Billionaires: George Soros offloads shares bought during Bill Hwang’s Archegos implosion

In our fortnightly roundup, DIY retailer Adisak Tangmitrphracha becomes Thailand's latest billionaire and Bill Ackman faces a lawsuit over his blank-cheque company

George Soros’s investment company, which snapped up shares sold off in massive blocks during the collapse of Bill Hwang’s Archegos Capital Management, has exited the positions.

Soros Fund Management sold $194.3 million of shares in ViacomCBS, $77m of Baidu shares and $46.4m of stock in Vipshop Holdings, according to a regulatory filing. The billionaire’s company also liquidated positions in Tencent Music Entertainment Group and Discovery.

The sales are nearly identical in size to the purchases Mr Soros’s investment company disclosed at the end of the first quarter. Archegos, the family office of former hedge fund manager Mr Hwang, fell apart during the last week of March after amassing large leveraged positions in a concentrated portfolio of US and Chinese companies.

Most of the Archegos-linked stocks extended their slide in the second quarter. Vipshop plunged 33 per cent in the three months through June, Tencent Music tumbled about 24 per cent, Discovery dropped about 21 per cent and Baidu fell 6.3 per cent. ViacomCBS was little changed.

Mr Soros’s investment company did not hold these companies’ shares before Archegos’s implosion. Chief investment officer Dawn Fitzpatrick has said she is willing to jump on dislocations in the market and “not just double down but triple down when the facts and circumstances support that”.

At its peak, Mr Hwang’s family office had more than $20 billion of capital and total bets exceeding $120bn. The portfolio collapsed in a matter of days after its investments tumbled, triggering margin calls from banks, which then sold the stocks in big block trades. Hedge funds and other investment companies swooped in to buy chunks, but the trades have not necessarily worked out.

Adisak Tangmitrphracha

Dohome may not qualify as a “unicorn” but the home-improvement retailer does possess some rare traits that have made founder Adisak Tangmitrphracha a new member of Thailand’s billionaire club.

Established in Ubon Ratchathani, a rice-growing province about 600 kilometres from Bangkok, Dohome is one of only two Thai exchange-listed companies with a market value of more than $1 billion. The company was started in the rural north-east Isaan region.

Dohome is also among a handful of Thai companies whose shares have at least doubled this year amid the backdrop of the pandemic, boosting the fortune of Mr Tangmitrphracha and his family to $1.3bn, according to the Bloomberg Billionaires Index.

Mr Tangmitrphracha, 68, opened his first shop in Ubon Ratchathani in 1983, selling tools and construction materials mainly to local farmers and small contractors.

It wasn’t until 2007 that he set up the first Dohome mega-shop outside his home province, having gradually gained confidence and the resources to take on home-improvement shops owned by larger rivals such as Siam Cement – Thailand’s first conglomerate – and Central Retail, controlled by Asia’s 20th-richest dynasty, the Chirathivat family.

“Dohome has set a great example for small businesses to compete with much larger and better-funded companies from the metropolis,” said Mongkol Julthus, chairman of the Ubon Ratchathani Chamber of Commerce.

“An aggressive pricing strategy and good customer services have helped the company attract loyal clients from many provinces.”

The company operates 14 full-service shops nationwide, with a plan to increase outlets to 36 by end of 2025, according to its website. With the onset of the pandemic, the company boosted its online presence and marketing as government restrictions forced several shops to close in the country’s worst afflicted areas.

Earlier this month, Dohome reported a net income of 601m Thai baht ($18m) in the second quarter, a 311 per cent increase from the same period last year and a quarterly record since its listing in 2019. For the six months through June, profit climbed 253 per cent to 1.14bn baht.

“The work-from-home policy is spurring demand for home renovation and decorations in some areas,” said Amnart Ngosawang, an analyst at KTBST Securities in Bangkok. “We expect Dohome to maintain steady earnings growth in the long term through its expansion strategy and effective product mix.”

Bill Ackman, chief executive officer of Pershing Square Capital Management LP, speaks during a Bloomberg Television interview in New York, U.S., on Wednesday, Nov. 1, 2017. Ackman discussed his proxy fight at Automatic Data Processing. Photographer: Christopher Goodney/Bloomberg

Bill Ackman

Billionaire investor Bill Ackman said he is prepared to return the $4bn he collected from investors in his blank-cheque company if regulators approve a new vehicle that will allow him to continue to search for deals without the pressure of a definitive deadline for a transaction.

Mr Ackman posted a letter to investors in his Pershing Square Tontine Holdings on August 19, saying a recent lawsuit challenging the legality of his blank-cheque company hurt his chances of finding a deal. Calling the lawsuit meritless, Mr Ackman noted that he still has about another 11 months to find a company to take public with his special purpose acquisition company, or Spac, and another six months after that to close the deal.

“While we have been working diligently to identify and close a transaction, and we have begun discussions with potential merger candidates, our ability to complete a transaction in the required time frame has been impaired by the lawsuit,” Mr Ackman said in the letter.

Mr Ackman said he was prepared to return the capital to his Spac’s investors if the US Securities and Exchange Commission approves a new investment vehicle – known as a special purpose acquisition rights company, or Sparc – that would allow him to continue to pursue a deal without holding investors’ capital. If the Sparc is approved, Pershing Square Tontine holders would receive $20 in cash and one Sparc warrant for each share they own, he said.

In a series of tweets on August 20, Ackman said returning the money would eliminate the opportunity cost for Pershing Square Tontine investors, meaning they could deposit their funds elsewhere and still have the chance to participate in his next deal at cost.

“If you find yourself in a leaky boat, often times you are better off switching boats than patching leaks to complete the mission,” he wrote on Twitter.

The move comes after Pershing Square Tontine traded below its $20-a-share initial public offering price for the first time on August 19, amid a broader slowdown for blank-cheque companies.

Unlike a Spac, a Sparc would not require investors to contribute capital until a target is identified. It would also eliminate the need to find a deal within the two-year period typically required with a Spac.

UAE - Ras Al Khaimah - Dec 16 - 2010: Gopichand P. Hinduja , Co-Chairman Hinduja Group, at Al Hamra Hotel after a ceremony to launch Ashok Leyland manufacturing company. ( Jaime Puebla - The National Newspaper )

Srichand and Gopichand Hinduja

The billionaire Hinduja family pledged more of their stake in IndusInd Bank to avoid triggering a covenant breach last quarter, a renewed source of concern given they had to step in to repay such a loan after a market rout last year.

IndusInd founders, led by brothers Srichand and Gopichand Hinduja, had raised about $300m in February by pledging about 36 per cent of their stake in the Mumbai-listed bank.

They topped up collateral to 45 per cent of their stake after IndusInd’s shares fell about 20 per cent from the date of the pledge to an April low.

The Hindujas, who have repeatedly been borrowing money against the bank’s shares, had to repay debt last year after a broader market rout, and sought extensions to convert warrants into equity. The family also paid a premium to boost its stake in IndusInd Bank in February in a sign of confidence for the lender.

The most recent pledge made by IndusInd International and IndusInd, which represent the Hinduja family, is equal to about half of their 15.19 per cent stake in the bank, according to an exchange filing.

The family was using the loan from Barclays and Deutsche Bank to fund its offshore business and refinance debt. Representatives for the Hindujas, Barclays and Deutsche Bank declined to comment.

With businesses across 38 countries ranging from lorries to banking to technology, the family has been selling some assets, including Hinduja Global’s healthcare outsourcing business, which was sold to Baring Private Equity for $1.2bn. They have a combined fortune of about $17bn, according to the Bloomberg Billionaires Index.

Updated: August 29th 2021, 5:00 AM
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