On the verge of collapse, Markstone Capital Partners Group LLC CEO Ron Lubash has asked investors, who are set to lose hundreds of millions of dollars on their investment, for a $95 million capital injection. There is little chance that the investors will respond favorably to the fund's request for capital to fend off an extraordinary insolvency by a private equity fund.
Markstone is asking for funds "from the remaining money from the institutions' commitments under the fund's prospectus". The $95 million amounts to 12% of the total commitments to Markstone, which raised the capital a decade ago. The investors have two weeks to respond.
Markstone raised $800 million to invest in Israeli companies. "The call for money follows consultation with and updating of the fund's investors committee consisting of its seven largest investors," said Markstone in a statement today.
Senior managers of Israeli investment institutions told "Globes" that they are unpersuaded by Lubash's remarks, as he is fully party to Markstone's string of failures and huge debts. They will not respond to the call for money, provided that they can find a way to avoid losing their full rights for not having met their commitments. "We're examining possible sanctions against us if we do not inject money into Markstone. If there is a way not to give the money, we won't give it, because we have no confidence in Lubash," said one executive.
Another executive was more blunt, "Markstone's conduct from the beginning was corrupt. Delusional people head it." He added, "We'll never see this money again, because it will be injected into companies with big debts."
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2014
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