Daily Lessons from Life 14 April 2010 - Wall St-backed Chinese dairy firm collapses

"Wall St-backed Chinese dairy firm collapses -Wed, Apr 14, 2010 Reuters

HONG KONG - Chinese dairy products maker Taizinai, which counts Goldman Sachs and Morgan Stanley among its investors and Citigroup among its lenders, has collapsed, leaving around 3 billion yuan (S$605 million) in unpaid debt, sources familiar with the matter said on Wednesday.


Morgan Stanley, Goldman and private equity firm Actis Capital had paid US$73 million for a 31 percent stake in Cayman Islands-registered Taizinai in 2007, with Morgan Stanley providing US$18 million, Goldman US$15 million and Actis Capital US$40 million, sources said."

It is apparently hit by the tainted milk scandal even though it DID NOT sell any contaminated diary product! It was once an IPO-candidate!!

Lessons for me are:

1. there is no sure thing in life. Despite it once being a high-flyer, the tainted milk scandal managed to impact its diary product nonetheless! An innocent victim if you like. Of course, this hit coupled with the rapid expansion of its business compounded the difficulties of steadying the ship!;

2. the blue-ribbon lenders and investments will be licking their wounds and humbly accept this, hopefully, an anomaly! I am sure this is not the first deal that gone awry for these famed investment banks and companies. While some of us would love to really rub salt into the wounds, I don't think they will be held down for too long as the amount, if totally lost, is simply like a drop in their vast money ocean!;

3. for those picking up the pieces and with less resources, they just have to hope for the best, which is not forthcoming from the various efforts tried. It will be interesting to find out in more details what exactly went wrong besides the 'public reasons' for this unfortunate collapse. Hopefully there is no scandalous tale to emerge from the debris!

Finally, it is a good thing that it did not make the IPO and the money lost, if any, are those professional investors who know that the rewards is high as the risk is high too.