Capital Calls: Bank of England’s dark clouds 4 Aug 2022 Concise views on global finance: The UK central bank predicts inflation will hit 13% and the economy will slip into recession just as Boris Johnson’s successor as prime minister takes charge.
Nelson Peltz’s ego may be only winner in scrap 4 Aug 2022 Investors in a London fund managed by the agitator are trying to replace its board and wind it down. The 80-year-old might prevail in a shareholder vote, but he still faces other battles. As he’s said to other executives, sometimes a compromise is better than a distraction.
American solar plan one-ups gas-junkie EU 4 Aug 2022 A U.S. bill is offering $30 bln in tax credits to companies to build solar panels at home. That will help crack China’s control of the green supply chain. The EU could increase solar capacity seven times by doing something similar. That requires better coordination and focus.
Private equity needs more other-people’s-money 4 Aug 2022 Firms like Blackstone and KKR have $1.4 trln in funds burning a hole in their collective pocket. But they need debt to juice up their equity investments. With loan markets in turmoil, and direct lenders potentially facing constraints too, the mountain of dry powder may stay dry.
Alibaba offers false ray of China’s economic dawn 4 Aug 2022 Quarterly revenue at the $260 bln e-commerce giant was flat, beating horrid expectations. As lockdowns ease, the hope is that consumers will spend more. But online advertisers, Alibaba’s core customers, are cutting budgets, suggesting a protracted slowdown is on its way.
Odd UK hospital deal has healthy prognosis 4 Aug 2022 Johann Rupert’s Remgro and shipping giant MSC are buying London-listed Mediclinic for $4.5 bln. It’s an unusual concoction, but time away from public markets may help the company grow. A fair price and the threat of rising costs mean minority shareholders should play along.
Banks’ private-credit fightback may underwhelm 4 Aug 2022 JPMorgan and Deutsche are trying new ways to fend off lenders like Ares, who are displacing them in funding buyouts. Holding onto loans for longer or launching funds mean lower returns and tough competition. Their best hope is that the booming $1.2 trln sector deflates by itself.
India’s war on foreign tech risks misfiring 4 Aug 2022 New Delhi is raiding offices of Chinese smartphone makers, banning Singaporean and Korean games, and nudging U.S. firms to integrate their e-commerce platforms. The crackdowns and cajoling underscore official efforts to reshape India’s growing tech sector. A lot could go wrong.
MGM and SJM fuel Macau recovery hopes and fears 4 Aug 2022 The $15 bln U.S. group’s record results in Las Vegas suggests its Chinese casinos should prosper, too, once Beijing’s zero-Covid policy lifts. That, though, is becoming a long-term bet, and cash-burning rivals like SJM are already having to raise more money to stay at the table.
Thoma Bravo pulls out its inflation-era playbook 3 Aug 2022 The private equity firm’s purchase of security software maker Ping Identity for $2.4 bln fits the thesis behind many of Thoma Bravo’s recent deals: Companies that are expanding can still use stern cost discipline. The question is whether cuts come at the expense of future growth.
It’s not so bad being a bubble stock after all 3 Aug 2022 GameStop, Microstrategy, AMC, and even Robinhood all attracted irrationally exuberant investors. Now an obscure Hong Kong company has caught a similar wind. Sure, the air has come out of most of the hype. But companies have ended up better off than they would have been otherwise.
Capital Calls: UK antitrust watchdog/M&A 3 Aug 2022 Concise views on global finance: The Competition and Markets Authority’s change of heart over NortonLifeLock’s 6.2 bln pound takeover of UK group Avast was an opportunity for bold investors.
Italy loafer buyout is a bet on a higher price tag 3 Aug 2022 Two decades after listing shoemaker Tod’s, founder Diego Della Valle is taking it private at the same 40 euro share price. His hope, with partner LVMH, may be that the group is worth more split up than his 1.4 bln euro bid implies. Weary investors may take the cheap offer anyway.
UK’s Bain ban sets oddly high moral bar 3 Aug 2022 Britain has barred the consultancy from public contracts due to misconduct in South Africa. The nod to ethics is overdue but tricky. Rivals McKinsey and KPMG, hit by related scandals, escaped UK censure. A similar stand against global skulduggery would red-card much of the City.
Chinese chip IPO is bet on double self-sufficiency 3 Aug 2022 Hygon is launching a $1.6 bln Shanghai float. Its joint venture blacklisted by Washington with U.S.-based AMD gave it a boost in microprocessors, an area Beijing wants to cut foreign reliance on. The huge valuation premium spotlights its hope for success as it goes alone.
Airbnb dodges inflationary roach motel 2 Aug 2022 The cost of hosting tourists – and being one – is rising. But not for Airbnb, which unlike Marriott and Hilton has managed to ensure price hikes remain other people’s problems. Meanwhile, travelers are willing to pay more, which cushions both the hosts and the company itself.
TD buys Cowen, and hopefully its people too 2 Aug 2022 The Canadian bank’s $1.3 bln purchase of investment bank boutique Cowen gives it a toehold in the U.S. market. Together the securities units are roughly the size of Jefferies. But successful investment banking deals always come down to employees – and paying enough to keep them.
China’s economic plight ups Pelosi visit risks 2 Aug 2022 Despite Beijing’s warnings, U.S. House of Representatives Speaker Nancy Pelosi landed in Taiwan on Tuesday. Slowing growth and supply chain constraints make it hard for China to retaliate against American or Taiwanese firms. Oddly, that makes a military showdown more likely.
Thoma Bravo is riding the tech downturn 2 Aug 2022 Tech valuations are in freefall amid a darkening economic picture, leaving private equity buyers to sift through the wreckage. In this episode of The Exchange podcast, Thoma Bravo managing partner Seth Boro explains how his firm is navigating the market shift.
Capital Calls: Uber’s cash starts to flow 2 Aug 2022 Concise views on global finance: The $56 billion car-hailing service is growing rapidly and has started generating positive cash flow. It’s still overvalued, though.
Maersk’s cash machine is economic storm warning 2 Aug 2022 The Danish shipping giant reckons sky-high freight rates will help it land $37 bln of EBITDA this year. The trouble is its $50 bln enterprise value gives little credit to what lies over the horizon. The likely explanation is a sharp collapse in container demand due to recession.
CATL can pull off its risky reshuffle 2 Aug 2022 A director and second-largest shareholder at the $194 bln battery maker has quit and founder Robin Zeng is now both chair and general manager. Such moves can be red flags for investors. But as CATL goes global, a familiar face at the top is for now more reassuring than not.
Antitrust watchdogs go big on drama, light on plot 1 Aug 2022 Penguin’s merger with fellow publisher Simon & Schuster is going to trial; Facebook owner Meta faces a battle over its deal with a virtual fitness firm. Both cases test out new storylines crafted by the U.S. competition watchdogs. But by getting creative they risk missing meatier targets.
Big Tech in finance? There’s a regulator for that 1 Aug 2022 Apple and peers are encroaching on banking services but without the same burdensome oversight. Amazon, meanwhile, supplies cloud services on which lenders depend, but avoids comparable regulatory headaches. The panel of U.S. watchdogs known as FSOC could level the playing field.
Women’s soccer kicks off virtuous financial circle 1 Aug 2022 England’s “Lionesses” won the European Championship in front of 87,000 fans with millions watching at home. That suggests public interest not far off the men’s game. If soccer follows tennis in closing the gender revenue gap, there will be big bucks for players – and for clubs.
HSBC’s cross-border ties are paying dividends 1 Aug 2022 CEO Noel Quinn promised a 12% return on tangible equity and higher payouts to shareholders as the global bank rebuffed Ping An’s breakup call. Higher U.S. interest rates help, but if the Chinese insurer has spurred the $125 bln bank to raise its game, all investors will benefit.
Capital Calls: Heineken’s post-Covid bounce 1 Aug 2022 Concise views on global finance: Beer drinkers are quaffing more than before the pandemic, despite higher prices. But the Dutch brewer’s decision to scrap its 2023 operating profit margin target suggests it can’t entirely escape rising costs.