The ghost of Instagram haunts Microsoft’s future 9 Dec 2022 When Facebook bought the photo-sharing site in 2012, regulators failed to see Mark Zuckerberg’s larger vision. Now the FTC is trying to block Microsoft’s $69 bln Activision deal, partly to stop future domination. Fighting on qualitative terms seems unfair but is inevitable.
Sinema widens gap between Democrats and Wall St 9 Dec 2022 The Arizona senator’s exit from the U.S. Democratic Party won’t change much in Washington, but it reflects a growing split between the financial sector and liberal lawmakers. Kyrsten Sinema stood apart in her support for wealthy investors. Wall Street is edging further right.
Aesop owner evokes goose and golden egg fable 9 Dec 2022 Ten years after buying control of the luxury skincare brand, Brazil’s Natura is exploring strategic options for the business. A possible $2.4 bln valuation from a spinoff or stake sale would help pay down the parent’s debt. The danger is bungling what has been a solid investment.
Capital Calls: Rio Tinto, Grocery delivery M&A 9 Dec 2022 Concise views on global finance: After a shambolic process, the $118 bln miner has succeeded in buying out the 49% of Turquoise Hill Resources it doesn’t own; Turkish grocery delivery player Getir gobbles up German rival Gorillas for $1.2 bln.
UK’s Big Bang barely mitigates City’s Brexit pain 9 Dec 2022 Finance minister Jeremy Hunt is fiddling with some peripheral regulations to try and boost the City’s competitiveness. It won’t reverse the flow of bankers to Europe. The exodus might even speed up if the EU finally gets moving on its own financial reforms.
China’s reopening will come with big late fees 9 Dec 2022 Strict quarantine rules have helped authorities to keep money onshore, including $760 bln in travel spending. If China fully relaxes, capital outflows could be Beijing’s next headache. But the damage to outward-facing parts of the economy from keeping borders closed is worse.
Asia debt craze spawns vicious tech funding circle 9 Dec 2022 India’s Byju’s wants easier terms on an existing $1.2 bln loan, one of a series of punchy deals the region’s hottest money-losing firms sold to BlackRock and others ahead of planned listings. Poor results and rising funding costs raise the stakes on getting IPOs across the line.
Blackstone gets a slap from efficient markets 8 Dec 2022 Clients have pulled money from funds like BREIT, whose purported strength is that their valuations aren’t subject to public markets’ whims. That offered stability during recent strange times. But if investors decide the market’s pessimism might be justified, there’s a problem.
Exxon and Chevron give in a little to temptation 8 Dec 2022 The two oil giants plan to increase investment in shale next year, to a combined $39 bln, and reduce carbon intensity. Raising output and growing sustainability could even boost capital returns to investors. The worry is that the industry regains its taste for profligacy.
Congress can finally end private-equity tax break 8 Dec 2022 Presidents Obama, Trump, and Biden all tried to close the carried-interest tax loophole, and they all failed. Democrats’ latest election win gives them another shot at an overhaul. Lobbyists will push back, but liberals and deficit hawks should unite to end the unfair carve-out.
The implications of Blackstone’s property wobble 8 Dec 2022 The giant alternative asset manager’s market value dropped by $8 bln after it said investors were exiting its flagship real estate fund. In this Viewsroom podcast, Breakingviews columnists discuss the causes of the jitters and how rivals are vulnerable to similar moves.
New buy-now-pay-later fad runs old-school risks 8 Dec 2022 After Klarna and others saw their valuations slashed, venture investors are now pouring money into business-focused lenders like Wayflyer. It sounds like digital trade finance, which has a patchy past. There’s often a good reason that small borrowers can’t get money elsewhere.
Banks’ buyout-debt machine defies quick jumpstart 8 Dec 2022 SocGen, BNP and Deutsche are buying slices of their own European collateralised loan obligations, which turn private-equity loans into bonds. That has echoes of 2008-style excess, but it’s not too risky. Their bigger problem is that the $1 trln market may be inexorably slowing.
Capital Calls: U.S. labor market softens, slowly 8 Dec 2022 Concise views on global finance: Joblessness data suggests Americans are taking longer to find work. That’s good for inflation, but sluggish progress means the Fed will have to keep tightening monetary policy.
Sinopharm’s second Chinese herb shot is potent 8 Dec 2022 The pharma giant may revive a $4 bln buyout of its Hong Kong-listed traditional medicine arm. Valuations for rivals on the mainland have risen in the two years since the last try. A growing disconnect between the markets allows for a bigger premium and a lucrative relisting.
BlackRock’s activist investor fights passive tide 7 Dec 2022 A tiny shareholder says boss Larry Fink’s climate-change position falls short and that the $8 trln asset manager shouldn’t impose its beliefs on companies. Some customers agree, but the firm’s solid performance makes it a tough target. When things are going well, inertia reigns.
Rio Tinto plays chancy round of Mongolian roulette 7 Dec 2022 After years of wrangling, the fate of a $3 bln offer for the rest of the Oyu Tolgoi copper mine’s partner heads to a vote. A win would make a key piece of growth easier to manage. If the bid fails, minority shareholders face stake dilution and Rio managers may merit the boot.
Capital Calls: DWS fixes what it can 7 Dec 2022 Concise views on global finance: The 6 bln euro German asset manager unveiled some punchy new targets, but its biggest challenge will be to unshackle itself from controlling shareholder Deutsche Bank.
Big Pharma’s heartburn win is a valuation salve 7 Dec 2022 GSK, Haleon and Sanofi’s combined worth rose $14 bln after a U.S. judge dismissed claims that a drug causes cancer. It frees up cash for new research and deals. The victory also helps lay to rest the ghost of Bayer’s Roundup legal thwack, which has haunted the sector since 2020.
ECB’s bank loan-loss worries look overdone 7 Dec 2022 Chief supervisor Andrea Enria fears that BNP, ING and others are flying blind into a 2023 default storm. But rate hikes will give the 10 largest lenders a 120 bln euro profit buffer before their capital gets hit. The big banks can afford to keep going with dividends and buybacks.
Fortescue boss sets himself up for climate bonanza 7 Dec 2022 Twiggy Forrest has bought wind-farm firm CWP for some $2.7 bln via his personal fund. Being the largest owner of Aussie renewables is a great hedge for his miner’s punt on green hydrogen. And if the gas takes off, he’ll earn even more selling the clean energy needed to make it.
Vietnam’s Tesla faces daunting Nasdaq road test 7 Dec 2022 Electric-car maker VinFast has filed for a U.S. IPO. It is unprofitable, has only just gone all-in on battery power, and its dependency on parent Vingroup may be a turnoff, too. The young marque could make a case for a $5 bln valuation, but investors will kick the tires hard.
Chinese insurer bets on IPO clouds parting 7 Dec 2022 Sunshine has raised $863 mln in its Hong Kong debut despite volatile markets, low interest rates and Covid disruptions to its business. The group may have navigated all three relatively well, but a valuation premium suggests investors expect brighter days ahead.
Disney’s board needs some magic 6 Dec 2022 Nearly all the media giant’s directors were picked during Bob Iger’s first term as CEO. He’s back and part of his job is to find a replacement, something he failed to do. He needs people to challenge his thinking and prepare to exit. That requires dismantling the inner circle.
New CEO gives Prada more stylish look for listing 6 Dec 2022 Former Luxottica executive Andrea Guerra will replace founder Patrizio Bertelli at the $15 bln fashion house. It’s a breath of fresh air for the family-controlled firm. Putting an experienced outsider in charge may increase Prada’s appeal as it eyes a share sale in Milan.
SPACs and crypto are just the tip of the iceberg 6 Dec 2022 Low rates pushed investors into risky pools of money – blank, digital, illiquid or otherwise. A defunct deal involving stablecoin issuer Circle shows that the go-go days are over. But other, much bigger, problems may be lurking in the murkier worlds of buyouts and private credit.
The complexities of EY’s big breakup bet 6 Dec 2022 The Big Four firm is pushing a plan to separate its auditing unit from its consulting business. In this Exchange podcast Andy Baldwin, global managing partner, discusses the challenges of convincing partners in over 70 countries to back the split – and what happens if it fails.
UniCredit CEO Orcel has leverage in pay debate 6 Dec 2022 The veteran dealmaker has hit his bank’s targets this year and narrowed a valuation gap to peers. Andrea Orcel may therefore deserve his maximum annual bonus. A pay hike beyond that is less obviously required, but legitimate fears he may jump ship may tip the board to offer one.
Breakup is best cure for Fresenius chronic pain 6 Dec 2022 Covid-19 disruption and staff shortages have hit the $16 bln medical group, in which activist fund Elliott owns a stake. Sold separately, its various bits could better reward investors. Flogging low-hanging fruit like hospital builder Vamed would earn CEO Michael Sen a first win.
Capital Calls: Twitter’s news problem 6 Dec 2022 Concise views on global finance: If the U.S. Congress passes a law that allows news organizations to band together and negotiate with online platforms, Elon Musk may have one more challenge to add to his growing list.