WWD : The Latest Greek Island Luxury Resorts Are Inviting Travelers to Experienc

The Latest Greek Island Luxury Resorts Are Inviting Travelers to Experience New Spots in the Aegean
The Cyclades' newest boutique resorts invite visitors to venture beyond the area's most popular tourist destinations.
For seasoned Greece-bound travelers, the “Mykonos or Santorini?” debate has been replaced by a different question this summer: “Where to next?” The Cyclades’ newest boutique resorts invite visitors to venture beyond the area’s most popular tourist destinations, where unique experiences (and fresh beaches) await. Here are three islands to consider.
Gundari on Folegandros
Gundari, located on the small island of Folegandros, is among the latest luxury properties opening in time for the peak summer season.
“It’s an island that still has very much a strong soul,” says Gundari founder and chief executive officer Ricardo Larriera. He compares Folegandros’ appeal to what the nearby Santorini was like 30 years ago, before the island’s popularity soared, leading to its main towns becoming overrun with hotels, nightlife appeal and tourist-driven shops. “It still feels untouched because the locals are still living in and around the island, the locals are still farming, the locals are still wandering around on their donkeys,” adds Larriera of Folegandros, which is a 45-minute boat ride from Santorini. “You really get a sense of timelessness there.”
Gundari
Gundari, which began welcoming visitors in May, is Folegandros’ first luxury resort. Larriera, who’s based in Australia, first visited the island several years ago at the recommendation of a Greek expat friend. Blown away by the location’s natural beauty and intimacy of the local community, Larriera saw an opportunity to bring an elevated boutique hotel to the island. He also set out to make Gundari a case study in meshing sustainability with uncompromised luxury hospitality, drawing inspiration from the Aman hotel brand.
“Our positioning is focused on giving people a really raw, nature and dramatic landscape-based luxury experience,” he says, adding that Gundari will appeal to a more independent luxury traveler — someone who’s comfortable with taking a chance on a less-trodden location, and taking their travel itinerary into their own hands. Leading up to the opening, resort bookings were led by American and British travelers, a signal of international appetite for a new summer destination in the area.
Gundari resort entrance.
COURTESY
The property offers sea-view suites and villas, some with private pools. There is a spa onsite, and a seasonal-driven restaurant and bar featuring a menu designed by Michelin-starred Greek chef Lefteris Lazarou. Room rates start at 520 euros per night.
Folegandros’ main town and “crown jewel” is Chora, located on a high cliff with winding maze-like streets, originally constructed to ward off pirates. Today, the vibrant town boasts charming restaurants and bars, free from car traffic. Other island attractions include the Church of Panagia, secluded beaches, and scenic vistas well worth the trek.
Gundari room.
The main pool at Gundari.
COURTESY
One&Only Kéa Island
Kéa is one hour from Athens, making it the closest Cyclades island to mainland Greece: 30 minutes by boat, 15 by helicopter. The resort offers one- and two-bedroom suites, with views of the sea or island landscape. Each option is outfitted with a private pool and deck, and design elements are rooted in highlighting the island’s natural beauty with high ceilings and open archways, and materials like local marble. Onsite dining includes a “farm and sea to table” restaurant, pool bar, and the Bond Beach Club, which boasts a resident DJ and Latin-Asian cuisine. Kéa will appeal to travelers looking for a less scene-y scene, with plenty of hiking paths and ancient ruins, and the island’s notable Lion of Kéa sculpture from 600 BC. The luxury of privacy and seclusion comes at a price: with the brand firmly rooted in the ultra-luxury category, room prices start at $2,750 euros during peak season.


One&Only Kéa Island
RUPERT PEACE
One&Only Kéa Island
RUPERT PEACE
Kéa Island
RUPERT PEACE

Odera Tinos
Marriott has opened Odera, its newest Autograph Collection property, on the island of Tinos, about a 20-minute boat ride away from Mykonos. Odera is the island’s first luxury hotel, offering visitors 77 rooms and suites, most with panoramic views of the sea and opening out on shared and private plunge pools. Onsite restaurants led by chef Dimitris Skarmoutsos offer Mediterranean cuisine with a distinctly Tinian influence, including local wines with the island’s distinct terroir. Tinos is home to the Panagia Evangelistria church, a prominent pilgrimage destination; other attractions include the Museum of Marble Crafts, located in the “marble village” of Pyrgos, and, of course: the beaches. Room rates start at around $282 euros a night.
The entrance to Odera.
A guest room at Odera.
GIORGOS ZONDI

WWD : Saint Laurent Productions’ ‘Emilia Perez’ Wins Big at Cannes Closing Cerem

Saint Laurent Productions’ ‘Emilia Perez’ Wins Big at Cannes Closing Ceremony
The musical won a joint best actress prize for Adriana Paz, Karla Sofía Gascón, Selena Gomez, and Zoe Saldana, plus the jury prize for director Jacques Audiard.

CANNES – Saint Laurent Productions’ “Emilia Perez” won big on the closing night of the Cannes Film Festival, with the movie being awarded a joint best actress prize for all its leads, as well as the third place jury prize for director Jacques Audiard.

Adriana Paz, Karla Sofía Gascón, Selena Gomez, and Zoe Saldana were awarded the best actress prize as an ensemble for the musical comedy.

“Barbie” director Greta Gerwig served as president of the jury, alongside actresses Lily Gladstone, Eva Green, and Ebru Ceylan, actors Omar Sy and Pierfrancesco Favino, and directors J.A. Bayona, Hirokazu Kore-eda and Nadine Labaki.

“Women together — that’s something we wanted to honor when we made this award,” said Gerwig when announcing the unusual prize. “Each of them is a standout, but together they are transcendent.”

It is the first time the jury has awarded a collective acting prize for actresses, though Léa Seydoux and Adèle Exarchopoulos were jointly awarded the Palme d’Or with director Abdellatif Kechiche a decade ago for “Blue is the Warmest Color.”

Gascón is also the first trans actress to win a best actress prize in Cannes. Saint Laurent dressed her for the occasion in an asymmetrical black jersey dress, brass earrings and cuffs and a pair of classic patent pumps.

Gascón accepted the award solo and dedicated the prize to all trans people. “I want these people to come to believe, like in ‘Emilia Perez,’ that it is always possible to improve, that everyone can become a better person. So, all of you who have made us suffer, it is also time for you to change,” she said.

The film, also starring Édgar Ramirez, has been one of the buzziest at Cannes, and its winning of two prizes is also a rarity as the jury traditionally gives just one prize per film.

The top prize of Palme d’Or went to Sean Baker’s “Anora” starring Mikey Madison as a stripper-turned-call girl who marries the son of a Russian oligarch.

“This, literally, has been my singular goal as a filmmaker for the past 30 years, so I’m not really sure what I’m going to do with the rest of my life,” Baker said upon accepting the award.

He also encouraged viewers to see films on the big screen. “The future of cinema is where it started – in a movie theater,” he said. “The world has to be reminded that watching a film at home while scrolling through your phone, answering emails and half paying attention is just not the way, although some tech companies would like us to think so.”

Madison attended the ceremony wearing Chanel, as she has been dressed throughout the festival.

Demi Moore, who had been tipped for best actress for her mindbending role in “The Substance,” attended the film in a black and white couture gown from Celine.

The film, costarring Margaret Qualley and Dennis Quaid, took the best screenplay prize for director Coralie Fargeat.

“This film speaks to the experience of women in the world,” Fargeat said when accepting the prize. The movie is set as a feminist body horror film commentary on the tyranny of youth and beauty.

“I really believe that movies can change the world, so I hope this movie will be a little stone to build new foundations. I really think we need a revolution, and I don’t think it has really started yet,” she said.

It was a strong year for female directors, as the second place Grand Prix went to Payal Kapaidia for “All We Imagine As Light.” The film tells the stories of a trio of women in Mumbai.

In the best actor award, Jesse Plemmons won for his role in “Kinds of Kindness,” Oscar-winner Yorgos Lanthimos’ latest surrealist film. Plemmons was not present to accept the award, but he attended the premiere on the arm of wife Kirsten Dunst earlier in the festival.

“Star Wars” director George Lucas was given an honorary Palme d’Or, a lifetime achievement award of sorts, presented by good friend and fellow San Franciscan Francis Ford Coppola, whose own film “Megalopolis” screened earlier in the festival.

WSJ : America’s New Island Fighters Are Preparing for Conflict—a Stone’s Throw F

America’s New Island Fighters Are Preparing for Conflict—a Stone’s Throw From Taiwan
The Wall Street Journal flew out with U.S. Marines to remote locations from where they might one day fight China

ITBAYAT, Philippines—The U.S. and Philippine marines arrived in waves on this little island nearly 100 miles from the southern tip of Taiwan. A platoon clutching automatic rifles and machine guns sprang from Black Hawks and took up positions around the airfield. In a whirl of hot air and dust, Chinook helicopters lowered dozens more men.

They unloaded fuel cans, sacks of ready-to-eat meals and cases of medical supplies, small drones and satellite-communications gear—everything they would need for a three-day stay.

If their ride had continued north, they would reach Taiwan in less than an hour.

This was a military exercise, the guns had no ammunition and the Javelin missile launcher had no missiles. But the marines were preparing for a real-world conflict, fine-tuning a strategy they see as critical to fighting China in its neighborhood—from strings of islands close to it.

This terrain is meant to be in their wheelhouse.

They belong to the 3rd Marine Littoral Regiment, created two years ago as part of a sweeping redesign to better prepare the U.S. Marine Corps for great-power rivalry after decades of fighting in Iraq and Afghanistan. The Wall Street Journal flew out with them to Itbayat—90 minutes by helicopter from the nearest large Philippine island—and island-hopped to remote Philippine military sites they were operating from during the drills.

In a conflict, these Marines would move forward—as far and as fast as possible—with missiles and radars. They would fan out in small groups across islands and coastlines. Then, they would keep moving so that China’s missiles, sensors and drones wouldn’t find them.

The adversary would have to “expend an awful lot of resources to figure out where we are and what we’re doing,” said Col. John Lehane, the commander of the 2,500-strong Hawaii-based regiment. “We complicate his decision-making.”

In practice, it isn’t that easy to do.

Operating in austere, far-flung locations presents lots of problems. Some islands have sizable runways but others have only small helipads. Remote coastal areas aren’t always connected by roads wide enough to move radar systems and missile batteries. The Marines need small ships to maneuver but don’t have them.

In war, threats would be everywhere, making it harder to bring them supplies. China has a formidable arsenal of missiles, as well as drones of all shapes and sizes. And it has an advantage—fighting in what it considers its backyard, in the vicinity of its naval fleet, military bases and an extensive surveillance network.

Part of the Marines’ goal is to bog down China in the early stages of a conflict, buying time for other U.S. forces to get in place. From the front line, they would get a close-up picture of the battle space using sensors and small drones, and fire missiles to destroy Chinese ships or send back targeting data to U.S. and allied warplanes or ships to strike.

These smaller, more nimble units would act as a 21st-century littoral cavalry, said Benjamin Jensen, a senior fellow at the Washington, D.C.-based Center for Strategic and International Studies who teaches at the Marine Corps University.

“The ideal case is that you have these fluid forces that are flowing up and down the first island chain, so you’re constantly forcing [China] to look for you,” he said, referring to a stretch of territory from Japan to Taiwan, the northern Philippines and the South China Sea. That would impose a “tremendous tax” on China’s intelligence network, he said.

“Every sensor China tasks to look for a Marine Corps littoral regiment is a sensor that isn’t tasked on another target,” Jensen said. “You want them to go on wild-goose chases.”

To do that, these Marines need to square some circles.

Travel light while still being lethal. Get food, fuel and missiles across sprawling island chains. Gather tons of information about the enemy’s movements without giving away their own.

And do all that up close to China, where turning on a radio or a radar could make them a target.

Over the past two years, the 3rd Marine Littoral Regiment has trained on Hawaiian islands, simulated combat in California and made four trips to the Philippines. They are rehearsing tactics to communicate while remaining hidden, such as creating a lot of noise in the electromagnetic spectrum to confuse enemy forces, or drawing attention to different aspects of the formation that might or might not be something.

Racks of servers are being replaced by equipment the size of laptops, and 3-D printers are making repair parts. “We are continually refining the balance between what is the lightest package I can put there to reduce the logistics burden while still making sure that it is combat credible and able to fight,” Lehane said.

‘Seeing it, taking pictures of it’
During the recent exercises in late April and early May, several small teams flew to three tiny islands scattered across the strategic Luzon Strait.

Their presence signaled that the island-hopping Marines were getting out, with their allies, to the places from where they might fight Chinese forces someday.

“We do assessments on the islands all the time,” said Lt. Col. Mark Edgar, who helped oversee the exercises. “Everything from what those airstrips can support to what a port can support to what a beach can support.”

They tracked how many gallons of fuel they were burning. They landed helicopters on fields, or “hasty landing sites.” They purified water from a creek using a portable system.

For three days on Itbayat, home to 3,000 civilians, they camped out in an abandoned building near the airstrip. They sent out patrols to the local town, which would be a potential source of food and water in a crisis, and to the ports. They measured roads and bridges to figure out what vehicles they could bring, and pushed up to the island’s north, which faces Taiwan, for a closer look.

A different team went further to Mavulis, a tiny speck of land at the northern Philippine frontier, just 88 miles from Taiwan. They linked up with the small rotational detachment of the Philippine military—no civilians live there—and went fishing together. They learned, in planning for the trip, that they couldn’t land Osprey aircraft on the island. Out on patrols, they discovered that mountainous paths that looked walkable on satellite images were in fact not.

“Nothing replaces putting a Marine on the ground and actually looking at that terrain,” said Edgar. “That’s where we learned the most, what we call physical reconnaissance: which is just being there, seeing it, taking pictures of it, understanding it.”

They are also learning what they really need and don’t have: ships to move Marines and their gear between islands or from one point on the coast to another. Without them, the Marines are constrained by rugged terrain, small bridges and narrow roads, and dependent on helicopters, which are more visible and carry smaller loads.

Plans to produce the ships are delayed and construction hasn’t begun.

China’s ‘defensive bubble’
The littoral regiments face two problems, said Mark Cancian, a former colonel in the Marine Corps. First, resupplying missiles at austere locations inside China’s “defensive bubble” in a conflict would be hard. Cancian, who ran a wargame last year that featured island-hopping Marines, said the risk was that after a few useful strikes, they would run out.

Access was the other hurdle, he said. Manila would likely welcome the Marines if a fight broke out in the South China Sea, where it faces direct threats from Beijing. But whether it would do the same to help the U.S. repel a Chinese attack on Taiwan is much less certain.

The Marines have two littoral regiments—one in Hawaii and one based in Okinawa, Japan. A third regiment is pending.

Cancian said the Marines would be most effective if they were already in position at the time that hostilities erupt, giving the Japan-based regiment an advantage because they have the ability to move down the country’s Ryukyu Islands that stretch southwest to Taiwan, he said. The Hawaii-based Marines might have to fight their way in.

That regiment is spending more time in the Philippines. They arrived in April for the recently concluded exercises, called Balikatan, and will stay through June when they participate in another set of drills. By then, many of them will have clocked as many as five of the past 14 months in the Philippines.

That increases the chances they’ll be around if a crisis erupts.

Holding a foot in the door
The alliance between Manila and Washington is stronger than it has been in decades. The U.S. doesn’t have bases in the country, but it has an agreement giving it access to Philippine military sites to upgrade facilities on them. Washington struck a deal last year to expand that access to four more, taking the total to nine.

If China moved to invade Taiwan, American forces would want to shift some U.S. warplanes to these sites. The idea would be to disperse U.S. aircraft across an array of bases and even civilian airfields in the region to make it harder for China to target them and to provide the U.S. different avenues for strike, said Becca Wasser, a senior fellow at the Center for a New American Security who runs wargames.

The Marine littoral regiments, meanwhile, would mobilize to try to restrain the Chinese fleet within the first-island chain, Wasser said. That is, block them from moving outside the first-island chain and from threatening American forces attacking from further back.

The Marines would also aim to counter China’s “anti-access” strategy aimed at locking down the area and making it too dangerous for U.S. forces to come close to Taiwan.

“We hold our foot in the door so that the door can’t be slammed shut for the rest of the joint force and that puts us at risk potentially,” said Lt. Col. James Arnold, who heads the 3rd Marine Littoral Regiment’s anti-air battalion. “That’s why we’re working every day on tactics that would allow us to do that effectively and survivably.”

FT : Western companies drive Chinese biotech licensing deal blitz

Western companies drive Chinese biotech licensing deal blitz
Merck, GSK and AstraZeneca have all signed deals

Western pharmaceutical companies and investors are driving a record number of licensing deals with Chinese drugmakers that have insufficient capital to fund late-stage drug development and global expansion.

Merck, GSK and AstraZeneca have all signed licensing deals in a wave of biotech investment that hit a record $44.1bn last year, according to UBS research. The momentum has been sustained in 2024, with $9.8bn worth of biotech licensing deals signed in the first quarter.

Western pharma companies are seeking to expand their product pipelines as they confront patent expiries of lucrative drugs in the coming years, while Chinese drugmakers are struggling to raise funds domestically for drug development and clinical trials during a stock market slump. A Hong Kong-listed index of 50 “innovative” biotech stocks has fallen 57 per cent over the past three years.

“Over a decade ago, China started pouring investment into biotech. Now the results of that investment are coming out just as the Chinese companies face funding constraints,” said Helen Chen, head of LEK Consulting’s healthcare practice in Shanghai.

She added that Chinese drugmakers were facing challenges in the domestic market following a pricing regime overhaul that has forced them to drop prices of innovative drugs to qualify for the national medical insurance scheme. Beijing’s campaign to drive down prices has forced drugmakers to search for growth overseas.

The interest in Chinese pharma defies a broader exodus of foreign capital from the country at a time of rising geopolitical tension and slowing economic growth. China’s funding crunch has created an opportunity for drugmakers to expand their product pipelines.

“Many large global pharmaceutical companies are sitting on cash piles following the pandemic,” said Chen Chen, a healthcare analyst at UBS. “At the same time, they are looking to expand their portfolio as many drug patents are due to expire in the next few years.”

Most of the deals involve US or European pharmaceutical companies licensing Chinese-made drugs for a low price and then providing the capital needed for more development, clinical trials and commercialisation. Some of the deals are to license the rights to sell within China. “It’s a form of venture capital investment,” said Chen Chen.

In December 2023, Merck made an upfront payment of $70mn for the Chinese rights to license Shanghai-based biotech group Abbisko’s treatment for benign joint tumours that affect mobility. The licence is to commercialise in China with the option to go overseas.

New investors are coming to the sector. “One of the most interesting developments is the entry of private equity, seeking Chinese assets for internationalisation with the hope of exiting to large pharmaceutical companies within one to three years,” said Helen Chen of LEK.

This month, Shanghai-listed Jiangsu Hengrui Pharmaceuticals said it sold the overseas licence for a portfolio of weight loss drugs to Hercules CM NewCo, a company formed by a consortium of investors including Bain Capital Life Sciences, the US buyout group’s pharma arm.

It has licensed three drug candidates for $110mn, with later payments upon hitting regulatory targets and royalties if the product is rolled out to the public. Hengrui also received a 20 per cent stake in Hercules.

Hengrui struck a less favourable deal in August to sell the global rights for its adult asthma treatment to Aiolos Bio, then known as One Bio, for an initial upfront payment of $21.5mn, with up to $1bn more if it gains approval overseas.

In October, Aiolos raised $245mn from a group of backers including Bain Capital Life Sciences and venture capital firms Atlas Venture, Forbion and Sofinnova.

Months later, GSK announced it had acquired Aiolos for an upfront payment of $1bn, with a further $400mn to be paid after clearing regulatory milestones. GSK will also pay Hengrui if the drug hits certain milestones and royalties if it commercialises.

The deal has prompted criticism within the Chinese pharmaceutical industry, where some are calling for more government support.

“Why is China selling its own innovative drugs so cheaply to foreigners?” said one Chinese biotech start-up executive who sold their drug licensing rights after struggling to raise capital from investors. “Beijing should help good enterprises to develop promising products and not just let them be sold to foreign companies.”

FT : Hedge funds hit by lack of private equity exits

Hedge funds hit by lack of private equity exits
Failure of private equity firms to return cash to investors is blocking institutions from backing hedge funds

Private equity’s struggle to return money to clients is hitting hedge funds, which rely on the same pension plans, foundations and endowments for fundraising.

Hedge funds seeking to raise money from institutional investors are being rebuffed on the grounds that the institutions lack the cash to give them. 

The difficulty is at least in part due to a slowdown in distributions that investors have received from private equity funds.  

“The lower rate of distributions from private equity, [private] debt and venture funds is having a knock-on effect, leading some allocators to pause on new investments into illiquid funds and reduce new investments in more liquid hedge funds,” said Michael Monforth, global head of capital advisory at JPMorgan Chase.

Buyout-backed exits fell to $345bn last year — their lowest level in a decade, according to Bain & Co’s annual private equity report. This has left the private equity industry sitting on a record backlog of 28,000 companies worth more than $3tn, the Bain & Co report found, as a slowdown in dealmaking made it harder to return money to their backers. 

“Private equity distributions have gone down, the IPO market has been very thin and M&A has been held back,” said Nick Moakes, chief investment officer of the £36.8bn Wellcome Trust. “If you’re not going to get bought and can’t get listed, PE is scratching its head on how to do distributions.”

Hedge funds and private equity managers are often competing to raise money from the so-called “alternatives” allocation of institutional investors, which can also include private credit, infrastructure and real estate assets. As investors receive distributions from existing holdings, the money is recycled into new commitments.

“For the vast majority of institutions, private equity and hedge funds come out of the alternatives bucket,” Sunaina Sinha Haldea, head of private capital advisory at wealth manager Raymond James, said.

“The lack of distributions out of private markets portfolio is going to impact the ability to make new commitments in other parts of the alternatives portfolio . . . that includes hedge funds.”

Last year assets in the global private capital industry ballooned to $14.5tn, according to the Bain & Co report, more than treble the $4tn it managed a decade earlier.


In contrast, inflows to hedge funds have been muted for the past decade, with investors pulling cash on a net basis in five years out of the last 10, according to Hedge Fund Research. 

The capital constrained environment is also having an impact on the market for new hedge fund launches.

Former Millennium co-chief investment officer Bobby Jain has been forced to scale down day-one fundraising ambitions for his new hedge fund, Jain Global, ahead of its July launch.

One hedge fund manager currently trying to raise capital said investors often cited the lack of distributions they had received from their private equity investments as a reason why they would not invest. Investors were waiting to receive more money back before reinvesting, they added.

“What you are seeing is a failure to exit on the private equities, and it’s kind of having this follow on effect where its leading to a lower velocity of capital flowing throughout all alternatives,” Sam Diedrich, a managing director at Partners Capital, said. “It’s becoming a real issue.”  

FT : Shipping rates spike as businesses expect more Red Sea attacks

Shipping rates spike as businesses expect more Red Sea attacks
Companies prepare to ship goods for festive season early as attacks by Yemen’s Houthis force ships to take longer route

The cost of international shipping has shot up as businesses prepare to ship goods for the festive season far earlier than usual, in a sign of the far-reaching effects of disruption from attacks in the Red Sea.

The average cost of shipping a 40ft container between the Far East and northern Europe at short notice, the figure that is most sensitive to market prices, hit $4,343 last week, roughly three times higher than the same period last year, according to freight market tracker Xeneta.

Prices have not yet surpassed the peak seen immediately after Yemen’s Houthi militant group began targeting vessels in November. But they are rebounding during a usually quiet period for shipping in the spring months.

Typically the peak period occurs between late summer and autumn, when retailers start importing goods for the November Black Friday sales and Christmas shopping season.

“The peak season has been brought forward,” said Michael Aldwell, head of sea logistics at Kuehne + Nagel, one of the large freight forwarders that handles goods and sets the price of shipping for retailers.


Industry figures said the resurgence in shipping costs had multiple causes. But these were largely linked to the attacks in the Red Sea, which the Houthis have said are in support of Gaza’s Palestinians during Israel’s war with Hamas, they said.

These have constrained the global supply of shipping space and containers as shipowners travelling between Asia and Europe are forced to take a longer route around Africa.

Because of the war in Gaza, shipowners are preparing for the attacks to disrupt global supply chains through the autumn months when retailers normally import Christmas goods.

Aldwell said some Kuehne + Nagel customers had pre-booked shipments for the festive shopping period as early as April, while others were stocking up on summer goods such as outdoor furniture and barbecues.

He added demand had also been boosted by customers who previously slashed inventories in expectation of weak consumer demand this year. With consumer demand now not as depressed as some businesses expected, they “are very quick to pay higher prices to get access to [the limited shipping] capacity”.

Peter Sand, chief analyst at Xeneta, which supplies data to traders, said importers had learned the hard way during the pandemic that the best way to build resilience in their supply chains was “to stock up as fast as you can”.

He said businesses had told Xeneta that some decided to “bring in Christmas goods if [they] can now because [they] may be short of capacity come the traditional peak season”.

“This is a direct response to the disruption coming about with the Houthi attacks,” he added. “Nobody is really sure of when it will go away.”

Facing a weak global economy and an oversupply of vessels last year, “the main shipping lines were all suggesting [that their financial outlook] was going to be really quite soft” before the attacks in the Red Sea began, said Marco Forgione, director-general of the Institute of Export & International Trade, which represents UK traders.

Now, the disruption is expected to continue later into the year, he said.

Even after the Red Sea disruption is resolved, “supply chains are going to be different in the future”, as globalisation is threatened by repeated geopolitical instability, Forgione added. “We are going to see inventory management much more at the forefront,” he said.

FT : Unilever enjoys surge in demand for high-end cosmetic brands

Unilever enjoys surge in demand for high-end cosmetic brands
Despite cost of living crisis, consumer goods group enjoys strong performance in its premium products

Demand for Unilever’s high-end cosmetic brands has surged despite the cost of living crisis in contrast to its mass market businesses in food, soap and detergent, says the head of the group’s premium beauty arm.

The company aims to overturn years of disappointing performance by focusing on top brands and offloading lower-margin divisions such as ice cream and unloved personal care products.

“Beauty is recession proof,” said Vasiliki Petrou, chief executive of Unilever Prestige, who has led the business since its launch 10 years ago.

Prestige has 10 brands including skincare products Tatcha and Dermalogica, Hourglass make-up and Living Proof haircare.

“If there is a downturn, people will always sacrifice an expensive bag or dress for a skincare item or a lipstick because it links back to their confidence . . . it’s part of self esteem,” she added.

The Prestige division has delivered 13 consecutive quarters of double-digit sales growth up to the first quarter of this year, and turnover for 2023 was €1.4bn compared with €700mn in 2020.

Sales across the company as a whole grew 4.4 per cent in the first three months of the year and 7 per cent in 2023, while turnover fell 0.8 per cent to €59.6bn in 2023 compared with the year before.

The company’s premium brands make up 30 per cent of its products, with more than half in the mass market bucket while the rest are classed as value goods.

The Prestige division was established in 2014 after the company had fallen behind competitors in premium categories, which have driven much of the sector’s growth in the past decade.

Petrou was given the task of acquiring a portfolio of luxury brands that Unilever could then grow.

Two of the division’s 10 brands, Dermalogica and Paula’s Choice, are now among Unilever’s so-called power brands — the 30 that make up 70 per cent of group sales.

The business model of the Prestige division has a different approach to other parts of the business, Petrou said, as she outlined its strategy.

Acquisitions, for example, are left to function independently rather than merged into the group. Most recent acquisitions were haircare brand K18, which has a strong presence on TikTok, and Paula’s Choice, founded as one of the first online beauty brands in 1995.

“With mass market, you have to have widespread distribution, but in the luxury market you go for the selective beauty business model, which is all about quality of education, content and advice. Scarcity, sometimes, is key to desirability.”

The decentralised model at Prestige means the soul of the new brands are not lost, Petrou said.

“Unilever has a reputation for a mixed M&A record at best,” wrote Barclays analysts in a recent note. “However, when it comes to building out its Prestige and wellness business, it has made very few mistakes.”

Barclays estimates that together, Prestige beauty and its other fast-growing division, Health and Wellbeing, could reach as much as €10bn in annual revenues by 2030. Profits margins for the two divisions are close to 60 per cent, compared with 30 per cent in ice cream.

Petrou said the US was its largest market, making up 60 per cent of sales, and she was also focused on “winning” in the UK and China, its second-largest market, where consumer demand has been sluggish.

In terms of beauty trends, Petrou said younger people were increasingly interested in skin health, “much more than we have seen before”, adding that there was also a big opportunity in the market for men’s products.

“That’s the next explosive wave. And the good thing about men is that they are much more loyal. When they discover something they stick with it.”

FT : SoftBank targets $9bn a year in AI investments while hunting bigger deals

SoftBank targets $9bn a year in AI investments while hunting bigger deals
Japanese group says it will ‘step up’ artificial intelligence outlays without stretching finances

SoftBank is prepared to commit close to $9bn a year to artificial intelligence investments, even as the Japanese tech group holds back firepower for bigger deals aimed at accelerating what could be its most radical transformation to date.

Founder Masayoshi Son has been vocal about his belief in AI and the need to reshape the company in the hunt for deals that can support the group’s crown jewel, UK-based chip designer Arm, which has soared in valuation since it went public last year.

SoftBank’s outlay for investments and commitments has more than doubled to $8.9bn in the 12 months since Son said the company was ready to go on the “counteroffensive”. SoftBank said it was ready to maintain, or even exceed, the amount for the right mega-deal.

“We will, in principle, be keeping the same kind of trend in terms of the pace of investment activities,” SoftBank’s chief financial officer Yoshimitsu Goto told the Financial Times. “From now on, we want to step up investments in AI companies.

“The reason we’ve been keeping our balance sheet at a very safe level is because we would like to be prepared,” he added, “and we would like to be flexible if there is anything that we would like to move on.”

Son built SoftBank from an internet broadband business into a regulated mobile phone network company, snapping up Vodafone Japan and Sprint along the way. He then radically transformed the group into an investment giant with backing from Saudi Arabia and Abu Dhabi, while also capitalising on a wildly successful investment in Alibaba.

In his belief that AI will be the source of future growth, the billionaire is attempting to reshape SoftBank, and its risk-taking Vision Funds, to remain relevant in what he considers humanity’s next stage.

However, it faces stiff global opposition. Big tech groups such as Microsoft, Amazon and Google have committed billions of dollars to partnerships with start-ups building AI models, while top venture capital firms are hunting for deals with groups building AI products and applications.

SoftBank has also suffered in recent years from some of its bigger investments, including about $14bn in WeWork before the desk-renting start-up went bankrupt.

The group’s balance sheet has been strengthened since those darker moments and, on Wednesday, rating agency S&P upgraded SoftBank back to double B plus, its highest non-investment grade, citing an “improvement in asset quality”.

That increasing strength gives SoftBank capacity to do a large-scale deal, but Goto said he would not allow its finances to be stretched in that pursuit.

Highlighting a loan-to-value ratio of about 8.5 per cent and a net asset value of ¥27.8tn ($180bn) — driven by Arm — SoftBank’s CFO said it had the balance sheet capacity to make big deals worth tens of billions of dollars. But he cautioned that investors should not expect SoftBank to finance such moves alone or without using structured or non-recourse financing.

“That [strength] doesn’t mean that we are ready to spend $10bn, $20bn, $30bn . . . that’s not something that we expect to come out from our balance sheet,” he said.

Dealmaking appears to be picking up. SoftBank this month led an investment of more than $1bn into UK self-driving car start-up Wayve, marking Europe’s largest AI deal to date.

Son was personally involved in the deal because of its size and the fact that it was an AI-related investment, said Kentaro Matsui, head of new business at SoftBank and a managing partner in its Vision Funds.

Goto has also outlined some areas that he sees as ripe for the kind of investment needed in order to help the AI sector grow and benefit Arm, including power generation and data centres.

But he refused to comment on press reports that Arm and SoftBank were considering producing an AI chip. The group is also in talks to buy another UK chip designer, Graphcore, according to a person familiar with the discussions. SoftBank declined to comment.

Having stepped back from presenting earnings more than a year ago, Son is due to speak at SoftBank’s annual shareholders’ meeting in June, when Goto suggests he could reveal more details about his AI plan.

For some investors, those plans could distract the group from its core businesses, including Arm and its telecoms subsidiary SoftBank Corporation.

“If you look at their investments, the volatility is such that whether they do $10bn or $20bn doesn’t matter . . . and it will be all or nothing if they go in on AI chips,” said one long-term investor in Tokyo. “Yes, they have Arm and they can write big cheques, but moving from planning to execution is not going to be easy.”

Within SoftBank, however, the direction of travel appears set. Its Vision Funds are already a very different beast from the years when they wrote large cheques to start-ups. They have increasingly shifted from finding investments to exiting in order to deliver returns, and that has led to billions of dollars in sales in the past year.

As its pace of investment slows down, the Vision Funds are increasingly folding themselves into SoftBank, rather than operating as their own fiefdom. This is not least because the vast majority of money left to invest — housed in the second Vision Fund — is Son’s.

The shift has resulted in an increased blurring of roles for executives at the Vision Funds. Last year SoftBank created its so-called Platform Group, which is made up of Vision Funds advisers scouting for AI investment opportunities.

Crucially, those investments are not necessarily made by the Vision Funds but instead are financed through the group’s balance sheet — a decision that is defined by whether SoftBank views the asset as strategic, rather than one which will eventually be sold to realise returns.

“We’ve actually merged and call our international businesses ‘One SoftBank’ internally as a way to remind ourselves that look, the goal is bringing money home,” said Alex Clavel, co-chief executive of SoftBank’s Vision Funds.

WSJ : With $14 Billion U.S. Steel Deal in Limbo, Nippon Steel Seeks Community Su

With $14 Billion U.S. Steel Deal in Limbo, Nippon Steel Seeks Community Support
Japanese steelmaker’s vice chairman visits Pittsburgh area and says company is ready to ‘share all the fruits of our technology’

Nippon Steel has launched a charm offensive to win support for its planned acquisition of U.S. Steel in a bid to counter the deal’s staunchest critics.

U.S. Steel shareholders overwhelmingly approved the company’s $14.1 billion takeover in April, but the deal remains bogged down by federal regulatory review and a raft of opposition. Leaders of the United Steelworkers union, some members of Congress and Cleveland-Cliffs, U.S. Steel’s main rival, have panned the purchase. President Biden has expressed skepticism about it.

Takahiro Mori, vice chairman of the Tokyo-based steelmaker, met this past week with business executives and government leaders in the Pittsburgh area, which includes U.S. Steel’s headquarters and its Mon Valley Works operation. Mori hosted a dinner and a presentation for about 150 people that lasted more than two hours.

“This transaction is about growth,” Mori said in an interview. “We’re going to share all the fruits of our technology.”

The company said it would invest at least $1.4 billion to improve the performance of U.S. Steel’s older mills, which also include operations in Indiana. Nippon Steel spends more than $500 million a year on research and development, compared with about $40 million by U.S. Steel, according to the companies. Mori said Nippon Steel’s chief technology officer will visit the Mon Valley Works as part of the planning for production improvements.

Residents of some of the small towns surrounding the Mon Valley plants have complained for years about air pollution and a lack of investment in maintenance. Mori has pledged to use hydrogen energy to reduce Mon Valley’s carbon-dioxide emissions from burning coal in blast furnaces.

Elaina Skiba, borough manager of Glassport, Pa., said she and other community officials have been skeptical about the acquisition and concerned about the future for the Mon Valley operation, but she left the presentation with more confidence in Nippon Steel’s plans.

“Nippon has no intention of closing this mill,” she said. “They want it to succeed. They’re not going to put this kind of money on the table to close it.”

Mori is planning several stateside visits this summer, but didn’t meet with union leaders in the latest visit. The union is seeking commitments from Nippon Steel on specific plant upgrades and has been dissatisfied with the Japanese company’s attempts to maintain the current labor agreement with U.S. Steel.

The union said Mori’s visit was a “desperate last gasp” by the two companies to save the deal and accused Nippon Steel of trying to escape its obligations under the union’s contract with U.S. Steel.

The union endorsed Cleveland-Cliffs’ attempt to buy U.S. Steel last year. In turn, Cleveland-Cliffs Chief Executive Lourenco Goncalves is backing the union’s opposition to the sale to Nippon Steel. He said recently that the deal is dead without the union’s support.

Nippon Steel is seeking to close its purchase by year’s end, pushing back the deadline by a few months. It has said it would refrain from plant closings and layoffs through the end of U.S. Steel’s union labor agreement in 2026.

Slowing market
A weakening American steel market threatens to add uncertainty to Nippon Steel’s investment plans. Falling steel demand and low prices would ratchet up the pressure on the company to conserve cash and reduce expenses.

Manufacturing activity has receded in some steel-consuming industries, including parts of the construction industry, commercial trucks, farm machinery and home appliances. Contributing to the downturn is the absence in recent years of panic buying caused by Covid-related supply bottlenecks, Russia’s war in Ukraine and other market shocks that drove up prices.

Some steel mill executives describe reluctant buyers as being on a diet. The U.S. spot-market price for hot-rolled coiled sheet steel was $750 a ton on Friday, down nearly 30% from a year earlier, according to S&P Global Commodity Insights. The benchmark price sank to $690 in September when a strike against U.S. automakers chilled steel buying, but went as high as nearly $2,000 a ton in 2021.

A decline in shipments hurt U.S. Steel’s first-quarter performance, with sales falling 7% from a year earlier and net income shrinking 14%.

Mori said a soft American steel market wouldn’t sidetrack spending to improve U.S. Steel. Nippon Steel executives have been dealing with a yearslong slump in Japan, where the company is the country’s largest steel producer.

Japan’s estimated steel consumption—which includes domestic steel production and imports minus exports—sank 17% from 2019 to 2023, according to the Japan Iron and Steel Federation. Nippon Steel has closed some plants in Japan in response to falling demand.

American steel consumption slipped 7% during the same period, according to the American Iron and Steel Institute.

Presidential campaign issue
Nippon Steel has the economics worked out on the deal, but the politics is a work in progress.

Biden, who won Pennsylvania in the 2020 election, has signaled opposition to foreign ownership of U.S. Steel, though he hasn’t explicitly said he would block the deal, which is now under national-security review by a Treasury Department-led committee.

The presumptive Republican presidential nominee, Donald Trump, has publicly criticized the deal, which could become an important issue in Pennsylvania, seen as a battleground state in the presidential contest.

The Justice Department is also reviewing the merger for market-concentration concerns. Nippon Steel is part owner of a steel mill in Alabama with the steel company ArcelorMittal.

“We are confident that we will be able to clear the issue if we are properly screened,” Mori said.

Nippon Steel said the deal reflects confidence in the U.S. steel market in the long run. The American market features some of the highest steel prices in the world, helped in part by tariffs on lower-cost imports. Domestic steel demand in recent years has been underpinned by spending on factory and warehouse construction and government-funded technology and infrastructure projects.

“It’s kind of an ideal place,” said Martin Englert, an analyst for Seaport Research Partners.

The purchase of U.S. Steel would double Nippon Steel’s overseas steel production capacity and profit. The company’s long-range goal is to raise its overall production capacity to 100 million metric tons a year.