IPO bankers may as well hit the beach until autumn 26 Jan 2023 A handful of mid-sized European companies are working on stock market debuts. But the upcoming share offerings are too small to reopen Europe’s drowsy equity capital markets. Regional ECM bankers may as well take to their sun loungers until things pick up in the third quarter.
Euro-banks have done their time in valuation jail 26 Jan 2023 Deutsche Bank, BNP Paribas and peers are valued by investors as if they are headed for a bruising slump. Yet the region’s lenders have been treading more cautiously than they did before the 2008 crisis, and have pared back risky trades. Their rehabilitation deserves more credit.
Adani’s buy now, pay later fundraise could sting 26 Jan 2023 The world’s third-richest man Gautam Adani won anchor investor backing for a $2.4 bln share sale by his flagship company, including from Abu Dhabi’s wealth fund. Yet an Adani group selloff resulting from a short attack means terms that were meant to reward buyers could hurt them.
Tesla’s price war can only go so far 25 Jan 2023 The electric automaker is leading its industry in cutting prices, and high margins mean boss Elon Musk can be aggressive. While he might outpace electric rivals, even zeroing out profit would only lower prices to around $39,000. As a downturn looms, that might not be enough.
Capital Calls: Juul’s extra puff 25 Jan 2023 Concise views on global finance: Three large tobacco companies may be interested in some sort of deal with the e-cigarette producer, whose $37 bln value has gone up in smoke.
Biden’s antitrust playbook values shots on goal 25 Jan 2023 In addition to suing Google over a 15-year-old deal, the White House is using an arcane 1936 law to fight perceived competition problems. A trio of court losses undercuts the aggressive strategy. With no sign of a letup, however, big companies will have to fortify their defenses.
AT&T’s fiber diet should help mitigate M&A bloat 25 Jan 2023 The telecom titan booked a $25 bln charge on creaky landlines as it keeps paying the price for the disastrous DirecTV and Warner Media deals. These struggles have John Stankey seeking fresh ways to grow. A venture with BlackRock to build high-speed networks is a prudent approach.
Nordic bidding war is tricky model for LBO revival 25 Jan 2023 Bain Capital and Triton are locked in a battle for $1.2 bln Finnish maintenance firm Caverion. High debt costs make buyouts challenging, but the target has a cheap valuation, a simple turnaround story and green appeal. That combination may not be easy to replicate.
High-flying airlines still face stiff headwinds 25 Jan 2023 EasyJet shares surged on improved expectations, as rising numbers of holiday-goers look set to push the sector back into the black. But recent meltdowns show air travel has an increasing problem with tech glitches. It’s premature for investors to settle back in their seats.
Rough chip waters give ASML little room for error 25 Jan 2023 The Dutch giant expects sales to grow by a chunky 25% in 2023. Clients’ fear of missing out on an economic rebound is propping up demand for its equipment. Yet rising costs and the risk of a widening export ban to China may take the shine off the $264 bln group’s rich valuation.
Short-seller attack raises Gautam Adani stakes 25 Jan 2023 Hindenburg reinforces how the $230 bln empire of the world’s third richest man is closely held, overvalued, and dismissed by Wall St. The upstart’s record of exposing U.S. fraud will make India sit up. But Adani is a giant target, and too many powerbrokers have a lot to lose.
Microsoft’s revenue sniffles are tech’s flu 24 Jan 2023 The software developer's growth rarely falters, but its 2% top-line expansion was the slowest in 22 quarters. Customers who overinvested during the pandemic are now retrenching, even on Microsoft’s software staples. It’s a poor omen for firms built on more dispensable offerings.
Google ad lawsuit reaches back to the future 24 Jan 2023 The Alphabet-owned search giant is in hot water with U.S. prosecutors who say its digital ad business is anticompetitive, citing deals it did 15 years ago. Google may be dominant, but regulators let it get that way. Meanwhile, the market has already started to create its own fix.
Capital Calls: VC bunks up 24 Jan 2023 Concise views on global finance: Josh Kushner’s deal to sell a stake to investors, including KKR’s Henry Kravis, values his firm at $5.3 billion just as startups are at an inflection point.
Amazon creates bazaar for U.S. banking wannabes 24 Jan 2023 The e-commerce titan’s latest debt, an $8 bln loan, is curious, but not as much as the foreign institutions providing it. Australia’s ANZ, Spain’s BBVA, Singapore’s DBS and others rarely turn up in such deals. The likelihood of them leveraging this one into more business is slim.
California floods underscore rising climate costs 24 Jan 2023 Catastrophic storms have devastated the Golden State’s economy and left more than $1 bln in damages. In this Exchange podcast, climatologist Adam Smith explains how global warming has made weather events more expensive, and what governments can do to protect against them.
Market’s irrational H2O aversion risks M&A drought 24 Jan 2023 Cost cuts, executive nous, and the need to invest in water security should ensure Xylem’s $7.5 bln purchase of Evoqua keeps benefits flowing to the bottom line. Yet 8% of the buyer’s value evaporated. That may prompt architects of other smart-looking deals to pull the plug.
Vodafone stake-builder sends fuzzy breakup signal 24 Jan 2023 UAE telecoms group e&’s 12% holding in its $31 bln UK peer makes it seem like a full bid or a breakup lies just around the corner. But the $61 bln Middle East stake-builder doesn’t seem that keen. And most of Vodafone’s many locales look hard to split off anyway.
EU debt fears hinder U.S. green subsidies riposte 24 Jan 2023 Ursula von der Leyen has pledged a European response to protectionist U.S. energy handouts. The European Commission president can improve permitting speed and offer token subsidies. But her best weapon, a permanent form of the EU-wide pandemic bond-sale programme, is far off.
Salesforce’s activists have an easy job 23 Jan 2023 Corporate cage rattler Elliott took a stake in the $150 billion tech firm alongside Starboard. They might want board seats or say in founder Marc Benioff’s successor. But the company is a better builder than buyer. With growth out of fashion, that’s naturally a good place to be.
Bank earnings become a post-Covid parlor game 23 Jan 2023 After three years of upheaval, JPMorgan, Bank of America, PNC and other lenders are waiting for customers and markets to revert to type. Some think bad debts, spending and trading will level out; others aren’t so sure. It leaves executives in a bind, and investors in limbo.
German economic engine is due an overhaul 23 Jan 2023 Slowing global trade hit the country’s exports while higher energy prices boosted imports. The current account surplus shrank last year to 4% of GDP, its lowest level since 2003. As globalisation recedes, Berlin has to reassess the old export-led economic model.
Creative green finance can go a long way in 2023 23 Jan 2023 Rich democracies are keen to help the Global South fight climate change, in part for geopolitical reasons. Though they will struggle to write big cheques, there are ways to make a little cash go a long way, says Hugo Dixon. 2023 is a key year to drive these ideas over the line.
Layoffs take Big Tech back to more modest future 20 Jan 2023 Alphabet has joined the ranks of U.S. technology firms cutting staff, with roughly 5% looking like the norm. Job openings are shrinking fast too. Proposed trims only partly cut back the 420,000 workers added since Covid-19 hit. The industry will still emerge bigger than it was.
Republican tax fantasy cements ugly fiscal reality 20 Jan 2023 U.S. lawmakers are set to vote on a silly plan to phase out the IRS and impose a 30% sales tax that would balloon the federal deficit. It’s going nowhere, but exposes the twisted economic logic in Washington. Small wonder it’s costing more to insure against Uncle Sam defaulting.
Capital Calls: “Angry Birds”, Cellnex 20 Jan 2023 Concise views on global finance: Playtika’s offer for “Angry Birds” maker Rovio may be just the beginning of a takeover saga; a mooted bid for phone tower operator Cellnex comes in the middle of a strategic turnaround.
Orsted increasingly merits its investor blowback 20 Jan 2023 The $38 bln Danish wind farm group flagged lower-than-expected 2023 targets as its key offshore arm struggled. Shareholders always granted Orsted a premium valuation, due to growth expected from new projects. Construction delays and rising rates are putting that in question.
Davos, Inc. finds reasons to be less gloomy 20 Jan 2023 Business leaders gathering in the Swiss mountain resort have plenty to fret about. Still, with China reopening, Europe keeping the lights on and interest rate pressure easing, the overriding emotion is one of relief. Less clear is whether the mood extends beyond the alpine elite.
Britain can afford to pay nurses and teachers more 20 Jan 2023 UK public workers want a big raise from the government. An inflation-matching pay rise would cost 18 bln pounds; growing state employees’ salaries in line with the private sector around half that. Downing Street could fund it with a 1p rise in VAT and closing tax reliefs.
Battered fintech sector’s next play: sell ads 20 Jan 2023 Erstwhile financial technology stars like $47 bln Block and Klarna are suffering from falling valuations and slowing sales. Yet they’re sitting on potentially valuable insights about punters’ spending habits. That points to an opportunity in helping retailers reach their users.