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Capital Calls

2 September 2021 By Breakingviews columnists


– NYC storm

– Coca-Cola Europacific Partners

– Kakao Pay IPO

The “Great Flood.” The remnants of Hurricane Ida knocked out another U.S. city on Wednesday. New York City received record rainfall, causing historic flooding and killing at least nine people, damaging homes and airports, and crippling public transportation. The devastation might get deep-pocketed residents to mobilize more capital in the fight against a changing climate.

Tipping points often come when the wealthy are hit with major issues head-on. That happened in London in 1858, in a period known as the “Great Stink.” Parliament was so crippled by the overpowering smell from the River Thames, it finally commissioned a sewer system, despite the fact cholera had plagued poor residents for years.

New York has already manifested a similar problem: Despite its hosting the highest population of residents with a net worth above $5 million of any city in the world, the municipality has a woeful infrastructure. Ida may not change that. But maybe with freak weather pitching up on New York’s toniest streets, rich citizens might start turning more of their sizeable investments green. (By Lauren Silva Laughlin)

Short of fizz. Coca-Cola’s European distributor is suffering from a lack of liquidity. Coca-Cola Europacific Partners on Thursday said sales rose 54% year-on-year in the second quarter to 3.6 billion euros, compared to the 3.3 billion euros expected by analysts. The $26 billion company is benefitting from the end of lockdowns and out-of-home consumption. And it still has the lion’s share of the gains from its acquisition of Australia’s Coca-Cola Amatil to look forward to next year.

It’s a good result, but you wouldn’t know it. The sales beat barely registered in the company’s shares in Amsterdam, Madrid or London. The stock was down 1.7% in Spain and up 0.5% in the Netherlands. That’s because most of its trading happens in New York. This makes little sense for a European company with revenue predominantly in euros and a narrow 44% free float. Scaling back its listings, to focus most probably on Amsterdam, would boost liquidity and cut costs. (By Dasha Afanasieva)

IPO pop. South Korea’s financial technology mania has reached new heights. The payments-to-wealth management arm of super-app owner Kakao cut the price range of its initial public offering by roughly 6% after regulators ordered it to revise its filings. Kakao Pay’s enterprise will now be worth as much as about $10 billion, or 27 times 2021 annualised sales. Brazilian fintech services PagSeguro and StoneCo and American e-lender Upstart trade at an average 16 times.

The company’s edge is its $60 billion parent. As of June, Kakao’s messaging platform boasted 46 million local users – nearly 90% of South Korea’s population. That has turbocharged payments growth: transactions have been expanding at an annual rate of 89% since 2018 and hit 12.5 trillion won ($10.8 billion) last year, according to analysts at Daiwa.

Dizzying valuations have become a norm in South Korea’s hot fintech sector. Affiliate Kakao Bank, whose shares jumped 80% on their debut last month, now fetches 15 times book value, well above traditional lenders. But justifying those sums requires creative evaluations. (By Robyn Mak)

(The Kakao Pay item has been corrected to say that transactions have been expanding at an annual rate of 89% since 2018 and hit 12.5 trillion won ($10.8 billion) last year.)


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