Oi is now controlled by Colony Capital, Inc., an American financial fund: what could this mean?

The telecommunications company Oi, which is undergoing judicial reorganization, was acquired by Highline, a company controlled by Colony Capital, Inc., an American financial fund created in 1991 and headquartered in Los Angeles, California.

Colony Capital, Inc. is currently present in 20 countries with assets linked to the real estate sector and assets in financial distress (such as Oi), which also qualifies it in the market as a "vulture fund".

Colony Capital, Inc. has assets of US$50 billion and is linked to other major funds such as Blackstone and Morgan Stanley Real Estate. By having these strong ties with other financial asset managers, Colony Capital is better positioned to enter into deals with strategic interests.

The case of telephony is one of them. Especially at a time when issues relating to the choices of new technology and companies that will provide 5G are being discussed. During this period of crisis and judicial recovery of Oi, it has been experiencing a fragmentation of its shareholding and lately, Vivo and Tim have had interests in taking over the competing company in the mobile telephony and internet sector.

Prior to this deal with Highline (Colony Capital, Inc.), 7,4% of Oi's shares were already held by another financial fund based in a tax haven, the Cayman Islands, in this case, York Global Finance.

The final amount that Highline (Colony Capital, Inc.) will pay to control Oi would be around R$ 1 billion. Oi has shares on the stock exchange, B3, and therefore, the deals need to be more transparent.

Colony Capital, Inc. also invests in the hotel sector in Canada, events, and football clubs, such as Paris Saint-Germain in partnership with the Qatari fund, Qatar Investment. It is also attempting to enter the streaming sector, providing films via the internet.

Another noteworthy fact about Colony Capital, Inc. was reported by the American newspaper, the New York Times, in June 2018, which stated that a subsidiary, Colony North Star, had raised over US$7 billion in investments since Trump came to power, and that 24% of this money came from countries close to Trump and the US: Saudi Arabia and the United Arab Emirates (UAE).

For all these reasons, it is worthwhile to delve deeper into the facts surrounding the negotiations and dealings that led to the acquisition and control of Oi by the American fund Colony Capital, Inc. We will return to this topic.

For some time now, I have been drawing attention to the movement of the financial funds industry in Brazil and globally. Global financial funds have been behind most privatizations and asset purchases in Brazil since 2016. With the political and financial crisis that has dragged on for five years, Brazil has become very cheap, even more so with the dollar at R$ 5,30.

I discuss the subject in the book, published last year (2019) by Editora Consequência, “The 'industry' of financial funds: power, strategies, and mobility in contemporary capitalism.".