FT : Italy strikes deal to set up migrant centres in Albania

Italy strikes deal to set up migrant centres in Albania
Giorgia Meloni and Edi Rama sign agreement to outsource Italian asylum process

Italy will build two centres in Albania to host migrants trying to reach the EU by sea, the prime ministers of the two countries announced on Monday.

Italian premier Giorgia Meloni described the deal as a “European agreement” and “an innovative solution” aimed at curbing a rise in illegal crossings on the Mediterranean Sea. More than 145,000 migrants have reached Italy’s shores from northern Africa since the beginning of 2023, compared with 88,000 people last year.

“Mass illegal immigration is a phenomenon that EU member states cannot tackle alone. Collaboration [with] non-EU states can be decisive,” Meloni said in a joint news conference in Rome, alongside her Albanian counterpart, Edi Rama.

It is the first time an EU country is outsourcing its asylum procedures to a country that is not yet part of the bloc. Albania is in talks to join the EU and has been a Nato member since 2009. The deal echoes the UK’s agreement with Rwanda, which however has been bogged down in legal challenges.

The European Commission said it was aware of the arrangement but that it had not yet received details. “It is important that any such arrangement is in full respect of EU and international law,” a commission spokesperson said.

Brussels in the past has questioned whether schemes for processing asylum claims in non-EU countries are in line with international rules, which stipulate that people seeking protection in another country cannot be sent away without their claim being heard there first.

Meloni has repeatedly floated the idea of building reception centres outside Italian and even European borders, suggesting they could be set up in northern Africa. She zeroed in on Albania in August, when she interrupted her holiday in the Puglia region to spend some days meeting Rama in his country.

The construction of the two migrant facilities — where Italian jurisdiction will be applied — will be entirely funded by the Italian state, she said. Migrants rescued at sea by the Italian coast guard would disembark in the port of Shëngjin, in northern Albania. They would first be hosted in reception centre where they would be registered and where they could apply for asylum in Italy.

An expulsion and detention facility will also be built 20km away from the coast, in the settlement of Gjadër. Albanian police guards will be in charge of patrolling both centres.

“If Italy calls, Albania is there,” Rama said. “Lending a hand in this case means helping to manage a situation that everyone sees is difficult for Italy.”

Meloni said Italy expects these centres to be fully operational by spring 2024 and to have the capacity to manage between 36,000 and 39,000 migrants per year. She added that she hoped this agreement could become a “model” for other countries to follow.

The facilities would only host people rescued at sea by Italian law enforcement and not by vessels operated by charity groups, according to a government official. Women, children and migrants in vulnerable conditions will not be brought to Albania but will continue to be disembarked in Italy.

>>> Fed Nov Senior Loan Officer Survey (SLOOS) on Bank Lending Practices: On bal

Fed Nov Senior Loan Officer Survey (SLOOS) on Bank Lending Practices: On balance banks eported tighter standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes
- Banks reported tighter standards and weaker demand for all commercial real estate (CRE) loan categories.
- For loans to households, banks reported that lending standards tightened across all categories of residential real estate (RRE) loans other than government residential mortgages, for which standards remained basically unchanged. Meanwhile, demand weakened for all RRE loan categories.
- In addition, banks reported tighter standards and weaker demand for home equity lines of credit (HELOCs). Moreover, for credit card, auto, and other consumer loans, standards reportedly tightened, and demand weakened on balance.

Autos:
In a set of special questions, banks were asked to assess the likelihood of approving credit card and auto loan applications by borrower FICO score (or equivalent) in comparison with the beginning of the year. Significant net shares of banks reported that they were less likely to approve both credit card and auto loan applications from borrowers with FICO scores of 620. Moderate and significant net shares of banks reported that they were less likely to approve credit card loan applications and auto loan applications, respectively, from borrowers with FICO scores of 680. In contrast, a modest net share of banks reported being more likely to approve credit card applications from borrowers with FICO scores of 720, while the likelihood of approving auto loan applications to borrowers with FICO scores of 720 was basically unchanged in comparison with the beginning of the year.

FT : Britishvolt staff warn battery start-up may be trading while insolvent

Britishvolt staff warn battery start-up may be trading while insolvent
Australian entrepreneur David Collard has left bills and staff unpaid for months

Staff at Britishvolt are warning the UK battery start-up may be “trading while insolvent”, after they were left unpaid for the past four months.

Two current staff said the company’s owner, Australian entrepreneur David Collard, who agreed to purchase the business out of administration earlier this year, has left its bills and staff unpaid for months.

One employee said staff were “at the mercy of David”. The person added: “Every week [the money] is coming the following week. I think the reality is we are currently trading while insolvent.”

To trade while insolvent is not against the law, but directors should only continue trading if they believe there is a reasonable prospect for avoiding an insolvent liquidation.

Directors continuing to trade with the knowledge that insolvency is unavoidable, risk being personally liable for a company’s debts. They could also face other sanctions and penalties, including a 15-year ban on acting as a director of a company.

On a call on Friday, Collard told the handful of remaining staff that he was in advanced talks with a potential investor, and said he expected money to come in this week, said two people who were on the call.

However, they said Collard has made such promises several times before, and no funds have arrived.

Another staff member said the business appeared unable to pay its bills and should be wound up. They added Collard had given “promises after promises after promises” that money would arrive.

“He’s always promising to raise the cash but he never does,” said another person involved in the administration process.

Collard declined to comment. He recently told associates that a new investor had signed an equity commitment letter for an investment that would allow the company to pay what is owed and meet its obligations.

Collard’s Recharge Industries has yet to pay former administrators EY for about £2.5mn of the agreed £8.6mn purchase price, according to two people, more than half a year after the original deadline for payment had passed.

EY on Monday said it “ran a thorough and competitive sales process” to find a buyer for the business. It said the £6.1mn paid so far was “materially above the next best alternative, deliverable offer received by the joint administrators”.

It added: “The joint administrators are taking steps to recover these further outstanding monies owed and continue to pursue options for the sale of the site in Blyth.”

When it launched in 2019 amid great fanfare, the company had plans to develop a UK battery factory with homegrown technology and had secured financial backing from the UK government as well as prospective orders from Mercedes-Benz.

However, it collapsed into administration earlier this year after running out of funds, and was bought by Collard, a former PwC partner. About 26 former employees were kept on following the administration.

EY, which drew criticism for running BritishVolt’s administration after being a longstanding adviser to the company, selected Collard as the preferred buyer for the business, over other offers that included a buyout from existing shareholders.

Collard’s aim was to resurrect the factory plans, although he has yet to purchase the land for the factory site in Blyth, said several people with knowledge of the arrangement. The site, reckoned to be one of the most promising for a battery factory in the UK, would now cost about £11mn to secure, the people added.

As a result of the long delays, the receiver for the land is pursuing interest elsewhere and has received approaches from other parties to buy the land, with Collard’s Recharge business no longer seen as a credible buyer, according to a person familiar with the matter.

Staff said their laptops stopped working last month, which they assumed meant that the IT company had not been paid. Some also received payslips from HR in recent months, but without the money ever landing in their accounts.

FT : Klarna studies ‘eventual IPO’ after first profit in 4 years

Klarna studies ‘eventual IPO’ after first profit in 4 years
Swedish ‘buy now, pay later’ group sets up UK company to go along with its Swedish banking licence

Klarna reported its first quarterly profit in four years as the Swedish “buy now, pay later” pioneer prepares for a possible stock market listing.

The Swedish fintech eked out a net profit of SKr90mn (€8mn) in the third quarter, compared with a loss of SKr2.1bn a year earlier, while revenue increased 30 per cent to SKr6bn. It almost halved its credit losses to SKr800mn, a drop which it attributed to improvements in the precision and accuracy of its underwriting models.

Klarna is taking what it calls an “early step on a journey towards an eventual IPO” by establishing a UK holding company to go along with its Swedish banking licence. It has not yet decided on the location or timing of any listing.

The once high-flying payment group was forced to slash its valuation by 85 per cent to $6.7bn last year and cut a tenth of its workforce after reporting heavy losses in the wake of rising interest rates.

But Sebastian Siemiatkowski, the co-founder and chief executive, said in August that Klarna was ready for an IPO whenever market conditions improved after establishing itself in the US, returning to profitability and demonstrating it had growth potential.

On Monday, Siemiatkowski said that Klarna had “achieved exactly what we set out to do” by posting a quarterly profit and that it would “build on this momentum” in the final quarter to “drive value” to its consumers and merchants.

A London listing would be a boost for the LSEG as companies, such as Cambridge-based chipmaker Arm, have opted for the greater liquidity and valuations offered by US public listings. A series of UK flotations have flopped in recent months, including CAB Payments, another fintech whose shares collapsed 72 per cent last month after it cut its revenue forecasts.

Other payments companies have also been hit by weakening investor sentiment in the economic downturn. Shares in US rival Affirm are down more than 85 per cent since their peak in November 2021, while Dutch fintech Adyen suffered an almost 40 per cent drop in its market cap in August after missing analyst expectations. 

In addition to economic pressure, the sector is under growing scrutiny from regulators who have expressed concerns about whether BNPL companies are doing enough to scrutinise whether the loans they make are affordable. Data released by the UK’s Financial Conduct Authority in October showed that frequent users of BNPL were more likely to be in financial difficulty.

Klarna, which partners with retailers including H&M, Ikea and Airbnb, earlier this autumn launched an AI-powered feature allowing its customers to find where to purchase items at advantageous deals by snapping pictures of them through its app.

FT : Germany seeks national ‘pact’ to stave off rising far right

Germany seeks national ‘pact’ to stave off rising far right
Bitter immigration debate has pitted Scholz’s coalition and opposition parties against each other

German chancellor Olaf Scholz is seeking to seal a national “pact” among mainstream parties and settle an increasingly bitter public debate on immigration in a bid to stave off resurgent rightwing populism.

On the table are proposals to sharply reduce benefits for asylum seekers, radically speed up deportations, and even open processing centres outside the EU — a measure so far only attempted by Britain in Rwanda, with little success. 

The prime ministers of Germany’s 16 state governments were hosted by Scholz on Monday in a meeting that was expected to last well into the evening.

Originally conceived by Scholz in September as a summit to agree a path forward for the country’s moribund economy, the “pact for Germany” has become consumed by disagreements over migration.  

Plans to cut government red-tape, agree ambitious new infrastructure plans and secure funding for the government’s popular flat-price national rail ticket are still due to be discussed. But without a consensus on migration it is unclear what the summit will be able to agree.

The Monday meeting “will have a significant impact on Germany’s political future”, said the prime minister of Saxony-Anhalt, Reiner Haseloff.

“We need a new realpolitik in migration policy,” said Bijan Djir-Sarai, general secretary of the ruling liberal Free Democrats. “This is about the credibility of the state as a whole.”

It is barely two weeks since Scholz’s coalition government, composed of the social democrats, greens and liberals, proposed fresh legislation to speed up deportations. But those measures have failed to appease demands by coalition party and opposition politicians concerned with a surge in immigration that exceeds the 2015-16 crisis that brought more than 1mn refugees, mainly from the Middle East.

German officials expect more than 300,000 people to apply for asylum in Germany this year. That figure does not include any of the 1.1mn Ukrainians who have moved to the country since Russia’s full-scale invasion last year. 

“What the government is currently preparing is in no way suitable to limit the influx into Germany,” said prime minister of Saxony, Michael Kretschmer.

“The expectations on the part of the federal government are so high that we must not disappoint people now.”

Kretschmer is also the federal vice-president of the Christian Democratic Union (CDU), Germany’s main party of opposition.

Scholz has held discreet meetings with CDU leaders over the past few days, in an effort to try and find common ground. 

Although he does not need the party’s support to legislate, it is his hope that by bringing the CDU together on the topic of migration with his government, he will have greater legitimacy to face down the political threat posed by Alternative for Germany (AfD), the hardline populist party that has surged in the polls since the summer. 

More than one in five Germans say they would now vote for AfD at the federal level, making the party the second-most popular after the CDU.

In two regional elections in October, the AfD scored breakthrough victories in Bavaria and Hesse. In three further regional elections next year the party is expected to extend its support. 

It is not only the CDU advocating for stricter measures to staunch the political momentum of AfD, however, but also voices from within Scholz’s coalition.

Christian Lindner, German’s finance minister, and Marco Buschmann, the justice minister — both of the liberal FDP — called for financial support for illegal migrants to be “cut to zero” in an article two weeks ago. 

FDP figures have also advocated for processing asylum claims in non-EU countries — a plan critics say is unworkable, both because of legal challenges, and because no one has yet been able to find a host country willing to strike a deal with Germany.

“I am in favour of discussing the whole thing very objectively and pragmatically,” Lars Klingbeil, the head of the Social Democrats — Scholz’s own party — told German media on Monday. “If procedures can ultimately be carried out in other countries, that is a viable option,” he said.

Other measures under discussion include proposals to lengthen the period of time asylum seekers must spend in Germany before they are eligible for full social security benefits. Asylum applicants currently become eligible for full benefits after 18 months in the country.

Funding will be another sticking point. The federal government wants to cut the support it gives the 16 regional governments for asylum processing by €2.5bn annually. That is regarded by all 16 states as deeply problematic, and may ultimately prove to be an insurmountable stumbling block.

FT Lex : Telecom Italia: good deal was arrived at through flawed process

Telecom Italia: good deal was arrived at through flawed process
By accepting an offer without putting it to shareholders, TI is storing up trouble

Does the end justify the means? That question has long preoccupied theologians and philosophers. It may also have been weighing on the minds of Telecom Italia’s board members this weekend.

Their decision to press on with the sale of TI’s network to KKR — valued at up to €22bn — makes good business sense. Yet, by accepting the offer without putting it to shareholders including Yannick Bolloré’s Vivendi, TI is storing up trouble. The French group has already said it will contest the move in court.

It is not hard to see why TI is so keen on the bird in its hand. The group is highly leveraged, with almost €26bn of net debt before adjusting for leases, or 4.4 times expected 2023 ebitda. The transaction will bring debt down to manageable levels. That should be around twice the ebitda that remaining activities — the so-called ServiceCo — are expected to generate. 

Despite its air of desperation TI has squeezed a respectable sum out of KKR. The transaction with the US buyout group values NetCo at a floor price of €18.8bn. This might rise to €22bn if conditions are met. That implies ebitda multiples in double digits, according to analysts at New Street. Not bad, considering the need for huge network investment. 

Yet, while this looks like the right deal for TI, the manner of its execution is troubling. By pushing the transaction through without a shareholder vote, it has denied a say to Vivendi, which controls 24 per cent of the stock and 17 per cent of the voting rights.

This would not be permissible in the UK. Deals that are a quarter or more of a company’s size by assets, profits, market capitalisation or capital, automatically require a vote.

In Italy, rules appear hazier. The board believes it has acted within its rights. It argues that the sale and leaseback of an asset, even a big one, does not fundamentally change the nature of the company. Vivendi clearly disagrees.

Law courts will decide the point. Given the uncertainty the legal process creates, it would have been better if TI had polled its shareholders in the first place.

TechCrunch : Palo Alto has acquired Talon Cyber Security, sources say for $625M

Palo Alto has acquired Talon Cyber Security, sources say for $625M

Palo Alto Networks has just confirmed one more major piece of security startup M&A out of Israel: it has acquired Talon Cyber Security, a specialist in building enterprise browsers for securing distributed workforces sources. Source say the deal is valued at $625 million.

This is PA’s second Israeli security acquisition within a week: last Tuesday, Palo Alto Networks announced that it was scooping up cloud data specialist Dig Security, for a price that sources close to the deal tell TechCrunch was around $400 million. As with Dig, Talon will be integrated with Palo Alto’s Prisma cloud security division.

We first reported that the two deals were in the works in September, after hearing for weeks beforehand that it was about to make some big acquisitions to beef up its security bench.

Talon — cofounded by Ofer Ben-Noon and Ohad Bobrov — had raised around $143 million, with its investors including Team8 (a specialist cyber investor in Israel), Entrée Capital, Evolution Equity, LightSpeed, and Cyverse Capital. Sources tell us Talon was approached proactively and was not int he market to be acquired.

Today’s acquisition, along with last week’s for Dig, are significant developments in the Israeli technology ecosystem, where right now it is anything but business as usual.

The current war between Israel and Gaza — which kicked off after terrorists from the latter territory busted through the wall separating the two, killed some 1,400 civilians and took hundreds more back to Gaza as hostages — has, unsurprisingly, had a strong chilling effect on the region’s technology industry, which has in many ways come to a standstill in the last month.

As we have reported previously, tech accounts for 18% of Israel’s GDP, and some 14% of all people in the country work directly for the tech industry (with many others indirectly). A number of those civilians have either been called up for duty, or are involved in volunteer efforts, effectively putting a lot of their regular working lives on hold.

At the same time, the conflict and instability is having a big knock-on effect for investors, partners and would-be customers to want to do business in the region, something that is impacting both Israeli and Palestinian companies. (That’s not to mention the interruptions in supply chains and logistics, as well as even more basic needs.)

Some investors are even looking to step up by creating emergency impact funds specifically to fund startups that have had to pause their activities due to the situation.

Aside from this, there is also the image of public perception outside of the region: as shown by the recent blow-up around Web Summit and the departure of the founder from executive roles after comments he made about the situation, and a backlash against that, some of the most public efforts of energy that we are seeing coming out of the Israeli tech ecosystem right now are focused on that conflict and how that’s being represented. M&A does not feel like a top of mind concern in that regard.

To be clear, this deal for Talon, along with the one for Dig, were very much already in the works before the surprise attack by Hamas. That they managed to close them during the turmoil is notable, but what remains to be seen are how M&A activities, along with funding, and business for startups overall, will develop as the conflict wages on.

The bigger cyber picture, and how Talon fits in
The deal, Palo Alto said, will help address the rise of different devices and apps that are being used in organizations, some of which are not provisioned by the organizations themselves.

“The average enterprise uses hundreds of SaaS and web applications, meaning that most work is now done primarily via the browser,” said Lee Klarich, Chief Product Officer for Palo Alto Networks, in a statement. “Talon enables organizations to secure all work activity via an Enterprise Browser, without touching the personal usage of the device or impacting user privacy. Integrating Talon with Prisma SASE will enable Palo Alto Networks to securely connect all users and devices to all applications, including private applications, and apply consistent security no matter who the user is and what device they use for work. Today’s announcement underscores our continued belief in the strength of the Israeli cybersecurity ecosystem and our commitment to our growing team in Israel.”

“While BYOD offers an advantage for productivity, it is also a source of significant security risk,” added Anand Oswal, its SVP and GM. “Talon’s Enterprise Browser empowers security teams with deep visibility and control over all work-related SaaS and web activity on all devices, including personal and unmanaged endpoints. SASE solutions must evolve to secure unmanaged devices with the same consistent security applied to managed devices so that users can securely access business applications using any device from any location. The unique combination of Prisma SASE and Talon will transform how organizations navigate the challenges of today’s modern and connected digital environments.”

Like Dig, Talon is working in a newer area of the wider cybersecurity market, which would make it attractive to Palo Alto as it looks to keep up with the evolving threats in the market.

Talon’s focus on the concept of an enterprise browser — a platform for large organizations to operate all of their apps and services, built from the ground up with security in mind — is still a relatively new concept in the market. As we have previously noted, though, it has already started to catch on big with customers and competitors: Island is another company in the same space.

“They’re creating a new category that has the potential of being bigger than endpoint security altogether,” a source told us in September. “They’re reinventing the operating system.”

Even as a lot of funding and M&A continues to remain largely stagnant in the current market, and Israel in particular is facing some big geopolitical barriers to activity, security continues to be a huge priority for enterprises and smaller businesses.

That is because of the cost of not managing it well. A McKinsey report from last year noted that organizations would have to spend up to $10.5 trillion annually to deal with breaches by 2025, a 300% increase from 2015. So while a lot of companies have clamped down on spending and IT budgets over the last couple years, security is one area where they have returned to spending even when other categories have remained frozen or constrained.

“For end customers, security is still a big business risk, so budgets are back in action and we’re seeing sales picking up in Q3 and Q4,” one investor told us. “Security companies will want to tap into this opportunity aggressively.”

Second, cybersecurity remains a moving target. Malicious hackers are turning to technologies like AI to break into networks, so, as smaller startups come up with new techniques to tackle the problem, they become acquisition targets for larger companies looking to stay ahead of the curve. This is where this Talon acquisition fits in.

Other examples of this include CrowdStrike acquiring security startup Bionic for $350 million, and IBM buying Polar earlier this year for $60 million — a deal IBM made, we understand, partly in response to Palo Alto buying Cider Security in 2022.

There are mega deals in this trend, too, such as Cisco’s plan to buy Splunk for $28 billion.

For security companies, it becomes a question of competitive edge both against malicious hackers and other security companies. “Palo Alto is buying partly in reaction to these deals,” one source said.