TheChek News Flow

Marc Rowan says his firm could create co-branded investment funds with traditional managers

Apollo Global Management chief executive Marc Rowan says a wave of partnerships between alternative and big asset managers will shake up Wall Street.

Rowan predicted that large private capital companies would increasingly distribute their investments, such as corporate buyouts, to traditional asset managers that had prioritised raising their clients’ exposure to unlisted assets.

He said companies such as Apollo could create co-branded investment funds or “massive managed accounts” with traditional asset managers that would widen investors’ ownership of unlisted assets.

“I see a very good marriage between our industry, our company, and the public or traditional asset managers who I believe are going to reinvent their businesses spurred on by competitive forces,” said Rowan during Apollo’s fourth-quarter earnings call.

For the quarter, Apollo’s adjusted net income rose 15 per cent to $1.36bn from a year earlier.

Rowan said BlackRock’s acquisition of private credit manager HPS Investment Partners and infrastructure group Global Infrastructure Partners should be taken as a “wake-up call” to the investment industry.

Those megadeals signalled a need for traditional investment groups to offer private funds, which would lead to greater “convergence” between public and private investment portfolios, he said.

His comments come as the industry’s largest private capital groups such as Apollo, Blackstone, KKR and Brookfield have hitched their growth to managing money for wealthy individual investors and, ultimately, ordinary retirement savers.

Executives predict that they will manage trillions of dollars for individual investors in addition to the $13tn that the industry manages for institutions.

Traditional asset managers have prioritised investing in unlisted assets, which carry higher fees and greater diversification than public markets. Those efforts come as fees on public funds fall and investors increasingly view public stock and bond portfolios as commodity products.

“Our industry and our firm will be a supplier of products similar to traditional asset managers as they seek to make their products more competitive given the incredible amount of indexation and correlation,” said Rowan.

Such partnerships between two areas of finance that have for decades been treated as distinct markets mirror the increasing lending ties between private capital groups and the broader banking system.

Since the collapse of Silicon Valley Bank and Credit Suisse in 2023, private capital groups have formed loan origination ventures with large banks, such as Citigroup and JPMorgan, which curtailed lending owing to regulations and capital constraints.

In these partnerships, private capital firms use their investor’s cash to fund loans sourced by the large banks. They have also formed flow arrangements to distribute slices of the loans they originate, selling off pieces to large banks in search of higher-yielding assets.

In 2024, Apollo originated a record $220bn in debt and has a dozen partnerships to distribute debt to large banks.

Rowan said that the Trump administration would roll back bank regulations that had constrained their lending businesses, reviving competitiveness.

“Banks will be stronger competitors in what we call direct lending or a small portion of our private credit business,” said Rowan of the deregulatory push. He also predicted “a tremendous consolidation of regional banking” during the Trump administration.

The adjournment of the meeting was followed by LTG Earnings, which highlighted the hit and future risk on US revenue and growth at affirmity following Trump order regarding equal employment - DEI education / compliance. We understand that the company could suffer -10% ebit and a less growth profile. Also, affirmity is 3x the blended ebit % of LTG

=> We now see downside around 60/65p and 78% implied

LTG was trading on a 50% implied prob last week of Jan. The stock ticked up when Octopus (potential deal blocker) disclosed 1.2m shares buying on 30/1... LTG is now trading on c.80% implied post this move

We understand the EGM was postponed on the basis that LTG knew for a fact the vote was not going through. GA has 27.8% irrevocable commitment from founders/directors. On the other hand, no public statements from Liontrust (14%) and octopus investment (7.6%) who we identify as key shareholders who could try to bloc this deal.

We recreated the register based on offer doc and latest disclosure available (including 8.3s). Below we outline the possible scenarios:

Key assumptions is that (i) 90% or more attendance at EGM and (ii) 98% of unidentified voting in favor

Scenario 1: Liontrust AM & Octopus vote against, deal approved with 75.3%, but will fail if attendance is below 89%

Scenario 2: Liontrust AM votes against, Octopus in favor, deal approved with 83.9%. But will fail if attendance is below 65%

Scenario 3: Liontrust AM & Octopus vote in favor, deal approved with 99.7%

Conclusion = deal would fail if both Liontrust AM & Octopus vote against and attendance below 90%

Worth mentioning scheme meeting average attendance in UK is well above 90%.

We have no view on how these 2 will vote but they probably opposed the deal initially (delaying the vote). Key question if the offer looks attractive enough post earning?

The company will cut up to 7,000 jobs, as net sales fall 6 percent in the second quarter.

The Estée Lauder Cos. is more than doubling the number of employees it plans to lay off as part of its profit recovery plan.

As the company’s sales fell 6 percent in the second quarter, the owner of namesake Estée Lauder, Jo Malone, Tom Ford, Clinique and more, announced plans to ramp up its restructuring program, to between 5,800 to 7,000. This includes the 3,000 already announced.

Actions under the plan are expected to be executed in fiscal 2025 and 2026 and completed in fiscal 2027.

Net sales decreased 6 percent to $4 billion in the second quarter covering the final three months of 2024, a touch above analysts’ estimates, while adjusted diluted net earnings per common share decreased to 62 cents.

Skin care net sales decreased 12 percent, primarily due to impacts from the overall challenging retail environments in Asia/Pacific and the company’s Asia travel retail business, including ongoing pressure from subdued sentiment from Chinese consumers, which drove declines from Estée Lauder and La Mer.

Makeup net sales decreased 1 percent on the back of declines from Tom Ford, while hair care net sales decreased 8 percent.

On a brighter note, fragrance net sales increased 2 percent, led by Le Labo and its strong double-digit growth across each geographic region, partially offset by the decline from Estée Lauder, due in part to reduced shipments of holiday sets.

On a geographical basis, sales were flat in North America, decreased 6 percent in Europe, Middle East and Africa, and fell 11 percent in Asia/Pacific.

Releasing his first set of earnings since taking the reins as president and chief executive officer on Jan. 1, Stéphane de La Faverie, said: “While we are not satisfied with our third-quarter outlook, it primarily reflects weak retail sales trends in our Asia travel-retail business, which deteriorated in our second quarter driven by Korea. While our retail sales trends in Hainan were still negative in the second quarter, they improved sequentially, fueled by our retail activations. For the third quarter, we expect overall soft retail trends to persist in Asia travel retail, significantly pressuring our organic net sales despite the improvement we made with in-trade inventory levels in the first half of fiscal 2025, which we intend to maintain around current levels.”

At the same time, he unveiled the company’s new strategy: Beauty Reimagined. De La Faverie described it as “a bold strategic vision to restore sustainable sales growth and achieve a solid double-digit adjusted operating margin over the next few years as we aim to become the best consumer-centric prestige beauty company.”

Self-driving truck startup Waabi is partnering with Volvo Autonomous Solutions to jointly develop and deploy autonomous trucks, an important milestone as it gets closer to a commercial launch.

The tie up also marks Volvo’s second partnership to co-develop self-driving big rigs with a startup partner. In May 2024, Volvo teamed up with Aurora Innovation to reveal the Volvo VNL Autonomous truck.

Waabi will be using the same truck, but it will have Waabi’s tech on it, including its sensor suite, compute, and the Waabi Driver software.

“We now have everything we need to scale our product,” Raquel Urtasun, founder and CEO of Waabi, told TechCrunch. “We have the next-generation AV 2.0 technology, we have an approach that is much more capital efficient, and a much faster path to market.”

Waabi plans to launch commercial pilots with the Volvo-built trucks in Texas over the next couple of months, with a product-ready driverless demonstration on public roads planned for the end of 2025.

A fully driverless commercial launch – directly between customer depots from day one, rather than via terminals – will follow soon afterwards, according to Urtasun.

Urtasun, who previously served as chief scientist at Uber ATG before launching Waabi in 2021, claims to have built AI models that can reason as a human would, which in turn speeds up commercial deployment and makes for a more efficient system overall. She has reasoned that a better quality AI will require much less data and compute to understand and react to the world around it.

Waabi has relied on its simulation technology to not just test and train its self-driving technology, but also to help design trucks for OEM integration. The startup unveiled its first purpose-built truck — with sensors, compute, and software built in at the assembly line — in 2022.

By contrast, competitor Kodiak Robotics has developed a self-driving system that includes all of the redundant hardware and software system, but is not tied to one manufacturer. Urtasun is more interested in integrating the Waabi Driver into autonomous trucks at the factory level with no interruption to an OEM’s assembly line.

Urtasun believes this is the best approach to building a safe, reliable product.

Waabi’s partnership with Volvo builds on the automaker’s strategic investment into the startup two years ago via its venture arm, Volvo Group Venture Capital. Volvo later participated in Waabi’s $200 million Series B.

Volvo will build trucks for Waabi at its production-ready facility in Virginia. Urtasun said the first “handful” would come off the assembly line in 2025, and that she expects a timeline of around two to three years to reach volume scale.

Over that time, Urtasun also noted that capital efficiency will be “an absolute must” to be successful in this industry. She says Waabi’s “AI-first approach” means the startup’s capital needs to get to a driverless launch will be “a tiny fraction of what you see in the industry today.”

To date, Waabi has raised $282 million, per PitchBook data, and Urtasun says the startup has enough to launch a driverless operation on public roads and beyond. Its main competitors, Aurora and Kodiak, have raised $3.46 billion and $243 million, respectively.

Aurora plans to launch a driverless commercial trucking operation by April, and Kodiak last month delivered its first autonomous trucks to a commercial partner that will use them for off-road operations.

“2025 is the year of trucking; it’s a make it or break it situation,” Urtasun said. “I think there will be potentially more consolidation.”

There aren’t many players left in the game since Embark and TuSimple shut down and Waymo paused its autonomous truck ambitions.

When asked if Waabi was considering a merger or acquisition, Urtasun replied: “Absolutely not. Trucking is only the beginning. We’re going to do so much more than trucking – robotaxis, warehouse robotics. I have tremendously big plans for the company, and we are going to remain a fully independent company.”

On the heels of Chinese AI firm DeepSeek making a huge splash in OpenAI’s American backyard, OpenAI is expanding in Asia, with major commercial deals that will also help it train its AI on more Asian-language content and user behavior — a gateway to doing more business in these markets in the future on its own.

Today, OpenAI unveiled a strategic collaboration with Kakao, the South Korea tech company that operates one of the region’s most popular messaging apps, KakaoTalk.

The move comes one day after SoftBank also announced a major commitment to using OpenAI: it has allocated a budget of $3 billion to deploy OpenAI tech across its various group operations and subsidiaries, as well as establish a joint venture, SB OpenAI Japan, to build solutions customized for enterprises in the country.

Today’s Kakao news was announced earlier today at an event in Seoul co-led by Kakao CEO Shina Chung and OpenAI CEO Sam Altman, and it will initially cover three projects.

The companies plan to develop a new Korean-language assistant called Kanana powered by OpenAI; OpenAI tech will be integrated into KakaoTalk; and Kakao will also become a customer of OpenAI’s, using ChatGPT Enterprise internally among its employees.

Meanwhile, the SoftBank announcement is just the latest development of what looks like a pretty deep-looking relationship between the two companies. SoftBank is also reportedly eyeing up a major investment in OpenAI — yet to be confirmed — and the two are in theory also working together on the Stargate project to build AI superservers and other infrastructure in the U.S..

On the surface, both of these partnerships are big commercial deals that will bring OpenAI services to new populations in their home languages.

“Korea is a very impressive market,” Altman said today at the press event. “The adoption of AI in Korea is remarkably advanced. Considering various industries, from energy to semiconductors and internet companies, there is a very strong environment conducive to applying AI. It is a market that is extremely important to us and is growing rapidly.”

But beyond that, in both the case of Kako and SoftBank, the deals will benefit OpenAI in another very significant way.

The U.S. company continues to build out and train its Large Language Models. Deals with major players in Korea and Japan, with their access to millions of consumers in their respective markets, gives OpenAI an opportunity to unlock new linguistic doors.

This is especially important given DeepSeek. If the Chinese AI company proves to be more than just a viral flash in the pan — and it doesn’t get buried under a sea of legal issues around copyright, personal data protection, and more — it will have proven to be a very clear signal to OpenAI that a company building outside of the U.S. has stolen a march on capturing English-language generative AI momentum.

Thus, OpenAI needs to continue to expand its reach internationally, too, and that includes in terms of its ability to work just as well in different languages as it does in English.

It’s notable too because SoftBank at one point saw a very different route, and opening, for itself.

Seizing the opportunity to build for its home language in an AI world largely dominated by English natural language services, in 2023, it announced a new company. SB Intuitions aimed to build LLMs and generative AI in Japanese.

It’s not clear what is happening with that business — whether it never got off the ground, or whether that work will be rolled into the JV, or something else altogether. We have contacted the company and will update as we learn more.

Apart from the collaboration with Kakao, Altman is using the moment to connect with other major Korean tech giants. He also took meetings with top executives at Samsung Electronics and Korean semiconductor maker SK Hynix to discuss custom-designed chips and AI-powered devices, per a local media report. OpenAI is joining other tech giants such as Google, Amazon, Microsoft, and Meta, all developing their own in-house AI chips.

SoftBank OpenAI Japan

The latest strategic collaboration comes a day after OpenAI’s joint venture announcement on Monday with SoftBank, which will spend $3 billion annually to implement the U.S. AI firm’s solutions, including ChatGPT Enterprise, OpenAI’s API and agents products like Operator, across its group companies. The Japanese tech giant and OpenAI have set up “SB OpenAI Japan,” a JV that will exclusively offer the U.S. AI startup’s enterprise technology to large enterprises in Japan.

Last week, OpenAI introduced Operator, an agent capable of carrying out tasks like vacation planning and restaurant reservations on the web, and the o3-mini, the latest and most cost-effective reasoning model. The creator of ChatGPT also unveiled a new capability called Deep Research, which can perform in-depth internet research for complicated tasks.

Arm, the chip designer from the U.K. acquired by SoftBank in 2016, will also use OpenAI tools to increase productivity, per SoftBank’s statement.

SoftBank is reportedly in talks to lead a funding round for OpenAI that could be worth as much as $40 billion and potentially value the company at $300 billion.

Separately to this, last month, OpenAI said it will team up with SoftBank and Oracle to build multiple data centers for AI in the U.S., forming a joint venture called the Stargate Project. The project will kick off with a large data center in Texas. Initially, the three companies plan to invest $100 billion in Stargate and potentially contribute up to $500 billion to the project in the following four years.

Beijing seeks leverage against US president by reviving investigations into tech giants

Beijing has revived antitrust investigations into Google and Nvidia, while considering a new probe against Intel, as China looks for new leverage against US President Donald Trump.

China’s State Administration for Market Regulation announced on Tuesday that it had opened an competition investigation into Google, which two people familiar with the matter said would focus on dominance of US group’s Android operating system and any harm caused to Chinese phonemakers, such as Oppo and Xiaomi, which use the software.

Chinese regulators, who announced a similar antitrust investigation into Nvidia in December, were now also looking at launching a formal probe into Intel, said two people familiar with the situation.

However, the nature of the probe into the US chipmaker remained unclear, one of the people said, adding whether it was officially launched could be affected by the state of US-China relations. President Xi Jinping expected to speak to Trump in the coming days.

The tech investigations “may be part of the retaliatory measures”, made by China in response to Trump’s new tariffs against the country, said Liu Xu, a researcher at the National Strategy Institute of Tsinghua University.

Xu added that using antitrust investigations as a tool in trade negotiations might not be the best way to protect Chinese companies hit by US tariffs. “It would inevitably spark controversy,” he said.

Beijing’s scramble to build cases against prominent US tech companies comes as they are increasingly caught in the crossfire of growing tensions between the two global powers.

The Google probe, which regulators first began in 2019, had been shelved for years, but was reopened in December, according to two people familiar with the matter. That move came just before Donald Trump was sworn in as US president, who had run an election campaign vowing to impose steep tariffs against Chinese goods.

Given new urgency to launch the probe, SAMR regulators visited Google’s Beijing office in January before Trump came into office and demanded related information to be handed over, according to the people.

The outgoing Biden Administration also used its final months to step up export controls on advanced chips, seeking to curb China’s growing AI capabilities.

During this period, SAMR announced in December it was investigating claims about Nvidia violating commitments made during its 2019 acquisition of Mellanox Technologies, an Israeli company that makes computer networking equipment.

SAMR approved the acquisition in 2020 with conditions to prevent anti-competitive practices and ensure supplies to China, and soon thereafter began to quietly collect complaints from industry, according to a person familiar with the matter.

The probe came as a surprise to Nvidia, the world’s largest maker of advanced AI semiconductors.

Days prior to the SAMR announcement, Nvidia’s executives met with China’s Ministry of Commerce to discuss the $2.9bn chipmaker’s operations in its second biggest market outside the US, according to two people with knowledge of the meeting.

One of those people said the Mofcom officials advised “Nvidia is welcome to continue growing its business in China”. The country represents 13 per cent of its global sales during the first three quarters of 2024, according to company filings.

The antitrust investigations into large US tech companies could lead to fines linked to the companies global revenues, or losing certain market access in one of their largest international markets.

China is Intel’s largest market worldwide, exceeding its home turf. The US chipmaker recorded $15.5bn sales in the country in 2024, accounting for 29 per cent of its global revenue, according to company filings.

While Google’s search engine is blocked in China, along with most of its parent company Alphabet’s businesses, the US company profits from Chinese businesses advertising abroad. Chinese phonemakers also mostly use its Android operating system.

Alphabet does not break out its revenue from China, but the Asia-Pacific region contributed 17 per cent of sales in 2023.

Google and Nvidia declined to comment. Intel did not immediately respond to requests for comment. Beijing-based Mofcom and SAMR didn’t respond to faxed questions requesting comment outside working hours.

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