BREAKINGVIEWS

Private equity hangers-on face diminishing returns

3 June 2020

France’s Ardian raised $19 bln to buy stakes in other buyout funds. The niche, known as secondary investing, did well after the last crisis and is booming as conventional fundraising slows. Yet sellers are less desperate this time, and an oversupply of capital may hurt returns.

War for Hong Kong talent is Taiwan’s to lose

3 June 2020

The island’s proximity and cultural similarity should appeal to Hong Kongers fleeing Beijing’s crackdown. For its part, the $600 bln economy needs to plug a severe labour shortage and boost investment. But warm political gestures could be offset by bad immigration policies.

American CEOs have huge power. They can use it

2 June 2020

Leaders like JPMorgan’s Jamie Dimon support calls for racial justice. Most businesses can do more though, financially and in their workforces. Even if it’s not their job to fix society, U.S. norms and pliant shareholders give executives wide latitude to do what they think best.

Only losing users will get Zuckerberg’s attention

2 June 2020

Facebook workers and civil rights groups criticized the social network’s hands-off approach to President Trump’s inflammatory posts. Its co-founder says he’s listening, but Zuckerberg has little incentive to act. Covid-19 has boosted the company, and reduced employees’ leverage.

Once in a lifetime is our hopeful prediction

2 June 2020

Humanity either learns key lessons from the pandemic, corrects course and becomes a more resilient species. Or it tears further apart and expands the divisions in society that predated Covid-19. In a new e-book on what will change, Breakingviews takes the more optimistic view.

Germany’s new $90 bln fiscal bazooka may misfire

2 June 2020

Chancellor Angela Merkel’s government is working on new stimulus measures. But the package, which is still being negotiated, is short on infrastructure investment. Consumer handouts and tax cuts may end up boosting savings given concern about the outlook for the economy and jobs.

TUI’s summer cheer may be short-lived

2 June 2020

The $3.5 bln holiday operator’s shares have risen by around 60% since Spain said it would welcome tourists again. But fewer sales and high debt could eventually force CEO Friedrich Joussen to raise more equity. With the stock buoyant, it’s a good time to tap shareholders.

Even a chastened SoftBank leans on engineering

2 June 2020

Boss Masayoshi Son is scrambling to clean up his “foolish” and costly WeWork mess. Instead of just selling some Alibaba shares, though, he’s using derivatives linked to them to raise $11.5 bln. The transactions are fiddly, but in this case may be a good use of creative finance.

NetEase fortifies itself against global disarray

2 June 2020

The $51 bln video-game producer is ready to raise $2.6 bln in Hong Kong. Quarantined customers have helped it defy a U.S. backlash against Chinese stocks. A secondary listing closer to home, following a tougher trail blazed by Alibaba, should add a useful layer of protection.

Clashes are facet of U.S. “exorbitant privilege”

1 June 2020

Unrest over racial injustice does nothing for a country already divided and struggling with disease. Yet it takes more to unseat a superpower. America is no longer the only one, but it still has unrivaled heft. The downside: limited pressure to tackle economic or social problems.

Tech giants dare antitrust deal watchdogs

1 June 2020

Facebook, Microsoft and Apple have been on a buying spree of small companies. U.S. regulators are examining such deals but their work has been hindered by Covid-19. Big Tech can argue some firms would fail otherwise. But the effect on consumers is a mixed bag.

Zynga puts overvalued shares to risky use

1 June 2020

The $9 bln video-game company is buying the Turkish maker of Toon Blast and Toy Blast for $1.8 bln, its biggest deal ever. Zynga is partly financing it with stock puffed up by the pandemic. But the high price and its mixed acquisition record should give investors pause.

Kylie Jenner teaches Coty celeb value is cosmetic

1 June 2020

The perfume maker’s stock fell after Forbes suggested the TV star, who sold 51% of her makeup brand to Coty last year, had exaggerated her wealth. Coty had overpaid either way. But the drama exposes the folly of companies buying brands whose value they can’t really control.