China’s Evergrande headache turns into a migraine 9 Jun 2021 Beijing wants lenders to stress-test their exposure to the developer, Bloomberg reports, which owes over $100 bln. In focus is troubled Shengjing Bank, but its tentacles stretch into larger institutions. With traders already anxious, a misstep by either side could upend markets.
KKR flips the LBO script with management “buy-in” 8 Jun 2021 Henry Kravis’s firm will list oil and gas firm Independence by merging it with publicly traded Contango. The latter’s shareholders will cede control while the chairman keeps his job, exchanging its highly valued paper for cheap assets. It’s a new twist on a management buyout.
U.S.-China trade relations run through Texas 8 Jun 2021 The Lone Star state surpassed California as America’s largest local exporter to the People’s Republic. That's mostly due to fossil fuels. While Washington and Beijing inflame tensions, regional economic ties are strengthening. That helps stop the uncoupling from going too far.
Fastly outage is a reminder to take life slower 8 Jun 2021 A glitch at the $6 bln digital content distributor took Reddit, Amazon and others offline. The internet is like a banking system without the government oversight, seemingly simple but really a complex patchwork. Users need to know instant online gratification is not guaranteed.
Amazon’s living-wage trade-off is worth it 9 Jun 2021 The $1.6 trln firm’s pay of $15 an hour, double the U.S. minimum, has bolstered hiring in a competitive job market. That could hurt some small businesses. But it puts the company in an important position to pressure America’s largest employers – the government and Walmart.
Blocked Nvidia-Arm M&A would hit SoftBank hard 8 Jun 2021 CEO Masayoshi Son agreed to sell his chip designer to the U.S. giant for $40 bln. If governments or competition authorities scupper the deal, an IPO would be the obvious Plan B. Based on sector valuations, $20 bln may be a realistic public price tag, landing SoftBank with a loss.
The Exchange: EU Trade Commissioner Dombrovskis 8 Jun 2021 With vaccination programs catching up with America and Britain, Europe is poised to rebound, the former Latvian premier, who is also responsible for an “Economy that Works for People,” tells Rob Cox in an interview hosted by the European-American Chamber of Commerce New York.
Aviva activist is part outrider, part salesperson 8 Jun 2021 Cevian Capital has taken a 5% stake in the 16 bln pound UK insurer. Unusually for an activist, it likes boss Amanda Blanc’s current strategy. But it gives her cover to move quickly, and also sets Aviva on a similar path to the lucrative exit Cevian managed at fellow insurer RSA.
Russian gold IPO hunters can afford to wait 8 Jun 2021 London listing candidate Nord Gold boasts scale, healthy margins and a decent dividend. But it’s owned by a tycoon and his sons. Given miners’ track record in snubbing minorities, investors may find it preferable to wait for the stalled IPO of peer GV Gold to return.
Capital Calls: Warren Buffett’s taxes 8 Jun 2021 Concise views on global finance: A ProPublica report unveils the true tax rate of the Sage of Omaha, Jeff Bezos and other members of the uber-rich elite.
Hong Kong devolving into economic monoculture 8 Jun 2021 Banks including Citi and UBS are hiring in the city, but other industries are looking to move headcount to Singapore or Shanghai. The financial hub is becoming dangerously one-dimensional: a recipe for rapid stagnation, not the renaissance Beijing promises.
Electronic waste unearths green China unicorn 8 Jun 2021 Used-phone retailer Aihuishou wants to go public at a $5 bln valuation. Thanks to frugal and environmentally conscious shoppers, demand for second-hand goods is booming. The company has yet to turn a profit, but backer JD's deep pockets and rare ESG credentials should appeal.
Alzheimer’s drug feeds U.S. healthcare cost spiral 7 Jun 2021 The approval of a treatment will bring hope to millions and might bring maker Biogen over $20 bln of revenue a year. But there’s little evidence it works. By taking a flier, regulators may be intensifying the trade-off between patients’ hope and Americans’ financial health.
QTS looks better for Blackstone than its clients 7 Jun 2021 Acquiring the fast-growing data-center firm for $10 bln makes sense for the private equity shop, which has cash to spend. It’s appealing for QTS too. Less obvious are the benefits for investors in Blackstone funds, who get something they could have bought more cheaply themselves.
It’ll take more than Dave to beat finance Goliaths 7 Jun 2021 The fintech named for the Israelite hero agreed to a $4 bln SPAC deal with Mark Cuban and other boldfaced names in the mix. The price isn’t bad. And Dave’s goal of taking on onerous overdraft fees is noble. But it’s a crowded space with many slingshots aimed at the mega-banks.
Danish hydrogen adds hygge to market green malaise 7 Jun 2021 Green Hydrogen Systems is planning a Copenhagen float that will value the electrolyser maker at $500 mln. Of late, pulled IPOs reflect investor scepticism about so-so renewable energy listings. The green gas’s key role in cutting EU carbon emissions may make this a comfier fit.
Wall Streeters outpace Europeans back to office 7 Jun 2021 JPMorgan CEO Jamie Dimon wants staff in by summer, and Goldman’s David Solomon called home-working an “aberration”. Deutsche, HSBC and Barclays are taking a laxer approach. Sidewalk-pounding bankers at U.S. firms might win more client facetime, and an even greater share of deals.
Anglo spinoff points to darker future for coal 7 Jun 2021 The mining giant’s thermal coal unit, Thungela, was valued at just $250 mln on its market debut. That’s a third of the EBITDA its South African mines may earn this year. It’s a stark reminder of the black stuff’s rapidly declining worth, and of public investors’ aversion to it.
Capital Calls: Medline’s money machine 7 Jun 2021 Concise views on global finance: Blackstone and partners’ purchase of a majority stake in the $34 bln medical equipment maker could generate a big windfall for its founding family, without the clan members handing over the keys to their empire.
Software deal contains two-sided logic errors 7 Jun 2021 Sydney-listed Altium spurned a $3.9 bln takeover bid from larger U.S. peer Autodesk. It’s an odd response given recent struggles and the chunky 42% premium on offer. The maths doesn’t compute for the suitor either. In wild M&A markets, such behaviour is a feature rather than a bug.
India Insight: Facebook losing one of its besties 7 Jun 2021 The social network’s WhatsApp messaging service is suing New Delhi over encryption. Even if it prevails, there’s growing support to get tough on foreign tech goliaths making the country their top market. Facebook’s $6 bln Reliance investment is becoming an important hedge.
Taxes are good first, knotty global step forward 7 Jun 2021 A G7 accord on a 15% minimum corporate tax, plus at-source levies on big firms helps rich nations shore up pandemic-hit coffers. Details are hazy but after years of wrangling it raises hopes of resolving harder multilateral challenges, principally in combatting climate change.
Medline deal subdues the buyout club 7 Jun 2021 Blackstone, Carlyle and Hellman & Friedman are buying a majority stake in the $34 bln medical supplies maker. Compared with past club deals, there’s less leverage and financial wizardry, but also less scope for friction, with the founding Mills family keeping a strong upper hand.
Confusing U.S. labor signs augur uneven recovery 4 Jun 2021 The Dallas Fed thinks the jobs market is hot; the San Francisco branch says the opposite. Both are right. While the unemployment rate fell to 5.8% in May, it’s less rosy for women and people of color. The central bank needs to focus on the weakest link to fulfill economic goals.
Pharma CVRs are an unhealthy M&A habit 4 Jun 2021 A lawsuit claims Bristol Myers slow-walked a cancer drug approval to avoid a $6.4 bln top-up payment on its buyout of Celgene. Aggrieved investors may get something but should have known better. Contingent value rights are illiquid, dispute-prone and best given a wide berth.
UFC has to earn its valuation belt 4 Jun 2021 The mixed martial arts powerhouse was valued at nearly $10 billion in deals struck alongside owner Endeavor’s IPO. That’s in line with big-talking UFC boss Dana White’s assessment. It’s a lot pricier than rival sports franchises, though. It could take some big hits to justify it.
Review: Meritocracy is a myth 4 Jun 2021 The business leaders who flock to the World Economic Forum use wealth and power to get their offspring into the best schools. This approach increasingly undercuts a society based on merit. Today’s capitalist elite, argues Adrian Wooldridge, is a new aristocracy in disguise.
Ackman SPAC falls flat with Universal denouement 4 Jun 2021 After sniffing at Airbnb and Bloomberg, the billionaire’s blank-cheque firm may instead buy 10% of the music label for $4 bln. It’s a fair price but Universal was going public anyway. And Bill Ackman’s “Tontard” acolytes could get it cheaper simply by buying its parent, Vivendi.
Credit Suisse fantasy M&A roads all lead to UBS 4 Jun 2021 The embattled $26 bln bank is a hypothetical takeout target. HSBC, JPMorgan or Morgan Stanley make strategic sense. But international interest would pile pressure on UBS to come up with an all-Swiss solution. An already-mooted Zurich mashup would also yield the most cost savings.
Capital Calls: Turkish gas, Generali, Garuda 4 Jun 2021 Concise views on global finance: President Erdogan’s “good news” on hydrocarbons smells off; the Italian insurer’s 1.5 bln euro bid for NN Group’s asset management unit may trigger a shootout; the Indonesian flag carrier’s long struggle to avoid bankruptcy is coming to a head.