. Speaking of Cavendish Asset Management, their €10 billion investment to purchase Standard Chartered Bank's "distressed assets"—over 50,000 homes, apartments, and office buildings—wasn't simply a one-time investment.
First and foremost, Baron was extremely optimistic about the future of the British real estate market and the rental market...
This was based on his experience in his previous life.
According to professional research institutions, approximately one in five households in the UK chooses to rent a home.
Therefore, the UK has an enormous demand for rental housing, which in turn provides a significant opportunity for the growth of the rental industry.
Currently, private landlords hold a significant market share compared to private rental companies in the UK's vast rental market.
The largest private rental company in the UK owns over 9,000 apartments, yet its market share is less than 0.2%.
However, Barron knew that the UK's rental market would become increasingly specialized. Furthermore, the internet's impact on the rental industry would significantly shorten the distance between users and available properties. Therefore, Cavendish Asset Management could provide Standard Chartered with liquidity by acquiring these properties, while also gaining access to the UK's rental market. It
's also possible that even the UK's largest bank, Lloyds Bank, would be tempted to enter the market.
Cavendish Asset Management has already acquired Grainger, a company with extensive property rental experience, for £150 million, which will manage the acquired properties.
They have also launched a website providing rental information and services to individual users, and will conduct marketing and business online.
Furthermore, Cavendish Asset Management will continue its partnership with Standard Chartered, not by acquiring their "distressed assets" but by packaging their property rental business into fixed-income products for sale.
After all, real estate rentals often offer very stable returns, making them popular with risk-averse investors.
At the same time, the Cavendish Trust Fund, backed by Cavendish Asset Management, can use this to recoup its investment in these properties and invest in other investments.
They can also benefit from the future appreciation of these properties.
Compared to the subprime mortgage debt that triggered the subprime mortgage crisis, this type of financial product, which relies on renting out owned properties, carries far less risk.
...
"This case is sensational enough. I'm afraid the number of wealthy individuals involved is beyond imagination..."
"Now it seems like everything has a clear path forward, but how many people actually caught these clues back then?"
Baron shook his head, placing the newspaper on the table. He said to Amber Sheen,
"But I believe he's a smart man. Some people had already withdrawn their money before this..."
The newspaper Baron placed on the table had the headline on the front page:
"$50 Billion Scam - Bernard Madoff Arrested."
Yes, on October 15th, this news spread around the world, causing a sensation. According to reports, Madoff's arrest was the result of a tip-off from his son.
In early October, Madoff revealed to his son that clients were demanding the withdrawal of $7 billion in investments from his firm, posing a liquidity crisis. On
October 14th, Madoff confessed to his son that his firm was practically "destitute," having previously run a massive pyramid-like Ponzi scheme that had defrauded clients of over $50 billion.
That same evening, Madoff's son reported him to the police, thus unleashing what would become one of the largest fraud cases in history.
Madoff was a major figure on Wall Street, having previously served as chairman of Nasdaq. Of course, he wasn't a prominent figure, and it's unlikely that he could have amassed $50 billion by "helping others invest."
In reality, Madoff's Ponzi scheme had been operating smoothly, running for over eight years from 2001 to the present.
The reason for this is that Madoff, a veteran of the financial industry, was able to strictly control the scale of his scam—a so-called "Ponzi scheme," to put it bluntly, using funds from later investors to pay interest to earlier investors.
Therefore, in addition to leveraging his fame and relatively high interest rates (over 10% annual returns) to attract capital, his ability to operate safely for so many years was due to Madoff's strict control over the scale of his capital intake.
He had to create an inverted pyramid, starting small and then gradually increasing it. This was the only way to keep the entire "Ponzi scheme" running smoothly...
Therefore, Madoff could be considered a "master" of this technique. If it weren't for the unfortunate subprime mortgage crisis, when some investors, suffering heavy losses from other investments, needed to redeem their funds from Madoff, leading to continued large-scale redemptions at his firm, his "Ponzi scheme" would likely have continued to operate for some time.
According to Barron's information, not only in the United States, but also in the United Kingdom, many wealthy individuals and companies suffered losses from Madoff's fraud.
HSBC Holdings and Royal Bank of Scotland both lost at least £1.5 billion in this fraud.
Of course, other victims included wealthy individuals from the Middle East—they were initially proud to be among Madoff's investors. Ultimately, Madoff returned the money to the truly powerful, leaving the rest to bear the brunt of the losses.
As for the reported reports of Madoff's son reporting him, Baron can only say, "Shhh!" Sacrificing himself to save his family was a desperate decision.
But the ultimate outcome likely wasn't what Madoff had hoped for. After all, he'd overreached. If I remember correctly, his son also met with disastrous consequences, and Madoff himself died in prison.
In fact, Baron had been keeping tabs on Madoff's firm even earlier, but he chose not to expose it at the time—it simply didn't concern him.
The surprising yet predictable thing was that this case broke out earlier than in Barron's previous life—back then, it didn't break out until December.
But now that the subprime mortgage crisis has accelerated significantly, it's only natural that the Madoff fraud, impacted by the crisis and catastrophized by the massive redemption of its users, would break out earlier.
"By the way, how are the negotiations going with the Youcheng Group?"
Barron asked, and Amber Sheen temporarily shifted her focus from the shocking Madoff fraud. She said to Barron,
"We still need to discuss the price. They rejected our initial offer."