>>> Europe : Brokers Upgrades & Downgrades - 4th of June 2024

>>> Up
* Ariston Raised to Buy at Citi; PT 5.80 euros
* Freenet Raised to Buy at UBS; PT 29 euros
* Future PLC Raised to Buy at Berenberg
* Generali PT Raised to 28.70 euros from 23.36 euros at Citi
* Structure Therapeutics ADRs PT Raised to $93 from $58 at Leerink
* Wise Raised to Buy at Peel Hunt; PT 1,000 pence

>>> Down
* Alfen Cut to Hold at Berenberg; PT 40 euros
* Allianz Cut to Neutral at Citi; PT 283 euros
* GSK Cut to Hold at Intron Health; PT 1,750 pence
* NIBE Industrier Cut to Underweight at Barclays; PT 34 kronor

>>> Initiation
* Flutter Rated New Outperform at Oppenheimer; PT 18,780.81 pence
* Gamma Communications Rated New Buy at Berenberg; PT 1,980 pence
* Michelin Rated New Outperform at Bernstein; PT 43 euros
* Pirelli Rated New Market Perform at Bernstein; PT 6.20 euros

>>> Call
* Alfen Cut to Hold at Berenberg on Continued Lack of Visibility
* Ariston’s Valuation Undemanding, Stock Upgraded to Buy at Citi
* GSK’s Delaware Court Ruling Raises Risks, Intron Cuts to Hold
* Hedge Funds Sell Software Stocks as AI Splits Tech, Goldman Says
* JPMorgan’s Kolanovic Warns of Risks as Stock Prices Stay High
* Klepierre Double-Upgraded at Citi as Rental Prospects Improve
* Wise Upgraded at Peel Hunt on Pullback and Growth Prospects

>>> What to look at today - 4th of June 2024

Asian stocks struggled for traction, as investors weighed concerns about the health of the US economy against stronger expectations for early Federal Reserve policy easing. Shares declined in Japan, South Korea and Australia, while those in Hong Kong and mainland China gained. US equities futures were flat. The dollar stabilized after weakening against most of its major and Asian peers earlier. In the spotlight was India, where the country’s stocks, currency and bonds all dropped as euphoria around exit polls that predicted a landslide third term for Prime Minister Narendra Modi waned. Treasuries steadied in Asia after Monday’s rally following data that showed US factory activity shrank at a faster pace. The benchmark 10-year yields edged up two basis points at 4.41%, after sinking 11 basis points previously. Australian and New Zealand government debt rose. The mixed picture across asset classes suggests investors may be waiting for more US data, such as Friday’s crucial jobs figures, for more clues about the outlook of the world’s No. 1 economy and its central bank. While the latest soft US manufacturing data revived bets for the Fed to cut rates sooner, it also raised concerns about the potential drag on Asian economies. Swap contracts tied to upcoming meetings continue to fully price in a quarter-point rate cut in December, with the odds of a move as soon as September edging up to around 50% and November also given high odds.
The S&P 500 turned green in the final minutes of trading as a rally in big tech outweighed a plunge in energy producers. A technical issue at the New York Stock Exchange resulted in erroneous trading volatility halts earlier Monday.  Back in Asia, Japan’s finance minister said the government’s intervention in the currency market a little over a month ago was effective to some extent, in the first official acknowledgment of the action after the ministry disclosed data indicating it spent a record amount to prop up the yen. The yen slipped on the commentary as investors assessed the commentary. In commodities, oil tumbled as OPEC+ rolled out a plan to restore some production to the market. Bitcoin briefly topped $70,000. Gold held its biggest advance in two weeks, after soft US data reignited optimism the Federal Reserve will cut rates this year. US After Hours FGEN +27.6% surging on a couple of announcements; HQY +4.6% up on earnings; GTLB -3.1% slips despite upbeat guidance.

Nikkei -0.37% Hang Seng +0.36% CSI +0.27% Shanghai -0.17% Shenzen -0.45%

Eur$ 1.0904 CNH 7.2570 CNY 7.2458 JPY 156.17 GBP 1.2802 CHF 0.8957 RUB 89.33 TRY 32.2059 WTI$ 73.34 -1.3% Gold 2,348 -1% BTC 68,938 ETH 3,760

S&P -0.02% Nasdaq -0.92% EuroStoxx -0.10% FTSE -0.19% Dax -0.23% SMI

Macro :
- Hedge Funds Sell Software Stocks as AI Splits Tech, Goldman Says
- JPMorgan’s Kolanovic Warns of Risks as Stock Prices Stay High
- UAE seeks ‘marriage’ with US over artificial intelligence deals

Keep an eye on :
- AIR FP : Airbus in Talks to Sell More Than 100 Widebody Jets to China
- AAL LN : De Beers Casts Off Man-Made Diamonds as It Looks Beyond Anglo
- BA US : Boeing 737 Deliveries to China Still Halted Amid Restart Reports
- BCHN SW : Burckhardt FY Operating Profit Beats Estimates
- DTE GY : Germany’s KfW Sells Deutsche Telekom Shares at €22.13 (June 3)
- DTE GY : Deutsche Telekom Increases Second Buyback Tranche by €600M
- EBOX LN : Tritax EuroBox Confirms Hasn’t Received Brookfield Proposal
- EUROB GA : Eurobank Buys 26.1% Stake in Hellenic Bank for €275.7 Million
- ILMN US : Illumina Board Approves Spin-Off of Grail
- IPH FP : Innate Pharma Notes Positive Results From Tellomak Phase 2 Study
- IP US : International Paper Seeks to Reassure DS as Suzano Plots Bid
- MAERSKB DC : Maersk Boosts FY Underlying Ebitda Forecast, Beats Estimates
- NWL IM : New Princes Group Targets €5b Rev by 2030, Looks at Further M&A
- NVDA US : Intel CEO Fires Back at Nvidia in Battle for AI Chip Leadership
- OR FP : bareMinerals, Laura Mercier Owner Orveon Global Mulls M&A Options
- PSH NA : Ackman’s Pershing Square Targets Raising $25 Billion for US Fund
- PSH NA : Pershing Square Holdings May Net Performance +1.8%
- REN PL : Portuguese Electricity Demand Rose 2.1% in May, REN Says
- RMV LN : Rightmove Clients' Election Fate Mixed But Homebuyers Won't Fret
- ROTH FP : Edmond de Rothschild Gained Business From Credit Suisse Failure
- SAABB SS : Saab’s 385% Rally Looks Like It’s Running on Fumes, Analysts Say
- SGO FP : Saint-Gobain Closes Purchase of the Bailey Group of Companies
- SAN FP : Sanofi: Sarclisa Combo Cut Risk of Recurrence or Death in MM
- SHLF NO : Shelf Drilling Says Norway Didn’t Accept Application for Rig
- STLA US : Italy May New Car Sales Fall 6.62% Y/y
- STM FP : STMicro, Geely Sign Long-Term Silicon Carbide Supply Pact
- TRMDA DC : Torm Offering by Holder Oaktree Capital Management Closes
- 2330 TT : TSMC’s New Chairman Affirms Hopes of AI-Fueled 2024 Recovery
- VIE FP : Eiffage, Vinci & Veolia Win >€400M Water Treatment Contract
- VIV FP : Canal+ Mandatory Offer for MultiChoice Opens on June 5

FT : Von der Leyen’s rival lashes out at her ‘unacceptable’ leadership style

Von der Leyen’s rival lashes out at her ‘unacceptable’ leadership style
Also in this newsletter: severe floods in Germany claim several casualties

The first polls open in two days for a continental vote that will shape the EU’s next five years — and campaigning is reaching its peak.

Today, Nicolas Schmit, the lead candidate for the centre-left bloc, tells our parliament correspondent that centre-right rival Ursula von der Leyen has an “unacceptable” leadership style. And our Berlin bureau chief reports from deadly floods in southern Germany.

Interested in how the elections will change the EU? Join me and my colleagues in Paris, Rome and Germany for a subscriber-exclusive webinar on June 12 and put your questions to our panel. Register for your subscriber pass now. Your pass also gives you access to a recording of the event.

Enter the ring
Socialist candidate Nicolas Schmit has finally taken off the gloves with a direct attack on his boss-turned-rival ahead of the weekend’s elections, writes Andy Bounds.

Context: Schmit, employment commissioner in the current European Commission, is running as the Socialist’s lead candidate for the commission presidency — against incumbent Ursula von der Leyen, the European People’s party candidate and favourite to win the race.

In an interview with the Financial Times, Schmit said von der Leyen had quashed dissent in the 27-strong college of commissioners and took decisions “in some hidden room” without discussions.

Schmit singled out a controversial deal with Tunisia, negotiated by von der Leyen together with autocratic leader Kais Saied, in which the EU offered money in return for stopping migrants leaving its coast for Europe.

“This came on a Friday afternoon [to the college] and we had one hour to say no. If after one hour you hadn’t said anything it was yes. This is unacceptable,” Schmit said.

Tunisia’s security forces have driven thousands of migrants into the desert on the borders with Algeria and Libya, and faced widespread accusations of human rights abuses and even human trafficking.

“The way refugees are treated is just shocking,” Schmit said about Tunisia, contrasting it with a 2016 agreement between the EU and Turkey. According to him, refugees were treated more benignly there, including because of EU funding for NGOs rather than security forces.

Schmit said von der Leyen consistently excluded her commissioners from decision making. “This is about the governance of Europe,” the Luxembourger said. “You cannot just keep that under the table in some hidden room. We need a real debate in the commission. And you need a president that faces criticism.”

Commission spokesperson Eric Mamer said the “process was collegial” with “ample opportunity for members of the college to request a discussion in the college”.

Despite Schmit’s criticism, von der Leyen’s EPP is on track to win the elections, giving her the first chance to get the job — provided most of the 27 EU leaders back her.

She must then get a majority in parliament.


Italy’s Giorgia Meloni and France’s Marine Le Pen represent two different shades of Europe’s far-right. If they can find a way to work together, they could determine the EU’s short-term future.

Washed away
Floods in southern Germany are claiming a rising number of casualties, as Chancellor Olaf Scholz yesterday travelled to the region to inspect the damage and promise federal support, writes Guy Chazan.

Context: Heavy rains in the states of Bavaria and Baden-Württemberg over the weekend have caused severe flooding, resulting in the disruption of train services in the region and forcing dozens of schools and businesses to close.

Firefighters yesterday discovered the bodies of a man and a woman in the village of Schorndorf, just east of Stuttgart, an area that has been particularly affected by the floods. Another body was found in Schrobenhausen, north-west of Munich.

On Sunday, the body of a fireman was found, who died when his rubber dinghy capsized. A second fireman is still missing.

Speaking to reporters in the Bavarian town of Reichertshofen, Scholz said more had to be done to tackle the climate crisis, noting that it was the fourth time he had visited a flood-affected area in Germany this year.

“We cannot neglect the task of stopping man-made climate change,” Scholz said. “That is the message we must take from these events and this disaster.”

The floods seen in recent years were no longer singular events, he said. “That’s why the government has to act.”

Video footage published by local media showed rivers transformed into fast-flowing torrents, and cars left piled up on each other as the floodwaters in some villages receded.

Thousands of volunteers filled sandbags as river levels remained elevated and an important dam on the river Paar between Munich and Nuremberg burst in three places.

But officials said it was too early to give the all-clear, with heavy rains expected to continue falling.

TechCrunch : After raising $100M, AI fintech LoanSnap is being sued, fined, evic

After raising $100M, AI fintech LoanSnap is being sued, fined, evicted
The company’s backers include Reid Hoffman, Richard Branson and the Chainsmokers

AI mortgage startup LoanSnap is facing an avalanche of lawsuits from creditors and has been evicted from its headquarters in Southern California, leaving employees worried about the company’s future, TechCrunch has learned.

LoanSnap, founded by serial entrepreneurs Karl Jacob (pictured above) and Allan Carroll, has raised around $100 million in funding since its 2017 seed round, $90 million of which was raised between 2021 and 2023, according to PitchBook. Investors include Richard Branson’s Virgin Group, the Chainsmokers’ Mantis Ventures, Baseline Ventures, and Reid Hoffman, LoanSnap says. The startup also took on around $12 million in debt, PitchBook estimates.

Despite the capital it raised, since December 2022, LoanSnap has been sued by at least seven creditors, including Wells Fargo, who collectively alleged the startup owes them more than $2 million. LoanSnap has also been fined by state and federal agencies and nearly lost its license to operate in Connecticut, according to legal documents obtained by TechCrunch.

While LoanSnap has not yet shut down, according to two employees, the vibe inside the company is harrowing as workers wait for clarity on the company’s future. Between December 2023 and at least January 2024, the company missed payroll and headcount has dwindled. At its high point, LoanSnap employed more than 100. After layoffs and attrition, that number has diminished to less than 50, according to a source.

“The current state is a result of terrible leadership, overspending on futility, and institutional investors falling for the charming facade that Karl can show,” one former employee, who asked to remain anonymous due to fear of retaliation, told TechCrunch. The person’s identity is known to TechCrunch.

Given the scope of the company’s problems beginning in 2021, the situation begs the question of why investors poured money into the company as late as 2023 — and what will happen next.

Reid Hoffman was not available for comment, and his office declined comment. (LoanSnap is not a Greylock Partners investment, the VC firm confirmed.) Virgin Group, Mantis VC, and Baseline Ventures also did not respond to requests for comment.

Jacob and Carroll, who are LoanSnap’s CEO and CTO, respectively, did not respond to multiple requests for comments over several days, via email and texts. LoanSnap’s press line deferred to the CEO in the matter and declined to offer comment.

Creditors sue, agencies fine LoanSnap
In 2021, LoanSnap originated nearly 1,300 loans for a total value of almost $500 million, according to data filed with federal regulators — both records for the startup. By 2023, LoanSnap reported to the Consumer Financial Protection Bureau (CFPB) that it had originated only 122 loans for the year (though the data may not be final.)

Despite the record number of loans, trouble was already brewing in 2021. Legal documents show that in May 2021, the same month LoanSnap announced its $30 million Series B with investors like Hoffman, the U.S. Department of Housing and Urban Development Mortgagee Review Board entered into a settlement agreement with the company. While LoanSnap did not admit to wrongdoing, the agency alleged that it violated Federal Housing Administration (FHA) requirements for failing to notify the FHA of an operating loss that exceeded 20% of its fiscal 2019 quarter-end net worth. It agreed to pay a $25,000 fine.

Since 2021, at least three complaints have been filed against LoanSnap with the Better Business Bureau, and the company now has an F rating. Those complaints allege that the startup charged non-refundable fees and then failed to close on loans in a timely manner or failed to pay taxes from an escrow account. Additionally, in four complaints filed to the Consumer Financial Protection Bureau and reviewed by TechCrunch, consumers accused LoanSnap of selling a paid-in-full loan to another lender instead of properly closing it out, misleading consumers about mortgage approvals and shorting escrow accounts.

Between December 2022 and May 2024, at least seven creditors sued LoanSnap, and the company went through at least three CFOs, a source says. Near the end of 2022, Baseline Ventures’ Steve Anderson stepped down from the board, according to someone familiar with the matter.

Four of the lawsuits were from vendors claiming that the startup had fallen behind or completely stopped making contractual payments for services. LoanSnap has not yet filed a formal response with the courts for any of these suits, according to public records.

For instance, Wells Fargo filed a lawsuit in August 2023 for $431,000, alleging a loan it bought from LoanSnap violated the bank’s income-to-debt-ratio policies. Because LoanSnap defaulted on the lawsuit (meaning it failed to respond in a timely manner), the judge ordered LoanSnap to pay.

In mid-2023, LoanSnap was facing a California Department of Financial Protection and Innovation investigation stemming from a complaint filed against it, and the company was fending off threatened litigation from at least one investor, according to records viewed by TechCrunch. (A spokesperson for the California Department of Financial Protection said it “does not comment on investigations even to confirm or deny their existence.”)

Then, 2024 brought more legal troubles. In January, Connecticut’s Department of Banking alleged the company was partaking in “systemic unlicensed mortgage loan” activity by employing unlicensed people. One employee told TechCrunch that the company was eager to hire those without much mortgage experience, with the idea of training them so they could one day get licenses.

Connecticut also claimed that LoanSnap violated the Fair Credit Reporting Act, the SAFE Act, and the Fair Lending Act, among other state statutes, and threatened to revoke its license. Ultimately, LoanSnap paid a $75,000 fine without admitting fault and promised not to use unlicensed people for mortgage loan officer work in the state.

“It’s a really big deal for them to threaten that,” said Andrew Narod, a partner in the Banking and Financial Services Practice Group at the law firm Bradley. But Narod noted that the settlement wasn’t “particularly onerous,” adding, “Pay $75,000 and stop doing illegal things, which, candidly, really should have been the business model from the start.”

In February, LoanSnap was sued by its Costa Mesa landlord, who alleged the company stopped paying rent and owed nearly $405,000. When LoanSnap didn’t answer the suit, the judge ruled that it defaulted on the complaint, and the landlord was given the OK to evict LoanSnap in mid-May, according to court filings. (LoanSnap had a second office in San Francisco, though it is unclear if that office is still in use.)

In May, a new suit was filed. A tax company that loaned LoanSnap $5 million alleges that LoanSnap stopped making payments and owes more than $900,000.

Another VC invests millions in 2023
Many of these lawsuits were filed in late 2023. But even before then, internal problems were clear: LoanSnap’s finances had seen trouble, according to the FHA settlement; it had gone through layoffs; complaints had been filed to the BBB and the CFPB; and a known Silicon VC had, internal sources say, resigned from the board.

Still, in July 2023, LoanSnap raised another $19 million in venture funding from new investor Forté Ventures, according to Pitchbook. (Forté Ventures did not respond to a request for comment.)

One employee attributes the company’s venture fundraising success to CEO Jacob.

Jacob has the kind of résumé that attracts Valley VCs, having founded and exited multiple startups since 1997, when he sold a company called Dimension X to Microsoft. His LoanSnap bio proudly says he’s “raised 23 rounds of financing” and “generated hundreds of millions of dollars in investor returns.” His co-founder Carroll has also had repeat successes. He’s a former Microsoft research engineer who launched three previous startups and sold two of them.

But many questions remain, such as where all the millions that LoanSnap raised went. The employees we spoke to don’t have answers. When times were good in 2021, and headcount was at its highest, Jacob engaged in expenditures like authorizing an expensive open-bar holiday party for employees in 2021 at a beachside resort. One year, he gifted employees with Meta Portals and hosted a party in Denver for the Web3 ETH event.

The company was also operating two offices, both in pricey rental areas. The rent in Costa Mesa (from which it was evicted) was around $55,000 a month, and the office in San Francisco charged at least $30,000 a month rent, according to court documents obtained by TechCrunch.

Employees were told that the multimillion-dollar Newport Beach town house where Jacob and Carroll stayed when visiting the Costa Mesa office was also owned by the company. LoanSnap hosted its 2022 holiday party there.

Despite all of the now-obvious problems, LoanSnap is still earning public accolades from investors, the media, and industry players.

In mid-May, Newsweek named LoanSnap among its list of America’s Best Online Lenders, and one of its VCs, True Ventures, applauded the startup on LinkedIn for the inclusion. That same month, LoanSnap and Visa announced that LoanSnap had joined Visa’s fintech program, which helps startups use its payment programs.

And just last month, LoanSnap announced it entered into Nvidia’s free Inception program, which gives benefits to AI startups. One former employee called these recent announcements odd, as the company appears to be trying to either pivot or move on as if nothing is wrong.

“It’s really not hard to find numerous lawsuits and complaints, some of them from governmental agencies, with a quick Google search,” the employee said, wondering how Nvidia and Visa let LoanSnap into the programs.

WWD : French Clothing Brand Ba&sh Teams With Saysh on a Limited-edition Sneaker

French Clothing Brand Ba&sh Teams With Saysh on a Limited-edition Sneaker in Time for Paris Olympics
The Saysh x Ba&sh collaboration will launch on July 9, and come in two color variations, a brownish-red and vibrant green.

With the Olympics just two months away, the French women’s clothing brand Ba&sh is in the mood to move and has teamed with the women’s sneaker specialist Saysh on a limited-edition style called Saba.

The Saysh x Ba&sh collaboration will launch on July 9, and come in two colors, terracotta, a brownish-red similar to the color of clay tennis court, and vibrant green. The sneakers are priced at 195 pounds.

Saysh cofounder Allyson Felix is an 11-time Olympic medalist and a member of the International Olympic Committee.

Barbara Boccara and Sharon Krief, cofounders of Ba&sh, said their clothing brand is about “energy, confidence and joy,” which is why connecting with Saysh, and Felix, felt like a natural move.

“It’s been special to partner with such a standout woman who exemplifies those qualities on and off the track…and to bring Saysh to more Ba&sh women,” they said.

The sneakers combine “1990s influences and 1970s style in a design that’s made for the city,” according to Boccara and Krief.

They’re sold in a specially designed box with a matching pouch. The swirling infinity symbol appears on the sole, representing “both the universe of possibilities open to women and the osmosis between Saysh and Ba&sh.”

The sneakers feature the Saysh Eva sole, which is light, flexible and cushioned. The shoes‘ suede inserts are certified by the Leather Working Group (LWG Gold), which promotes a responsible leather manufacturing process.

The use of recycled mesh on the upper, and recycled polyester for the lining, is meant to encourage the reuse of materials and reduces the ecological footprint. “Born to move,” the slogan of the collaboration, appears on two pairs of socks in the Saba colours.

Felix cofounded Saysh with her brother Wes Felix to fill what she saw as a gap in the market for sneakers designed specifically for women’s feet. The siblings have built a lifestyle brand on their unique designs, and run their company with the aim of empowering female customers and employees alike.

As reported, Saysh has a Maternity Returns Policy to support women’s changing shoe sizes during pregnancy, and a customer community called Saysh+, which offers various perks, virtual events and run clubs.

“All that matters is that when we encounter challenges, we understand how to push through, learn from these tests and, when we can, use our voice to encourage each other to question the status quo and ourselves,” Felix said.

“And there’s no reason not to wear something that makes us feel and look good while we’re doing it,” she added.

The Saba Sneaker will be sold on ba-sh.com and in selected Ba&sh stores, stockists and department stores.

Ba&sh is sold in more than 70 countries, including in Europe, China and North America, and has more than 320 stores. Investors include L Catterton, Groupe Arnault and the French firm HLD. In 2022, the label achieved 310 million euros in revenue, up 22 percent on the previous year.

WSJ : Hitachi, Microsoft Plan for Multibillion-Dollar AI Partnership

Hitachi, Microsoft Plan for Multibillion-Dollar AI Partnership
Japanese conglomerate to integrate Microsoft Cloud and GitHub Copilot into Lumada, Hitachi’s core digital, software and services business

Hitachi and Microsoft MSFT -0.39%decrease; red down pointing triangle announced a multibillion-dollar collaboration to accelerate the adoption of generative artificial intelligence, the latest in a series of partnerships and investments the two companies are undertaking.

As part of the three-year partnership, the Japanese conglomerate will integrate Microsoft products including Microsoft Cloud and GitHub Copilot into Lumada, Hitachi’s core digital, software and services business, according to a joint statement by the two companies.

Hitachi aims to hit $18.9 billion in revenue from its Lumada business in the current financial year that began in April. The business generated revenue of $15.0 billion in the last financial year.

Late last month, Hitachi announced a partnership with Google that would see the Japanese company establish a business unit focused on helping businesses solve industry problems with Google’s AI technology.

For its part, Microsoft has been pursuing billions of dollars in investments in Asia, especially in Southeast Asia, a fast-growing region of more than 670 million people where demand for data centers and cloud-computing businesses is rising.

Last month, the U.S. tech giant announced plans to invest $2.2 billion in cloud and AI infrastructure in Malaysia after disclosing similar plans in Indonesia and Thailand.

“We are entering a new era of AI with the promise to deliver transformative business outcomes across every role and industry,” said Microsoft Chief Executive Satya Nadella.

Hitachi also plans to train more than 50,000 generative AI professionals, enabling them to acquire advanced software-development skills using GitHub Copilot and Azure OpenAI Service, and use Azure OpenAI Service to enhance its customer service.

Microsoft’s cloud-computing business, Azure, has been expanding rapidly amid rising demand for AI computing. Last quarter, Azure’s cloud business grew 31% compared with the same period a year earlier, with 7 percentage points of the growth coming from its AI services, helping to fuel the company’s 17% top-line growth.

Hitachi plans to invest 300 billion yen, equivalent to $1.92 billion, on generative AI in fiscal 2024 to capture new growth opportunities, Hitachi Chief Executive Keiji Kojima said.

The two companies have been working on various projects, including the development of digital solutions for the manufacturing and logistics sectors, Kojima added.

FT : ‘Bar is high’ for China deals, says EQT’s Asia private equity chair

‘Bar is high’ for China deals, says EQT’s Asia private equity chair
Jean Salata, who oversees €40bn in assets, says dealmaking opportunities are better in India and Japan

The “bar is high” for investing in China and there are greater deal opportunities in India and Japan, the chair of private equity firm EQT’s Asia business said after raising a regional buyout fund.

Jean Salata, the founder of Barings Private Equity Asia, which Stockholm-based EQT bought in 2022, said that as it considered potential deals in mainland China, it was not clear how easily it might later sell or list those companies.

“I think the bar is high for new deals in China at the moment . . if you invest today, how easy will it be to get liquidity on those investments five years from now?” he told the Financial Times.

Although falling valuations in the country are “making that market more interesting”, Salata said his firm was “finding more companies that we want to invest in — and a higher concentration of those deals — in markets like India, Japan and Australia”.

Salata’s comments come as Asia-focused private capital groups are eschewing China for other markets amid slowing growth, rising geopolitical tensions and Beijing’s regulatory crackdown on overseas listings, once a crucial source of returns for foreign investors.

Foreign direct investment in China fell last year to its lowest level since the 1990s, while the total value of private equity deals plummeted from a high of $47.6bn in 2021 to $4.5bn last year, figures from Dealogic show. Overseas listings have tumbled after a regulatory crackdown in 2021. Last year, Beijing introduced rules requiring Chinese companies to get regulators’ approval before listing outside the country.


EQT’s private equity business in Asia has €40bn under management. Nine per cent of its invested cash is in China deals, according to a presentation to investors in March. Its deals in the country include ecommerce giant JD.com’s healthcare unit, in which it took a minority stake in 2019.

It closed a $1.6bn mid-market Asia growth fund last week and said it raised more than twice its original $750mn target. It has a separate $11.2bn Asia fund, which was raised in 2022. Salata said his firm tends to take majority stakes in target companies, whereas many private equity deals in China involve the sale of minority stakes.

Salata, who said his firm had been investing in India since 1997, said he had “never felt as positive or confident about the outlook in India as I do today”. He added that the country’s young population, growing middle class and infrastructure expansion were among the reasons to invest. Almost 40 per cent of EQT Private Capital Asia’s invested funds are in India, according to the investor presentation.

“It does really remind me of the golden period that China went through between 2005 and 2015, that sort of 10-year period,” he said. “It feels like India is in the middle of that right now.”

Salata said the country’s prime minister, Narendra Modi, “has provided some clarity and continuity for financial investors and business investors into the economy . . . and this has created a really favourable backdrop”.

There is “real fundamental support” for the hefty corporate valuations often seen in the country, he added.

Salata said corporate governance reforms and rising shareholder activism in Japan had created “a sea change, a mindset change” in the country.

“You’re seeing companies that previously would have been resistant to any approach or to engage with private equity actually embracing or at least being open-minded about what private equity could bring,” he said.

“There are companies that have sold divisions to private equity firms and have done so successfully. They didn’t get embarrassed, the company wasn’t sort of torn apart and highly levered.”

Private equity dealmaking globally has slowed in recent years, partly as a result of higher interest rates.

Salata said the industry, particularly in the US, had benefited from “market dynamics that led to a lot of multiple expansion and essentially a lot of market beta which drove returns”. He warned that those favourable conditions were unlikely to be repeated.

FT : UAE seeks ‘marriage’ with US over artificial intelligence deals

UAE seeks ‘marriage’ with US over artificial intelligence deals
Gulf state’s AI minister says recent investment deal between Microsoft and G42 is part of strategy to reshape its economy

The United Arab Emirates is seeking a “marriage” with the US over artificial intelligence as the Gulf state hopes to use its petrochemical wealth to become a global superpower in developing the cutting-edge technology.

The UAE’s AI minister Omar Sultan Al Olama told the Financial Times that a recent deal with Microsoft to acquire a $1.5bn stake in Abu Dhabi’s commercial AI champion G42 was only the start of greater tech collaboration between the two countries.

That deal, which followed months of negotiations between US and UAE officials, led to G42’s promise that it would dump Chinese systems as the US seeks to maintain dominance over AI.

“Now you’re going to see the outcomes of that marriage, if I may use that word, between both G42 and Microsoft, but also the UAE and the United States,” said Al Olama. “When you look at the frontier technology, at the most cutting edge, that needs to be in co-ordination with the US players and there needs to be reassurances that are given to the US.”

Fuelled by sovereign wealth funds worth about $2tn, the UAE’s AI ambitions have emerged into sharper focus this year as it tries to lower its economic dependence on fossil fuels in part by positioning itself as a global AI hub.

Abu Dhabi has created the investment vehicle MGX, expected to be worth billions of dollars, chaired by the UAE’s powerful national security adviser Sheikh Tahnoon bin Zayed al-Nahyan.

MGX has been in talks with San Francisco-based OpenAI over its chip development plans, the Financial Times has reported, and Sheikh Tahnoon has spearheaded discussions between the UAE and US on AI.

The UAE is building AI capabilities in key sectors from healthcare to defence and believes that AI can help its biggest enterprises become more efficient. Abu Dhabi’s national oil company said the use of AI-tools helped to generate $500mn in cost savings last year through increasing production capacity and making operations more streamlined.

The UAE is up against stiff global competition. The US and China are battling to take a technological lead over AI, while start-ups in the UK, France and across Asia are attracting multibillion-dollar investment from international investors.

However, the UAE’s advantage is being able to provide unparalleled access to capital. Expectations that Abu Dhabi will invest heavily in AI projects overseas has also attracted industry leaders to the nation in recent months, from OpenAI’s Sam Altman to Nvidia’s Jensen Huang.

The UAE has stockpiled chips needed to power large language models, with Al Olama estimating the country had amassed a backlog that would serve its needs for two years. However, US officials are also seeking to slow the shipment of some AI chips to the Middle East, including the UAE, according to Bloomberg.


Some observers worry about the autocratic UAE having access to advanced AI technology.

Marietje Schaake, international policy fellow at Stanford University’s Institute for Human-Centered Artificial Intelligence, said US policy around AI had so far been pragmatic, narrowly focused on combating China. 

“The singular focus on China means other countries can claim to be part of a like-minded coalition, and the US administration gladly turns a blind eye to their human rights violations in the meantime,” said the former European parliament member.

This month, Abu Dhabi’s Advanced Technology Research Council released its latest large language model, Falcon 2, which it said has been assessed by outside evaluators as performing as well or better than rival LLMs made by Meta and Google.

ATRC has also spun out a commercial AI company, AI71, to build models based on UAE government data from health authorities and the judicial system.

The government data gives the UAE a “very strong critical advantage in this game, where there are very few players that have a lot of proprietary data”, said Faisal Al Bannai, ATRC’s secretary-general.

Abu Dhabi also opened Mohamed bin Zayed University of Artificial Intelligence, the world’s first AI dedicated university, in 2019.

The institute has helped establish a pipeline for talent in the UAE, a major challenge for the country of only 10mn, most of whom are expats. Though a fifth of the university’s graduate students are from the UAE, 22.5 per cent are from China, said the university’s provost Tim Baldwin.

While Abu Dhabi focuses on building AI technologies, its neighbouring emirate Dubai wants to apply them.

Dubai plans to increase its data centre capacities to host the cloud computing needed for AI and wants to foster AI “clusters” of companies around established industries such as finance.

“There is a belief, across all of the leadership levels in the UAE, that AI is a technology that we are going to focus on,” said Al Olama. “The decisions we take today [ . . .] are going to shape how the UAE is for future generations.”

FT : Meloni and Le Pen: the relationship at the heart of European politics

Meloni and Le Pen: the relationship at the heart of European politics
How Italy’s prime minister and France’s opposition leader work together — or not — will help determine the EU’s future direction

Campaigning at a crowded Sunday market in northern France, far-right leader Marine Le Pen was quizzed by journalists about her strategy for Europe if, as expected, she secures a big win in European parliamentary elections this weekend.

In response, Le Pen suggested that it might depend on another populist nationalist leader: Italian prime minister Giorgia Meloni.

After recent friction between the two, Le Pen issued a conciliatory, almost plaintive appeal to the Italian leader to unite their respective political forces into a single far-right group that could end what she called European Commission president Ursula von der Leyen’s “disastrous policies”.

“This is the moment for us to join forces; it would be truly useful,” Le Pen told Italian newspaper Corriere della Sera. “If we succeed, we could become the second-biggest group in the EU parliament. I don’t think we should miss such an opportunity.”

Just how Meloni answers that appeal could be decisive for Europe’s future. The two powerful women — whose parties belong to separate nationalist, anti-immigration blocs in the European parliament — are set to emerge as the biggest winners in the elections taking place on June 6-9, the twin figureheads of a rightward swing across the 27-member bloc.

The elections could tilt EU policy to the right on contentious issues ranging from the energy transition and agriculture to immigration. The ballot will also help determine the next commission president — whoever the 27 member states nominate must win the support of a majority of MEPs.

Meloni and Le Pen have much in common. Both women have thrived in the male-dominated ranks of far-right political movements historically rooted in fascism. Both have pursued a strategy of detoxifying their parties to make them more acceptable to a wider swath of their electorates. They share ideological ground, including the belief in a Europe of nation states rather than a more closely integrated federal union.

“There is a convergence and I would say competition between Meloni and Le Pen in terms of their ambitions,” says Marc Lazar, a professor at Sciences Po university in Paris and Luiss university in Rome. “Both of them are seeking to become the reference figure for national populist movements in the region”.

Yet on some issues their differences are stark — on relations with Nato, on arming Ukraine, on immigration, and most of all, on the question of whether to work within the EU system and its mainstream leaders, or whether to fight them.

Meloni is governing as a pragmatist “within the system”, says Lazar. Le Pen, a more radical opposition figure gunning for the French presidency in 2027, “is against the system and outside it”.

Since her own election as Italy’s prime minister in late 2022, Meloni, once a Eurosceptic firebrand, has surprised friends and foes alike with her collaborative and constructive approach to Brussels as it dispenses €200bn to Italy for its post-pandemic recovery, reform and investment programme.

Meloni sees herself as a “bridge-builder” between the mainstream right and the EU’s nationalist Eurosceptic forces such as Hungarian prime minister Viktor Orbán, says Catherine Fieschi, a visiting fellow at the European University Institute and an expert on populism. She is also an ideologue “who can see a path to true conservatism within Europe”, she adds.

The question now is what role Meloni decides to play after an election: the pragmatist eager to convene the forces of the right and centre-right, or a radical disrupter who wants to overhaul the EU to hand power back to nations. Von der Leyen’s future may rest on the former, while Le Pen and her allies are hoping for the latter.

“The future of the sovereigntist camp in Europe today lies in the hands of two women,” Orbán told Le Point magazine on May 30. “Everything will depend on the capacity of Marine Le Pen in France and Giorgia Meloni in Italy to co-operate.”

A decade ago, Meloni expressed strong admiration for Le Pen as a role model, given their shared hostility to EU integration. But in those days, Meloni was a political irrelevance, and Le Pen struck up a friendship and alliance with the more powerful Matteo Salvini, leader of the far-right League. That alliance is still in place.

As Meloni emerged from Salvini’s shadow, her ardour for Le Pen cooled, as did her once fiery anti-Europe rhetoric. In the European parliament her party, Brothers of Italy (Fdl), is in the European Conservatives and Reformists grouping originally founded by David Cameron; its partners include Poland’s Law and Justice party and Spain’s Vox. Le Pen and Salvini’s parties are in the harder right Identity and Democracy group.

Both of their parties are set to gain in the European elections next week. The National Rally (RN) is now polling at 33 per cent, up from 23 per cent in 2019, while FdI is on course for 27 per cent, up from only 6 per cent. As a result, polls suggest the ID grouping could win around 66 seats, while ECR should get some 74 seats, with another 16 for potential new members. Von der Leyen’s centre-right European People’s party (EPP) is again set to win the most seats, but will need coalition partners to form a majority.


Just as Meloni’s domestic political strategy has been to take power by uniting the Italian right, so has she set out to do the same in the EU — by implication, working with both the EPP and ID. “We want to do in Europe exactly what we did in Italy,” Meloni told her FdI party conference in April. “Create a majority that brings together the forces of the centre-right and finally sends the left into opposition in Europe too.”

Yet such a coalition is highly unlikely to be replicated at the European level. The EPP has ruled out working with Le Pen or her allies in the ID group on the basis that they are too extreme and have pro-Russia sympathies.

Among ID’s historical members are the extremist Alternative for Germany (AfD), whose lead candidate recently downplayed the role played by SS soldiers in the Holocaust. In the ensuing furore, AfD was kicked out of the ID parliamentary group after Le Pen’s party said it could no longer sit alongside it.

Le Pen herself has already ruled out any coalition in Brussels that involves von der Leyen. “Her time is up,” Le Pen said in late May. “As far as we are concerned, we will never, I repeat never, vote for Ursula von der Leyen.”

Instead, the ECR grouping, of which Meloni is president, is being wooed by both the mainstream centre-right and the hard-right.

Von der Leyen, who has worked closely with Meloni, especially on the migration issue, may need the Italian premier’s support in a potentially tight parliamentary vote on her sought-after second term. That would put the Italian leader in a powerful kingmaker position.

The EU’s liberal and centre-left leaders have become so alarmed at the prospect of von der Leyen forming a pact with Meloni that they have threatened to vote against re-electing her.

The hard-right is just as opposed to such an agreement. Back in March, Le Pen made a combative video demanding that Meloni tell “the truth to Italians” about whether she would support von der Leyen’s re-election, which the French leader said would “aggravate the policies that are causing so much suffering to the people of Europe”.

More recently, Le Pen’s tone has shifted markedly as she has invited Meloni to merge ECR and ID into a hard-right “supergroup”, which would have more power within the assembly than as two entities. So far, the Italian premier has been ambiguous. Instead, she has talked publicly of co-operating on selected issues of mutual concern.

As long as Meloni sticks to her moderate path, that scope for co-operation appears limited.

She has of late pursued mainstream conservative goals, depicting herself as a serious leader able to fulfil Italy’s commitments to unlock its share of EU recovery funds and reassuring markets that she is a safe pair of hands.

She has largely accepted the basic tenets of EU economic policy: the rules of the single market, deficit and debt limits, and economic and administrative reforms in return for securing this economic support.

On foreign policy, Russia’s invasion of Ukraine in February 2022 put a new focus on geopolitical issues. Though Meloni had previously expressed admiration for Russian president Vladimir Putin, she came down quickly and unambiguously in support of Kyiv. As prime minister, Meloni continued sending weapons to Ukraine and backed its accession to the EU.

“The world changed in February 2022 and she understood she had to take a position and not move from that position,” says Ernesto Di Giovanni, co-founder of the Rome-based political consultancy, Utopia.

“This is one of the things she is doing to normalise the party, and let Brothers of Italy not be seen as a far right party, but a conservative right party, as the Tories, as others around western countries.”

Le Pen has also moderated her Euroscepticism somewhat, especially since losing the 2017 presidential election. She no longer calls for France to leave the EU or abandon the single currency — a position seen as unpopular after Brexit.

But RN’s proposals to drastically cut immigration and give French companies preference in public procurement would, say the party’s opponents, break EU law and amount to a soft “Frexit”.

Unlike Meloni, Le Pen wants to gain power not by working with mainstream conservatives but by supplanting them, while also appealing across the political spectrum, especially to the young and working class, with more radical, populist and often left-leaning economic positions.

“She has a totally different approach,” says Lazar, the Sciences Po professor.

Privately, many of Le Pen’s closest allies are critical of Meloni, suggesting the Italian prime minister has been forced into a position of subservience to Brussels because of her country’s fragile public finances.

“When you have a recovery plan to get €190bn as Italy does, you cannot bite the hand that feeds you,” says Renaud Labaye, secretary-general of the RN group in the French parliament.

RN leaders were also unhappy with Meloni giving more work permits to migrants and her role in securing agreement for an EU migration pact, which introduced a system for EU members to share the burden of asylum-seekers arriving in frontline border states like Italy, an approach they staunchly opposed. “Meloni’s policies on immigration are baffling and horrifying,” says one Le Pen ally, who asked not to be identified.

Meloni’s position on Ukraine and European defence puts her at some distance from Salvini and Le Pen, who both had personal, political and financial ties with Putin and his United Russia party.

Le Pen, whose party was once financed by a Russian bank loan, also switched to denouncing Putin for breaking international law. However, the French opposition leader, who has a long history of anti-Nato statements, is against arming Kyiv and says there should be immediate peace talks even if that means accepting Russian territorial gains.

These fissures are emblematic of the wider splits between the main pan-European populist and far-right political parties — and indeed divisions within them — that, say analysts, demonstrate why nationalists are inherently bad at the kind of international co-operation needed to wield power in the EU.

“I expect the far right to remain electorally successful but politically marginal, mostly because of its internal divisions,” says Cas Mudde, professor of international affairs at the University of Georgia and an expert on populism.

Despite this, some hard right politicians on both sides of the Alps see the differences as bridgeable. They suggest that prospects for collaboration — or even a broader reconfiguration of the party groups — are greater than the pre-electoral positioning would suggest, especially after Le Pen’s split with the more extreme AfD made her less toxic by association.

“We are in a moment of real evolution in European politics,” says Jean-Paul Garraud, an MEP for Le Pen’s RN. “And these two women of stature truly embody this change. The possibility of working together really does exist.”

One sign was Le Pen’s appearance at a conference in Madrid last month hosted by Vox and involving Meloni and other nationalist leaders, such as Hungary’s Viktor Orbán, who may also play a key role in any recomposition. In an online campaign event, Meloni also said last week that she felt Le Pen was “on an interesting path”.

I expect the far right to remain electorally successful but politically marginal, mostly because of its internal divisions

Claudio Borghi, an Italian senator who is running in the European elections for the League, says historic differences over Russia are no longer so relevant, since most of the parties that could form a new unified “rightwing euro-critical” party had condemned Putin’s invasion. “This subject is not on the table anymore,” he says.

Borghi also predicted that relations between Rome and Brussels would become more fraught this year when the commission starts to enforce EU fiscal rules that had been suspended during the pandemic. Italy’s public deficit stands at 7.4 per cent of GDP, the highest in the Eurozone.

Most of the populist and far-right parties could join a bigger, broader group “that will not be monolithic,” says Garraud, but would instead “understand and deal with” divergent national interests.

As for Meloni, “we see her as an ally in terms of ideas and we have lots of political points in common, but there are differences in approach,” Garraud continues. “Madame Meloni is confronted with the realities of power. We know very well that the Italian situation is complicated, including with regard to finances.”

Le Pen feels no such pressure in opposition, however, and her allies say she will not become any less radical in her push to win the presidency. Meloni “fit into the mould since she had to do so,” says Labaye, “and we will not”.