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Euronext ‘ready to strike’ with further acquisitions

Head of Europe’s biggest stock exchange operator says group would consider combination with any large regional rival

Europe’s biggest stock exchange operator Euronext is on the lookout for more acquisitions as it seeks to entrench its position in the region’s capital markets.

Stéphane Boujnah, chief executive, said “combining Euronext with any large exchange in Europe” could “create a lot of synergies”.

“We are monitoring all sort of situations and we are ready to strike or jump on any situation that becomes actionable,” he told the Financial Times. 

Boujnah has led Euronext since 2015 and previously worked as a mergers and acquisitions banker at Santander and Deutsche Bank. He has expanded the group through a series of acquisitions in recent years, including Borsa Italiana, which owns the Milan stock exchange. 

While he declined to comment on specific acquisition targets, Boujnah has previously told the FT that he is eager to buy Nasdaq’s Nordics business, which includes the Stockholm and Iceland stock exchanges, and is open to buying the Spanish exchanges BME from Swiss group SIX.

Stock exchange acquisitions would cement Euronext’s position as the biggest listing and trading venue in Europe. The group owns stock listing venues in Amsterdam, Paris and Lisbon, among other cities, as well as a clearing house. 

Several large European stock exchange groups have tried and failed to merge or run partnerships over the past decade. European competition regulators in 2017 blocked a merger between Deutsche Börse and the London Stock Exchange Group, while Deutsche Börse recently approached Euronext about launching a new tech-focused stock exchange. 

European officials are seeking to revitalise the region’s fragmented capital markets, in order to encourage investment in domestic companies and deepen market integration.

Private equity company CVC and software group Planisware were among the 28 companies that listed on Euronext venues in the second quarter of the year, Boujnah said. Companies raised €3.4bn through equity listings on Euronext venues, up 204 per cent compared with the second quarter of last year.

“The listings are not as hot as we thought it would be six months ago” as some companies postponed their IPOs because of mismatched valuation expectations, Boujnah said. But he added that “companies that 10 years ago would have listed on LSEG are now listing on Euronext”.

Euronext made €413mn in revenues in the second quarter, up 12 per cent on the same period last year. Stock listings accounted for €26.6mn in revenues, a 5 per cent increase on the same period last year.

Swiss drugmaker unveils promising data for obesity drug

Roche plans to fast-track its anti-obesity drugs to challenge rivals Eli Lilly and Novo Nordisk in the booming market after unveiling promising data for a weight-loss pill.

Thomas Schinecker, chief executive of the Swiss pharmaceutical company, told the Financial Times that Roche’s first obesity drugs would come to market “significantly faster than people are expecting”, potentially by 2028.

The treatments, acquired in an up to $3.1bn takeover of biotech Carmot last year, includes a weight-loss jab set to enter phase II trials and a pill that has given users 6.1 per cent reduction in weight compared with a placebo after four weeks.

Schinecker said the company could have “around seven” drugs from the Carmot acquisition, with several in an earlier stage of development, although it has disclosed details for just three of the assets.

Data from its pill last week sent shares in the Swiss company up 6 per cent on the day of the release. The results also hit shares of Novo Nordisk and Eli Lilly over concerns that Roche could challenge their dominance in the sector.

Goldman Sachs analysts expect the obesity market to surpass $130bn by 2030, with several companies seeking to launch their own drugs.

But Roche will have to catch up with the two incumbents in the field, both of which are developing stronger and more effective treatments than their Wegovy (Novo Nordisk) and Mounjaro (Eli Lilly) drugs that have led to about 15 per cent and 20 per cent weight loss respectively in trials lasting more than a year.

Other drugmakers, including Boehringer Ingelheim and Pfizer, are also hoping to launch drugs, while shares in US biotech Viking Therapeutics rose 30 per cent on Thursday after it said it would advance an obesity pill to late-stage trials.

Schinecker said the company’s weight-loss pill will be more easily scalable as it is made synthetically, rather than through living natural molecules known as peptides, which is the case with the weight-loss pill being developed by Novo Nordisk.

Emily Field, an analyst at Barclays, said it was too early to tell if the company would be able to “disrupt the head start Novo and Lilly have”.

“If you look at what’s disclosed, it’s better than pretty much everything at four weeks. But there’s a lot we don’t know,” she said, pointing to a lack of detail on side effects from the drug, such as nausea and vomiting.

Schinecker took over as chief executive in March 2023 and, in the past year, Roche has cut 25 per cent of underperforming drugs in development. The group plans to focus on a smaller but more promising pool of drugs, including in obesity and Alzheimer’s.

“That creates room for new starts and things that we can bring in from the outside so that you don’t carry projects for too long and then you find resources that you could put to much more effective use to develop new medicines,” Schinecker told the Financial Times.

But its plans come after a series of research failures in recent years, including a late-stage trial for lung cancer drug tiragolumab this month. The treatment failed to increase survival rates compared with a Merck drug, Keytruda.

Schinecker said he hoped that Roche’s obesity drugs could also be used in combination with the company’s other treatments for conditions linked to obesity.

He pointed to the company’s blockbuster eye treatment Vabysmo, developed with its subsidiary Genentech, which made SFr1.8bn ($2.1bn) in sales in the first half of the year and has shown promise in treating diabetic macular edema.

Driven by strong sales of Vabysmo and multiple sclerosis drug Ocrevus, on Thursday the company raised its expected earnings per share growth in 2024 to the high single-digit range, up from previous guidance of a mid-single digit increase.

First Solar searches for breakthrough to cut China’s clean energy lead

America’s largest photovoltaics manufacturer must innovate if it is to compete with Asia as prices stay low

On a soyabean farm in Ohio, America’s largest solar manufacturer is trying to beat China to the next breakthrough in clean energy.

This month, First Solar opened the country’s largest solar research facility in the Rustbelt state, where it has manufactured panels since 2002. The objective: to commercialise the next generation of technologies to harness power from the sun before Beijing does.

The company’s push into research comes at a tumultuous time for US solar manufacturing, and is motivated by the belief that to compete on clean technologies, the US must innovate rather than replicate China. 

“We’re not going to follow this race to the bottom on pricing,” Mark Widmar, First Solar’s chief executive told the Financial Times. The company is spending about $500mn on the research facility, along with a new pilot line for an unproven but potentially revolutionary solar technology known as perovskites.

“We need to think about how do we continue to grow and how do we differentiate ourselves and it needs to be through technology leadership,” Widmar added.

Many US solar manufacturers have scrapped or delayed factory projects in the past year as China’s overproduction of panels dragged prices to record lows and rendered many western operations unprofitable even when accounting for subsidies and tariffs.

First Solar, meanwhile, has ploughed steadily forward, investing $2.4bn in manufacturing after the passage of President Joe Biden’s landmark Inflation Reduction Act, which included lucrative 10-year subsidies for the first time for producers.

The subsidies and the IRA’s incentives to buy US-made technologies have been a boon for the company: its share price has nearly doubled since the Democratic-backed law was enacted. First Solar’s growing profile has raised concerns among industry members that it may lobby for protectionist policies that benefit its bottom line but make it more expensive for customers to decarbonise.

“They’re on a tear right now,” said Michael Parr, executive director of the Ultra Low-Carbon Solar Alliance, a trade group. “The scale of First Solar’s work is very promising and validating the view that innovation is going to be what grounds the US industry successfully.”

First Solar is the only sizeable solar manufacturer that survived the wave of offshoring and bankruptcies in the 2010s which claimed, most notably, Solyndra, a start-up that defaulted on a $535mn Department of Energy loan and cast a negative light on government funding for clean tech for years.

What helped insulate First Solar is its now spun-off projects business and its largely domestic supply chain, a result of a bet in the 1980s on a technology known as cadmium telluride. While these panels make up a fifth of US projects, almost entirely supplied from First Solar, it is less than 5 per cent on a global market that is overflowing with Chinese crystalline silicon panels.

“They were the last company standing for a while in the United States largely because they never incorporated China into their manufacturing strategy,” said Mike Carr, president of the Solar Energy Manufacturers for America coalition, an industry group.

First Solar also operates research centres in California and Sweden, and invested $152mn in research and development in 2023, up 35 per cent from the year before. Among its rivals, Canadian Solar invested $101mn in R&D last year, up from $70mn the previous year. Qcells, which manufactures in Georgia, spent “hundreds of millions” on R&D last year, it said.

Becca Jones-Albertus, the director of the DoE’s solar energy technologies office, said R&D was “critical to long-term supply chain competitiveness”. The department dedicates $300mn annually to “research, development and demonstration” efforts to advance solar.

But on innovation the US still lags behind China, which filed more than 9,000 solar patents last year compared to less than 350 in the US, according to the International Renewable Energy Agency. 

Industry members warn that market conditions must improve before innovation can be achieved. “You can’t justify trying to get to the next technology level while losing millions of dollars,” Carr said. 

US-made crystalline silicon panels generate energy at an average cost of 29.5 cents per watt, while First Solar’s panels hover above 30 cents per watt and were less efficient, according to BloombergNEF. A panel sourced in south-east Asia, meanwhile, can cost under 16 cents per watt, and in China, it is 10 cents per watt.

Cheap panels have helped solar become the fastest-growing source of new US power generation, but have prompted domestic manufacturers to call for greater trade protections.

In April, First Solar filed a petition with several other manufacturers to the US Department of Commerce and International Trade Commission, accusing Chinese companies of dumping solar cells in south-east Asia, where the US sources the bulk of its supply. New tariffs could reach 270 per cent depending on the company and country.

The case has divided the US solar sector, with companies accusing America’s flagship manufacturer of “cornering the market” by pushing for protections that hurt its competitors and make decarbonisation more expensive.

The dispute points to perhaps the biggest advantage of First Solar: given its size and vertical integration, it can provide developers’ assurance on deliveries in a volatile trade landscape, a certainty that is worth its higher price.

“First Solar’s strength really is its lawyers,” said Jenny Chase, an analyst at BloombergNEF. “It’s purely about the trade wars.”

The political might of First Solar — and the lure of clean energy jobs — will be put to the test in November’s US elections. Its Perrysburg facilities are in a House district where the Democratic incumbent is facing a Donald Trump-backed challenger. JD Vance, Trump’s running mate, is a senator for Ohio, a swing state and top destination for solar manufacturing. Both Trump and Vance have attacked the IRA, with Trump vowing to “terminate” it.

While the IRA passed with no Republican votes, analysts say the law’s disproportionate returns to red districts gives it staying power in the event of a change in administration.

“This is an inflection point for this industry. If we are unable to establish a domestic industry under the IRA programme right now, I don’t think it ever happens,” Widmar said.

US buyout group’s London-based energy division combines counterintuitive strategy with commitment to cut emissions

Marcel van Poecke joined Carlyle in 2013 to run the US private equity firm’s new energy fund and immediately signed its first deal, buying his family office’s stake in a Swiss oil refiner.

In the decade since, the veteran Dutch investor has turned London-based Carlyle International Energy Partners into an unusual outpost of the buyout world by snapping up unloved oil and gas assets across Europe, Africa, Asia and Latin America.

While Carlyle’s main private equity rivals, including Blackstone and Apollo, have backed away from fossil fuel projects citing climate concerns, van Poecke and CIEP have persisted, arguing that it is better to invest in reducing emissions from oil and gas businesses than to divest.

“Not owning them doesn’t make them disappear because there’s obviously demand on the other side for that supply,” said Megan Starr, Carlyle’s global head of corporate affairs. “We’d rather be the owners of that supply and have a much more aggressive hand in the average emissions intensity . . . of energy produced by those companies.”

CIEP last month announced its 15th investment, a $945mn deal for a portfolio of oil and gas projects in Italy, Egypt and Croatia that will form the basis of a new Mediterranean-focused producer chaired by former BP chief executive Tony Hayward.

While other Carlyle funds invest in renewable power and some of CIEP’s portfolio companies are developing clean energy technologies such as hydrogen and biofuels, van Poecke and Starr argue that as long as fossil fuels remain part of the energy mix, they also require responsible investment.

And as some of Carlyle’s main US-focused buyout funds have struggled with poor performance amid a fumbled succession from the group’s founders to new management, the energy strategy has proved a success.

CIEP’s $2.3bn second energy fund, raised in 2019, has achieved a multiple on invested capital of 1.7 times — representing the current fair value of the assets plus realised proceeds — and generated a 13 per cent net annual return, outperforming many other private equity funds raised around the same time. The $2.5bn first fund, raised in 2013, has achieved a 1.9 multiple on invested capital and a 9 per cent net annual return.

Carlyle provided much-needed “patient capital”, subject matter expertise and unrivalled connections to customers, said Dev Sanyal, chief executive of CIEP-backed Varo. “They have a Rolodex like no other.”

Van Poecke has become one of Europe’s most successful energy sector dealmakers since co-founding Swiss oil refiner Petroplus in 1993. After selling the company in 2005 to Carlyle and New York-based Riverstone he ran it for another two years but left after it listed in Zurich, using his profits to set up a family office, AtlasInvest.

Carlyle and Riverstone made healthy returns on the deal but Petroplus fell into insolvency in 2012, enabling van Poecke to buy back its idled Cressier refinery in partnership with commodity trader Vitol.

The following year he joined Carlyle and made the Cressier refinery the energy fund’s first investment, selling AtlasInvest’s stake in the joint venture, Varo, to his new employer.

In 2013, most energy-focused private equity funds were pumping money into the US shale boom, as horizontal drilling technology opened up new oil and gas reserves in the country.

“We saw an open space outside of the United States,” van Poecke said. “People were not really looking.”

After Varo, CIEP acquired a Romanian oil and gas business in the Black Sea, bought onshore oilfields in Gabon from Shell and in Colombia from Occidental, and took a stake in a set of oil and gas projects in Europe, north Africa and south-east Asia from Engie. In 2019, it acquired 37 per cent of Spanish integrated oil and gas company Cepsa from owner Mubadala.

“We clearly saw an opportunity . . . to buy businesses, invest in the whole energy value chain — so upstream, midstream, downstream, the whole complex — and improve those businesses in terms of positioning for the future,” van Poecke said. He backed CIEP’s second fund with $100mn of his own money.

By the early 2020s, however, amid intensifying investor scrutiny of the private equity industry’s carbon emissions, many groups began to divest carbon assets or ban oil and gas drilling from their portfolios.

For funds that had lost heavily on US shale after ambitious executives overspent and oil prices collapsed, the decision to withdraw from oil and gas was somewhat easier, people familiar with the matter said.

By contrast, Carlyle said in February 2022 that it would hold on to its energy investments but reduce each portfolio company’s emissions in line with the goals of the Paris climate agreement.

Then chief executive, Kewsong Lee, hired a former Canada Pension Plan executive, Avik Dey, to co-head CIEP and moved van Poecke to a new role as vice-chair of the platform. But only a month after Dey started, Lee resigned in a dispute over his pay. Dey, who did not respond to a request for comment, left four months later.

Despite the turmoil inside the company, Carlyle’s energy investments were delivering healthy returns, helped in part by soaring oil and gas prices resulting from the upheaval in energy markets caused by Russia’s invasion of Ukraine.

In 2022, a year when many private equity portfolios were pummelled by higher interest rates, Carlyle’s $27bn infrastructure and natural resources portfolio gained 48 per cent, largely driven by its energy investments. It gained a further 8 per cent last year, when it generated almost a third of Carlyle’s total performance fees, which are earned when selling assets for a profit, according to filings.

“They couldn’t shut down these energy investment businesses because they were too high of a percentage of the profit of the firm,” said one former Carlyle executive. In addition to CIEP, Carlyle owns a large minority stake in NGP, a private equity firm focused on US oil and gas.

Lee’s departure and the delayed retirement of chief operating officer Christopher Finn were good for CIEP, the former executive added, empowering van Poecke and other Europe-based dealmakers. Finn was a supporter of top European staff, according to people familiar with the matter.

Van Poecke is now chair of energy at Carlyle, while CIEP is run by managing directors Bob Maguire and Guido Funes Nova.

Starr, a former head of ESG at Goldman Sachs who joined Carlyle in 2019, has helped guide much of the group’s thinking on what constitutes responsible investing in traditional energy assets such as oilfields and refineries.

Within two years of ownership, each company must have a strategy to reduce emissions and a board-level ESG committee to oversee implementation, she said. For companies that produce fossil fuels there are further “guardrails”, such as joining the UN-backed programme for the reporting and mitigation of methane emissions.

Carlyle is also betting that by reducing absolute emissions its companies will be more valuable when the fund needs to exit. Last year it sold the portfolio of former Engie assets, know as Neptune Energy, to Italy’s Eni for $4.9bn having reduced the carbon intensity of operations since 2017.

“It’s a part of our investment thesis,” Starr said. “What’s the maximum feasible decarbonisation potential that we can implement and execute over our hold period.”

CIEP’s most ambitious investment is arguably in Cepsa, where chief executive Maarten Wetselaar is aiming to expand the oil and gas company’s low-carbon businesses, such as hydrogen and biofuels, from nothing to more than 50 per cent of group earnings within six years.

Wetselaar, who was hired from Shell in 2022, argued that such a rapid transformation would not be possible if Cepsa were publicly held.

“Having worked for a long time in a stock exchange traded company, I have seen how difficult it is to change your investor base from the big fossil fuel investor base that owns the majors . . . to an ownership that is enthusiastic about green investments,” Wetselaar said.

Both Shell and listed rival BP have pared back their energy transition plans in the past 18 months, following lacklustre support from shareholders.

“There’s a no man’s land between those two investor categories that you can’t cover by incrementally decarbonising your company,” Wetselaar said.