KKR debt fund hitches ride on Italian reforms 26 Jun 2015 The private equity firm is setting up a fund with Intesa and UniCredit to invest in troubled Italian companies. It’s a change from the old Italian way of sitting on dud loans. KKR is plugging itself into bigger trends: new bank regulation, a reformist government and QE-driven recovery.
IPO madness in China stock markets is relative 26 Jun 2015 Guotai Junan shares popped 44 pct after its IPO, valuing China’s third-largest broker at $35 billion. Rivals make that look pedestrian. Such excesses are possible because China remains mostly sealed. Foreign markets courting China’s capital should hope its exuberance stays home.
Hong Kong regulator rides to defence of principles 26 Jun 2015 By rejecting the stock exchange’s plan to weaken “one share, one vote” rules, the SFC has acted for the long-term good. Some companies might follow Alibaba and list elsewhere. But overall, public investors should benefit. It’s a welcome stance as China’s capital markets open up.
U.S. justices leave door ajar to risky home loans 25 Jun 2015 The Supreme Court confirmed that even neutral housing policies can be illegal if they have a prejudicial effect. That keeps banks and other mortgage providers vulnerable to claims of unintentional bias. More bad lending practices, not less discrimination, could be the result.
Williams may get too twisted avoiding complexity 25 Jun 2015 The U.S. natural gas pipeline operator wants to absorb its MLP offshoot in the hope of growing faster. A $53 bln takeover by Energy Transfer would put it in a more sprawling partnership web. Absent a Plan C, Williams could have a hard time showing greater value in simplicity.
Supreme Court tells Obamacare opponents to move on 25 Jun 2015 The top U.S. court upheld subsidies for health coverage bought on federal markets. The president’s landmark reform is popular and, now, entrenched enough to survive. Even if Republicans win the White House in 2016, they need to stop wasting time on the issue and start governing.
Guest view: What Argentina teaches about Greece 25 Jun 2015 The South American nation tried to live a currency lie in 2001. But even clever schemes could not stave off crisis. Fernando Fernandez of IE Business School argues that Greece is in a similar situation. Clever plans cannot save the country from an untrustworthy government.
IAC investors may get a Match from partial divorce 25 Jun 2015 Boss Barry Diller is spinning off the company’s online dating unit, but will retain control. Match, which contains fast-growing Tinder, is profitable with tech-like margins but showing some signs of age. Diller’s splits, though, have a history of creating value for shareholders.
Coty takes farcical route to right CEO 25 Jun 2015 Bart Becht is staying as the perfume maker’s interim boss, a week before outsider Elio Sceti was due to take over. The former Reckitt chief and dealmaker is just who Coty needs if its bid for P&G’s beauty business succeeds. But it hardly counts as a well-planned succession.
Fiat’s luxury dream highlights strategic nightmare 25 Jun 2015 CEO Sergio Marchionne wants the Giulia sedan to transform Alfa Romeo into a premium brand. That’s understandable as luxury cars are highly profitable. But he probably doesn’t have enough gas in the tank to take on Audi, BMW and Daimler. That can explain his recent merger zeal.
Time for EU to end Greek debt relief omerta 25 Jun 2015 Euro leaders in Brussels are refusing to discuss an easing of Athens’ debt pile until Greece makes solid reform pledges. That may make sense politically. But debt relief is a necessity, rather than a nice-to-have. If it were offered now, Greeks might budge on structural reform.
Chinese banks get closer to losing training wheels 25 Jun 2015 Removing an official cap on the ratio of loans to deposits should remove distortions and could boost credit. More importantly, it takes China a step nearer to freeing its domestic financial system. Then it will be up to regulators, not rules, to stop banks careering off the road.
China’s new Silk Road paved with hidden costs 25 Jun 2015 Banks are rushing to back Xi Jinping’s plan to expand China’s influence. Building infrastructure in central Asia and the Middle East is a smart way of exporting excess materials and labour, and gaining skills and allies. The cost is dud loans and stifled domestic consumption.
Indian banks need a capital flood, not a dribble 25 Jun 2015 The government may double to $3 billion the amount it injects into state lenders this year. That’s welcome, but still a fraction of the $50-odd billion they need. India needs to be more aggressive about fixing balance sheets and governance before outside investors will step in.
Boeing’s new captain can’t rely on autopilot 24 Jun 2015 During Jim McNerney’s decade at the controls, the shares failed to fly as high as the broader aerospace and defense index. New CEO Dennis Muilenburg faces competitive and union headwinds, but also extra turbulence in Washington. Boeing’s next leg requires a steady pair of hands.
New drivers could rev Formula One’s billions 24 Jun 2015 Private equity backer CVC is ready to speed off after a decade of turbocharged returns, while 84-year-old patriarch Bernie Ecclestone may not be doing enough to tune high-tech motor racing’s commercial chassis. Qatari and U.S. owners might just restore full power.
Palantir’s mystery inflates its $20 bln valuation 24 Jun 2015 The private data analytics firm beloved by government intelligence is raising $500 mln. Going public may not be an option for Palantir given its clients and culture. That deepens the enigma that further feeds its potential value - a James Bond privacy premium of sorts.
U.S. trustbuster delivers transatlantic smackdown 24 Jun 2015 The Justice Department’s Bill Baer stressed to London listeners the need to divorce politics from antitrust. American competition policy hasn’t been immune from bias. But the speech seemed squarely aimed at EU lawmakers pushing to break up the likes of Google on fuzzy grounds.
Edward Hadas: Unforgiving pope is right on money 24 Jun 2015 Pope Francis says we are permanently indebted to the world in which we live. It’s different for financial promises which he says should sometimes be forgiven. In a divided world, that means the rich must help the poor find the money they need to honour their environmental debts.
BoE has severe case of central banks’ new dilemma 24 Jun 2015 The UK economy has been growing for a while and wages are finally picking up. But inflation is still pitifully low. And if a rate rise chokes growth, there’s little room for stimulative cuts. It’s a far cry from the clear choices the monetary authorities faced during the crisis.
Antitrust food fight messes up outlook for mergers 24 Jun 2015 A U.S. court halted Sysco’s $3.5 bln US Foods purchase, saying the deal would probably harm national competition despite local rivals. A similar argument threatens Staples’ $6.3 bln bid for Office Depot. The bottom-line economics still look tasty, but legal precedent has soured.
Delhaize pays for sway in 25 bln euro Ahold combo 24 Jun 2015 Top brass at the Belgian supermarket operator have secured strong board representation in the agreed tie-up with its larger Dutch rival. The 5 pct fall in Delhaize stock suggests they may have surrendered shareholder value in the hope of retaining management influence.
French 10 bln euro telco bid isn’t quite dead 24 Jun 2015 The Bouygues board has rebuffed Numericable’s offer for some plausible reasons. Patrick Drahi, the ambitious Numericable boss, might yet gain favour with a hefty break fee and job commitments. But with a stretched valuation and the government still opposed, the risks are big.
Caixabank fail heralds fantasy Portuguese bank M&A 24 Jun 2015 Caixa’s withdrawn bid for BPI makes a merger of the latter with bigger rival BCP more likely. Meanwhile, the race to acquire the good bits of bust lender BES is hotting up. Both sagas remain unresolved, but Portugal’s bloated banking sector could soon be whittled down.
South Korean M&A quirks hold perils for investors 24 Jun 2015 A $9.2 bln merger led by Samsung’s holding company has cast a spotlight on the country’s peculiar stock market rules. The dealmaking shows the limits of measures designed to protect independent investors and how the wider system is stacked in favour of the chaebols.
Tencent dredges Hong Kong’s murky depths 24 Jun 2015 The tech giant is buying into Mascotte, an HK investment group mainly notable for a disastrous solar-materials acquisition. Financially, the $97 mln deal hardly matters for the $191 bln Tencent. But off-topic, unexplained moves like this should concern outside shareholders.
India in depth: Modi’s big bet on housing 24 Jun 2015 The prime minister wants to help build 20 mln new homes for the poor in seven years. That’s a challenge for a construction industry beset by unsold inventory and graft; and for capital-starved banks. But success would mean $250 bln in investment and a shot at rapid urbanisation.
3M’s biggest deal ever sticks safely to program 23 Jun 2015 The $100 bln inventor of Post-it notes is paying $2.5 bln for KKR-owned Capital Safety. The price for the workplace safety equipment manufacturer exceeds 3M’s R&D spend last year, and the valuation is healthy. Even so, it’s a high-growth business that suits a modest M&A strategy.
Uncle Sam wastes home-loan crisis 23 Jun 2015 Tackling expensive rent is a better policy goal than pushing mortgages – and would arguably create more jobs. Instead, Washington has stoked growth in home loans with low down payments and less creditworthy borrowers provided by shadow banks. That’s counterproductive.
UK’s imperfect bank pay rules still pack a punch 23 Jun 2015 The Bank of England’s code for investment bank remuneration introduces a sliding scale of deferral and clawback periods that hinge on seniority. Keeping bankers from their winnings for 10 years may still not be enough. But it positions the UK as significantly tougher than peers.