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Wednesday, August 3, 2016

1MDB Jho Low bought stake in Wall Street firm

Malaysian financier Jho Low’s Jynwel Capital made a $150 million investment in Electrum in 2012, purchasing a 7% piece of the firm

U.S. prosecutors have linked Malaysia’s prime minister to hundreds of millions of dollars allegedly siphoned from one of the country’s economic-development funds to buy hotels, luxury real estate, fine art and back the 2013 film “The Wolf of Wall Street.”

So far, investigators haven’t publicly identified money that may have flowed to Wall Street. But 3½ years ago, a New York investment firm run by Thomas Kaplan received $150 million from Malaysian financier Jho Low, a confidant of the prime minister, Najib Razak, according to the Justice Department’s complaint filed late last month. Mr. Low was central to the fraud involving one of Malaysia’s economic-development funds and “laundered more than $400 million of funds,” according to the filing.

Mr. Low, chief executive of Hong Kong-based investment firm Jynwel Capital Ltd., was deeply involved in the creation of 1Malaysia Development Bhd., or 1MDB, the fund at the center of the alleged fraud, according to the Justice Department’s filing.

There is no indication that Mr. Kaplan is being questioned by authorities or that he believed the money was coming from anyone other than Mr. Low and his firm.

The money that flowed from Mr. Low’s firm to Mr. Kaplan’s company, Electrum Group LLC, raises concerns about whether the investigation may affect Electrum or other Wall Street firms that may have received money from Mr. Low or others connected to the probe.

A spokesman for Mr. Low declined to comment. Previously, Mr. Low has denied any wrongdoing.

“We have been monitoring this situation since the initial news reports,” said a spokesman for Electrum. “Accordingly, Electrum has taken steps to ensure that Jynwel’s investment and its associated profits have been safeguarded and sequestered while the matter is pending.”

In late 2012, Mr. Low and Jynwel made a $150 million investment in Electrum, purchasing a 7% stake in the firm, Electrum said. Electrum is run by Mr. Kaplan, one of the biggest investors in gold and silver shares in recent years and a member of the board of Manhattan’s 92nd Street Y.

Until recently, Mr. Low was a member of Electrum’s board. He and Mr. Kaplan also are on the board of a charity called Panthera that aims to protect tigers, lions and other big cats.

At the time of the investment, Mr. Low explained the move by telling The Wall Street Journal that “we are bullish on the value of gold and gold-related assets in the long term.”

On a promotional video on Jynwel’s website, Mr. Kaplan shakes hands with Mr. Low and extols the firm. Mr. Kaplan says he looks for partners who share his “sense of social and environmental commitment.”

Jynwel’s investment in Electrum came at the same time sovereign-wealth funds Mubadala Development Co., which the Abu Dhabi government owns, and the Kuwait Investment Authority also invested in Mr. Kaplan’s firm. The three parties bought a total stake of about 20% in Electrum for $450 million, the firm said.

Mr. Low is a 34-year-old graduate of the University of Pennsylvania’s Wharton School and a “global investor and philanthropist who encourages market access and advances human progress through capital and social investments,” according to the firm’s website. It says Mr. Low “cultivates lifelong partnerships with significant investors in Asia and the Middle East” and is a member of the board of the Viceroy Hotel Group and nonexecutive chairman, Asia, for EMI Music Publishing.

Jynwel Capital joined groups of investors in the $2.2 billion acquisition of EMI Music in 2011 as well as the $2.2 billion purchase of Canadian-listed company Coastal Energy in 2013.

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