Pricey Nets LBO gives banks big payment to process 24 Mar 2014 Advent and Bain are buying Nets, a card-payments firm, from nearly 200 Nordic lenders for $3.2 bln with a dividend. The rich 12.8 times EBITDA multiple reflects private equity’s hunger for “carve-outs.” But applying sector knowhow and commercial nous could lead to decent returns.
Hugo Dixon: How EU can wean itself off Russian gas 24 Mar 2014 The Ukraine crisis has highlighted the EU’s dependency on Russian gas, although Moscow is even more dependent on exports. EU leaders want to intensify plans to diversify supplies. There will be a cost – either in cash or in the environmental impact. But it’s one worth bearing.
Deepening Thai crisis will worsen economy’s dive 24 Mar 2014 A court has voided the Feb. 2 poll that Prime Minister Yingluck Shinawatra most likely won. Soon, an anti-graft agency may demand her impeachment. The purge will worsen the power vacuum, and raise the risk of violence. Hopes of an economic revival later this year are fading.
Preferred shares may further muddy China’s market 24 Mar 2014 Letting companies issue securities that have features of both stocks and bonds sounds like healthy diversification. But it doesn’t address China’s fundamental problem with pricing risk. The danger is that investors see debt, while issuers see equity, when the reality is neither.
Banks’ answer to AIG question a qualified success 21 Mar 2014 How much big U.S. lenders would lose if their largest counterparty fails is now part of the Fed’s stress tests. Bear Stearns, Lehman and AIG all showed the importance of knowing this. But the usefulness is limited unless there’s also a broader picture of systemic frailties.
New top U.S. M&A judge brings calm after Strine 21 Mar 2014 Andre Bouchard, the nominee to lead Delaware’s Chancery Court, may be less a force of nature than predecessor Leo Strine. But his smarts, experience and balanced approach should strengthen America’s pre-eminent business bench. In the legal world, boring often beats bombast.
JPMorgan rated most vulnerable to activist advance 21 Mar 2014 That, anyway, is the upshot of a straw poll of 254 fund managers plied with liquor and Lucite. Among other predictions at the Lipper Awards, investors gauged the Wall Street bank as more likely than GE, Exxon, IBM and Berkshire Hathaway to draw an uppity shareholder’s attention.
Can regulating prostitution like a business work? 21 Mar 2014 A study sought by the Justice Department analyzed the $50 bln trade through the prism of eight U.S. cities. What emerges is an industry populated by mostly willing buyers and sellers, albeit with disgraceful management. While immoral, sex-for-hire might be less damaging if legal.
Russia good place to start for DSK’s macro fund 21 Mar 2014 Dominique Strauss-Kahn, the former IMF chief who quit under a cloud, is trying to raise $2 bln for a hedge fund. The first stop on the roadshow is China. But given current events, maybe his best bet is to convince his Russian friends that he’ll do better in finance than politics.
Review: A world of reasons for the dollar to crash 21 Mar 2014 In “The Death of Money” James Rickards sees a multitude of ways for the world monetary system to collapse. The greenback has dangerous adversaries in China and al Qaeda. But he lets the Fed and budget deficits off lightly. And some of his solutions would cause yet more havoc.
Li Ka-shing de-risks with $6 bln Temasek sale 21 Mar 2014 The Hong Kong tycoon has ditched plans to list his retail division by selling 25 pct to the Singaporean investor. The deal crystallizes a decent valuation for Li without the execution risk of an IPO. For Temasek, it’s a bold bet on both consumer growth and private investments.
Bouygues’s latest SFR offer may still fall short 21 Mar 2014 The French group has made a new pitch for Vivendi’s mobile unit, with 1.85 bln euros more cash and the backing of state-owned bank CDC. That puts some pressure on preferred bidder Altice. But Bouygues’s deal remains riskier. It may need to offer more equity - and a big break fee.
Orange faces strategic bind in Spain 21 Mar 2014 The French telco is caught between Telefonica and a strengthened Vodafone-Ono. Orange needs a bigger high-speed network in Spain. Buying $3.8 bln Jazztel would help, but it is expensive. That leaves riding off other networks, or taking a gamble on pulling back from “quad play”.
Obama’s new sanctions aim to expose crony Putinism 21 Mar 2014 The punitive steps against Russia are ostensibly just an escalated response to the Crimea annexation. But they allege a link between the Kremlin boss and Swiss oil trader Gunvor. Washington seems determined to reveal how Putin and his comrades amassed fortunes at public expense.
Li & Fung revival depends on more than split 21 Mar 2014 The Hong Kong trading group’s shares jumped 17 pct on plans to separate its branding arm from its sourcing business. Although two listed units may be simpler, it’s not obvious how the manoeuvre creates value. A sustained re-rating requires both bits to rediscover organic growth.
Google co-founder’s will may go Elon Musk’s way 20 Mar 2014 Larry Page is considering leaving his money to the Tesla and SpaceX boss. Musk doesn’t need the cash, of course, but his companies pursue green power, space colonization and other projects that Page cares about. It’s a reminder that doing well can be one path to doing good.
First Solar’s technology may help it eclipse China 20 Mar 2014 Advances in making energy cells more efficient could give the U.S. panel manufacturer a price edge over Middle Kingdom rivals like Trina and Yingli. The Chinese still lead the market with products made from low-cost materials. But First Solar may soon get its time in the sun.
Company religion case may shake shareholder faith 20 Mar 2014 U.S. boards have a legal duty to put business interests first. Yet a Supreme Court challenge to Obamacare mandates could give biblical doctrine priority. A decision will turn on corporate religious rights, but laws designed to protect investors could suffer collateral damage.
Compromise leaves banking union flawed not floored 20 Mar 2014 Euro zone governments and the European Parliament have struck a deal on the way to resolve failing banks. The decision-making process in case of crisis, and the firepower of the resolution fund, remain sub-optimal. But the positives of clinching a deal outweigh the negatives.
Ukraine defence more crucial than Crimean sanction 20 Mar 2014 Western leaders are still debating their response after Russia moved to annex the Black Sea territory. Their focus should instead be on preventing Vladimir Putin destabilising Ukraine. That requires tougher sanctions than previously discussed, and preparedness for economic war.
Market spared shame in gilt-rigging fiasco 20 Mar 2014 An ex-Credit Suisse trader has been fined by UK regulators for manipulating gilts during QE auctions. The Bank of England adds soft target to its role of passive watchdog earned in the Libor scandal. The market, which blew the whistle, gets rare kudos for self-enforcement.
Yellen and Carney miss chance for hard reset 20 Mar 2014 Central bankers say they’re paying more attention to the financial cycle but old economic fixations persist. The ECB hasn’t started to regulate banks and Janet Yellen’s Fed sounds as oblivious as Ben Bernanke’s. There’s progress at the Bank of England, but much more to be done.
Fed’s D.C. neighbors also need its jobs dashboard 20 Mar 2014 The U.S. central bank ditched its 6.5 pct target for headline unemployment, but Janet Yellen stressed broader indicators like U-6, which adds discouraged and part-time workers. Monetary stimulus may help at the margin, but lawmakers can use the data to guide structural changes.
Euro zone periphery trade is running out of gas 20 Mar 2014 Investors keen on a recovery story have been piling into assets in Spain, Italy, Portugal and Greece. Some periphery assets now look expensive. Further gains need two conditions to be satisfied – politicians enacting more reforms and companies growing profits.
Credit Agricole upends French bank hierarchy 20 Mar 2014 The farmers’ bank is reversing its failed pre-crisis strategy of careening into the euro zone periphery. CredAg will instead focus on a tighter range of European markets. Yet its return and payout pledges now look juicier than more celebrated domestic rivals BNP and SocGen.
Next flaunts rewards of getting online right 20 Mar 2014 The UK retailer’s annual results look good. A trend of big payouts and EPS growth has made the stock a must-have. The shareholder-friendly strategy could start to look tired, if rivals smarten up. But online strength means Next investors can now look overseas for inspiration.
Confused Fed adds to emerging market muddle 20 Mar 2014 U.S. policymakers have sent a garbled message about their intention to raise interest rates. Increased uncertainty makes global bond and currency markets more volatile. That raises the risks for developing countries already battling with slower growth and sagging investor morale.
Valuing Tencent’s chat app remains an act of faith 20 Mar 2014 The Chinese web giant has finally shed some light on its popular messaging platform. Revenue figures show WeChat is morphing from an app into a business. But sparse details on costs and regulatory risks make future earnings anyone’s guess. Valuations are based largely on hope.
Indian government seeks to cash in on Modi rally 20 Mar 2014 The state hopes to partially offload stakes in 10 listed companies through an exchange-traded fund. If the offer succeeds, it will boost privatization proceeds. It would also allow the current government to benefit from market hopes that rival Narendra Modi will win the election.
Fed’s only useful guidance is for more stimulus 19 Mar 2014 The U.S. central bank has dropped its 6.5 pct jobless trigger for raising interest rates – a risk to its credibility. Moreover, the change in future outlook seems dictated by a bias toward long-term easy money. Janet Yellen’s Fed won’t be putting on the brakes any time soon.