Chapter 640 Acquisition of Costco

Speaking of Larry Fink, the founder of BlackRock Group, he is a Jew born in California. After obtaining an MBA degree from the University of California, Larry Fink's first job was to join the well-known investment bank First Boston Bank.

During his time at First Boston Bank, Larry Fink created a new financial product, the installment mortgage bond (MBS), which laid the foundation for subsequent financial innovations - yes, the CDS that triggered the subprime mortgage crisis is a type of MBS, which was originally invented by Larry Fink...

1 Fink and Blackstone Group's founder Stephen Schwarzman founded Blackstone Financial Management, which later became BlackRock.

However, as the company developed, the differences between Blackstone and BlackRock gradually emerged.

In the end, Stephen Schwarzman cleared the cooperation with BlackRock at a price of US$240 million.

Since then, BlackRock has made great progress under the leadership of Larry Fink.

In fact, BlackRock Group also seized the opportunity in this subprime mortgage crisis and achieved explosive development.

From Bear Stearns to American International Group (AIG), BlackRock Group helped these companies, the U.S. Treasury Department and the Federal Reserve to deal with the "toxic" assets on these companies' books, analyze and liquidate them.

The reason why BlackRock Group, led by Larry Fink, was able to obtain this "big business" was not only because BlackRock Group, led by Larry Fink, had a deep understanding of this, but more importantly, their "Aladdin" system.

"Aladdin" stands for "Asset, Liability, Debt and Derivative Investment Network", which is an electronic platform with powerful data processing and analysis capabilities.

The platform was launched in 1988 and was initially only used internally by BlackRock.

Later, BlackRock discovered that the product had a huge market demand and began to sell it to the outside world in 1999.

During this subprime mortgage crisis, BlackRock Group used the "Aladdin" platform to effectively hedge risks and make profits, which was in sharp contrast to the heavy losses and even bankruptcy of Wall Street investment banks such as Lehman Brothers.

During this period, BlackRock used the "Aladdin" platform to quickly complete asset status analysis and formulate non-performing asset disposal plans for the U.S. Treasury, the Federal Reserve, and Wall Street giants such as JPMorgan Chase and American International Group. It also provided key consulting services to sovereign funds in Japan, Norway, and Singapore, and the results were widely recognized.

Baron knew that in the subsequent European debt crisis in 2009, the European Central Bank, the Irish and Greek governments all began to use "Aladdin" to deal with the crisis.

This system was widely adopted afterwards, and even BlackRock's "competitors" such as Vanguard Group, Blackstone Fund, and State Street Group had to buy and use it. It was called the "basic platform" in the financial field...

After this, BlackRock will obtain a management scale of more than 450 billion "non-performing" assets, and obtain 400 billion US dollars of capital credit from the U.S. government to solve larger-scale non-performing assets. After several years, the assets managed by this group will reach 10 trillion US dollars, becoming the world's largest asset management group.

It can be said that by that time, people's lives will be related to this group all the time...

Although Baron is also confident in DS Group, now, before the rise of BlackRock Group, exchanging equity with these future top capitals to deepen "friendship" is also acceptable to him.

Moreover, in addition to the fact that DS Group has completely become an asset management group, in the cooperation between the three parties, DS Group will not only accept one director from each other, but also send one director to each other, which can be regarded as restraining each other.

In addition, Baron has other gains.

Institutions such as Vanguard, BlackRock and State Street have agreed to sell their Costco shares to the consortium composed of Argos Retail Group and Caesar Fund - but they need to acquire them at a premium of 35% above the current share price.

Even so, due to the decline in Costco's share price, its acquisition price is much lower than when Baron was preparing to acquire Costco in June this year.

After continuing to absorb Costco's shares in the secondary market, if the acquisition of these institutional holdings is completed, Argos Retail Group's shareholding in Costco will exceed 50%.

Under such circumstances, Berkshire Hathaway finally gave in and was willing to sell their 45 million shares of Costco to them.

So far, Argos Retail Group has been able to launch a comprehensive acquisition of Costco and complete the offer of privatization and delisting.

They have been planning for the acquisition of Costco for a long time. After contacting the other party's management and promising to keep the management stable after the acquisition and not make too many adjustments, Costco's management also tends to be acquired by Argos Retail Group.

After all, everyone can see that DS Group is rich and powerful, and with its support, their future development plans must be guaranteed.

Therefore, the current acquisition of Costco only needs to wait for the approval of shareholders' votes and the approval of relevant regulatory agencies in the United States.

"I heard that you are also planning to acquire AIA, Your Highness."

As mentioned earlier, the relevant securities assets of American International Group were analyzed and liquidated by BlackRock Group. Especially after American International Group was taken over by the government, with the support of the Ministry of Finance and the Federal Reserve, BlackRock Group was deeply involved in the relevant assets of American International Group. Therefore, it is not surprising to know some of the internal affairs of the acquisition of AIA Insurance Company by Friendship Insurance Group owned by Barron.

"After all, they need funds to get through the difficulties, and I am also interested in AIA Insurance Company."

Barron smiled and said:

"In fact, I am also very interested in those "bad assets", Mr. Fink, but unfortunately, Paulson and others will not give us such things..."

"For these, we are more professional, and this is not an easy thing..."

Well, Barron just said this casually. After all, DS Group is British capital. Being able to intervene in the acquisition of some assets is already much more advantageous than Huaxia Capital.

As for the "preferential treatment" of local capital, it is purely imaginative...

Of course, he now has more advantages than Wall Street capital, that is, the trust of the local tycoons in the Middle East.

Previously, Badr, the president of Kuwait Investment Authority, represented several sovereign wealth funds and hoped to increase investment in DS Group's funds. The reason was that the money they invested in Wall Street was badly cheated in this subprime mortgage crisis.

Baron didn't care at first, as he was not short of funds now, but later he thought that if he didn't want it, the money would inevitably be invested in SoftBank, so he kept in touch with this matter.

If it was a profit-sharing type like the first phase of the Global Industrial Investment Fund, Baron didn't want to continue this form, not to mention that the funds of Kuwait Investment Authority and Saudi Public Investment Fund in the first phase of GII Fund had been withdrawn, and the remaining funds were merged into the second phase fund.

After the subprime mortgage crisis, these Middle Eastern tycoons now want stability, so they invested in the second phase of GII Fund in the form of fixed income... Well, with the dissolution of the first phase, there is no such thing as the first and second phases now, only the overall GII fund.

The first batch of these Middle Eastern sovereign wealth funds have invested a total of $10 billion, and they will continue to expand their investments in the future - they will slowly withdraw their investments in other places...mainly in the United States, and then invest them in the GII fund.