FT : New Abu Dhabi asset manager Lunate reveals deals streak

New Abu Dhabi asset manager Lunate reveals deals streak
The firm, which officially launched in January, has already taken stakes worth $5bn this year

New Abu Dhabi asset manager Lunate has invested in 25 deals so far this year, buying stakes in companies from private equity firm CVC to India’s National Stock Exchange.

Managing partner Khalifa al-Suwaidi told the Financial Times that the firm, which officially launched in January, had already invested $5bn this year and hopes to deploy $8-10bn a year, making it an attractive potential client for money managers looking to raise funds.

The dealmaking comes as oil-rich Abu Dhabi seeks to attract foreign hedge funds and asset managers to set up in its financial centre, advertising itself as the “Capital of Capital”.  

Lunate manages assets for Abu Dhabi sovereign investor ADQ and others, and is owned by its three managing partners and Chimera Investment. Chimera is part of the sprawling business empire of Sheikh Tahnoon bin Zayed al-Nahyan, the United Arab Emirates’ national security adviser and chair of ADQ.

Abu Dhabi has several sovereign investment funds, including ADIA, Mubadala and AI-focused MGX. But Suwaidi said the emirate was keen to support an independently managed “local champion”. Lunate has also been awarded a UAE licence to manage employee savings schemes, and has launched several passive funds. 

Some in the industry, however, question the extent of Lunate’s independence. 

The firm says it has $105bn of assets under management, including the investments it has made this year, and future commitments from ADQ totalling around $47bn.

This is in addition to the alternative investments portfolio it manages on behalf of ADQ, which was worth around $34bn in 2023 according to ADQ’s bond prospectus; and legacy investments of undisclosed value managed on behalf of Chimera. 

It declined to comment on whether it was charging management fees on the assets that had been committed but not yet deployed, saying the details were “confidential, in line with industry practice”.

Lunate also owns Alterra, a $30bn climate fund with international firms BlackRock, TPG and Brookfield, to which ADQ has committed $6.5bn. Lunate includes Alterra in its assets under management. 

The firm also declined to comment on whether its managing partners had contributed their own funds.

Until now, among Lunate’s few publicised deals were two acquisitions — stakes in a Dubai office tower and the Abu Dhabi national oil company’s listed pipelines business — and one joint venture, with New York-listed alternative asset manager Blue Owl Capital. The joint venture has invested in healthcare private equity firm Linden Capital Partners.

One Emirati finance executive said it was “quite complex to make sense of what is going on at Lunate,” and that “it feels like another pool of sovereign wealth money”. Another characterised Lunate’s relationship with Abu Dhabi’s sovereign funds as “right hand to left hand”.

Suwaidi insists Lunate is independent, pointing out that it manages money for more than 10 clients aside from ADQ and Chimera. He declined to name any of them, citing confidentiality, but said it had recently signed on a large family office in the Middle East.   

“I think it’s very natural for Abu Dhabi to think about supporting a local champion that is the largest in the region as of now,” Suwaidi said.

Nonetheless, its ties to ADQ are strong. ADQ’s chief executive Mohamed Hassan Alsuwaidi is chair of Lunate, and ADQ’s former chief investment officer Murtaza Hussain is one of Lunate’s managing partners. ADQ’s bond prospectus states that its alternative investments team “were hired by Lunate”, although Suwaidi said that Lunate had not hired the entire employee group. 

Meanwhile, Lunate’s nearly 200 employees have been busy. Suwaidi said the business had looked at 550 possible transactions, but ultimately chose just 25. He declined to give the size of any of Lunate’s investments, but said its “sweet spot” was to invest $100-300mn. 

Although it says it is not sector specific, the deals Lunate disclosed to the FT skewed towards financial services.


The “whole strategy is really around co-investment and sometimes co-underwriting,” Suwaidi said. 

Its main strategy — some 45 per cent of its assets — is to invest in funds. Lunate said it has made 12 fund investments this year.

Fund investing enables Lunate to build relationships with global asset managers and private equity firms, Suwaidi said. These then share opportunities with Lunate, “generat[ing] our direct and co-investment deal flow,” its second-largest strategy.  

Lunate also has a special opportunities strategy “for IPO, pre-IPO, where access is an advantage,” and a long-term capital strategy to generate yield. 

Suwaidi said Lunate had invested in several initial public offerings this year, but only disclosed two: Parkin, a state-controlled parking company listed in Dubai, and European private equity group CVC Capital.

FT : 3i searches for next ‘gem’ as short seller circles

3i searches for next ‘gem’ as short seller circles
The UK’s oldest buyout group has become heavily dependent on Dutch retailer Action that makes up two-thirds of its portfolio by value

When Britain’s oldest private equity firm 3i purchased an obscure Dutch discount retailer early last decade, even those involved in the deal had little inkling it would become one of the most successful leveraged buyouts in history.

One former executive who worked on the 2011 takeover of Action, which sells cheap products from towels to toilet cleaner out of retail parks, remembers looking around its warehouses and seeing piles of “very dusty old stock”.

But the takeover of an unassuming chain of bargain stores has proved 3i’s redemption trade, rescuing a storied buyout firm from growing irrelevance after a painful restructuring and making eye-watering returns for its shareholders in the process.

The firm, which in recent years has added to the majority stake it bought in 2011 for £114mn, now values its investment in the retailer at almost £15bn.

Action has driven a more than 1,000 per cent rise in 3i’s shares as the retailer’s value has ballooned to account for 66 per cent of the firm’s portfolio by value, and has returned at least £2.9bn in cash to its controlling shareholder.

“It’s the gem in their portfolio,” said a former 3i partner.

However, not everyone thinks the rally is deserved. ShadowFall, the hedge fund that shorted the now-defunct fraudulent German fintech Wirecard, has built a multimillion-pound position against the firm because it believes its valuation of Action is too high.

The debate around Action’s valuation has underlined how 3i’s future, and that of its chief executive Simon Borrows, are intimately linked to the retailer’s success and raised questions over what the buyout firm might become — with or without its star asset.

“Shareholders are now essentially buying 3i as a proxy for Action,” said Haley Tam, senior equity research analyst at UBS.

3i declined to comment.


By the time Borrows was promoted from chief financial officer in 2012, the FTSE 100 company, which was founded in 1945 at the request of the UK government to support war-stricken businesses, had 124 investments in small to medium-sized companies and offices across the world.

“When I first joined, 3i was completing a transaction every working day of the year,” said the former executive, who joined the firm in the 1990s. “It was just an extraordinary volume machine.”

But Borrows, a former investment banker who advised on 3i’s initial public offering in 1994, whittled the group down, closing offices from Barcelona to Hong Kong, cutting more than a third of staff and restricting new deals to northern Europe and Brazil.

Within three years the number of companies in 3i’s portfolio had almost halved to 65, with some sold at a loss, while the group’s credit business was sold in 2016.

In 2015 Borrows put an end to third-party fundraising because the firm’s aim of investing in up to seven new targets a year left it with “no compulsion” to seek money from outside investors.

Meanwhile 3i had been growing Action, which had operated 250 stores across the Netherlands, Belgium and Germany when the group bought it. Sales at the retailer, which now operates more than 2,300 stores in 12 European countries, rose from €1.2bn to more than €11bn in the decade to March 2023. 

Action’s returns to the investment firm have largely been funded by the retailer taking on additional debt. The Financial Times reported this summer that 3i was set to receive another payout of at least €1.1bn as Action worked to raise new leveraged loans worth more than €2bn.

The buyout group recently increased its stake in the retailer from 55 per cent to 58 per cent.

Executives at 3i last year received £735mn in carried interest solely relating to the group’s investment in Action.

On top of carried interest, Borrows received more than £7.5mn in bonus and long-term incentives as well as a £700,000 salary for the financial year.

3i now values its stake in Action at £14.8bn.

But Matthew Earl, managing partner of ShadowFall, told the FT he believed the implied Action valuation of 18.5 times operating earnings before interest, tax, depreciation and amortisation was too high. He added the price of 3i’s shares implicitly attached an even higher multiple to the retailer.

Earl said he believed the retailer had benefited disproportionately from high inflation because it buys half its inventory months in advance — an advantage that would fade as price rises subsided.

He also questioned how much the chain could further expand in France, a “saturated market”.

Many remain bullish, and are not convinced by the thesis of ShadowFall’s short position. Clive Black, head of consumer research at Shore Capital, said Action was a “formidable business and it hasn’t gained the valuation it has through market manipulation, it has done it through exceptionally strong sequential growth”.

The discount chain may have benefited from “a short-term tailwind in [profit] margins from inflation”, Black added, but “it’s not just Action, inflation has been everywhere, Action used it well”.

Citi, which increased its price target for 3i days before ShadowFall’s position became public, subsequently argued that the valuation was “cheap when factoring in faster-than-peer growth” and that most of Action’s store growth was expected to be outside of France.

But regardless of Action’s valuation, the more important question for some is what 3i’s purpose is, whether it keeps or exits the asset.

Michael Sanderson, director in equity research at Barclays, said shareholders in 3i were “buying a business that is heavily exposed to Action’s development”, whereas 10 years ago it was “building value by . . . buying companies and growing them and selling them on after a short time period”.

He was positive about 3i and Action overall, but added there were “undoubted questions about what the long-term plan is, given [Action] is such a large part of 3i right now” and that the retailer had “got to such a scale now, there are very few options” for exiting it.

For the former 3i executive, the group’s non-Action portfolio “is now not of a scale that it probably survives on its own”. They added that 3i had “become a victim of Action’s success”.

The need to diversify appears not to be lost on 3i, whose executives have pointed to other portfolio companies that could be their next success story.

3i designated Royal Sanders, a European producer of personal care products, to its “longer-term” assets last year. It has also highlighted Netherlands-based bread and snack producer, the European Bakery Group, as a strong performer in recent years.

“A number of assets have the potential to become longer-term compounders like Action,” Borrows said in May.

“We’ve obviously learned the benefits of holding things for longer,” he said last month, adding that the group’s 2015 sale of global material-testing laboratory network Element had been too early because it had “continued to grow significantly” since.

The buyout group is also looking to make two or three investments a year in software and services companies, to add to an overall “non-Action portfolio” that it recently said had both strong and weak-performing assets.

Despite Action’s continued growth, the former 3i partner suggested the group would keep Action “as long as they can”, but questioned just “how much of the juice is left” in the retailer.

As for what the firm would be without Action, the person suggested 3i might regret selling the credit arm given the private debt market boom.

“Simon’s probably looking at Action as his swan song,” they said. “After that he goes off. There isn’t anything else.”

3i still manages third-party capital in its infrastructure strategy but the former executive said the decision to stop raising more third-party funds in private equity might also hinder its pursuit of the next Action.

“If you can’t raise third-party funds, it’s very difficult to be a private equity firm these days,” they said.

Borrows has, however, pointed to the lack of pressure to return cash to external investors as a strength that will allow 3i to hold portfolio companies for longer.

Some observers, though, do not hold much faith in it repeating its success with Action.

“Being the next Action is really, really hard,” said Sanderson at Barclays, adding that the prospect of another investment doing as well was “almost impossible”.

Barrons : Russia’s Oil Keeps Flowing Despite Sanctions. That’s Exactly How the U

Russia’s Oil Keeps Flowing Despite Sanctions. That’s Exactly How the U.S. Wants It.

Two-and-a-half years after Vladimir Putin invaded Ukraine, provoking successive waves of Western economic sanctions, Russia is pumping about as much oil as ever. That’s the way Washington and other Western governments want it.

Russian production has dipped 8% from the prewar month of January 2022, to about 9.8 million barrels a day, but mostly thanks to compliance with OPEC+ cuts.

“From the beginning, the West tried to maximize sanctions without affecting Russia’s core industry, oil.” Says Eddie Fishman, a former U.S. sanctions official now at Columbia University’s Center on Global Energy Policy.

Avoiding an energy shock when inflation was already rocketing to 40-year highs took precedence over a strike at Russia’s economic jugular. That’s a comforting thought as crude prices head north again on Israel’s confrontation with Iran. It’s not so comforting for those hoping that Putin will make peace in Ukraine.

Sanctions did aim to cut Moscow’s earnings from oil sales. They have, some. The European Union stopped buying Russian oil in the winter of 2022-23. Exports rerouted elsewhere were supposed to be subject to a $60-a-barrel price cap. The EU and U.K. would enforce that by denying tanker insurance, which they dominate, to noncompliant shippers.

Moscow countered by assembling a “shadow fleet” of 300-some secondhand tankers, says Craig Kennedy, an associate at Harvard’s Davis Center for Russian and Eurasian Studies. It tacked on “mystery insurance that was good enough for India or China,” which stepped in as buyers.

The Biden administration started sanctioning individual shadow tankers last autumn, then stopped this February as Houthi militias in Yemen continued to threaten Red Sea shipping, Kennedy notes—another apparent concession to U.S. pump prices.

The expense and bother of shadow fleet shipments to Asia are still costing Russian exporters $5 to $10 a barrel compared with their former European sales, says Ronald Smith, senior oil and gas analyst at BCS Global Markets.

Roughnecks in West Siberia have adjusted well to any shortages of sanctioned Western equipment, and the forced exit of service companies like Halliburton and Baker Hughes, says Hunter Kornfeind, an oil market analyst at Rapidan Energy Group. “The domestic industry has continued to perform,” he says.

The worst economic blow to Russia was self-inflicted when Putin cut most gas exports to Europe in hopes of breaking its resolve to support Ukraine. That’s costing the Kremlin up to $20 billion a year, Smith figures, more than 1% of gross domestic product.

The Free World has stymied the Kremlin’s ambitions to replace pipeline exports with liquefied natural gas, forcing French oil major TotalEnergies out of an LNG partnership in the Arctic, and withholding ice-breaking tankers that are only built in South Korea. Exxon Mobil pulled out of a joint venture to extract oil from Russia’s Arctic, leaving longer term supplies in question as West Siberian fields dwindle. “Russia’s status as an energy superpower has fundamentally altered on a five-to-20-year horizon,” Fishman says.

For now, though, a trade surplus of $86 billion last year enables Putin to absorb his gas losses and meet skyrocketing military expenses. The next U.S. president, particularly if it is Kamala Harris, could have a freer hand to go after Russia’s shadow fleet and tighten other “secondary sanctions” without immediately worrying about losing an election over domestic gasoline prices. But markets aren’t betting on it.

“Either candidate will gradually push the envelope on Russia sanctions,” Rapidan’s Kornfeind predicts. “But not enough to raise prices.”

WSJ : Israel Says Documents Found in Gaza Show Hamas’s Attack Planning, Iran Tie

Israel Says Documents Found in Gaza Show Hamas’s Attack Planning, Iran Ties
Letters and meeting minutes appear to show Hamas seeking funding from Tehran, trying to win support from Hezbollah

DUBAI—Israel’s military shared with journalists documents that it said its soldiers found in Gaza and that appear to show financial and military support provided by Iran to Palestinian Islamist militant group Hamas before the Oct. 7 attacks.

The Israeli armed forces gave The Wall Street Journal a series of what it described as letters and notes from meetings of the Hamas leadership as Israel weighs a retaliatory strike against Iran after Tehran fired a large salvo of missiles at Israel this month.

A major counterattack would deepen tensions across a region already teetering on the edge of a broader and more intense conflict.

The papers shown to the Journal suggest that Hamas leader Yahya Sinwar was negotiating with Iran over funding for a planned large-scale assault on Israel as far back as 2021.

In one of the letters, written in Arabic, Iran says it has allocated $10 million for Hamas’s armed wing. A few weeks later, Sinwar asks Iran for $500 million, divided into $20 million a month for about two years.

Other documents were shared with different media outlets. The officials who provided the documents declined to say why they were releasing them now.

The Wall Street Journal hasn’t independently verified the documents, most of which the Israeli military said it discovered on Jan. 31 in an underground bunker in the Gaza Strip city of Khan Younis, Sinwar’s hometown.

Hamas didn’t respond to a request for comment.

Iran’s permanent mission to the United Nations in a statement said Hamas has acknowledged that its armed wing planned and executed the Oct. 7 attacks without the knowledge of even its political officials based in Doha.

Any claim attempting to link the attacks “to Iran or Hezbollah—either partially or wholly—is devoid of credence and comes from fabricated documents,” the mission said.

Both Iran and Hamas have acknowledged some Iranian financial and military support for the Palestinian militant group, though many details of Iranian support remain unclear or in dispute. Western officials have estimated that Iran handed tens of millions to the group.

Hamas and Hezbollah officials have offered conflicting accounts of Iran’s possible prior knowledge. The Wall Street Journal has reported that some Hamas and Hezbollah officials said Iranian security officials greenlighted the attack, noting that others questioned that account.

The Israeli military also shared an undated presentation it said it found on a Hamas computer near Gaza City on Nov. 10 which described Hamas’s plans for an attack on Israel that was more ambitious than what eventually occurred.

It described gathering 3,100 aerial photos covering 90% of Israel as it assessed the country’s vulnerabilities, with plans for simultaneous attacks targeting airports and other critical infrastructure and a takeover of Israel’s legislature in Jerusalem.

Other targets would include a set of towers in Tel Aviv near the Israeli defense ministry’s headquarters, aiming for the sort of symbolism that came with the destruction of the World Trade Center on 9/11, the plan said.

The plans also suggested the idea of using horses and chariots to move Hamas militants through Israel, and included a slideshow with an image of two horses and a chariot beside a picture of an Egyptian pharaoh riding in a chariot with a bow-and-arrow.

In the actual Oct. 7 attack, Hamas militants used motorcycles, pickup trucks and paragliders to sweep into Israel. Hamas and other militants killed 1,200 people, including women and children, and kidnapped around 250 others.

The attack led to the current conflict in Gaza, where Palestinian health authorities say almost 42,000 people have been killed, most of them civilians. The figures don’t distinguish between combatants and noncombatants.

Other, undated letters from Hamas to Iran, provided by the Israeli military, suggest the two sides deepen cooperation and organize joint military, intelligence and logistical plans for future conflicts with Israel.

The letters propose developing better drone, air defense and communications systems together.

Together, “we will uproot this monstrous entity, change the face of the region together,” Sinwar wrote in a letter to the head of the Quds Force, an arm of Iran’s Islamic Revolutionary Guard Corps.

Israel in recent weeks has shifted its focus to its northern border, where Hezbollah, a key ally of Iran, began firing rockets at Israel a day after Hamas led the Oct. 7 attacks.

Israel in recent weeks has killed Hezbollah’s leader and senior Iranian officials working alongside the Lebanese militia. That has drawn Iran deeper into the conflict. Earlier this month it fired a barrage of about 180 missiles at Israel.

Israeli Prime Minister Benjamin Netanyahu has vowed a painful response.

Some files provided by the Israeli military dating back to 2019 describe how a Hamas delegation traveled to Iran to meet leader Ayatollah Ali Khamenei and Qassem Soleimani, then the head of the Islamic Revolutionary Guard Corps’ overseas operations unit, the Quds Force.

Soleimani, who was killed a year later by a U.S. airstrike in Iraq, told the Hamas delegation that they had few military allies in the region. Turkey, which hosted some Hamas officials, was sympathetic, he said, but couldn’t provide “a single bullet.”

“The reality,” Soleimani said, “is that there is no one but Iran.”

WSJ : China Says It Has a Big Stimulus Coming—But Still Won’t Say How Big

China Says It Has a Big Stimulus Coming—But Still Won’t Say How Big
With few details offered by officials, stock investors are back to where they started the week: in a waiting game

HONG KONG—After a week of hope and disappointment on China’s stock market, anticipation was high among investors on Saturday that senior officials in Beijing would unveil a fiscal stimulus package with a large headline dollar figure.

They did not.

Instead, Finance Minister Lan Fo’an said that officials had a “fairly large” amount of room to boost spending, while pledging the boldest measures in years to resolve local governments’ debt loads, support the nation’s ailing property market and recapitalize large banks—tackling some of the most intractable challenges in the Chinese economy.

“I can tell you responsibly that China’s finances are sufficiently resilient, and that by adopting comprehensive measures, we can achieve a balance between revenues and expenditures and accomplish the annual budget target,” Lan said. “Please be assured.”

Markets were closed on Saturday, so it remains to be seen whether Lan’s pledge, free of any specific dollar figures, will be enough to assuage worries that Beijing has moved too slowly to address a sharp slowdown in the world’s second-largest economy.

Earlier in the week, stocks had surged as expectations for a flood of stimulus ran high, only to come tumbling down after a Tuesday news conference by China’s main economic planning agency ended without any details on the scale and scope of any government measures.

Those hopes were revived again after China’s Finance Ministry announced plans for Saturday’s news briefing, although mainland China and Hong Kong’s respective benchmark stock indexes both finished the week deep in negative territory.

With the Finance Ministry now having outlined its plans, albeit without a headline figure, stock investors are back to where they started the week—in a waiting game for more details from Beijing. Economists and market strategists now say any specific numbers are only likely to be announced later this month, after the standing committee of China’s legislature, which is entrusted with approving changes to the budget, can meet and approve any stimulus plans.

Despite shying away from any specific fiscal stimulus figures, the Finance Ministry addressed a range of challenges that they are focusing on, specifically the growing debt burden at the Chinese local government level, concerns about banks’ capital levels and the mess in the country’s property market.

The Finance Ministry said it would conduct a one-off quota increase for local governments, many of which have spent lavishly on infrastructure projects using off-the-books financing vehicles, to swap out their “hidden debt” for explicit government-backed debt. Without disclosing the size of the quota, Lan touted the plans as “the boldest measure” in recent years to address the local-government-debt overhang, which has become one of the biggest worries among China economists.

Many governments at the subnational level have fallen into dire financial straits as land sales to property developers—a key pillar of local government coffers—collapsed amid Beijing’s attempts to rein in the real-estate sector. That drop in land-sale revenues coincided with the Covid-19 pandemic, which hit the governments’ tax intake.

No one knows exactly how much Chinese local governments have accumulated in off-the-books debt, but economists estimate the size to be somewhere between $7 trillion and $11 trillion, about twice the size of China’s central government debt. As much as $800 billion of it is at a high risk of default, some economists have estimated.

Lan said Saturday that local governments will be allowed to use the proceeds from special-purpose bonds—debt typically used to fund state-led infrastructure projects—to buy up unsold homes from developers and convert them to affordable housing, and to repurchase idle land parcels from developers. Both measures have been floated by economists as ways to help relieve liquidity pressure on the country’s distressed real-estate developers.

Separately, Liao Min, a vice finance minister, said during Saturday’s briefing that the government will sell special treasury bonds to recapitalize China’s largest commercial banks. Notably, Liao didn’t put a number on the size of the bond issue—a figure that investors were closely watching for.

Before the press conference, economists and strategists had offered predictions about the dollar amount on any notional stimulus package, with estimates ranging from one trillion yuan and three trillion yuan, equivalent to $142 billion to $425 billion. Some tallied up all the key areas where China’s economy needed fiscal boosts and the figure came to about 10 trillion yuan, or $1.42 trillion, equivalent to roughly 8% of China’s gross domestic product last year.

While some, like Ting Lu, chief China economist at Nomura, had predicted earlier that the stimulus package might be capped at 3% of GDP a year for a few years, Lan’s comments on Saturday imply that Beijing will likely raise the fiscal deficit above that level next year, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

Lisheng Wang and his colleagues at Goldman Sachs, writing to clients after Saturday’s news briefing, expressed some disappointment at the continued lack of specifics on the size of the stimulus.

Still, over the past few weeks, “it’s clear that policymakers have been making more forceful and coordinated easing efforts to boost domestic demand (especially consumption), normalize inflation and rebuild confidence,” he wrote. “Fiscal stimulus is likely to take the heavy lifting.”

FT : Nike tries to get back in the race as sneaker sales gather pace

Nike tries to get back in the race as sneaker sales gather pace
Athletic footwear thrives as consumers seek wider choice of brands beyond the famous swoosh

As Nike tries to lift itself out of a sales slump with a new chief executive on Monday, the rest of the athletic footwear industry is booming.

Retailers are expanding their reliance on brands beyond the famed swoosh.

Foot Locker, one of the largest global sneaker retailers, posted a return to comparable store sales growth in its most recent quarter, due in part to the chain diversifying its assortment of products to brands beyond Nike.

Designer Brands Inc, which operates DSW shoe stores across North America, is also expanding its sneaker offerings, while Fleet Feet, a US-based chain of running speciality stores, said it “has never seen product this strong” from trainer brands.

Designer Brands chief executive Doug Howe told investors last month the company is in the midst of a “pivot” to offering more athletic footwear — up to 42 per cent of its assortment this year, from 32 per cent in 2017. While overall sales at US DSW stores fell 3 per cent in the most recent quarter, sales of athletic footwear, including Nike, rose 16 per cent.

The positive momentum at sneaker chains across consumer categories — from fashion, to family, to speciality — underscores the optimism for athletic footwear writ large, if not for Nike. Earlier this month, the swoosh withdrew its financial guidance for the year and reported a 10 per cent drop in sales over the three-month period ended in August.

“Footwear is interesting because it can be recession-proof in a sense,” said Matt Priest, chief executive of the Footwear Distributors and Retailers of America, a US trade association.

Even in adverse economic conditions with interest rates high, albeit coming down, “people still buy shoes in lieu of a new car or a washing machine”, he said.

Global retail sales of sports footwear totalled $165bn in 2023, up 23 per cent from 2018, according to Euromonitor. Growth occurred in every geographic region, led by Latin America, up 38 per cent, while Asia Pacific and North America remained the top two largest markets.

In the US, where 99 per cent of footwear is imported, sneakers are on the rise. Imports of athletic shoes are up more than 10 per cent year over year through August, Priest said, compared to a rise of just 1 per cent for all footwear.

Industry experts and retailers say the segment is performing well in part because of the broader “casualisation” of society, in which trainers are increasingly acceptable footwear in the workplace and for going out. 

“Once you discover that you can wear sneakers for almost everything, you hardly ever go back to heels”, Foot Locker chief executive Mary Dillon said last month. 

The fortunes of Foot Locker were once so closely tied to Nike that both companies cited one another for years in regulatory filings as their sole significant customer.

The proportion of Foot Locker’s inventory from Nike and its subsidiary Jordan brand peaked at 75 per cent in 2020, falling to 65 per cent last year.

At an investor conference last month, Dillon said Nike would “always” be an important partner, but emphasised the chain’s expanded offering of other brands, including Hoka, New Balance and On.

“Customers are voting. People want choice in this category. It’s very clear. They’re buying multiple brands and . . . using them for lots of different occasions,” Dillon said.

Some of the increased competitiveness in athletic footwear can be attributed to factors precipitated by Nike.

In 2017, the industry leader announced an aggressive plan to shift its sales strategy towards a direct-to-consumer model, moving away from what it called “mediocre retail”. This opened up shelf space at chains like Foot Locker for other brands.

That same year, Nike debuted its transformational Vaporfly 4% running shoe with improved foam and a carbon fibre plate in the sole, setting off an innovation arms race across the industry.

But Nike executives acknowledged the company pushed too hard into direct and online sales and failed to catch up with consumers who returned to shopping in stores as pandemic lockdowns eased. It is now working to win back retail partners.

“Our teams have been closely engaging with our partners since we acknowledged some of the mis-steps related to over-centring on direct [sales]”, said Matthew Friend, Nike’s chief financial officer, this month.

Foot Locker has said it expects a “return to growth” with Nike this year. Victor Ornelas, senior director of vendor management at Fleet Feet, a speciality chain for runners with 280 locations across the US, told the FT that “we have experienced an increase in energy and connections” from Nike beginning this year.

UK-based athletic shoe chain JD Sports posted falling profits for the half-year through August, due in part to the closure of a distribution centre and acquisition and divestment costs. But chief executive Régis Schultz told reporters: “Nike will be fine, it’s a question of time, it’s a strong brand.”*

Still, brands other than Nike have stepped up. At Foot Locker’s flagship store in New York City, autumn displays this month featured Timberland boots and Ugg slides, as well as prominent showcases for New Balance and Hoka.

Ornelas of Fleet Feet said brands are distinguishing themselves with footwear that can be used for various purposes — fusing the latest technology of performance foam soles, useful for running, with an upper part of the shoe in neutral colours that can be worn with a range of outfits.

“We are heavy into booking season right now for [shoes that will arrive in spring] 2025, and we’ve never seen product this strong,” said Ornelas.

CrunchBase : The Week’s 10 Biggest Funding Rounds: Form Energy Powers Up With $4

The Week’s 10 Biggest Funding Rounds: Form Energy Powers Up With $405M

What a week for big rounds — as nine of them hit $100 million or more. While there were no multibillion-dollar rounds like last week, there was still a lot of money invested into everything from renewable energy to a soccer entertainment company.

1. Form Energy, $405M, renewable energy: The biggest round of the week was one of the biggest this year in the renewables space. Form Energy, a renewable energy company developing and commercializing multiday energy storage systems, raised a $405 million Series F led by T. Rowe Price. Long-duration energy storage has proven to be a tough nut to crack, but Form has been able to get some commercial traction as it looks to ramp up manufacturing operations and commercial deployments of its iron-air battery systems. The Somerville, Massachusetts-based company, founded in 2017, has raised a total of $1.5 billion in a mix of equity and grants, per Crunchbase.

2. (tied) City Therapeutics, $135M, biotech: The big biotech raise this week came from a brand-new company. City Therapeutics launched with a $135 million Series A led by Arch Venture Partners. The Cambridge, Massachusetts-based biotech firm is building a product engine for RNAi therapeutics across multiple diseases.

2. (tied) EvenUp, $135M, legal: EvenUp, a legal tech startup creating artificial intelligence products for the personal injury sector, raised a $135 million Series D led by Bain Capital Ventures at a valuation of more than $1 billion. The San Francisco-based startup’s platform is powered by an AI model trained on hundreds of thousands of injury cases, medical records and internal legal knowledge. The platform helps with document generation and case and negotiation preparation. Founded in 2019, EvenUp has raised $235 million, according to the company. Legal tech has seen a huge bump this year — mainly thanks to AI. Per Crunchbase data, legal tech startups have already raised $1.9 billion this year. Last year, VC-backed legal tech startups raised less than $1 billion. The EvenUp raise is the second largest of the year thus far. In July, Vancouver-based legal tools platform Clio locked up a $900 million Series F at a $3 billion valuation.

4. AtVenu, $130M, event management: San Clemente, California-based startup AtVenu, which helps manage retail sales at live events, raised $130 million from Sixth Street. The firm provides payments and inventory logistics software to help artists, venues and others manage the sale of merchandise, food and beverages at live events like festivals and sports games. Founded in 2012, the company has raised $161 million, per Crunchbase.

5. Maven Clinic, $125M, healthcare: New York-based teletherapy startup Maven Clinic raised a $125 million Series F funding round led by StepStone Group that values the startup at $1.7 billion. Maven partners with employers and health plans to provide clinical support concerning preconception, family building, pregnancy, parenting and menopause. The company previously raised a $90 million Series E led by General Catalyst.

6. (tied) Auger, $100M, supply chain management: Bellevue, Washington-based Auger launched this week with a $100 million seed round led by Oak HC/FT. The new startup was founded by Dave Clark, former CEO of Amazon’s worldwide consumer division and co-CEO at Flexport. Clark resigned at Flexport last year after board pressure and a company shakeup. He’s back in the startup realm now, developing an AI-powered tool for existing inventory management platforms to deliver real-time insights.

6. (tied) Cytovale, $100M, health diagnostics: Cytovale, a medical diagnostics company focused on detection technologies to diagnose fast-moving and immune-mediated diseases, raised a $100 million Series D led by Sands Capital. Founded in 2013, the San Francisco-based company has raised nearly $229 million, per Crunchbase.

6. (tied) Glooko, $100M, healthcare: Palo Alto, California-based Glooko, an integrated digital health company for patients, providers, biopharma and medical device firms, secured a $100 million Series F led by Georgian. Founded in 2010, the company has raised $301 million, per Crunchbase.

6. (tied) Toca Football, $100M, sports: Toca Football, a soccer experience company that offers training center and entertainment venues, raised approximately $100 million from several investors. Founded in 2016, the Costa Mesa, California-based company has raised more than $240 million, per Crunchbase.

10. (tied) Imprint, $75M, payments: New York-based Imprint, which creates co-branded credit cards, raised a $75 million Series C led by Khosla Ventures at a $600 million valuation. Founded in 2020, the company has raised $202 million, per Crunchbase.

10. (tied) Judo Bio, $75M, biotech: Cambridge, Massachusetts-based Judo Bio, a biotechnology company developing oligonucleotide medicines delivered to the kidney, launched with $100 million in initial financing, including a Series A of $75 million co-led by Atlas Venture, Droia Ventures and TCG.

>>> weekend Papers Summary

FINANCIAL TIMES
-Boeing is set to cut 17,000 jobs and delay the first delivery of its 777X jet due to deepening losses and the effects of a weekslong strike by its largest labor union. Chief executive Kelly Ortberg announced the cuts, equivalent to 10% of the workforce, in a message to staff. Financial troubles have escalated at Boeing since the start of the year, with regulators demanding a slowdown in manufacturing to fix quality problems. Last month, 33,000 workers walked out of Boeing plants in Washington state after members of the machinists' union rejected a new contract, halting production of the company's 767 and 777 planes, cutting revenue and putting strain on suppliers and customers. S&P warned of a possible downgrade of Boeing's bonds to junk status, and analysts expect the company to raise at least $10B in new equity to shore up its financial position.
-China plans to issue more debt to boost the property market, recapitalize banks, and assist cash-strapped local governments. Minister of Finance Lan Fo’an announced the measures at a briefing in Beijing, suggesting that the government plans more stimulus measures to boost growth. The central government has significant room to increase the deficit and debt. Markets are waiting for signs that Beijing will increase fiscal spending to back up monetary stimulus plans amid doubts over the strength of the world's second-largest economy. The government will issue bonds to enable local governments to buy back idle land from developers and some of China's millions of unsold new homes. A special-purpose bond will be issued to help large banks replenish their capital, enhancing their ability to lend. Beijing will also provide more help to groups such as students and low-income earners.
-US bank stocks reached their highest level since the collapse of Silicon Valley Bank on Friday, as better-than-expected profits from JPMorgan Chase and Wells Fargo boosted hopes of an economic "soft landing" in the country. Quarterly earnings fell at both the largest and fourth-largest US banks by assets, with JPMorgan's net income declining 2% to $12.9B and Wells' falling 11% to $5.1B. Analysts had forecast JPMorgan's quarterly net income of $12.1B and Wells' $4.5B. JPMorgan's shares rose 4.4% in New York, while Wells' gained 5.6%. The KBW bank index, which tracks 24 of the country's largest lenders, jumped more than 3%, pushing the sector past its most recent high in February 2023 and to its highest close since April 2022. The earnings from JPMorgan and Wells are the latest sign that the Federal Reserve may have been able to tackle inflation without tipping the economy into recession.
-Tesla shares closed down nearly 9% on Friday, wiping $67B from the company's market valuation. Elon Musk's Robotaxi event disappointed investors with a lack of detail about a planned fleet of autonomous "Cybercabs". Tesla remains the most valuable car company in the world, with a market capitalization of $696B. Musk promised the new two-seated vehicle would be available for less than $30,000 and in production by the end of 2026, if it secures regulatory approval. However, he did not provide details on the technology behind the robotaxis or how he would reduce the cost of the self-driving vehicles.
-Sir Demis Hassabis, co-founder and CEO of Google DeepMind, has been awarded the Nobel Prize in chemistry for unlocking the structure of every protein known to humanity. The chemistry Nobel, shared with John Jumper and David Baker, was won for predicting the structure of every protein known to humanity using AlphaFold AI software. Hassabis now focuses on climate change and healthcare, working on six drug development programs with Eli Lilly and Novartis, focusing on disease areas like cancers and Alzheimer's. He expects to have a drug candidate in clinical trials within two years. Hassabis' other areas of focus include using AI to accurately model the climate and crossing the ultimate frontier in AI research: inventing machine intelligence at par with human intelligence.
-Tokyo will become the first part of Japan to ban customer harassment of service workers, amid a perceived worsening of consumer behavior linked to the return of inflation. The ordinance, passed by the metropolitan assembly, declares a blanket ban on customer harassment and calls on society to join in the effort to prevent abuse. This strikes a blow at the mantra of corporate Japan that "the customer is God." Economists argue that companies' reluctance to upset customers by raising prices was one of the reasons the Japanese economy spent so long mired in deflation. Now that sustained inflation has returned, senior executives in the restaurant, hospitality, and retail sectors say customers are unhappy.
-Iran has urged oil-rich Gulf states to remain neutral following a missile attack on Israel, as it seeks to maintain a diplomatic drive in the Middle East amid fears of an all-out war. The Islamic republic has cautioned its Arab neighbors not to facilitate an Israeli response, such as allowing Israel's war planes to use their airspace. The move came after Prime Minister Benjamin Netanyahu's government vowed a "deadly" response to Iran's missile attack and intensified its offensive against Hizbollah in Lebanon. Riyadh and Abu Dhabi are concerned that if Iran feels under grave threat, it could strike their oil infrastructure if Israel targets the republic's energy facilities. Iran is seeking to maintain a fragile rapprochement with arch-rivals like Saudi Arabia and the United Arab Emirates, urging them to discuss their differences and misunderstandings to resolve regional issues.
-TD Bank, a Canadian lender, has been fined over $3B in penalties for failing to maintain an anti-money laundering program, failing to file accurate currency transaction reports, and conspiracy to launder money. The bank was a hotbed for money-laundering, drug trafficking, and terrorist financing three years ago. Despite the bank's slogan as "America's Most Convenient Bank," executives claimed it was primed for growth in the US. The fines are the largest ever under the US's Bank Secrecy Act, which requires banks to be vigilant of suspicious money flows. TD's chief executive has announced plans to step down. The bank has also been hit with the largest civil penalty against a bank in the US Treasury's history. The fines are the largest ever under the Bank Secrecy Act.
-France's conservative premier, Michel Barnier, has unveiled a budget proposal that includes tax increases on businesses and wealthy individuals, a reversal of President Emmanuel Macron's pro-business policies. This reversal signals his diminishing political influence. French companies and foreign investors are anticipating further policy reversals and government belt-tightening that may damage fragile growth. The unstable business climate has already caused them to lose a deal in which a European company was circling a French one. The real problem is the uncertainty, as they struggle to tell clients what will happen next.
-Israeli forces have wounded two UN soldiers, marking the second consecutive day of attacks on peacekeepers in southern Lebanon. The strikes on the Unifil force deployed along Israel and Lebanon's de facto border have drawn international condemnation, following a military assault by Israeli forces in the south of the country. US defense secretary Lloyd Austin urged Israel to ensure the safety of the UN peacekeepers and called for a diplomatic solution as soon as possible. The UN mission described the fire on its post as a "serious development" and put UN peacekeepers at serious risks. The governments of France, Italy, and Spain, which contribute manpower to Unifil, condemned the "targeting" of peacekeepers, calling the attacks unjustifiable and urging an immediate end.

NEW YORK TIMES
-Former President Donald J. Trump has been a significant figure in international politics since leaving the White House, meeting with foreign leaders and operating from his Mar-a-Lago estate in Florida. Finland, a country seeking to join NATO to counter Russian aggression, sought Trump's support to ensure the U.S. Senate would ratify its membership bid. Finnish ambassador Mikko Hautala privately spoke with Trump to persuade him of the merits of joining the alliance, aiming to avoid opposition from Trump, who has long been hostile towards NATO. The strategy worked, and Trump remained publicly silent, allowing the Senate to approve Finland's admission to the alliance in August 2022. If Trump had spoken out against the move, it would have taken only 34 votes to block the two-thirds supermajority needed for ratification.
-Former President Barack Obama's admonition of Black men who are not "feeling the idea" of having a female president was a blunt and urgent statement that could potentially alienate a vital group of Democratic voters. Obama's remarks, which he made during his campaign for Vice President Kamala Harris, were seen as an urgent call to action to push Harris to victory. However, some Democrats saw Obama's tone as a threat to scapegoat some of the Democratic Party's most reliable supporters, alienating voters who may have grown disillusioned but are still persuadable.
-Kamala Harris, Vice President of the United States, has announced plans to form a bipartisan council of advisers on policy if she wins the White House. The move is part of the Harris campaign's strategy to court Republicans disaffected with former President Donald J. Trump. Harris has campaigned with former Representative Liz Cheney, the Wyoming Republican, and pledged to appoint a Republican to her cabinet if elected. At a campaign event in Scottsdale, Arizona, Harris said the council would be an attempt to "put some structure" around policy discussions that reach across the aisle. She emphasized the importance of having a healthy two-party system and emphasized the need for good ideas from all parties.
-Florida residents returned to neighborhoods impacted by power outages and debris as tens of thousands of emergency workers began repairing the destruction caused by Hurricane Milton. Initial assessments indicated that the damage inflicted by the storm, which made landfall as a Category 3 hurricane on Wednesday night south of Sarasota, was not as catastrophic as experts had feared, in large part because a dreaded surge of seawater around Tampa Bay never materialized. The storm cut an uneven path of damage across the state, submerging whole neighborhoods on the Gulf Coast while leaving others largely untouched and demolishing homes in unpredictable lines of tornadoes that tore through parts near the Atlantic Coast.
-China's fence in the Himalayas separates Tibet from Nepal, with barbed wire and concrete ramparts separating the two countries. In Nepal's Humla District, residents argue that China is encroaching on Nepali territory along several points of this distant frontier. Chinese security forces are pressuring ethnic Tibetan Nepalis not to display images of the Dalai Lama, the exiled Tibetan spiritual leader, in Nepali villages near the border. The recent proliferation of Chinese barriers and other defenses has divided the people, with thousands of Tibetans who once escaped Chinese government repression by fleeing to Nepal almost entirely vanishing.
-Boeing's new CEO, Kelly Ortberg, has announced plans to reduce its workforce by 10%, or about 17,000 jobs, as part of a restructuring effort to cut costs and improve plane production. The announcement comes as Boeing deals with a costly and disruptive strike that began nearly a month ago when members of its largest union, the International Association of Machinists and Aerospace Workers, rejected a contract offer and walked off the job. The union represents over 33,000 Boeing employees. Boeing also reported $5B in new costs associated with several commercial and defense programs. Ortberg said that restoring the company requires tough decisions and structural changes to ensure it stays competitive and delivers for customers over the long term. The cuts, which will include layoffs and not filling positions as employees leave, amount to a 10% reduction of Boeing's 170,000 employees.
-Rescuers are searching for survivors and bodies in central Beirut after Israeli airstrikes in two densely populated neighborhoods spread fear that no place in the country was safe from the Israeli military onslaught against Hezbollah. The Israeli airstrikes killed at least 22 people and wounded over 100, the deadliest attack in Beirut in over a year of fighting between Israel and Hezbollah, a Shiite militant group. The area hit is home to both Sunni and Shiite Muslims, and many residents fear the strikes will intensify sectarian tensions in Beirut. Since the war escalated last month, most Israeli airstrikes near Beirut have targeted predominately Shiite neighborhoods in the city's southern suburbs, where Hezbollah holds sway. The conflict raged as Israeli Jews prepared to observe Yom Kippur for the first time since the October 7 attacks.
-Thermite, a mixture of aluminum and iron oxide, has been used to devastating effect in both world wars. In Ukraine, it has been used primarily in artillery shells and hand grenades. Now, it is being attached to drones that sweep over Russian defensive positions, raining burning metal over the enemy before crashing. The flames ignite Russian troops' vegetation, exposing them and their equipment to direct attack. The dragon drones are part of the revolution of drone warfare that has transformed the battlefield, becoming a laboratory for improvisation and adaptation. Captain Viacheslav, who shared videos of his pilots testing the drones and using them in combat outside Pokrovsk, in eastern Ukraine, said it worked quite well. As more drones fill the skies, Ukrainian soldiers began posting dozens of videos of the attacks on social media, hoping to spark fear along with fire.

NEW YORK POST
-Meghan McCain threatened to share her late father's honest thoughts about Kamala Harris after the vice president invoked the memory of John McCain at an Arizona campaign rally. The 39-year-old pundit claimed that Democrats have "bastardized" her father's memory for their own political aims. She wrote on X, "Now, I know democrats want to reinvent history and turn my Dad into any illusion you guys need him to be depending on the political moment you need to bastardize his memory for." McCain issued the threat after Harris shared an anecdote of an interaction she had with the late Arizona senator in 2018, prior to his death from a brain tumor. Early voting is down significantly from 2020, and the data hold bad news for this candidate. Hurricane Milton produced dozens of tornadoes and rainfall estimates that topped more than a foot across west-central Florida, but a sight now opening up across many counties is that of sinkholes.
-Uber and Lyft have been enforcing lockouts on their New York City rideshare apps to avoid paying millions of dollars in pay. The lockouts are an attempt to make drivers appear busier on paper, potentially saving the companies nearly $30 million in pay by convincing the city not to raise a key portion of its minimum wage formula during its annual review. The frequent lockouts, which come without warning, have left Big Apple drivers scrambling to support their families. Uber and Lyft have told drivers they are forced to "limit access" because of rules from New York City's Taxi and Limousine Commission. Uber spokesperson Josh Gold stated that the characterization of lockouts as a loophole is inaccurate and has asked for a correction.