Citadel, Bloomberg and the perils of stale news…

Bloomberg today morning kicked off with a puff piece on Citadel, which will no doubt appear in Bloomberg magazine later in the month…

Oct. 29 (Bloomberg) — Rohit D’Souza was on vacation with his family in India in May 2008 when he got a call from Ken Griffin, founder and chief executive officer of Citadel Investment Group LLC. Griffin wanted the banker, who had just quit his job as head of equity trading and sales at Merrill Lynch & Co., to help him do something no other hedge fund had ever tried.

Less than two months earlier, Bear Stearns Cos. had disappeared, swallowed by JPMorgan Chase & Co. after losing billions on subprime mortgages. Griffin asked D’Souza, a 45- year-old native of Mumbai, if he would be interested in running a full-service investment bank.

6 hours later, WSJ reported the following

The Chicago firm also confirmed that a banker it hired last year to build an investment bank, Rohit D’Souza, was leaving.

The developments showcase the challenges facing the firm that manages $14 billion in assets as it tries to recover from a grim 2008 for its hedge funds while diversifying into other businesses.

Upon which, Bloomberg had to Update the article and add the following

Oct. 29 (Bloomberg) — Rohit D’Souza was on vacation with his family in India in May 2008 when he got a call from Ken Griffin, founder and chief executive officer of Citadel Investment Group LLC. Griffin wanted the banker, who had just quit his job as head of equity trading and sales at Merrill Lynch & Co., to help him do something no other hedge fund had ever tried.

Less than two months earlier, Bear Stearns Cos. had disappeared, swallowed by JPMorgan Chase & Co. after losing billions on subprime mortgages. Griffin asked D’Souza, a 45- year-old native of Mumbai, if he would be interested in running a full-service investment bank.

The two men talked through September as Lehman Brothers Holdings Inc. declared bankruptcy and rumors swirled that Chicago-based Citadel, whose gross assets had reached $145 billion earlier that year, would fail. The firm’s biggest funds, Kensington and Wellington, lost 16 percent that month and started exiting unprofitable businesses. In October, as the funds tumbled another 22 percent, D’Souza said yes. D’Souza said yes.

On Oct. 29, 12 months later, Citadel said D’Souza is leaving the firm and will be replaced by Patrik Edsparr, president of Citadel Europe and head of the company’s fixed- income business. The departure suggests that Griffin’s attempt to graft an investment bank onto a hedge fund firm won’t be easy.

Hilarious… at least Bloomberg is lucky the news wasn’t delayed a couple more days, then in would be in hardcopy in the Bloomberg magazine. However, they certainly couldn’t change the thesis of the article… that Citadel was building an investment bank, without deleting the entire piece… so they just ran with it, regardless of how irrelevant the entire story had become:

His latest enterprise may well be his most audacious, at least since starting his own hedge fund. Grafting an investment bank onto a hedge fund firm won’t be easy. Unlike large banks, Citadel doesn’t have a big balance sheet, so it can’t offer loans to clients to purchase companies or make investments.

Fund info: Och-Ziff Asia

General

Och-Ziff (NYSE:OZM) is a traded hedge fund initially seeded by the heirs to the Ziff publishing fortune and founded by Dan Och, a protege of Robert Rubin and alum of the Goldman Sachs risk arbitrage desk. Och-Ziff Asia has been around for a while, primarily trading liquid instruments and equities in Hong Kong, before they expanded their distressed business in early 2008. It was a disastrous move, and the the Asia Master Fund was down 31% in 2008. They ended up firing the entire distressed and private equity and credit section, and hiring real estate guys.

OZ has offices in Beijing, Tokyo, Hong Kong and Bangalore. It hired real estate guys for HK,  Singapore, China and India.

Deals

China Healthcare Holdings (HKSE:673):  A provider of healthcare services in China. OZM only owns 2% of the convertible shares according to news. Have to investigate further.

Fisherman’s Wharf: Stanley Ho promoted casino in Macau. Greenfield project. ML arranged a USD400mm private convertible in 2006. Looks like the CB value has crashed. Chow is offering 50 cents on the dollar or less to buyback the debt. When is this thing going to IPO given that the Macau gaming market has generally crashed? TPG was also in there…

People

Zoltan Varga: partner, head of Asia-Pacific. based in HK

Punit Patel: HK, Analyst, Ex JPM, Ex NYU Stern. Capital structure arb

Stephen Yuen: HK, Analyst, Ex GS, Wesleyan University

Manoj Jain: HK, MD, Ex-CS, Cambridge

Raaj Shah: former partner, former co-head Asia Pacific, head of credit and distressed, based in HK, former head of European credit trading

Mary Schroeder: former distressed debt head, based in HK,  joined the firm at the beginning of 2008 from Asian Debt Management.  Got axed by the end of the year. Poor woman, talk about a bad move.

Oliver Wimmer: former employee, formerly of Lehman Brothers.

Deep Mishra: Indian real estate. fired at end of 2008

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Josh Katzin: Analyst, HK, ex Mckinsey, Fenway Partners, HBS

Kirti Ram Hariharan: Analyst in Bangalore office, National Law School of India University, Partner at Amarchand Mangaldas

Zain Fancy: new hire, former head of Morgan Stanley Real Estate Asia Pacific. Zain joined Morgan Stanley in 1996. Prior to joining MSRE in 1998, he worked in the Mergers & Acquisitions Department. Zain has spent five years in the U.S. business and the remainder in Asia. Zain received a BS from Georgetown University’s School of Foreign Service.

Roy Kwok: new hire from MS

Annan Madduri: new hire from MS

Bharat Khanna: new hire from MS

Entities