Trump aide Scaramucci sells investment business to Chinese consortium

By Michael J. De La Merced, New York Times News Service

Wednesday, Jan. 18, 2017 | 2 a.m.

Donald Trump has made no secret that he is willing to pick fights with China. Yet a financier with close ties to the president-elect said Tuesday that he was selling his investment firm to a group led by a fast-growing Chinese conglomerate.

The investor, Anthony Scaramucci, announced that he was selling his firm, SkyBridge Capital, to a consortium led by RON Transatlantic and HNA Capital of China. The deal paves the way for Scaramucci to join the Trump administration as a public liaison and adviser.

A joint news release the parties said that Scaramucci would cut all ties to SkyBridge and to the SkyBridge Alternatives Conference, known as SALT, an extravagant hedge fund conference that the firm sponsors in Las Vegas every year. (This year’s gathering, in May, will feature Wall Street celebrities like fund manager William A. Ackman and actual celebrities like David Cameron, the former prime minister of Britain, and singer Jewel.)

Terms of the transaction were not disclosed. Still, Richard W. Painter, a professor at the University of Minnesota Law School and the chief White House ethics lawyer during the George W. Bush administration, noted that upon joining the White House, Scaramucci must file a financial disclosure that requires a broad range for the sale price of SkyBridge.

Scaramucci said last month that he was selling the firm, but he appeared to jump the gun on Tuesday. At a panel at the annual World Economic Forum in Davos, Switzerland, he told the audience that he had sold SkyBridge.

But for several hours after Scaramucci spoke, SkyBridge was silent. “I need a couple of more hours,” he told reporters.

During his panel, Scaramucci also confirmed that he would join the Trump administration as public liaison and intergovernmental affairs adviser, and he called Trump a “great leader.” He is part of Trump’s transition team.

By selling SkyBridge and the SALT Conference, Scaramucci — Mooch to those who have traded backslaps with him — is parting ways with the businesses that made him one of Wall Street’s most flamboyant salesmen.

In Wall Street parlance, SkyBridge is primarily a fund of funds, buying stakes in hedge funds like those run by the billionaires Paul E. Singer and Daniel S. Loeb. Fund of funds have never been the sexiest business in finance, and are often criticized because investors essentially pay fees to the underlying hedge funds and to the managers like SkyBridge who invest in them.

According to regulatory filings, SkyBridge managed about $9.2 billion in client money and advised on an additional $3.4 billion as of last year. Its senior management team will remain in place when the deal closes by the middle of this year, the filings said.

SALT will be taken over by the SkyBridge employees who have managed the conference since its creation in 2009.

“It has been an honor and privilege to help build SkyBridge and work alongside some of the most talented individuals in the asset management industry who day in and day out demonstrate an unrelenting passion and commitment to helping our clients fulfill their long-term financial goals,” Scaramucci said in a statement.

He is selling control of SkyBridge to two relatively low-profile investors. RON Transatlantic, which already owns a stake in the asset manager, is a conglomerate with varied investments that include finance firms and brewers. (Among its partners is Reginald Love, best known as President Barack Obama’s “body man” and close aide.)

HNA Capital is a division of the HNA Group, which has grown from a Chinese airline into a sprawling business empire. Its holdings include the technology sales company Ingram Micro and a 25 percent stake in Hilton Worldwide.

The deal is not expected to close until the second quarter of the year, several months after Scaramucci starts his White House position.

Painter, the former White House ethics lawyer, said the lack of details in the sale announcement raises questions about whether it is a straight cash sale, or whether some of the proceeds are contingent on the firm’s future performance. Such ties could create the potential for a conflict of interest, Painter said.

“Is it is a complete sale with no strings attached and no ability to go back?” he said. “This has to be a straight sale with no earn out.”

Scaramucci, a Long Island native and Harvard Law School graduate, spent much of his career at Goldman Sachs, as did others in the incoming administration. He eventually became a specialist at managing other people’s money, founding and selling an asset management firm before creating SkyBridge in 2005.

Yet Scaramucci, an irrepressible salesman with a taste for flair, used SkyBridge’s connections to create the vehicle for his celebrity: SALT. It is now one of Wall Street’s most prominent gatherings, where asset managers — not just SkyBridge — can connect with wealthy potential investors. To add another layer of gravitas and glamour, Scaramucci brings in boldfaced names, who have included former President Bill Clinton, Bush, actor Kevin Spacey and the band Maroon 5.

The success of SkyBridge and SALT allowed Scaramucci and the firm to revive “Wall Street Week,” a financial television program that now runs on the Fox Business Network.

And it moved the financier to the level where he can hold court at the annual meeting of the World Economic Forum in Davos, the sort of global gathering of elites that other members of the incoming Trump administration have shunned this year. True to the spirit of SALT, SkyBridge’s annual wine party at Davos has tended to feature expensive vintages, poured liberally.

While Scaramucci is selling SkyBridge, it is unclear, however, whether he will retain his ownership stake in the Hunt & Fish Club, a New York steakhouse known for sparing no expense — particularly truffle oil.