TheChek News Flow

Adani Group says it has enough cash to cover debt payments for the next year

Indian conglomerate releases report on its operations after the US indictment of founder Gautam Adani for alleged bribery

Adani Group said its listed companies had enough cash to cover debt payments over the coming year, as the conglomerate gave the first snapshot of its operations since US authorities indicted founder Gautam Adani in a bribery case last week.

In report that a company official described as a “half-yearly compendium of the business”, Adani Group said it had passed $10bn in earnings before interest, tax, depreciation and amortisation for the first half of its financial year, and was on track to report $12bn for the full year.

“Each of the portfolio companies has sufficient liquidity to cover all debt servicing requirements for at least the next 12 months,” said Adani Group on Monday.

The report comes after Adani was named alongside seven others in a criminal case over an alleged scheme to bribe Indian government officials in exchange for advantageous terms on solar power contracts that were set to yield more than $2bn in profits.

Adani Group has said the US charges are “baseless” and that “all possible legal recourse will be sought”.

Shares of the group’s listed companies plunged after the US unveiled the criminal and civil charges last Thursday, wiping off more than $20bn in market value.

On Monday, shares of Adani Enterprises and Adani Ports and Special Economic Zone climbed 3.6 per cent and 2.5 per cent respectively. Adani Enterprises remains down 21 per cent since the start of the year while Adani Ports is up 11 per cent over the same period.

Despite the rise in share prices for Adani Enterprises and Adani Ports, the group’s dollar bond prices were down. Ports bonds maturing in 2027 fell 1.6 cents to 88.98 cents on the dollar.

Trump nominee has caused concern in the industry due to his desire to reduce spending on medicines

Two drug developers are pressing ahead with public listings in the coming months despite fears that Robert F Kennedy Jr’s nomination as the top US health official will suppress biotech valuations, in a test of the market’s willingness for risk.

Kennedy’s nomination as secretary of the US Department of Health and Human Services by president-elect Donald Trump has roiled biotech stocks, with shares of big pharma groups and other healthcare companies gyrating in the weeks since.

The nomination of Kennedy has raised concerns in the biotech industry due to his sceptical stance towards vaccines and weight-loss drugs, his ambition to reorient spending away from medicines towards chronic disease and his vow to eliminate “entire departments” at the Food and Drug Administration, the US medicines regulator.

Autoimmune disease-focused biotech Odyssey Therapeutics, valued at $640mn in its latest private funding round, and cancer drug developer Aktis Oncology have been holding meetings with potential investors in recent weeks to gear up for initial public offerings, three people said. Both biotechs have confidentially filed to list with the US Securities and Exchange Commission. They were likely to push ahead with their listings by the first quarter of next year, the people said.

Confidentially filing for an IPO with the SEC does not oblige a company to list, but it puts them on a footing to go public with their listing ambitions, which they must do 15 days ahead of their official IPO date. Both companies have separately hired advisers to work on their listings, the people added.

The SPDR XBI exchange traded fund, which tracks an index of small biotech companies, fell more than 10 per cent in the days after Trump’s election and his nomination of Kennedy. It has recovered slightly since, closing at $96.24 on Friday.

Pharmaceutical companies such as Pfizer, Eli Lilly and GSK also fell substantially as investors digested the news of the nomination, but have since trimmed their losses.

Kennedy’s nomination added uncertainty to what was a brightening picture for the biotech industry, which was expecting to benefit from falling interest rates and a less aggressive antitrust enforcer atop the Federal Trade Commission.

So far this year, there have been 26 listings for biotech companies, raising a combined $4.3bn, after two slow years of issuance for the sector. But still the number of biotech IPOs is far behind the pandemic years, which generated a surge of investor interest.

Mike Perrone, a biotech analyst at investment bank RW Baird, said the election and the ensuing nomination of Kennedy, known as RFK Jr, had “changed things pretty materially”. The possibility of Trump introducing tariffs made rapid rate cuts less likely, while Kennedy’s possible appointment might affect the ease of getting drugs approved by the FDA, Perrone added.

“It will be a more muted year-end than it seemed like it was going to be pre-election, but if you have a high-quality drug and the support of institutional investors, biotechs are still going to list, but just maybe at a reduced valuation,” said Perrone. The biotech sector is closely linked with changes in interest rates because of the need to raise debt to fund costly clinical trials.

Last week, Trump announced that he had picked Johns Hopkins surgeon Marty Makary to run the FDA, among a flurry of health official nominations, in an appointment that was welcomed by the pharma industry.

Aktis, which completed a $175mn funding round in September, is researching drugs in the promising field of radiopharmaceuticals, a targeted form of radiotherapy used to treat cancers. Odyssey’s lead drug is an immunotherapy treatment for Crohn’s disease. Both biotechs are undertaking phase-two trials. Aktis and Odyssey did not respond to multiple requests for comment.

Mikhail Keyserman, a managing director at healthcare investment bank LifeSci Capital, said the uncertainty in markets since the nomination was “a blip” and the bigger question for the sector was how quickly interest rates would fall. “I’d be watching the 10-year Treasury yield [which is linked to interest rates] a lot more than what RFK Jr is going to tweet on his X account,” he said.

Deal would create one of Europe’s most valuable lenders and has no implications for Commerzbank investment, bank says

Italy’s UniCredit has launched a €10.1bn takeover bid for its rival Banco BPM, in a deal that would step up consolidation of Europe’s fragmented banking sector.

UniCredit said on Monday that its all-stock offer valued Banco BPM’s shares at €6.66 and the deal, if agreed, would create Europe’s third-largest lender by market capitalisation.

It comes months after UniCredit, led by dealmaker Andrea Orcel, shook European finance by revealing it had amassed a stake in Commerzbank, Germany’s second-biggest lender.

Orcel said in a statement that a deal for BPM would “broaden our geographic reach, expand our client base across both retail and corporate clients, and further grow our premium businesses”, adding that it would cement UniCredit’s status as Italy’s second-biggest bank.

He said the offer for BPM “does not have any implications” for its investment in Commerzbank. The German bank’s management has so far dismissed UniCredit’s approach. 

“The situation there is very different,”Orcel said. He said, in relation to its Commerzbank stake, that UniCredit “may either seek to go further if the conditions are right or to exit our investment and return the capital”.

That decision would take time because “I think it is important to respect the electoral process in Germany”, he said. Germany is set to hold a snap general election in February.

Talk of consolidation among Europe’s banks has begun to pick up in recent months, with policymakers in the region keen to encourage the emergence of larger domestic groups and multinational banks that can challenge US giants and fast-growing rivals in Asia.

UniCredit’s offer represents a 0.5 per cent premium to Friday’s price but a premium of 14.6 per cent premium to the share price on November 6, the date on which Banco BPM made an offer to buy asset manager Anima Holding for €1.6bn.

Days later BPM also took a 5 per cent stake in Monte dei Paschi di Siena when Italy’s government offloaded part of its shareholding in the once-ailing lender, kick-starting a domestic consolidation process.

UniCredit said that BPM “does not currently have the adequate scale to operate in a context of major change and evolution”.

Orcel made his name advising on bank M&A, including the €21bn merger of Italy’s Credito Italiano with UniCredito to create UniCredit. He also advised on Royal Bank of Scotland’s disastrous acquisition of ABN Amro in 2007.

UniCredit built its Commerzbank position by buying a chunk of shares from the German government and adding to that using derivatives.

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Real estate developer CPIPG, run by Radovan Vítek, preparing to segregate assets after Cypriot court order

One of Europe’s largest property groups is bracing for the impact of a complex legal dispute between its billionaire owner and two convicted money launderers who say they privately bankrolled him. 

Senior executives at CPIPG, the Frankfurt-listed group run by Czech billionaire Radovan Vítek, are preparing plans to segregate €537mn of assets following a freezing order from a Cypriot court.

The court made the order in favour of the two litigants, Czech investors Marek Čmejla and Jiří Diviš, earlier this year. But legal wrangling has until now meant that it has not been enforced.

The investors’ victory increases the likelihood that the central claims at the heart of the dispute — which has bounced from jurisdiction to jurisdiction due to technical legal challenges over the past few years — could finally be heard.

Čmejla and Diviš have been unsuccessfully pursuing CPIPG and Vítek through the courts for several years, alleging the billionaire developer cheated them out of a huge early investment in his group. Vítek has denied the claims and cases in the Czech Republic, Luxembourg and US have all been thrown out.

Vítek, CPIPG’s Swiss-resident majority shareholder, built his property empire through a series of audacious and sometimes aggressive takeovers, swooping on underpriced property companies — often using complex financial structures to secure control.

In their application for the asset freeze seen by the FT, Čmejla and Diviš claimed that a complex series of corporate shells and trust arrangements were manipulated to lock them out of access to property assets to which they had legal title.

Vítek denies that he had any clandestine arrangement with the pair.

At the centre of the investors’ case is the accusation that a “parity partnership” with Vítek was established in secret because, as convicted money launderers, it was felt by both themselves and the property tycoon that any publicly-known investment might have had a detrimental effect on the group’s access to future sources of capital and banking services.

In 2013 Switzerland’s central criminal court found the pair guilty of a “massive” criminal scheme to plunder Czech coal company Mostecká uhelná společnost, or MUS, in which money was laundered through a network of more than 100 Swiss bank accounts.

CPIPG and Vítek’s legal advisers argue the conviction should have significant bearing on the legal dispute.

Although CPIPG executives dispute the allegations, the group has been forced to develop legal contingency plans to comply with a notice expected from the court in Cyprus, people familiar with the matter told the Financial Times.

The group believes it can easily pledge unencumbered liquid assets from its €20bn portfolio to meet the court order’s requirements, the people said, and will not have to pledge cash.

But the lawyer for the investors, Marek Stubley, has cast doubt on whether “ring-fenced” property assets pledged by legal means from CPIPG would fulfil the Cypriot court’s asset freezing order. He said his clients expected cash to be held in segregated bank accounts.

Many large European commercial property investors are still facing a liquidity squeeze after portfolio values nosedived due to rising interest rates over the past two years.

Executives at CPIPG, which has €4.9bn of bonds outstanding, say they have ready access to capital and liquidity, and have been completely transparent with creditors over the legal challenge to the company.

“The plaintiffs have repeatedly tried, and failed, to ‘forum shop’ these allegations across courts in various jurisdictions,” CPIPG said in a statement.

“The ruling in Cyprus, which CPIPG has appealed, has had no practical impact on the Group or any bank accounts or assets belonging to CPIPG or Vítek. CPIPG’s real estate portfolio continues to perform well and we remain focused on executing our strategy.”

The appeal process could take up to two years to complete. The Cypriot courts have held that a full complaint must be filed by Čmejla and Diviš by the first week of December.

The 53-year-old Vítek is a combative figure, who, in a 2018 dispute with the local municipality for the luxury Swiss resort of Crans-Montana, turned off the ski lifts which he then owned. The move choked the town of the winter sports enthusiasts that were its most valuable source of money.

Vítek sold his investment in Crans-Montana’s ski lift operator last year.

CPIPG has also been targeted by the prominent short seller Muddy Waters, which in November 2023 accused Vítek of overvaluing assets and “asset stripping” companies in the group.

An independent review into the group’s financial affairs by law firm White and Case, commissioned in response by CPIPG’s board, concluded in September that the allegations were unfounded.

Annual revenues from copyrighted music hit almost $46bn last year, against $33.2bn for cinema

Music industry revenues rose a tenth last year — overtaking cinema’s pre-pandemic sales peak — on the back of booming streaming platforms and the renaissance in vinyl records.

Annual revenues from copyrighted music were $45.5bn last year, up a quarter since 2021 and double the 2014 figure, according to a report based on data from trade bodies. It compares with cinema box office spending of $33.2bn last year and $41.9bn in 2019, according to media consultancy Omdia.

“Make no mistake: it’s boom time,” said Will Page, the report’s author, a former chief economist at music streaming platform Spotify and a fellow of the London School of Economics.

“Cinema’s pain has been the streamers’ gain,” Page said, noting that streamers tended to pay more for music than filmmakers do. “If you had suggested when we first did this exercise in 2015 that music might overtake cinema, you would have been laughed out of the room.”

Revenues for record labels and their artists were $28.5bn, up 12 per cent on a year earlier, showing how the industry has ridden the growth in music consumption helped by the popularity of streaming services.

The remainder — about a third — was accounted for by music publishers and songwriters, with consumers paying for music directly as well as commercial enterprises such as TV shows and restaurants. 

Physical sales of music such as CDs and vinyl rose faster than streaming revenues, with vinyl in particular rising by 15.4 per cent. In the US alone, vinyl will generate $1bn a year for labels by the end of 2024, and will soon overtake CD sales, the report predicted.

Page’s report, an annual study, uses data from the International Federation of the Phonographic Industry, artists’ organisation CISAC and the International Confederation of Music Publishers.

The value for music publishers and songwriters of live performance now exceeds that of general licensing such as through shops and hotels, showing the extent to which bands and artists hit the road to make their money rather than relying on their old releases being played in retail and hospitality settings.

A number of older bands — such as Oasis — have reformed to tap into the surge in popularity of live music, while acts such as Coldplay are playing venues on more nights.

The value of digital channels now exceeds that of broadcast and radio for music publishers and songwriters, according to the report. A decade ago, digital made up about 5 per cent of revenue collections, while broadcast made up half.

The report also shows the globalisation of music, with almost a third of all streams inside America from non-American artists, while Britain is the single largest importer of music into the US.