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Talks didn’t result in a deal but illustrate shifts in the growing business of handling parcels that customers send back

After a high-profile split, FedEx FDX -0.04%decrease; red down pointing triangle and Amazon.com AMZN 0.03%increase; green up pointing triangle have explored doing more business with each other.

The two companies last year discussed FedEx accepting returns of Amazon packages at its retail locations, bringing the delivery giant a share of the business, according to a person familiar with the matter. Amazon has partnerships with a number of companies, including FedEx rival United Parcel Service UPS -1.10%decrease; red down pointing triangle, to handle the millions of returns it has annually.

The two sides didn’t reach a deal, but the developments come as FedEx has sought to boost parcel volumes amid an industry slump and Amazon seeks to improve the experience its customers have in returning items.

The talks with FedEx happened last spring, around the same time that Amazon introduced a fee for some customers who bring their returns to UPS stores.

In October, UPS signed a $465 million deal to buy Happy Returns, which has partnerships with several retailers and thousands of return drop-off sites in its network. The deal enabled UPS to reduce its exposure to Amazon and handle returns from other online retailers.

Happy Returns included FedEx Office locations as a drop-off point for packages prior to being purchased by UPS and now no longer does so. It doesn’t accept drop-offs of Amazon returns.

Ties between FedEx and Amazon began to fray in 2019 when FedEx, then led by founder Fred Smith, said it would end delivery contracts to move Amazon’s boxes. Since then FedEx has tried to fill its trucks and planes with parcels from other companies.

At that time FedEx saw Amazon as a growing competitive threat since the e-commerce giant was developing its own delivery capabilities. Amazon’s ground network, for example, uses local contractors to get parcels to customers, similar to FedEx.

After the breakup announcement, Dave Clark, Amazon’s then-senior vice president of operations, called it a “conscious uncoupling at its finest.”

The breakup was a gamble for FedEx at the time, and since then, Amazon’s daily shipping needs have only increased. Amazon accounts for nearly 40% of U.S. ecommerce sales, the largest share, according to estimates from eMarketer.

Amazon’s heavy investments in its logistics network have helped it become less reliant on the likes of FedEx and UPS. In 2022, Amazon surpassed UPS as the largest nongovernmental carrier of parcels in the U.S. It eclipsed FedEx in 2020, The Wall Street Journal reported.

The risks of relying on one customer are well known. UPS has said that it wants to reduce its exposure to Amazon but the partnership still drives a substantial part of its business. Amazon accounted for 11.8%—or about $11 billion—of UPS’s revenue last year, up from 11.3% in the year prior.

Amazon represented 1.3% of FedEx’s total revenue in 2018, or less than $1 billion. FedEx still delivers items for some merchants that sell items through Amazon’s marketplace but use their own warehouses.

FedEx is now fighting for business amid a downturn in demand after a pandemic-fueled surge. Daily package volumes for FedEx have fallen year over year for several quarters in a row. It has had to park planes and furlough workers, and it embarked on a corporate restructuring to combine its air and ground networks.

The parcel-delivery giant is slated to release its quarterly earnings report March 21.

A major lender in Dubai has scaled back Russia-related business, while Turkish lenders have become more cautious

When the U.S. and Europe tried to sever Russia from the Western financial system, Moscow found workarounds. Key among them: banks in the Gulf and Europe that maintained ties with Russia.

Now, Washington’s efforts to close these loopholes appear to be paying off. Dubai’s main state-owned bank has shut some accounts held by Russian oligarchs and traders of Russian oil. Turkish lenders are growing wary of handling Russia-related business. The U.S. has also put bankers in Vienna, another important financial hub, on notice.

The moves follow visits by U.S. officials, and recent rounds of sanctions against trading firms and others. In late December, the White House gave the Treasury Department greater sanctions power, enabling it to penalize foreign banks for dealings involving Russia’s military-industrial base.

Emirates NBD, the Dubai-based banking giant, is central to the shift.

Russian businesses and oligarchs flocked to the United Arab Emirates, including the commercial hub of Dubai, after Moscow invaded Ukraine in 2022. Emirates NBD was one of the biggest beneficiaries, according to people familiar with the matter, including financial professionals in the Persian Gulf country, U.S. officials and an energy executive.

The bank handled sizable Russia oil trades and set up a department catering to Russians seeking a safe haven for their wealth, for which it poached bankers from the former Soviet Union, said one of the U.S. officials and some of the other people familiar with the matter.

In recent months, however, the U.S. has applied heavy pressure on the U.A.E. Washington has sent Treasury and State Department officials to the nation, and imposed new sanctions on U.A.E.-based entities such as the Russia-focused oil trader Voliton.

Emirates NBD has reversed course. It has shut its Russia-focused department, stopped accepting transfers in rubles from Russia and closed a large number of Russian-held accounts, typically either containing more than $5 million or held by sanction-connected entities, the financial professionals in the Emirates and another of the people familiar with the matter said.

Some of the closures affect companies in a network of trading and shipping companies operated by Etibar Eyyub, a former executive at the U.A.E.’s Coral Energy.

This network, which includes Voliton and another recently sanctioned firm, Bellatrix Energy, has become the key route through which the Russian state exports oil to global markets, The Wall Street Journal has previously reported.

Emirates NBD has ordered the closure of accounts held by Coral, Voliton, Bellatrix and another Eyyub-linked firm, Pontus Trading, one of the U.S. officials and other people familiar with the matter said.

A spokesman for Emirates NBD said it couldn’t comment on specific clients, but was committed to fighting financial crime and money laundering, and to complying with applicable international sanctions.

“The bank works closely on these priorities with its regulators and law enforcement agencies in the U.A.E. and other relevant jurisdictions,” the spokesman said.

A spokesperson for Coral said it maintains strong working relationships with all banking partners, and that the Journal’s questions were based on “an inaccurate or misleading premise.” The spokesperson has previously said Coral has nothing to do with the firms operated by Eyyub.

Spokespeople for Pontus, Bellatrix and Voliton didn’t respond to requests for comment.

Emirates NBD has also shut accounts held by Russian fertilizer giant Uralkali, and by Russian businessman Ivan Tavrin, according to the financial professionals in the Emirates. In December, the U.S. sanctioned Tavrin, who has spent billions of dollars buying up technology companies, as “one of Russia’s biggest wartime dealmakers.”

Representatives for Uralkali, Tavrin, and Tavrin’s Kismet Capital didn’t respond to requests for comment.

In addition to Emirates NBD, the Dubai branch of Banque Misr has shut down accounts for Coral and some other companies, according to some of the people familiar with the matter. The small, state-owned Egyptian lender was one of a clutch of banks processing payments for the trading network, those people said. Banque Misr didn’t respond to a request for comment.

In Turkey, the climate has also changed, as the U.S. government has pushed Ankara to adjust its growing economic relations with Russia.

The U.S. has penalized Turkish companies for aiding Russian violations and urged the government to foster sanctions compliance. Turkish exporters have complained of trouble getting paid.

“We are having difficulties receiving our funds,” said Omer Gencal, a financial adviser for Turkish companies doing business with Russia.

“Recently some banks said they are stopping their operations from transferring their funds from Russia to Turkey,” said Gencal, a former investment chief for HSBC’s local asset-management arm.

Turkish exports to Russia in February fell 33% from a year earlier to $670 million, trade-ministry data show.

Alexei Yerkhov, Russia’s ambassador to Turkey, said Russia was “in intense talks with Turkish officials regarding the refusal of some Turkish banks making payments in the name of the Russian companies,” according to Russian state media.

The U.S. has also targeted Austria, a banking hub for Central and Eastern Europe, recently sending Treasury official Anna Morris to meet with the government and banks including Raiffeisen Bank International, which retains a unit in Russia.

Treasury said the visit was part of a broader international outreach to ensure financial firms understood its new sanction powers, which were meant partly “to create heightened risks for banks.”

Raiffeisen is trying to sell or spin off its Russian unit, though Moscow has made business exits difficult.

The bank said it has guidelines and procedures to ensure sanctions compliance. “Since the beginning of the war, RBI has been steadily scaling back its Russian business,” it said.

The redoubled U.S. effort has led to some disruption of Russia’s energy exports, a financial pillar for the war in Ukraine.

Voliton and Bellatrix were among the biggest resellers of oil pumped by Russia’s Rosneft Oil, shipping and customs data show. But neither Voliton nor Bellatrix has handled any Russian oil trades since being sanctioned, according to commodity-data provider Kpler.

The U.S. pressure on banks to clamp down on energy payments has caused complications in recent weeks, said the U.S. officials, the financial professionals in the Emirates and others. Nonetheless, Russian oil is still flowing freely.

Last month, the Financial Action Task Force, an international anti-money-laundering body, took the U.A.E. off its gray list of noncompliant countries, citing significant progress in addressing deficiencies.

Hippocratic hits $500mn valuation as tech investors seek new bets in AI

One-year-old healthcare start-up gains investment from venture groups including General Catalyst and Andreessen Horowitz

One-year-old healthcare start-up Hippocratic AI has gained a $500mn valuation following a funding round, as Silicon Valley investors seek to cash in on promising new applications built using generative artificial intelligence.

The Palo Alto, California-based group received the valuation following a $53mn fundraising led by venture firms General Catalyst and Premji Invest, with participation from Andreessen Horowitz and SV Angel among others.

Hippocratic, founded in February 2023, is creating AI “agents” that can assist hospitals and clinics. It is part of a wave of new companies seeking to build AI applications that can have a large impact on specific industries.

Such groups have become the focus of venture capital investors, who have increasingly been crowded out from an AI investment boom by Big Tech companies that have showered billions of dollars on groups making powerful AI models such as OpenAI and Anthropic.

Microsoft, Google and Amazon last year struck a series of blockbuster deals, amounting to two-thirds of the $27bn raised by fledgling AI companies in 2023, according to private market researchers PitchBook.

This has increasingly led VCs to bet on start-ups with a narrower focus. Legal start-up Harvey has raised more than $100mn to apply generative AI within law firms, while Hippocratic is aiming to tackle “low-risk, non-diagnostic, patient-facing healthcare”.

Hippocratic’s AI agents have not yet been rolled out to patients, however. “We’re going to sit here until it’s safe, as determined by clinicians,” said Munjal Shah, the company’s founder and chief executive.

The company on Monday announced a partnership with Nvidia, the market leader in building AI chips. Hippocratic will use the chipmaker’s hardware to reduce the “latency” of AI agents, meaning they can respond in real time to patients.

Shah suggested current AI models, such as by OpenAI, can take up to nine seconds to produce an audio response to a question, a lag that will be too slow to be “convincing” to patients. “That’s not a big deal when you’re doing search but, in a voice conversation, nine seconds is an eternity,” he said.

The partnership entails no “financial commitment on either end”, said Kimberly Powell, vice-president of healthcare at Nvidia. “We’ve been working together on research, development and engineering to optimise the speed, operation and cost of running these systems,” she said.

Generative AI, technology that can produce words, video and code in seconds, has been heralded by investors as a paradigm shift in sectors as diverse as education, graphic design and law.

But the tools often “hallucinate” or produce incorrect answers, a potentially fatal problem in healthcare. Shah said his company had built a “constellation” of large language models checking one another, rather than relying on just one, to ameliorate the risk.

Previous attempts to disrupt healthcare have had mixed success. UK digital healthcare company Babylon Health, which went public at a $4bn valuation in 2021, declared bankruptcy last year. Olive AI, a US start-up that was valued at $4bn on a promise to shake up healthcare using AI, also announced it would wind down in 2023.

Shah’s previous business Health IQ, a life insurance broker which used AI, filed for bankruptcy last year after rising interests hit its ability to meet debt payments. Before winding down, the start-up was one of the fastest growing health-tech companies in the US, having raised well over $100mn from investors including Andreessen Horowitz and Greylock Partners.

Nvidia has unveiled its latest more powerful artificial intelligence chips as it sets its sights on extending its dominance in the burgeoning industry.

Chief executive Jensen Huang on Monday said Nvidia’s Blackwell graphics processing units would massively increase the computing power driving large language models. The Blackwell GPU has 208bn transistors, compared with 80bn in last year’s H100, in a measure of its increased power.

Huang said the chip was twice as powerful when it came to training AI models as its current generation of GPUs, and had five times their capability when it came to “inference” — the speed at which AI models such as ChatGPT can respond to queries.

“The inference capability of Blackwell is off the charts,” he said, adding that there was “unbelievable excitement” about it.

Huang said Nvidia’s GB200 “superchip” would combine two of the Blackwell GPUs with the company’s “Grace” central processing unit, which has powered the growth of generative AI.

Huang’s keynote address — delivered to a packed audience of developers, investors, media and others at the SAP Center in San Jose, California, where Nvidia is holding its annual developer conference — underlined the buzz the company has attracted as the excitement about AI has grown. In two years, Nvidia has managed to turn the debut of new GPU chips into an event equalling the hype of consumer product launches from the likes of Apple, a phenomenon Huang himself noted on stage.

When Nvidia first went to the market around two years ago with its “Hopper” chips, it started with just two potential customers, Huang said. “We have more now,” he quipped.

That the Nvidia executive was going to announce the Blackwell chips during his presentation was one of the worst kept secrets in Silicon Valley, and the presentation did little to jolt investors. Nvidia’s market capitalisation has grown to $2.2tn, overtaking Google and Amazon to become the third most-valuable company in the world after Microsoft and Apple, but its shares were slightly lower in after-hours trading following the event.

The new partnerships, customers and software tools Huang revealed during his two-hour speech reflected Nvidia’s core contention that AI will have a transformative effect on every part of the global economy.

All the big cloud service providers, which include Google, Amazon and Microsoft, were “lined up as customers” for what he predicted would be “the most successful product launch in our history”.

Nvidia’s chips have become the commodity that has underpinned the generative AI revolution, and its rocketing stock has fuelled share price rallies across the globe.

Companies including OpenAI, which is backed by Microsoft, and other entities have spent billions of dollars to acquire Nvidia’s chips, which offer the computing power behind generative AI technology that can produce humanlike text, video and code within seconds.

At the same time Google, Amazon and Microsoft are racing to develop their own generative AI chips in an attempt to reduce their dependence on Nvidia and to lock customers more closely into their own hardware and software systems.

Nvidia’s new focus on AI inference addresses Wall Street concerns that the huge demand for its chips may start to tail off as companies such as Intel and AMD seek to compete and customers shift away from training large language models to implementing them.

To help entrench itself as the primary AI chip supplier, Nvidia is also building out its software offering with tools to help build AI applications that run on the chips.

The company is releasing a new layer to its Cuda software called “NIM microservices”, which businesses can use to deploy a range of AI models that have been optimised to run on Nvidia’s chips.

“We are effectively an AI foundry . . . We will do for you and the industry on AI what TSMC does for us building chips,” he said, pointing to new partnerships with a number of companies including SAP, Snowflake, and NetApp. Taiwan’s TSMC is the world’s leading chip manufacturer and a critical component in the global supply chain.

Whether Nvidia can continue its trajectory depends in part on the returns its customers start to see on their initial investment. With investors rushing into Nvidia’s stock, the pressure is on for the company to maintain its dizzying growth.

The ultimate size of this future generative AI market remains unclear. Huang has predicted that the total value of all the technology in data centres will reach $2tn in the next four to five years.

Huang also used the event to promote Nvidia’s Omniverse software platform, which can create “digital twins” of objects. In the future, “we’re going to manufacture everything digitally first, and then we’ll manufacture it physically”, he said.

New Nvidia AI models and software would help with the development of humanoid robots that look and move like people, which Huang said would be “the next generation of robotics”. Towards the end of the event, Huang invited two small robots on to the stage, one of which at a certain point seemed to ignore his instructions to move closer to him.

The market’s muted reaction may point to the frenzy around Nvidia “hitting its peak”, Daniel Newman, chief executive of The Futurum Group, told the Financial Times. “The market is very forward-looking. It already sees massive market share, the dominant position with the hyperscalers, the genuine market lead it has with the stickiness of Cuda [software].”

The arrival of competing chips coincides with the question of how long Nvidia can sustain double-digit growth quarter after quarter, Newman added. “There’s only really one way for Nvidia to go: we need to see how big this market really is.”

Abu Dhabi fund offers to buy out investors fleeing China private equity

Deal with Hong Kong-based PAG could provide exit at a discount for US pension funds

The Abu Dhabi Investment Authority is seeking to capitalise on western investors’ retreat from China by offering to buy at a discount their stakes in funds managed by Hong Kong-based PAG.

The move from Abu Dhabi’s main sovereign wealth fund, described by four people with knowledge of the matter, is a sign of how some Gulf investors are looking to snap up bargains as US-based investors cut their China exposure.

“It’s a transition from US investors who [previously] favoured China, towards Middle Eastern investors that don’t have the same concerns they do,” a person briefed on the plans said.

PAG, in which Blackstone has a minority stake, built a reputation for offering global investors access to deals in China, using connections forged by its chair Weijian Shan, who has a seat on Alibaba’s board.

One of Asia’s biggest private equity groups, managing more than $55bn, its investors include state pension schemes in California, Texas, Florida and Iowa as well as investment funds in Canada, Australia and across Europe.

It has faced difficulties raising a new fund since Shan criticised Beijing in 2022. PAG filed for a $2bn initial public offering in 2022 in a deal that would have valued it at up to $15bn, but the listing has not materialised.

Four of PAG’s five largest deals since 2019 have been in China, according to figures from the London Stock Exchange Group. They include investments in Dalian Wanda’s shopping mall operator, Zhuhai Wanda, and online video platform IQIYI.

As of June last year, two of the funds that Adia is offering to buy stakes in — which were raised in 2015 and 2018 — had returned just 53 per cent and 13 per cent of the amounts investors had paid in, according to filings from Calstrs, a US teachers’ pension scheme. PAG’s first buyout fund, raised in 2012, had given investors 1.8 times the money they paid in by the same date.

Buyout funds typically aim to hand back investors’ cash, plus returns, within a decade.

PAG, which invests across Asia including in credit and real estate as well as private equity, had raised roughly $3bn for its planned new fund by the beginning of this year, according to four people with knowledge of the situation. Two of those people said it previously told investors it aimed to close the fundraising by the end of 2023.

Its original target for the fund was $9bn, according to Reuters. It had raised just $2.2bn by March last year, according to filings to the US Securities and Exchange Commission.

Under the deal, Adia — which has a long-standing relationship with PAG — would offer to buy investors’ stakes in PAG funds at a discount, in a transaction that the buyout firm would facilitate. The investors could choose whether to sell their stakes.

One PAG investor said the buyout group had brokered the Adia deal to provide a chance for others to exit because “they want [investors] who are committed to ongoing investment in China, which a lot of US and European [groups] are not”.

Adia declined to comment. PAG did not respond to repeated requests to comment. In early March a PAG spokesman said it was “definitely incorrect” to say it had raised $3bn, adding: “We can’t give a number as yet because the fund hasn’t closed.” 

Pension funds and other investors in the US are increasingly wary of investing in China. Geopolitical tensions have triggered US restrictions on investments there while a crackdown from Beijing has made it harder to list Chinese companies overseas. 

A chunk of the money in two of the PAG funds is tied up in the Chinese industrial gases company AirPower Technologies, which PAG originally backed in 2017, the people said. PAG has agreed to sell AirPower, but regulators have not yet approved the sale, they added.