Merrill Lynch may get $5 billion Temasek injection in Singapore

[EV_Ares]

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) -- Merrill Lynch & Co is in advanced talks to receive a $5 billion cash infusion from Singapore's state investment company Temasek Holdings Ltd., becoming the latest among a number of blue chip Wall Street and European financial institutions to receive funding from Asian or Middle Eastern government funds in the wake of the ongoing turmoil in structured credit markets, according to a media report Friday.
Talks between the organizations are at an advanced stage, The Wall Street Journal reported in its online edition, citing a person with knowledge of the matter. See Wall Street Journal story (subscription required)
The Journal report said Temasek's board had given preliminary approval to the investment, although terms on how the multi-billion-dollar investment would be structured as well as timing and regulatory issues were still under negotiation.
A spokesman for Merrill Lynch (MER:Merrill Lynch & Co., Inc in Hong Kong declined to comment Friday. A media representative for Temasek in Singapore also declined to comment.

Talks between Temasek and Merrill are ongoing at a time analysts speculate the New York investment bank may book mortgage-related write downs of up to $8 billion in the fourth quarter, the Journal reported. A write down of that amount would reportedly lift Merrill's mortgage losses to $15.9 billion in the second half of 2007, propelling it to the top of charts in terms of having absorbed the most mortgage-asset losses among Wall Street banks.
Analysts reportedly said a capital injection alone or in conjunction with an asset sale could help Merrill soften the impact of the write-offs on its capital base.

"There's a greater pool of cash, and a greater interest in getting this cash invested."
— Chris Lobello, a risk and trading strategist at CLSA Asia-Pacific Markets
Analysts in Hong Kong said capital flows from Asia and other emerging markets are a growing trend as nations seek to recycle surplus cash to productive investments.

"Asia with its growing pool of investable money and growing demographic push is going to need to invest more and put money elsewhere, and now that various companies and countries are in trouble, this is a great time to go swooping in and picking some of those things up," said Chris Lobello, a risk and trading strategist at CLSA Asia-Pacific Markets in Hong Kong.
"In short there's a greater pool of cash, and a greater interest in getting this cash invested."
Singapore's potential investment in Merrill marks the latest acquisition spree by state-controlled investment funds in Asia and the Middle East since the subprime meltdown in August.
Earlier in December the city-state's sovereign wealth fund Government of Singapore Investment Corporation invested nearly $10 billion to help recapitalize UBS along with additional funds from an unidentified investor.
The Financial Times reported Friday the unidentified Middle Eastern investor channeling $1.73 billion into Swiss bank UBS is from Saudi Arabia. The report citing an unidentified figure with knowledge of the negotiations said investors could include the Saudi royal family, with Price Sultan, the nation's defense minister, involved in the deal.
Other deals
In the past week, Morgan Stanley announced it would sell about $5 billion in equity units convertible into common stocks, equivalent to a 9.9% stake, to China's sovereign wealth fund China Investment Corp. The investment was the second foray by China's sovereign wealth fund into the U.S. since paying $3 billion for a 9.3% stake in the initial public offering of Blackstone Group LP In November Citigroup received a $7.5 billion investment from the Abu Dhabi Investment Authority.
Also that month China's second-largest life insurer Ping An Insurance (HK:2318: news, chart, profile) paid $2.7 billion for a 4.2% stake in Belgo-Dutch banking and insurance group Fortis, a move that made it the largest single shareholder.
Earlier in the autumn, China's largest listed brokerage Citic Securities stuck a cross investment alliance with Bear Stearns that saw the Chinese firm take a 6% stake in the Wall Street firm with an option to increase that stake to 9.9%. Under the deal, Bear Stearns received a 2% stake in the Chinese firm and has the option to lift its stake by a further three percentage points.
In July U.K banking group Barclays (UK:BARC: news, chart, profile) (BCS:Barclays PLC agreeded to sell a stake to Temasek and China's state-controlled China Development Bank.

Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
http://www.marketwatch.com/news/story/merrill-lynch-may-get-5/story.aspx?guid=F3906A10-1437-4193-BB1F-428A4053A0C8&dist=SecEditorsPicks
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[rocktivity]

1. Five billion dollars for ONE injection?

Big pharma has GOT to be brought back under regulation!

:crazy:
rocknation