India’s shopping aisle cleanup risks bigger mess 1 Apr 2021 Amazon and Walmart would have to treat small and large vendors alike and could be forced to shed stakes in their wholesale arms. The leaked draft rules overlook e-commerce realities. And targeting foreigners sits especially uneasily after Reliance’s international cash call.
Capital Calls: Elon Musk, LeBron James 1 Apr 2021 Concise views on global finance in the Covid-19 era: Endeavor, Ari Emanuel’s entertainment group, is hoping the Tesla boss’s stardust will help a second attempt at an IPO; the basketball star’s stake in the Red Sox is a foil to Steve Cohen’s Mets deal.
Chinese AI dragon confronts fiery new realities 1 Apr 2021 Megvii wants to raise over $900 mln in a Shanghai IPO after a U.S. blacklist torpedoed its 2019 Hong Kong listing. Revenue growth is slowing and losses widening, as Beijing proceeds with its own crackdowns. It also may not be the best time to have Alibaba and Ant as big backers.
ViacomCBS crazy volatility is rooted in sanity 31 Mar 2021 After hitting a high of over $100 a share, the media firm’s shares plunged partly due to the blowup of hedge fund Archegos. The uncertain value of ViacomCBS's streaming service makes the group's real value a crapshoot. Even so, the company now looks undervalued.
Biden’s $2 trln road trip can’t start soon enough 31 Mar 2021 Republicans think the president’s infrastructure plan is too big; progressive Democrats think it’s too small. The cost is deceptive because projects still have to surmount local politics and red tape. The main thing is to agree something so that investment and jobs can follow.
U.S. offshore wind set to hit gale force growth 31 Mar 2021 The first big project, worth $2.8 bln, is on track for a final green light. Europe already has 30 times as much capacity. Slow approvals have left U.S. wind power in the doldrums but with costs now lower than some fossil fuels and falling fast, opposition will be blown away.
Joe Biden’s trustbusters reveal their merger DNA 31 Mar 2021 The U.S. Federal Trade Commission wants to block Illumina’s $7.1 bln purchase of cancer-testing outfit Grail. Preventing the gene-sequencing group from reabsorbing a company it spun out in 2017 shows that watchdogs’ tougher thinking about competition is turning into action.
Draghi’s corporate inbox will keep flashing red 31 Mar 2021 Rome’s to-do list, left over from the last government, includes selling dud bank MPS, resurrecting carrier Alitalia, expanding broadband and ending a motorway row. With vaccinations and recovery his legacy, these secondary tasks will slip to the bottom of Mario Draghi’s pile.
Credit Suisse is overdue for new chairman’s axe 31 Mar 2021 The Swiss bank’s shares are down 23% in a month after Archegos and Greensill collapsed. Though losses are unclear, investors assign no worth to the investment bank. By shrinking that unit, and hiving off the fund and local divisions, António Horta-Osório could rescue some value.
Deliveroo is unsavoury appetiser for UK IPO revamp 31 Mar 2021 The food delivery group’s shares dropped up to 30% on their stock market debut. Hefty losses, a punchy valuation and founder Will Shu’s super-voting stock proved a turnoff. The flop should prompt a rethink of the government’s rushed plans to lure more such companies to London.
Hitachi’s $9.6 bln buy defies some global logic 31 Mar 2021 The Japanese group is paying a huge 38 times forecast EBITDA for U.S.-software firm GlobalLogic. That’s only partly justified by the target’s superfast growth in a hot “digital transformation” market. Boss Toshiaki Higashihara will need serious synergies to eke a decent return.
Capital Calls: Volvo IPO, Walgreens, Saudi Arabia 31 Mar 2021 Concise views on global finance in the Covid-19 era: Geely’s mooted $20 bln valuation for its Swedish brand still looks ambitious; Amazon can't match the transatlantic pharmacy chain's in-store clinics; Mohammed bin Salman grabs private cash to pay for a switch away from oil.
Xiaomi becomes ultimate electric-car test driver 31 Mar 2021 The smartphone maker is spending $10 bln to expand into smart vehicles. There are no shortcuts to success. But it has ample resources, manufacturing experience and a formidable founder, Lei Jun. If Xiaomi falters, it could prompt other tech industry EV wannabes to steer clear.
Archegos pours sand into Nomura’s main fuel tank 31 Mar 2021 The Japanese lender’s investment bank makes more money in the United States than elsewhere, thanks in part to being big in equities. A potential $2 bln hit from the troubled fund has the unit sputtering. Unclogging the mess means proving the loss is an anomaly. That’ll be hard.
Archegos takes shine off family office freebies 30 Mar 2021 By deeming itself a family office rather than an investment adviser, Bill Hwang’s hedge fund sidestepped many disclosure requirements. That might not have mattered to the culprit of its demise: opaque equity swaps. Still, it raises questions about bigwigs managing for themselves.
Air-taxi SPAC only partly defies financial gravity 30 Mar 2021 German flying-cab startup Lilium is getting a U.S. listing at a $2.4 bln enterprise value. Cutting commutes from Philadelphia to Manhattan may appeal to the richest 4%. But with a 2024 take-off and plenty of rivals, including chopper firm Blade, it will be hitting crowded skies.
Chancellor: Value investing’s day is coming soon 30 Mar 2021 Between 1926 and 2009, lower-rated stocks outperformed more expensive “growth” shares by over 4% a year. Shifts in recent years to passive investing and tech stocks changed that. But a new study shows they outperform when stock market bubbles burst – as this one inevitably will.
Robinhood IPO comes with forest of perils 30 Mar 2021 The U.S. retail brokerage has expanded its user base and profile fast. But its main revenue, payments from market makers, is under pressure from regulators and rivals. Other parts of the top line are under pressure too. It’s hard to square that with a $30 billion valuation.
IPO laggards pay price for predecessors’ chutzpah 30 Mar 2021 Miner GV Gold, defence firm Leonardo DRS and soccer team Club Brugge shelved their listings. Investors have been stung by the poor performance of a wave of richly valued tech floats earlier this year. With the pipeline still full, hopeful issuers will now have to offer bargains.
The Exchange: Sustainable finance 30 Mar 2021 European bank ING is a leader when it comes to holding borrowers to climate-change commitments. In an interview hosted by the European-American Chamber of Commerce New York, ING Americas CEO Gerald Walker talks to Breakingviews’ Richard Beales about the future of green finance.
Deliveroo’s IPO cash hunger leaves sour aftertaste 30 Mar 2021 The UK food delivery firm’s offering values it at 7.6 bln pounds, the bottom of the target price range. Despite its rapid growth and big ambitions, investors face post-pandemic uncertainty. Boss Will Shu’s order for 1 bln pounds of fresh cash suggests profitability is a way off.
Europe’s greenwash-slayer becomes Trojan Horse 30 Mar 2021 The EU has proposed classifying natural gas as sustainable. Its taxonomy, which differentiates green assets from the rest, is likely to be watered down further. Such an imperfect guide risks leading investors astray and delaying progress towards decarbonising the economy.
Aussie power giant spins into climate quandary 30 Mar 2021 AGL Energy hopes running its generation and retail units as separate businesses will lift its slumping stock. But CEO Brett Redman’s pitch is short on financial detail, envisions himself as boss of both parts, and leaves the $5 bln company heavily reliant on fossil fuels.
Capital Calls: BlackRock’s Archegos angle, SPACs 30 Mar 2021 Concise views on global finance in the Covid-19 era: The fallout from the collapse of Bill Hwang’s family office gives regulators reasons to focus on funds, not fund managers; and bosses of blank-check companies don’t take investor questions.
Hong Kong softens the G in ESG 30 Mar 2021 A new proposal would limit access to information about company bosses. Labyrinthine structures and easily confused names make such data invaluable for bank and investor due diligence. Going against the tide of governance and disclosure will taint the city’s business standing.
China Evergrande spinoff is draped in red flags 30 Mar 2021 The indebted property conglomerate plans to list its online market for flats and cars, valued at $23 bln. Unlike rival Ke, the unit has grown by taking stakes in customers, mostly real estate agencies, and giving them equity. Brash financial engineering is unlikely to pay off.
Hedge funds take third strike vs. U.S. watchdogs 29 Mar 2021 So far Archegos’ default hasn’t matched the systemic impact of other crises. But last year short-term funding stresses forced a U.S. government backstop. Then there was the GameStop roller coaster. The industry can only sustain so many misses before regulators say enough.
SpongeBob emerges from market chaos mostly intact 29 Mar 2021 ViacomCBS pocketed $3 bln by raising equity after a meteoric share-price rise, only to find itself at the center of a selloff triggered by hedge fund Archegos. The broadcaster’s shares are still up over 20% this year, but its next capital raising may not be so easy.
Banks’ prime broking blowup reveals lurking danger 29 Mar 2021 Credit Suisse and Nomura could lose up to $6 bln on the default of Archegos Capital. Neither have been forthcoming yet about how a single client cost them so much. But such glaring control failures raise questions about what other risks are hidden in banks’ trading books.
AstraZeneca could use a shot of under-promising 29 Mar 2021 The pharma group got caught in a spat between states over vaccine supplies, partly due to PR gaffes and overhasty pledges. A refresh of the board and chairman would be one way to overcome an episode that has hurt credibility and hampered rollout of a good product millions want.