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  • Overseas investments in American companies

    As Kamuelakea noted in the mortgage mayhem thread, the Chinese are buying up a lot of paper from us because they have all these excess US dollars due to the trade imbalance with that country.

    Other foreign governments/companies are also buying up more and more shares of American private equity companies. One of the latest (and of direct interest to Hawai'i consumers) is the owners of Hawai'i Tel, Carlyle, has just sold a "silent partner" 7.5 percent stake to an investment firm owned by the government of Abu Dhabi.

    The $1.35 billion sale to Mubadala Development is only the second time the Washington firm has allowed an outsider to buy into its highly profitable partnership. Carlyle sold a 5.5 percent stake to the California Public Employees' Retirement System (Calpers) in 2001 for $175 million.

    The Mubadala investment values the privately held Carlyle at $20 billion. That is about six times the partnership's value when it sold the stake to Calpers.

    Abu Dhabi is one of the seven oil-rich emirates that make up the United Arab Emirates, which has been looking for ways to invest the cash it is generating from a steady rise in oil prices. Some of the countries once sought to buy assets outright, but after the outcry over a bid to take over management of a U.S. ports operator, many have pursued less-visible strategic investments with key firms.

    ...The transaction is the latest in a series of moves by the private-equity giants to seek sources of capital. The Chinese government recently bought a $3 billion stake in Blackstone Group, which went public this summer.

    ...Carlyle has long taken on Middle Eastern investors in its funds, including the Abu Dhabi government, and made headlines when it bought out the bin Laden family's interest after the Sept. 11, 2001, terrorist attacks.

    Before yesterday's announcement, Carlyle's 60 partners owned close to 95 percent of the company's shares, and Calpers owned the rest. But both allowed the value of those shares to be reduced to make room for the Abu Dhabi investment, according to a Carlyle source who spoke on condition of anonymity because the source was not authorized to speak about specifics. A Carlyle statement said the Mubadala deal includes "value-related protective rights," which protects the company if the value of its investment falls below $20 billion.
    Miulang
    "Americans believe in three freedoms. Freedom of speech; freedom of religion; and the freedom to deny the other two to folks they don`t like.” --Mark Twain

  • #2
    Re: Overseas investments in American companies

    It's an interesting issue, and I am not sure how I feel about it. May I ask why you're commenting on it here?
    But I'm disturbed! I'm depressed! I'm inadequate! I GOT IT ALL! (George Costanza)
    GrouchyTeacher.com

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    • #3
      Re: Overseas investments in American companies

      Oops. Just "oops." Move along...

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      • #4
        Re: Overseas investments in American companies

        This subject is an important one with Dubai being in the news again! Pisses me off that we are letting them invest in Nasdaq! TWENTY percent is what they now, or soon will own. No, doesn't make sense, but then China owns the personal computer part of IBM....why is this even fornicating LEGAL?! Wouldn't be if I could run things, LOL I know how dumb that sounds but just being elementary here. It just does not make sense in any right and just way to allow other countries to OWN parts of ours.

        Dubai is also buying into the Carlyle Group. Don't they own our goofy phone company? Anyway, again....this news is unsettling and just so wrong that I bet a school age child could see the injustice of it. Only Americans should be able to "own America."
        Stop being lost in thought where our problems thrive.~

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        • #5
          Re: Overseas investments in American companies

          I'm no child, but what about other forms of property? Should only Americans own land in America? Should only Americans be able to offer their services for money? It seems to me that there are a lot of benefits to allowing overseas money into this country. I just want to know where you'd draw the line so that we have a launching-point for continuing the discussion without resorting to name-calling.
          But I'm disturbed! I'm depressed! I'm inadequate! I GOT IT ALL! (George Costanza)
          GrouchyTeacher.com

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          • #6
            Re: Overseas investments in American companies

            Owning property does not usually have the power to affect millions if not hundreds of millions of us. China is no friend, and they own a huge division of IBM? It just isn't right.....it's stupid and dumb. Let's say we have a neighbor on our block that's harassed us, always given us the stink eye, challenged us in many ways and clearly doesn't have our best interest at heart and we know it. We would never allow them any power to affect our lives in any way.

            This is in a very simplistic way what we do when we allow China, Dubai and god knows what other unfriendly countries....OWN part of our huge corporations.....in my opinion, of course, yeah and you can tell this is a hotbutton issue for me, but know that as I reply yet again I am not trying to shout down your beliefs on the issue, and thanks.

            Oh! where I would draw the line...well, I draw as simple of lines as possible...yet knowing there are "gray areas" in life of course. I think....haven't thought your question out, so forgive me as I ramble in pondering what I think I might determine as "the line" to be drawn....

            I think letting someone own rental property.....maybe fine. Letting someone own our utilities, dumb and stupid...Dubai owning the port security that was news back whenver...dumb and stupid. Let China own the company that controls all of our port security?? VERY INSANE....hmmm.....I don't see any wisdom in letting China own part of IBM....a huge part, no way.

            No, our enemies should never be given the power to "affect" our inborder security, health or welfare. Does not make sense. If so....well, hand a house key of yours to one of your neighbors that trust the least...being rhetorical of course.
            Last edited by Karen; September 20, 2007, 06:50 PM.
            Stop being lost in thought where our problems thrive.~

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            • #7
              Re: Overseas investments in American companies

              Let's just say that the worm has turned. Used to be that we were so rich that American investors were buying up foreign companies. Now, they're buying us up. Is that fair? Depends on which end of the stick you hold, I guess.

              The scary thing is that if we piss off enough of those foreign investors, they could call in all their chips and cause one humungous recession for us.
              We have two choices: either allow this inflow (and influence) of foreign cash to continue at its current pace or control the amounts that are allowed. America was born as a country that was self-sufficient. Now, we are an importer, not an exporter, of most goods. We consume rather than produce. We want cheap things and are willing to let good paying jobs flow overseas. At some point, we will have to pay the piper.

              Toys are one example. Toy manufacturers are saying that if Americans now want safe toys from China, they had better be prepared to pay at least 10% more. To a parent, paying 10% more for a Barbie is worth it if s/he can be assured that there's no lead or other toxic substance included in that toy. In other words, cheaper does not equate to being safer or better.

              Regarding foreign ownership of US property, I think we should take a page from many other countries which require establishing citizenship as a prerequisite for land ownership. Look at Costa Rica, for example. It has a growing American expat community because of its low cost of living.

              It is necessary to qualify for and establish legal residency if one plans to live in Costa Rica for an extended period of time. To this end, Costa Rica offers several alternatives for legal residency: a pensionado (pensioner), a rentista (a foreigner with a guaranteed income), an investor, a relative of a resident, or one with a foreign government assigment or an international mission (Lawrence Publication, 1995).

              The pensionados and rentistas program has historically been the easiest method of establishing temporary residency in Costa Rica. Keep in mind when receiving advice from current pensionados and rentistas who have been residing in Costa Rica since before 1992, that the laws governing such residency status have changed. In 1992, the legislature revoked the tax exemption laws that allowed pensionados and rentistas to bring all of their possessions into the country duty free. Under the current law, these groups are no longer exempt and must pay import taxes of up to 100 percent on their belongings.

              To quality for the pensionado status, one must fulfill three basic requirements: (1) prove that one eams at least $600.00 per month from a qualified pension or retirement account or from Social Security, (2) change at least $500.00 per month into colones, and (3) live in Costa Rica for at least four months out of the year. In order to quality for rentista status, one must fulfill three similar requirements: (1) prove that one has outside investments that will guarantee $1,000.00 income per month for five years, (2) change at least $1,000.00 a month into colones, and (3) live in Costa Rica for at lease six months out of the year. Neither pensionados nor rentistas pay taxes on money eamed outside of Costa Rica.

              Pensionados and rentistas have restrictions as well as rights in Costa Rica. While either may set up their own business, as discussed below under the investor classification, neither may work for someone else. Individuals of either residency status must first become permanent residents in order to obtain a work permit.

              The investor status is granted to those who invest at least $50,000 in special projecs such as reforestation, tourism and exports, or who invest at least $200,000 in any other business. The investor must also reside in Costa Rica for at least six months out of the year. If there are no problems, the investor may become a permanent resident in two years.

              Miulang
              Last edited by Miulang; September 20, 2007, 07:36 PM.
              "Americans believe in three freedoms. Freedom of speech; freedom of religion; and the freedom to deny the other two to folks they don`t like.” --Mark Twain

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              • #8
                Re: Overseas investments in American companies

                This is the NASDAQ/Dubai deal that Karen alluded to. They want 20% of that exchange. Having a Middle Eastern country (no matter how "friendly" it may appear on the surface) controlling 20% of an American stock exchange gives me the willies. It's bad enough that they already might own shares in many of the companies that trade on that exchange (a large number of which are tech stocks).

                Miulang
                "Americans believe in three freedoms. Freedom of speech; freedom of religion; and the freedom to deny the other two to folks they don`t like.” --Mark Twain

                Comment

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