Fintech superstars face brutal financial comedown 3 Jun 2020 Digital banks like Chime and Monzo have millions of customers but are tackling their first big crisis with scant revenue. Online lenders from Kabbage to Klarna face rising defaults, less new business, and funding concerns. Valuations, business models, even survival, look shaky.
Corona Capital: Crisis loans, Jet fighting 3 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Bank customers are no longer making a dash for cash, loan drawdowns suggest. Meanwhile, a U.S. block on Chinese passenger flights suggests domestic battles haven’t dimmed President Trump’s desire to make China pay.
Private equity hangers-on face diminishing returns 3 Jun 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.
Tycoon’s rig empire leaves lenders deep underwater 3 Jun 2020 Oslo-listed Seadrill, founded by billionaire John Fredriksen, wants to swap its $7.4 bln of debt for equity. A slump in crude prices means creditors will face heavy losses. But, with oil majors retrenching and rigs heading for the scrapyard, a bankruptcy could be even messier.
American CEOs have huge power. They can use it 2 Jun 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 Jun 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.
Corona Capital: Bank fears, Payments M&A, Coal 2 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: A new U.S. regulator wants cities to reopen to prevent bank robberies. Western Union may bid for struggling rival MoneyGram. And the pandemic is hastening the decline of U.S. coal.
TUI’s summer cheer may be short-lived 2 Jun 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 Jun 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 Jun 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.
Tech giants dare antitrust deal watchdogs 1 Jun 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.
Kylie Jenner teaches Coty celeb value is cosmetic 1 Jun 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.
West End foray breathes life into UK property M&A 1 Jun 2020 Capco, owner of much of London’s upmarket Covent Garden district, has bought a 26% stake in $2.4 bln Shaftesbury, which manages large swathes of the trendy Soho area. A merger could follow. The risky punt shows UK landlords are starting to think about life after the pandemic.
Buyout firms make first move in EU telco shake-out 1 Jun 2020 KKR, Cinven and Providence are offering $3.3 bln for low-cost Spanish operator MasMovil. Stricter financial discipline may mean less of the cut-throat pricing that hurt rivals. After an EU court ruling on a nixed UK merger, it may also be the start of a new round of mergers.
Germany’s car bonus scheme is only half the trip 1 Jun 2020 Chancellor Angela Merkel is mooting 5 bln euros in auto subsidies. A similar plan saved jobs at Volkswagen and Daimler in 2009. But the incentives would cover 2 mln vehicles – barely half last year’s sales. If the pandemic has permanently dented demand, a bigger boost is needed.
Corona Capital: Tech diversity, CNN’s middle age 1 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: As big U.S. technology companies’ CEOs speak out about racial inequality, working from home trends could give them a chance to make a real difference; and 24/7 news network CNN feasts on Covid-19 as it turns 40.
India Insight: Mukesh Ambani sets high bar for Jio 1 Jun 2020 At $68 bln, the tycoon’s telecom operator is being valued like a tech startup. It’s backed by A-list investors from KKR to Facebook, and more are queuing up. Growth has been impressive. But the wannabe super-app could encounter serious competition in the country’s digital race.
Mall-to-retailer relationships will get creative 29 May 2020 Brookfield Asset Management launched a $5 bln fund to invest directly in retailers. It’s an effort to salvage some of the Canadian mall owner’s top customers. As Neiman Marcus and J.C. Penney march into bankruptcy, other real estate owners will rethink traditional rents, too.
German carmakers step on Chinese electric pedal 29 May 2020 VW is taking big stakes in two Chinese EV firms, while Daimler may invest in battery-maker Farasis Energy’s $480 mln IPO. Demand remains tepid, oil is too cheap, and the targets look richly priced. But these deals lock in supply, and position both to compete with Tesla in China.
Virus bailouts will be messier than past rescues 29 May 2020 Governments are ponying up trillions of dollars to save lockdown-hit firms. Further assistance looks inevitable as economies falter. States will demand higher taxes and jobs in return, putting them at odds with private owners. And lending to smaller firms creates bigger tensions.