Airline investors weigh up more pandemic baggage 24 Nov 2021 U.S. travelers may log their busiest day since the pandemic during Thanksgiving. In Europe, government clampdowns may crimp winter travel. And airlines on both sides still have to contend with what happens in China, which could knock some wind out of valuations.
Chobani founder seeks frothy IPO cream 24 Nov 2021 An Oatly-like valuation for the Greek-yogurt maker could make boss Hamdi Ulukaya’s stake worth $8 bln. Valued like Danone, he would be worth about a quarter of that. A valuation closer to the latter is reasonable, but Ulukaya can’t be blamed for reaching for a yogurt substitute.
New German coalition has old problem with spending 24 Nov 2021 The three parties that will form the next government want to invest more in green and digital projects while respecting strict debt limits. Cutting budget subsidies and using off-balance-sheet vehicles may help. But the plans fall far too short of big-spending peers like America.
Chancellor: U.S. bull market can’t go on forever 24 Nov 2021 Stein’s Law dictates that “if something cannot go on forever, it will stop.” Timing is another matter. “Nowcasting” looks at macroeconomic and market indicators, and finds little cause for concern. But it’s just another model. And, as Box’s Law states: all models are wrong.
KKR has wiggle room to sweeten Telecom Italia bid 24 Nov 2021 The U.S. private equity group will need to raise its 33 bln euro offer for the Italian telco to win over investors Vivendi and CDP. It’s already the largest buyout in European history. But KKR has ways to fund the deal without overloading Telecom Italia with debt.
BBVA’s Turkey M&A logic beats currency chaos 24 Nov 2021 Just before the lira’s plunge, the Spanish bank offered to buy the 50% it doesn’t own of local lender Garanti. The crisis will push up bad debt and squeeze lending margins. But the target’s low valuation and the inefficiency of only owning half give BBVA reason enough to proceed.
Foreigners will get the best buzz off German weed 24 Nov 2021 Berlin is preparing to light up its recreational cannabis market. With potential sales taxes and savings of 5 bln euros a year, the move could give the economy added puff. But German players may at first have to play second fiddle to Canadians that dominate the medicinal market.
Jamie Dimon sets his bank up to be China punchline 24 Nov 2021 JPMorgan’s boss was looking for chuckles when he said he’d wager that his employer would outlast the country’s Communist Party. Beijing is unlikely to appreciate the humour. As UBS and others can attest, the business blowback from perceived slights is often no laughing matter.
Paytm battering targets raw valuation underbelly 24 Nov 2021 India’s fintech giant is worth $13 bln after a 31% post-IPO drop. That remains exuberant at 26 times sales. The company is still growing, but revenue pressure is a concern, and costs are high. Success requires official help on fees and lending. That’s far from guaranteed.
Capital Calls: China’s data centre sale 24 Nov 2021 Concise views on global finance: Global Switch is attracting big-name private equity interest, but its quirky setup might justify suitors asking for a discount.
Joe Biden constructs a club of oil guzzlers 23 Nov 2021 The U.S. president along with China, India, and other nations that consume about half the world’s crude will tap stockpiles. Despite banding together, these fossil fuel users will have less impact than OPEC in the near term. But striking such alliances makes sense longer term.
Fed will have to put inclusive jobs on back burner 23 Nov 2021 Chair Jerome Powell wanted a labor market recovery to filter through to women and minorities before hiking interest rates. But tighter monetary policy is the surest way to contain inflation, which is at a 31-year high. Price stability will trump the job prospects of these groups.
The Exchange: Fintech evolves 23 Nov 2021 Companies from JPMorgan to Goldman Sachs are upgrading their banking businesses. Al Goldstein, one of the pioneers of peer-to-peer lending and online funding, tells Lauren Silva Laughlin how he reshaped those areas and why he is moving into private equity and venture capital.
German $2 bln buyout flags bank investor myopia 23 Nov 2021 Advent and Centerbridge agreed to buy Aareal Bank, a real-estate lender that also owns an IT business. They could churn out a good return with a breakup or just by investing in the business rather than paying dividends. Payout-hungry shareholders in other banks should take note.
Capital Calls: Risky banks, UK SPAC, AO World 23 Nov 2021 Concise views on global finance: A global watchdog reckons JPMorgan is once again the world’s most systemically important lender; investment firm Hambro Perks launches a UK blank-cheque vehicle; the British online retailer issues its second profit warning in two months.
ESG ratings’ big dogs may need to learn new tricks 23 Nov 2021 IOSCO wants better oversight in the murky world of sustainability grading. The global standards-setter hasn’t called for much that the likes of MSCI can’t live with. But the direction of travel suggests incumbents will lose out as data becomes more sophisticated and transparent.
Plastic-surgery app MBO aggravates governance scar 23 Nov 2021 Boss Xing Jin wants to buy the 85% he doesn’t own of New York-listed So-Young, which matches users with beauty services. Shares have slumped since its IPO and China may regulate ads. But Xing’s supervoting stock means investors have themselves to blame for any forced face-lift.
Telenor dials up another promising Asian deal 23 Nov 2021 Following its jumbo Malaysian merger, the Norwegian telecom operator plans to combine its Thai unit with a rival owned by conglomerate CP. There’s a 25% premium on offer to sell, but $2 bln of intended synergies from the first transaction suggest sticking around is a better call.
Elliott’s Athenahealth sale wins it future friends 22 Nov 2021 The activist firm has made roughly a fivefold return on the health-tech firm it bought after an acrimonious battle in 2019. While some of that’s down to market timing, Athenahealth’s old shareholders might have shared in the gains had the firm given Elliott more of a hearing.
Capital Calls: Eni spinoff 22 Nov 2021 Concise views on global finance: The $50 bln Italian oil group has a new name for the renewable energy and retail arm it plans to partially list.
Powell is best person for finance’s worst job 22 Nov 2021 The Fed chair faces a tough second term: Raise rates too quickly and he’ll hurt jobs, move slowly – as dovish vice chair pick Lael Brainard may favor – and inflation could mount. Economic indicators offer less help than they used to. Given the uncertainty, Powell is a safe bet.
Monster fizz and Corona would make icky cocktail 22 Nov 2021 The $47 bln energy drink maker may be in talks to merge with Constellation Brands, which sells beer and wine. Both have reason to try a new tipple, but savings would be scant given differences in distribution. And a more sprawling business may command a valuation discount.
KKR bid is next act in Telecom Italia soap opera 22 Nov 2021 The buyout group wants to take the phone operator private for 10.8 bln euros. Offering less than the pre-pandemic share price looks opportunistic. Yet the 47% premium will tempt all but top investor Vivendi, which is nursing hefty losses. The board should start a conversation.
Ericsson makes puzzling $6.2 bln ascent into cloud 22 Nov 2021 That’s how much the Swedish telecom kit maker is paying for web-based communications firm Vonage. With few cost savings on offer CEO Börje Ekholm will take years to generate a decent return. Moving into a fast-growing but ultra-competitive sector highlights his need to diversify.
Reliance-Aramco no-deal is sign of the ESG times 22 Nov 2021 A Saudi plan from 2019 to invest $15 bln into the Indian company’s refining arm is being re-evaluated as Reliance’s green ambitions complicate matters for both sides. The impasse reflects the hectic pace of the energy transition, and the cheap capital available to fund it.
Japanese golf buyout plays like a long par-4 22 Nov 2021 SoftBank-backed Fortress is paying $3.5 bln for Accordia’s collection of courses. The sport’s Covid-19 resurgence probably isn’t sustainable, so a valuation of over 10 times EBITDA adds some hazards. A few solid strategic shots, however, could make the investment green reachable.
UBS foreign chair ticks more boxes than Deutsche’s 21 Nov 2021 The Swiss lender picked Irishman Colm Kelleher to lead its board, while the German bank nominated Dutchman Alex Wynaendts. The former Morgan Stanley banker might bring some of the U.S. firm’s valuation magic to UBS. But M&A-hungry Deutsche could use more political heft in Berlin.
Disney’s empty chair is a succession stumble 19 Nov 2021 There’s still no official replacement for Bob Iger, who’s expected to exit at the end of the year. Other companies, from Mastercard to AT&T, named a new chairperson faster and more transparently. With a new CEO in charge, a switched-on board is all the more important.
Bezos could be $90 bln richer with Amazon breakup 19 Nov 2021 The $1.8 trln giant manages its AWS cloud group separately from e-commerce. On its own, the former may be worth as much as the entire company is now. J&J, GE and Toshiba are heading to splitsville. The world's richest man could become even wealthier by adding Amazon to the list.
Voters are last brake on Turkey’s lunatic express 19 Nov 2021 Bullied by President Tayyip Erdogan, the central bank slashed borrowing costs to 15%. Fearing runaway inflation, the lira plunged to record lows. With few other checks on a leader at war with interest rates, 2023 elections may be Turks’ best hope of restoring monetary sanity.