TheChek News Flow

Creditors including Pimco and Davidson Kempner may wind up taking over SVB’s roughly $10 billion venture capital business, sources say

A process to sell the venture-capital arm of bankrupt SVB Financial, the former parent of Silicon Valley Bank, has fallen flat and creditors are now gearing up for a potential takeover of the business.

Two front-runners had been vying for SVB Capital: a duo of Anthony Scaramucci’s SkyBridge Capital and Atlas Merchant Capital, and San Francisco private-equity firm Vector Capital, The Wall Street Journal reported in September.

Those bidders aren’t moving forward in the process, after SVB considered the bids to be too low, according to people familiar with the matter. Instead a group of SVB Financial’s creditors is planning to take over the venture capital business for themselves, the people said.

SVB Capital has around $10 billion in assets under management, including investments in venture capital funds, direct investments in tech companies, and a book of private loans. It was expected to fetch anywhere between $250 million and $500 million. Bankers at Centerview Partners were advising the parent company on the process.

If new bidders don’t show up to buy the business, it would stay in the reorganized SVB Financial which could be controlled by creditors including Pacific Investment Management Co. and Davidson Kempner Capital Management once the bankruptcy is done, the people said.

The creditor group organized earlier this year and hired PJT Partners to help them as the collapsed firm sold off its private-wealth and other units.

Silicon Valley Bank’s parent company filed for bankruptcy in March after federal regulators took over the bank, which collapsed when depositors lost confidence and ran for the exits.

The bankrupt company has been selling off assets through the chapter 11 process. It sold the investment banking arm, SVB Securities, for $100 million in July.

Suitors for the $11 billion company could include private equity and technology firms

E-signature company DocuSign DOCU 14.22%increase; green up pointing triangle is working with advisers to explore a sale, in what could be one of the largest leveraged buyouts in recent memory.

Conversations are in the early stages, people familiar with the situation said, and there are no guarantees a deal will be reached. DocuSign could attract interest from private-equity firms and technology companies.

A deal could be sizable, given the San Francisco company’s market capitalization of over $11 billion.

DocuSign’s technology allows users to securely send and sign documents from almost anywhere, using any device. Customers range from individual business owners to large corporations, including smartphone maker Apple, and Aon, the big insurance broker, according to the company’s website.

DocuSign went public in 2018 and was valued at about $6 billion at the time. The company, founded in 2003, was among a class of unicorns that made their public market debut that year, including Spotify and Dropbox.

The company thrived during the pandemic as ubiquitous remote work fueled demand for virtual signing of deals, mortgage papers and other documents. However, demand for the technology eased faster than expected as return-to-office trends accelerated and the combination of rising inflation and fears of a recession cooled the market.

DocuSign’s stock is close to flat so far this year. For the period ended Oct. 31, its quarterly revenue rose 9%, beating market expectations, and it swung to a profit.

Private-equity firms have been less active this year than normal due to a consistent gap between buyer and seller price expectations as well as elevated interest rates that make doing deals more expensive. Leveraged buyouts, in which firms employ swaths of debt to do their largest deals, are down some 30% so far this year, according to data-provider Dealogic.

Incidents cast shadow over Europe’s leading start-up in sector

Two workers have died in separate accidents at Northvolt’s battery gigafactory in northern Sweden, casting a shadow over Europe’s leading start-up in the sector.

A 25-year-old Northvolt employee died on Friday after suffering severe burns in early November following an explosion on a production line.

Separately, a man in his 60s working for construction company NCC died after an accident involving a crane used to extend Northvolt’s battery factory in Skellefteå, just below the Arctic Circle in Sweden.

“This is a dark day,” said Peter Carlsson, Northvolt’s chief executive and co-founder.

Northvolt was the first homegrown European company to produce a battery cell from a gigafactory, in December 2021 in Skellefteå.

The site is one of Sweden’s largest construction projects, with new production lines being built and opened continually as Northvolt aims to produce 60 gigawatt hours of batteries a year — enough to power about 1mn cars.

The accident involving the crane on Thursday also seriously injured a second worker for NCC in his 20s. Police are investigating the incident and have cordoned off the construction site. NCC is also conducting its own probe into what happened.

Carlsson said of the two deaths: “We now come together in grief. The situation is devastating, and we are now working hour by hour to help each other through this.”

He called the Northvolt worker an “ambitious, positive and highly-regarded colleague, who it hurts incredibly to lose”.

Northvolt stopped the production line after that incident in November and undertook a safety review to ensure that such an explosion — which took place during regular maintenance — could not take place again. Production has since restarted.

The Swedish industrial start-up is ramping up production in Skellefteå at the same time as aiming to build three new gigafactories: one in central Sweden with Volvo Cars, one in Germany and another in Canada.

Started by two former Tesla executives in 2017, Northvolt is preparing for a potential IPO valuing it at about $20bn in Stockholm and is interviewing bankers. But investors are sceptical that the lossmaking company can list any time soon in the current market environment. Northvolt has raised more funding than any other European start-up, and is close to announcing more than €5bn in debt financing in the coming weeks.

The Swedish group also recently announced a breakthrough in battery technology for energy storage where it developed a sodium-ion cell that has no lithium, cobalt or nickel — all critical metals that are normally used and where China has an advantage.

Exclusive: Audemars Piguet’s Maverick CEO Gets the Last Word

François-Henry Bennahmias faced down doubters as he leveraged popular culture to transform Audemars Piguet’s business. Ahead of his departure from the now $2.6 billion brand next week, Bennahmias revisits his triumphs and setbacks, and hints at his start-up ambitions.

Few figures in Swiss watchmaking have been as disruptive or as divisive over the past decade as François-Henry Bennahmias. In the 11 years since he was appointed chief executive of the family-owned Swiss watch company Audemars Piguet, an obsession with hip-hop and street culture, the launch of a new line called Code 11.59 and his leather bomber jackets have won him legion admirers — and as many detractors.

Next week, the 59-year-old Frenchman will walk out of the company’s headquarters in the sleepy village of Le Brassus for the last time, leaving a gaping hole not just in a company whose revenues have more than tripled during his tenure, but in an industry that’s short on high-flying mavericks. Few chief executives in the conservative watch world have reshaped the brands they run like Bennahmias. Have any made luxury watches as desirable? Since his departure was announced in 2022 observers have been left wondering not just what will become of AP, but of the wider industry, as well as what one of watchmaking’s greatest showmen will do next.

Sitting in a meeting room in the company’s New York offices, 29 storeys up, Bennahmias admits he’s running on fumes. In previous weeks, he’s been in Dubai and Geneva representing Audemars Piguet at large-scale events, and he’s just come from the launch of the brand’s latest high-octane, high-profile collaboration — with rapper Travis Scott’s brand Cactus Jack — at the brand’s 57th street boutique. The following week, he’ll be in Miami for Art Basel. And as I entered the office, I caught a glimpse of him in a glass-walled meeting room in deep conversation with actor Kevin Hart. (More on that in a moment.)

Bennahmias begins on slightly guarded form for a known performer whose expletive-laden speeches and unpredictable on-stage stunts have become familiar. At last month’s Grand Prix d’Horlogerie de Genève, he stunned the audience when he planted a kiss on the lips of unsuspecting French actor Edouard Baer, who was hosting the event.

Seismic Impact

His relationship with the Audemars Piguet board is thought to have been fractious at times as he stretched the company into new territories, leading where other Swiss brands might not dare to follow.

“They gave me the possibility to achieve what we’ve achieved together,” he says of his employers a touch evasively. “Were they always at ease with all my visions? No. Are they happy about what happened for the last 11 years? Sure. So it’s a balance.”

What has happened since he was appointed interim chief executive in 2012 is that AP has reported record-beating revenues 10 years out of the past 11 years (during the initial coronavirus outbreak in 2020, a 4 percent slip bucked the industry’s brand’s 21.4 percent norm), leapfrogging the brand ahead of rivals and, climbing the Swiss league tables. This year, Bennahmias forecasts revenues of 2.3 billion Swiss francs ($2.6 billion), a result which should cement its position in the top four Swiss watch companies behind Omega, Cartier and perennial chart-topper Rolex.

With success has come criticism: While his acolytes express unstinting loyalty, painting him as a visionary leader, those less enthused have accused him of undoing the traditions of the brand and currying favour from characters with questionable reputations. Scott, the latest example, narrowly avoided criminal charges after 10 people died at his Astroworld Festival in 2021, including a nine-year-old child. The star’s public response to the tragedy was widely condemned.

In spite of this, or perhaps because of it, Bennahmias’ impact on the watch industry has been seismic. Who else, many have asked, would have partnered a watch company founded in 1875 and revered by collectors for its arcane high-end complications with Marvel? Or Jay-Z? Or LeBron James? But his tenure saw watchmaking conquer a younger, global, more diverse audience as “at some point, street and luxury merged,” Bennahmias said.

Stubbornly high borrowing costs continue to stall property market, analysts warn

UK house prices will probably fall further in 2024, according to forecasts by two of the country’s largest mortgage lenders, as stubbornly high borrowing costs continue to stall the property market and strain affordability.

Halifax on Friday projected that house prices will fall between 2 and 4 per cent next year, while rival lender Nationwide said prices would likely register a “low single-digit decline or remain broadly flat”.

“Even though house prices are modestly lower and incomes have been rising strongly, at least in cash terms, this hasn’t been enough to offset the impact of higher mortgage rates,” said Robert Gardner, Nationwide’s chief economist. “As a result, housing affordability is still stretched.”

Mortgage rates have declined from their recent peak level this summer as the Bank of England signalled it had reached the end of a blistering series of interest rate increases.

The lender calculated a typical first-time buyer on average UK income would have to pay 38 per cent of their monthly take-home pay in mortgage costs, above the long-term average of 30 per cent.

BoE governor Andrew Bailey warned on Thursday there was “still some way to go” before inflation hit its 2 per cent target and that interest rates would need to stay high for an extended period.

Few property analysts expect mortgage rates to fall quickly next year. Meanwhile, borrowing costs remain three times higher than the lows recorded in 2021, meaning the housing market is likely to stay subdued with low transaction numbers and soft prices.

The UK is on track to record just 1mn home sales in 2023, the lowest number in a decade, according to property website Zoopla.

House prices have proved more resilient than some analysts expected this year — declining just 0.1 per cent in the year to September, according to the Office for National Statistics. 

Karen Noye, mortgage expert at Quilter, said: “Much of the reason why house prices have remained buoyant in the face of serious economic headwinds is that this country has very little housing stock for its population”.

House price declines are steeper when adjusted for inflation, with average real house prices no higher than they were in late 2015, according to estate agents Savills’ research earlier this year.

The forecasts from the two mortgage lenders align with other analysts. Consultancy Capital Economics forecasts house prices will probably fall 1.5 per cent in 2024, and that mortgage rates will sit just below 5 per cent for most of the year.

“This will leave affordability very stretched in 2024, meaning that the cost of a new mortgage will continue to prevent many from buying,” said Andrew Wishart, Capital Economics’ senior property economist.

Savills predicts the housing market is already past “peak pain”, but still expects modest falls next year before house prices start to increase again in 2025. Analysts said the housing predictions are uncertain, depending on how the UK economy, jobs market and interest rates develop.

“A lot depends on what happens in the labour market and the true trajectory of mortgage rates,” said Richard Donnell, executive director at Zoopla.

“Pricing needs to keep adjusting, because consumers are not adjusting what they are prepared to spend. I think we are halfway through the market adjusting to higher mortgage rates.”