 billion investment from Davis Select Advisors, Merrill Lynch received a total of $6.2 billion in capital injection at that time - in addition, they also sold most of their commercial financing business to British Motor Group for $1.2 billion.

Just one month later, Merrill Lynch needed another $6.6 billion in funds, which also shows how serious their losses were in the subprime mortgage crisis.

According to the Wall Street Journal, John Thain, the new chairman and CEO of Merrill Lynch, said that one of his main tasks in the past few weeks has been to ensure Merrill Lynch's strong financial position, and this transaction will ensure that Merrill Lynch has sufficient capital.

These Merrill Lynch shares will be sold mainly to South Korea Investment Corporation, Kuwait Investment Authority and Mizuho Corporate Bank under Mizuho Financial Group of Japan - the first two are government-controlled investment funds.

The issue price of this batch of shares is US$52.40 per share, which is equivalent to the average closing price of Merrill Lynch shares in the three days before last Friday, and the dividend is 9% per year.

A month ago, when Caesars Fund invested in Merrill Lynch, the corresponding issue price of Merrill Lynch's new shares was still US$48. Now it has risen to US$52.4, which did not make them too "sucker"...

It is worth mentioning that among the major banks in Japan, Mizuho suffered the biggest loss in the previous subprime mortgage crisis.

Even so, the company's losses from investing in risky mortgage securities in the six months to the end of September last year were only $630 million, much less than some Western banks that have lost billions of dollars - but Mizuho also said that losses may increase.

Mizuho Corporate Bank, a subsidiary of Mizuho Financial Group, is the second largest commercial bank in Japan by market value, second only to Mitsubishi Tokyo UFJ Financial Group.

Well, they are also on the short list of IE Fund and Rich23 Fund under Tianhe Capital...

In addition, South Korea established KIC (Korea Investment Corporation) in mid-2005 to use some of the excess reserves of the South Korean central bank for more proactive investment projects that the central bank is not allowed to engage in according to regulations.

As of the end of 2007, the company managed assets of $20 billion, of which $14.8 billion had been used for investment.

Two months ago, the South Korean government allowed KIC to invest in emerging markets and announced that it would allocate $10 billion from a foreign exchange stabilization fund to the institution for management in early 2008.

As for the Kuwait Investment Authority, it is Barron's "old friend". Among the many investment funds controlled by the governments of Middle Eastern countries, KIA (Kuwait Investment Authority) is the oldest and most experienced one, with assets under their control exceeding US$200 billion. At the same time, KIA has invested in Western companies for decades, but before that they adjusted their investment strategy and began to get involved in other investments and private equity transactions.

This also includes investments in various funds under the DS Group.

…

In early February, Barron and his party returned to London, and a personal assistant Zhang Junning was added to the entourage.

It must be said that returning from warm Australia to London in winter does require some adaptation. On the way home by car, they could still see the scene of snow, as if they had traveled from summer to winter immediately.

Barron met with Brown as soon as he returned to London.

"The sale of British Energy requires comprehensive consideration of more aspects, Your Highness, after all, EDF and Centric Group each have their own advantages..."

Barron did not react much to the words of the Prime Minister in front of him, but said lightly:

"We already hold 8% of British Energy Group's shares, which is one of the company's major shareholders. After the acquisition, United Energy Group will be able to promote the use of clean energy, shut down coal-fired power plants, and increase the number of natural gas power plants. Prime Minister, I need your support in this regard, and I don't think it is a good idea to hand over all our nuclear power plants to the French."

Yes, the main purpose of his return this time is to help United Energy Group win the bid for British Energy Group, so as to increase the power generation business for United Energy Group.

British Energy Group is the largest nuclear power company in the UK, with 8 nuclear power plants and 1 thermal power plant under its umbrella. The British government holds 35% of British Energy Company's shares and is the company's largest shareholder. Therefore, for this acquisition of British Energy Group by United Energy Group, the government's intention is still very important.

Prior to this, the British government set the deadline for the sale of British Energy Group's shares at the end of May, so before this, United Energy Group needs to try its best to obtain government support.

At this time, United Energy Group has bought 8% of British Energy Group's shares from British Energy Group's major shareholder, Invesco Fund (INVESCO-PERPETUAL).

Their main competitors for this acquisition include Electricité de France and Centric Group.

Among them, Electricité de France is the most enthusiastic - the world's most advanced third-generation nuclear power technology currently includes the AP1000 of the American Westinghouse Consortium and the ERP technology of Areva in France. The competition between these two technical routes is relatively fierce.

What Electricité de France has is Areva's ERP technology. If it takes over British Energy Group, it will be able to gain a larger market for Areva's ERP technology.

The French government currently holds more than 80% of the shares of Electricité de France - they hope to use these power stations under the British Energy Group as their bridgehead, so as to build four new nuclear power plants in the UK by using the technology of the French AREVA Group.

For the British side, not only can the disposal of their shares in the British Energy Group bring billions of pounds of income, but the situation of energy shortage in the UK is becoming more and more obvious, and they also hope to alleviate it by building new nuclear power plants.

"We don't have to use French technology, Prime Minister, I can also cooperate with the Westinghouse consortium to build a new third-generation nuclear power plant with the best technology in the UK."

Behind the Westinghouse consortium is American capital. Of course, Barron does not really want to cooperate with the other party. This is just a means.

Before this, Electricité de France had a considerable share of the British power grid business - they already occupied more than 30% of the British power network, which is also the field that United Energy Group hopes to enter.

It is worth mentioning that the national grid business that Li Chaoren will buy in the UK in the future will be bought from Electricité de France.