* Macrovision will sell TV Guide to Lionsgate for $255 mln

President George W. Bush cut taxes by $581 billion through 2005, part of what was sold as a $1.35 trillion, 10-year plan in 2001. President-elect Barack Obama looks set to change all that. Ok, maybe not. He is said to be considering $300 billion of tax cuts, the first half of an expected $775 billion, two-year stimulus plan.

With tax cuts the stimulant of choice for presidents seeking to boost the economy, Deal Journal decided to talk with Steve Gordon, the head of the tax practice at white-shoe Wall Street law firm Cravath Swaine & Moore, to discuss a topic that everyone wants to avoid–until it affects them.

Deal Journal: When the credit crisis started in the summer of 2007, one of the first proposals to emerge in political circles was the issue of taxes–particularly, taxes on private-equity funds, which Washington wanted to increase. but as the debate about taxes intensified, it has become friendlier to corporate interests.
Steve Gordon: I think the discussion initially was in respect to raising taxes on the sponsors of the funds, on the fund managers. One issue was the income that many managers were receiving was taxed at long-term capital gains rates, which are far lower than normal income rates–15% compared to 35%. The other was that the fund managers did not have to pay tax on their share currently. They could defer tax on their share of the funds through foreign entities. The conversation centers around the fund managers. That is, among this new Congress, clearly going to be an area of continued contention. I think the new Congress will take up both of those proposals again. I don’t think the opponents of these measures [the private-equity firms and hedge funds] are going to get a lot of traction with the Obama administration. I think the chance that something will be done is high. It will look like a tax increase, but I think it will be regarded as loophole-closing rather than a tax increase because it’s focused on a very specific, narrow, anomalous situation.

Deal Journal: In the fall and winter, the IRS and Treasury allowed auto companies and acquirers of banks to use the financial losses accrued by their targets to offset taxes in something called “the Wells Fargo ruling,” because it helped induce Wells Fargo to buy loss-plagued Wachovia. It was a controversial change. Will it be rolled back at all?
Gordon: The Treasury has actually issued four different notices this fall that have the effect of insulating companies from section 382, the section of the tax code that allows a company to use a limited amount of a target’s net operating losses to offset income after an acquisition.

The first thing the Treasury did was exempt Fannie Mae and Freddie Mac from the application from Section 382. The other thing is Notice 2000-83. In that notice, the Treasury and IRS said that the normal Section 382 restrictions on the ability of a bank to get money on its unrealized losses can be suspended. [Deal Journal explained the controversy around Section 382 tax breaks here.] There are a number of things that are interesting about that. One is that no one really knows how much of a tax benefit that really is. The suspension of 382 applies to net unrealized losses, so unrealized losses minus unrealized gains. You can easily tell unrealized losses, but it’s difficult to tell how much banks might have in unrealized gains. The real tax break is going to be a lot smaller than people first thought. Interestingly, there has been a lot of furor about this but no one really has the idea of the scope of the actual tax break.

There’s also been a lot of discussion in Congress about whether Treasury even had the right to suspend 382 in this way, because it’s part of a statute passed by Congress. There’s an argument that the original bailout legislation gives Treasury and IRS the requisite authority, but a lot of people in Congress don’t believe that’s true. There has been legislation to stop that rollback. [Deal Journal wrote about that legislation, H.R. 3700, here.] My guess is that legislation will be reintroduced in Congress.

Deal Journal: What about this potential Obama tax legislation? What does that add to the mix?
Steve Gordon: The proposal would allow net operating losses in 2008 and 2009 to be carried back five years, instead of two years, which is the current law. What that means is that it would allow companies who were profitable in 2003 to 2007 to get refunds for those years if the companies also record losses in 2008 and 2008. It is precisely like the legislation in 2001, in the wake of the Internet bust, in which the Bush Administration had Congress change the carryback period for net operating losses from two years to five years. It was a two-year temporary measure, and it lapsed. Starting with losses incurred in 2002, we went back to the two-year rule. The Obama plan is only a benefit for companies that paid taxes in those years. For companies that were start-ups or distressed and didn’t pay taxes in 2003, 2004 and 2005, there’s no benefit here.

Deal Journal: What are some of the other times when the government used tax breaks as a stimulus?
Steve Gordon: There are constant changes in the tax code designed to stimulate investment and the like. There have been two in this administration. One was the change in 2001. Another good example was in the Jobs Creation Act of 2004. There was a proposal that allowed U.S. companies that had built up lots of cash in their foreign subsidiaries to bring back that cash at a low tax rate, provided that the repatriated money was used for more things that were designed to create jobs. Tens of billions of dollars of cash were brought back for the ostensible purpose of job creation. There’s a lot of discussion in the academic literature about how effective a stimulation that was.

Deal Journal: What was the impact on the M&A market of all these tax changes?
Steve Gordon: The 2001 and 2004 changes didn’t have an obvious impact on the M&A market. But the stimulus changes we’re seeing right now that Treasury put in–Notice 2000-83–has to facilitate M&A activity. Why? Because Section 382 is only useful when a company with net operating losses is acquired. That has to some degree stimulate M&A with target companies with losses. Parsing out how much it will affect M&A is hard. To do an acquisition, you still have to borrow money, and borrowing money has been a problem. There are other forces at work in the M&A market right now, so it is hard to separate what the effect of the Treasury notice will be. There’s no doubt in my mind, however, that it makes a target company more valuable and more willing to undergo a change in control.

Deal Journal: How would you characterize the current state of the tax laws? Would you call this a positive or negative tax environment?
Steve Gordon: By and large, the state of the tax law hasn’t changed. I don’t think the current credit crisis changes our perspective on whether the tax regime is good for business or bad for business. Our tax rate on corporate profit is 35%, which is high relative to other countries. There is a lot of discussion among companies about whether our high corporate tax rate puts our companies us at a disadvantage compared to other countries.

HONG KONG, Jan 6 (Reuters) - GSR Ventures, a China partner of U.S. venture capital specialist Mayfield Fund, said on Tuesday that it had raised $383 million for a new fund to focus on investing in Chinese technology companies.

NEW YORK, Jan 5 (Reuters) - Endo Pharmaceuticals Inc said on Monday it will buy Indevus Pharmaceuticals Inc for about $370 million, or $4.50 per share, in a deal that will enable Endo to expand its product line beyond pain treatments.

BOSTON, Jan 5 (Reuters) - Affiliated Managers Group (AMG) , a U.S. holding company for asset managers, has agreed with smaller rival Harding Loevner LLC to postpone a deal to acquire it, citing tough markets.

SAN FRANCISCO, Jan 5 (Reuters) - Venture capitalists, the traditional engine of starting up firms in Silicon Valley, saw their initial public offerings (IPOs) sputter to a halt in the last three months of 2008, two surveys revealed on Monday.

CHICAGO, Jan 5 (Reuters) - Mattel Inc's Fisher-Price brand signed a multi-year deal as the global toy licensee for HIT Entertainment's Thomas & Friends train product line, in a move to boost sales globally, the companies said on Monday.

So is the U.S. heading toward another Great Depression?

Economist Paul Krugman certainly thinks the country is moving quickly in that direction. Unless, of course, the government acts “swiftly and boldly.”

And by “swiftly and boldly,” Krugman means massive government spending to fight mass unemployment, not more monetary policy.

“Under Mr. Bernanke’s leadership, the Fed has been supplying liquidity like an engine crew trying to put out a five-alarm fire, and the money supply has been rising rapidly. Yet credit remains scarce, and the economy is still in free fall.…Friedman’s claim that monetary policy could have prevented the Great Depression was an attempt to refute the analysis of John Maynard Keynes, who argued that monetary policy is ineffective under depression conditions and that fiscal policy—large-scale deficit spending by the government—is needed to fight mass unemployment. The failure of monetary policy in the current crisis shows that Keynes had it right the first time. And Keynesian thinking lies behind Mr. Obama’s plans to rescue the economy.”

The problem is the government might blow it, thanks to a desire for bi-partisanship. (The WSJ reported today that President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.)

Joe Weisenthal over at ClusterStock has a question for Krugman and others, who are calling for an increase in government spending: “If government were the answer to preventing recessions, why are we in a recession in the first place? Government has been on a big spending jag for the past several years.”

To let fail or not to let fail?

Economist Anna Schwartz had warned that not allowing banks and financial firms that had brought themselves to the brink to fail was a recipe for economic disaster, writes ClusterStock’s John Carney. And up until a fateful weekend in September the federal government had followed her recipe. But since then it has taken a “no failure” approach. What happened? Carney offers this answer up:

“It strikes us that the problem was just an awful combination of special interest politics and a failure of nerve.”

Tidbits

• From Time: “Madoff never even came close to realizing the gains he reported and paid out to some investors. Yet even funds with fairly accurate estimates of unrealized gains are guilty of engaging in similar Ponzi practices in the short term.”

• While bank robbers are getting busier, the Madoffs of the world are starting to get caught, writes James Surowiecki.

• Paying bankers is still a problem from hell, writes Carney.

• Is Anheuser-Busch InBev poised to rebound? Chad Brand of Peridot Capital Management thinks so.

• Waterford Wedgwood has called in the receivers, reports Reuters’s DealZone. Meanwhile, a string of bankruptcies has hit U.K. retailers, writes Dealscape.

• In the spirit of holiday fun peHUB’s Erin Griffith translates PE speak.

• From footnoted.org: And the footnote of the year goes to…A. Schulman’s fishing camp disclosure.

• The Epicurean Dealmaker’s top posts of 2008.

FRANKFURT, Jan 5 (Reuters) - Dresdner Bank parent Allianz and Commerzbank are in talks with the German government over state aid for Dresdner Bank, a German newspaper reported, citing financial sources.

NEW YORK, Jan 5 (Reuters) - Prices of private equity assets sold in the secondary market have slumped to the lowest level recorded in three years of compiling data, a report by advisory firm Cogent Partners said on Monday.

Private-equity firms are getting clever again.

After paying billions of dollars in 2006 and 2007 for deals that many considered overvalued and that burdened the targets with too much debt, private-equity firms have before them a potential feast of cheap assets that could be acquired, rolled together and eventually sold for big profits.

There is just one problem. These cheap assets are banks–and federal laws prohibit any company or investor except a bank from owning more than 10% of a deposit-taking bank. And yet, some buyout funds are proceeding, finding ways meant to comply with the letter–if not exactly the spirit–of the federal ownership laws.

The latest exhibit: This weekend, a group of seven private equity firms led by Dune Capital bought the carcass of failed Pasadena, Calif., mortgage lender IndyMac. The private-equity firms plan to rebuild it and use it as a platform to acquire other financial institutions, while overhauling IndyMac’s business model to steer clear of risky subprime mortgage loans. Because each of the firms are pitching in some money, no one firm owns more than 10% of IndyMac, thus appeasing federal regulators.

Similarly, in August, private-equity investor J. Christopher Flowers, a veteran of Goldman Sachs Group’s financial-institutions group, bought a little bank in Missouri called First Cainsville Bank. The bank, with $14 million in assets and just two branches, probably wouldn’t normally be considered worthy of the attention of a financial sophisticate like Flowers, who kicked the tires at such massive potential M&A targets as Bear Stearns, American International Group and Washington Mutual and advised on Bank of America’s acquisition of Merrill Lynch. But Flowers saw the Cainsville acquisition as a way to get a foothold into the banking business and make it easier to buy other banks. And instead of buying the bank as part of his private-equity firm, J.C. Flowers, he bought it under his own name, overhauled the board of directors and informed the Office of the Comptroller of the Currency of his plan to make more acquisitions.

Federal regulators have been amenable to such solutions thus far. Perhaps that has something to do with the fact that roughly 25 banks have already failed, and more are expected.

The benefit to the private-equity firms of participating in federal auctions for failed banks is the chance to own cheap assets and gain a toehold in the rapidly consolidating banking industry, which they know well. Private-equity firms plowed $23 billion of capital into financial-services deals in 2008, and that is down 69% decrease from the $74 billion of 2007, according to data from Freeman & Co.

Meantime, the federal government gets a known quantity: private-equity firms that are experienced players in financial services. This is something of an echo of the late 1980s and early 1990s, when some private-equity firms snapped up assets from the government’s Resolution Trust Corp. amid the savings & loan crisis. They are also willing buyers, which is no small comfort to the government. Federal regulators looked for a buyer for IndyMac for five months before finally handing it over to a private-equity consortium.

Still, in taking over banks, private-equity firms are entering somewhat complicated contracts to accept federal bank regulators as highly involved overlords, something not all PE firms have been willing to do. Blackstone Group abandoned its proposed $6 billion acquisition of Alliance Data Systems–which owned a bank–arguing that it wouldn’t be able to meeting the changing requirements of federal regulators. In addition, some banks are allowed to choose their regulator, which creates a confusing drama of regulatory competition. IndyMac, for instance, chose the Office of Thrift Supervision, which ended up looking the other way at the lender’s financial troubles.

Success isn’t, of course, guaranteed. Investment fund Corsair did nicely on its investment in National City, but TPG was hardly as lucky with its ill-fated investment in Washington Mutual, which was nearly wiped out entirely when WaMu was seized by regulators.

Josh Beckerman and Jennifer Rossa of Private Equity Analyst, look at one of the more notable ripples of the global financial crisis. Though at times, it seemed more deals didn’t get done than did in 2008 - although maybe it was just the never-ending story flow on two deals in particular, BCE Inc. and Huntsman Corp., that made it feel that way. Herein, relive all the pain one last time. Private Equity Analyst is a Dow Jones publication and a contributor to Deal Journal.

PHH Corp.
Deal announced 3/15/07; terminated 1/1/08
At 12:18 AM on Jan. 1, 2008, PHH Corp. announced the termination of its $1.7 billion acquisition by General Electric and Blackstone Group. While no surprise–the mortgage services and fleet management company had previously warned about “revised interpretations as to the availability of debt financing”–the timing proved an appropriate beginning for a year teeming with canceled deals. Blackstone paid a $50 million termination fee.

3Com Corp.
Deal announced 9/28/07; terminated 3/4/08
Bain Capital’s planned $2.54 billion acquisition, alongside Chinese partner Huawei Technologies, of 3Com was one of the few that didn’t run directly afoul of debt markets. Instead, it ran into the regulatory brick wall of the Committee on Foreign Investment in the U.S., which was concerned that Huawei had ties to the Chinese military that could result in improper access to 3Com, which provides anti-hacking software for the U.S. Department of Defense.

Alliance Data Systems Corp.
Deal announced 5/17/07; terminated 4/18/08
This was an unusual one, with Blackstone claiming the Office of the Comptroller of the Currency was imposing unreasonable requirements on the $7.8 billion deal, and Alliance Data saying Blackstone simply needed to try harder. The company sued the private-equity firm not once, but twice, on this point, the first time to compel Blackstone to proceed with the deal (it withdrew the suit when Blackstone assured Alliance Data that is was, in fact, trying) and the second to force Blackstone to pay the $170 million break-up fee for the deal after it became patently clear that the firm no longer was.

Penn National Gaming Inc.
Deal announced 6/15/07; terminated 7/3/08
Compared to many of the other deals on this list, the planned $9.4 billion buyout of Penn National ended well for all parties involved. The deal was terminated without litigation, with Penn National basically saying it didn’t have time for the distraction of that. All parties got on board the “consolation prize” deal, with lenders Wachovia and Deutsche Bank agreeing to cover the $225 million breakup fee and $325 million in fees and expenses for the buyers, while buyers Fortress Investment Group and Centerbridge Partners agreed to a $1.25 billion preferred stock investment in the casino and horse-racing company. In a sad commentary on the state of the market in 2008, this fee ranked as one of the largest transactions in July.

BCE Inc.
Deal announced 6/29/07; terminated 12/11/08
For the longest time, this deal seemed like the giant LBO that could. For the year and a half from announcement to termination, this $41 billion merger overcame hurdle after hurdle, including a dustup with bondholders, scrutiny over whether it would remain sufficiently Canadian, a decline in the Canadian dollar that meant it was no longer the largest announced buyout on record, and grumbling from lenders. But it couldn’t overcome the language in its own agreement that required a positive solvency opinion from auditor KPMG LLC. When KPMG indicated it wouldn’t deliver such an opinion, that was the final straw. The saga continues, though, as BCE has sued the proposed buyers–Ontario Teachers’ Pension Plan, Providence Equity Partners LLC, Madison Dearborn Partners LLC and Merrill Lynch Global Private Equity–over the $1.2 billion breakup fee.

Huntsman Corp.
Deal announced 7/12/07; terminated 12/14/08
Hexion Specialty Chemicals, owned by Apollo Management, said in January that its $10.6 billion purchase of Huntsman “is not expected to close before May 3.” It wasn’t kidding. This was the buyout soap opera of the year, with big egos and hurt feelings on parade, and suits and countersuits flying. As this deal was chronicled in painful detail by us throughout the year–some 32 stories in LBO Wire, a Dow Jones publication–we won’t put either ourselves or you through the pain of reliving it in depth. We’re just happy that things ended amicably, with Huntsman founder Jon Huntsman and Apollo co-founder Leon Black riding off into a Hawaii sunset together, after previously calling each other “pathetic” and “dishonest.” All that’s left is a lawsuit pending between Huntsman and the banks that were supposed to fund the deal.

The market turmoil has reshaped the financial landscape. Financial News, a Dow Jones publication and a contributor to Deal Journal, looks at some individuals entering a make-or-break period following the maelstrom of 2008:

Mark Aedy
The acquisition of Merrill Lynch by Bank of America will put its commitment to European investment banking to the test, and test the mettle of Aedy, who stands at the helm of corporate and investment banking for Europe, the Middle East and Africa.

Until the Merrill deal in September, Bank of America had preferred to build a European investment banking business by recruiting from rivals, rather than through acquisitions. It appeared to send mixed messages about the scale of its ambitions in recent times following trading losses associated with the credit crunch at the end of 2007. Merrill’s European investment-banking business dwarfs that of Bank of America and the merged entity has the opportunity to create a powerhouse. Ambitions are high, but expectations are even higher.

Bob Diamond
Diamond may have waived last year’s bonus to appease investors, but that might not be enough if the acquisition of Lehman Brothers’ North American business fails to yield the expected rewards. He has been praised for a “fantastically priced,” “outstandingly attractive” and “tremendous” deal. But that was based on potential. Now he must achieve tangible results to justify the acquisition. On a conference call last September, Diamond said the pools of revenue in investment banking and investment management were a little less than a trillion dollars and “growing at double the rate of GDP, notwithstanding the fact that 2008 will be a slow year.” He also said the market conditions offered one of the best opportunities in decades to build an investment-banking business.

Sadeq Sayeed
Japan’s Nomura rewarded Sayeed for his role as chief negotiator on the takeover of Lehman’s European and Asian assets by appointing him vice chairman of Nomura International and chief executive of Europe, the Middle East and Asia. He has been busy recruiting former Lehman staff who weren’t part of the businesses acquired, as well as sorting out leadership for the enlarged business.

Having convinced Nomura to take another stab at Europe, he will now have to call on all of his 25 years of investment-banking experience to realize the Japanese bank’s ambition. On a conference call, Sayeed said he was “extraordinarily optimistic” about the acquisitions.

Greg Coffey
Coffey, the former star manager at GLG Partners, will have to prove his worth in his new role as chief investment officer at the European branch of Louis Bacon’s $20 billion Moore Capital. Coffey gave his former employers at GLG a nasty surprise by resigning in April, precipitating a sharp fall in GLG’s share price and causing investors to demand their money back.

GLG posted a $6.4 billion decline in assets under management in the third quarter, reflecting both investment losses and $1.3 billion of redemptions from hedge funds run by Coffey. He was widely expected to launch his own hedge fund, but resurfaced in November a few floors above his former GLG colleagues in the same building, working for Moore.

Jon Moulton
Jon Moulton, founder of Alchemy Partners, has been one of private equity’s most vocal practitioners in recent years. As the industry’s Cassandra, Moulton long had warned of the dangers of over-leveraging businesses and forecast a downturn.

Now that his predictions have come to pass, he must capitalize on the opportunity. His firm specializes in acquiring distressed companies and turning them around. There should be no shortage of deal opportunities this year as the recession bites – but if Moulton can’t earn returns in this environment, tailor-made for his firm in terms of opportunities (if not the availability of debt financing), he never will.

John Hourican
A former leveraged financier, Hourican is probably the most senior banker you have never heard of. In the middle of October, he was promoted to one of investment banking’s higher profile posts, chief executive of global banking and markets at Royal Bank of Scotland. He started his job at a time when RBS’s global banking and markets division faced a heavy redundancy program and restructuring.

His job shows no signs of getting easier. While his division employs more than 20,000 and is important to the company’s results (accounting for 42% of underlying group profit in the first half), it also is home to the bank’s riskiest assets and most complex businesses, which resulted in billions of pounds in write-downs last year. Now his every move will be scrutinized by RBS’s majority shareholder, the U.K. government.

BELGRADE, Jan 5 (Reuters) - Serbia called on industrial natural gas consumers to prepare to switch to another fuel should a row between Russia and Ukraine continue, the head of the state-run gas monopoly said on Monday.

NEW YORK, Jan 5 (Reuters) - The following list shows the arbitrage spread for proposed mergers and acquisitions of U.S. companies.

Journal reporter Dan Fitzpatrick has been following the IndyMac saga and sends this dispatch on the past and future of one of 2008’s last deals.

Steven Mnuchin’s holiday gift was IndyMac, not that it didn’t nearly ruin his own holidays. With a group of seven investment firms racing to get a deal done for the failed mortgage lender by year end, Mnuchin spent the past few weeks holed up in a hotel room ostensibly on a vacation but really putting the deal together, said people familiar with the situation. It wasn’t until Friday night that he had time to buy his family gifts, these people said.

Still, he expects IndyMac to be a gift that keeps on giving. When IndyMac went under last summer, Mnuchin thought he could buy it, rebuild it and use it as a platform to acquire other financial institutions, according to people familiar with the situation. He thus far hasn’t bid for other troubled institutions.

The 46-year-old architect of the IndyMac bid, Mnunchin has been in the mortgage business since 1985. He was with Goldman Sachs during the savings & loan crisis and was involved in buying assets from the Resolution Trust Corp. that was formed by the government to take over troubled S&Ls.

IndyMac’s business model was troubled, and Mnuchin has no intention of repeating its old mistakes. The new investor group intends to remain in the mortgage loan business and will focus nationwide on new loans with appropriate underwriting standards, rejecting the riskier products that IndyMac once offered.

BUENOS AIRES, Jan 5 (Reuters) - Argentina's antitrust commission ordered Telecom Italia not to change its participation in Telecom Argentina due to concerns over Telefonica's indirect stake in the Italian company.

Jan 5 (Reuters) - Progress Energy Inc said it sees fiscal 2008 earnings at the lower end of its prior outlook range, citing mild weather across service territories in December and the continuing impact of the slowing economy, and cut its 2009 capital expenditure budget.

CHICAGO, Jan 5 (Reuters) - Mattel Inc's Fisher-Price brand signed a multi-year deal as the global toy licensee for HIT Entertainment's Thomas & Friends train product line in a move to boost sales globally, the companies said on Monday.

Deals of the Day, compiled by Stephen Grocer and Heidi N. Moore, gathers all the biggest news of the morning related to mergers and acquisitions, bankruptcies, financing and private equity. You can bookmark Deal Journal for easy visiting throughout the day at http://blogs.wsj.com/deals.

Mergers & Acquisitions

Who wants to buy a failed bank at the heart of the country’s mortgage crisis? As it turns out, a lot of Wall Street’s “smartest money.” [WSJ]

Related: Is the government charging too little for the remains of failed mortgage lender IndyMac? [WSJ]

Rogue move: GE’s Universal Pictures has sold Rogue Pictures, a film label that produces and distributes lower-budget films, to Relativity Media. [WSJ]

The Priory: The acute care specialist is pushing for a £2 billion merger with Four Seasons, the care-homes group. [Times of London]

National Australia Bank may put Clydesdale and Yorkshire banks up for sale after it launched a wide-ranging review of the business.[Times of London]

Financial Institutions

Obama’s tax cut: Obama plans a $300 billion stimulus plan full of tax cuts for businesses and individuals to win Congressional support. [WSJ]

The purse strings remain tight: U.K. banks sharply tightened credit to households and companies, intensifying worries that a bank-rescue plan is failing to get money flowing. [WSJ]

Catatonic fear: U.S. consumers are propping up banks that won’t lend to them. [Bloomberg]

Bankruptcy & Restructuring

LyondellBasell: The chemical maker is awaiting clearance by a US court of the appointment of a corporate turnaround specialist. [Times of London]

Woolworths: The retailer’s lenders are in line to collect millions of pounds in controversial fees following the collapse of the retail chain. [Daily Telegraph]

Buyside

Heading out on his own: Paolo Pellegrini has resigned from hedge-fund firm Paulson & Co. and is expected to start his own hedge fund. [WSJ]

Pay is coming under pressure: A Renaissance hedge fund will waive management fees this year following a poor performance in 2008. [WSJ]

Don’t count them out yet: Many hedge funds won’t survive 2009. But there could be some good investment opportunities for those still standing later this year. [Barron’s]

Darn, buyout: Highly leveraged retailers will struggle to meet covenants as the liquidity crisis continues and the M&A market is quiet. [Times of London]

Capital Markets

Completely dry: Just 29 companies went public in the U.S. last year, compared with 215 in 2007 — an 87% drop. No deals are on the immediate horizon for 2009. [WSJ]

Nakheel: The company behind some of Dubai’s best-known landmarks is considering a stock market listing to raise as much as $15bn (£10.3bn) to reinforce its finances. [Daily Telegraph]