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Investment in Aleph Alpha involves equity injection, research grants and commitments to joint business development

The owners of the Lidl supermarket chain are among those investing more than $500mn in German artificial intelligence start-up Aleph Alpha, as it seeks to capitalise on a global rush into the sector.

Schwarz Group, which controls Lidl and is building out a new IT division, is co-leading the deal alongside an AI hub based in the south-west German city of Heilbronn that was jointly set up by a foundation established by Dieter Schwarz, the Lidl founder.

Other investors include the venture capital unit of Bosch, Europe’s largest car parts supplier, according to an Aleph Alpha statement.

Founded in 2019, Aleph Alpha is among the most prominent European start-ups that focus on generative AI, the software that can create sophisticated text, imagery or computer code that mimics human ability.

But the German start-up may struggle to break through in an increasingly crowded generative AI market, with better funded competitors such as Microsoft-backed OpenAI, Google and Facebook parent Meta all investing heavily in the space.

Aleph Alpha, which has about 70 employees, aims to distinguish itself by offering data protection, security and transparent software to clients including in sensitive sectors such as law enforcement and healthcare. It has already raised about €28mn.

“We need to make sure we have a hand on the wheel of how the future will turn out,” Aleph Alpha chief executive Jonas Andrulis told the Financial Times. The company’s clients “have full sovereignty over what’s going on”.

Roughly a quarter of the funding comes via an equity investment, with the remainder composed of research grants and commitments for joint business development that will not dilute shareholders, said people familiar with the deal. They added that Aleph Alpha’s equity would be valued at roughly €500mn in the transaction.

The company did not disclose its valuation.

Schwarz Group, an unlisted and family-controlled giant with €154bn in annual revenue and 575,000 staff worldwide, is best known for its Lidl discount supermarkets. But it has also branched out into food manufacturing, recycling and IT services. In September, it pooled its cloud and cyber security offerings into a standalone unit, Schwarz Digits, which services the rest of Schwarz operations as well as external clients.

Dieter Schwarz this year backed the Heilbronn hub, Innovation Park Artificial Intelligence, which is also funded by the state of Baden-Württemberg and aims to become Europe’s largest AI cluster.

“Cash is necessary, but not sufficient,” said Andre Retterath, a partner at the venture capital firm Earlybird and an Aleph Alpha board member. The partnerships will give the company “access to compute, access to talent, and distribution into the market”, he said. Earlybird led a 2021 funding round for the German start-up.

Aleph Alpha wants to accelerate its expansion as it sees a window over the coming 12 to 24 months during which companies will test and select which AI software they plan to use.

While some of Aleph Alpha’s competitors have developed close corporate relationships with the largest technology groups, the company stressed that it is independent.

Other investors in the consortium include IT business Hewlett Packard Enterprise and German software company SAP, as well as VC group Burda Principal Investments, and existing backers, the statement said. The company has been previously supported by VC groups UVC Partners, LEA Partners, 468 Capital, Cavalry Ventures and Lakestar.

Largest shareholder ‘deeply regrets’ acceptance of private equity’s firm offer of up to €22bn for fixed-line network

Telecom Italia is being threatened with legal action from Vivendi, its single largest shareholder, after accepting KKR’s offer of up to €22bn for the telecoms group’s fixed-line phone and internet network.

Telecom Italia’s board of directors approved the sale on Sunday in a majority vote. It comes two years after the private equity firm’s first €33bn takeover offer which envisaged taking the company private.

In response, the French media conglomerate said in a statement that it “deeply regrets” the board accepting the offer without requesting a “vote from its shareholders”. It added that it will “use any legal means at its disposal to challenge this decision”.

However, the board said the decision to accept the offer was of its “exclusive competence”. It also mandated chief executive Pietro Labriola to sign contracts and verify the possibility of receiving a binding offer at a higher value for its submarine network Sparkle.

Under the deal, expected to close next summer, Telecom Italia said it will reduce its €26bn debt pile by around €14bn. The junk-rated company also said the transaction will reduce regulatory constraints in its domestic market, which have hindered its growth, and will help it to maintain strategic flexibility.

Telecom Italia hopes the plan will improve the company’s share price but it has long been opposed by Vivendi. The conglomerate, owned by the Bolloré family, holds a 23.75 per cent stake and more than 17 per cent of Telecom Italia’s voting rights.

Shares in Telecom Italia were down 3.6 per cent to €0.25 in morning trading on Monday. Shares in Vivendi were down 0.4 per cent to €8.63.

The French group has invested more than €4bn in building the stake over the past eight years and has had to write down its investment twice as Telecom Italia’s valuation has fallen amid high debt, multiple management overhauls, lower margins and increased domestic competition. 

Vivendi has previously rejected plans to separate the network from the group’s services business, saying Telecom Italia had undervalued it. 

Labriola was put in place, with Vivendi’s backing, two years ago after his predecessor was ousted over KKR’s first offer. He has since become the main sponsor of KKR’s plan to split and turn round the business.

“Two years of hard work with our heads down wrap up with a historic decision which will see the creation of two separate companies with entirely new development perspectives,” he said in a statement.

The Italian government, which can veto deals involving telecommunications infrastructure, greenlighted the deal last month. Rome’s department of the Treasury plans to spend more than €2bn in taking a 20 per cent stake in the network company, alongside KKR, to oversee an asset which it deems strategic.

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Domestic sales account for 15 percent of the e-tailer's overall sales.

The direct-to-consumer U.K.-based company PrettyLittleThing is trying to carve out more of the American market to build its overall business.

That focus mirrors that of other fast-fashion specialists like Shein, Temu, Asos, Zalando, Romwe and Zaful, which are all vying for more price-conscious domestic shoppers. PrettyLittleThing’s chief marketing officer Nicki Capstick mapped out some of the upcoming initiatives Friday.

In the U.S. for a 10-day stay that included hosting media types at a New York City dinner, she also touched down for Wednesday’s launch party for model and influencer Lori Harvey’s upcoming capsule collection and advertising campaign. With the business established in the U.K., the brand has set its sights on the U.S. due to its potential to drive growth.

Estimating there are 30 million to 33 million females living in the U.K. versus the 167 million women in the U.S., she said that base is where the company sees the most potential. Asked if the Stateside focus has been mostly driven by the downturn in U.K. and European sales, Capstick said “absolutely not,” claiming they continue to grow through a loyal customer base in the U.K., who shop frequently and will be built upon and scaled beyond that.

Last year sales were reportedly more than $881.7 million — a 0.3 percentage increase compared to the previous year. U.K. sales climbed 6.4 percent to upward of $484.95 million and U.S. sales were slightly up by 0.1 percent to $260.1 million. Company executives declined to disclose figures, prior to its public figures being released. The U.K. accounts for about 70 percent of PrettyLittleThing’s overall business, the U.S. represents about 15 percent and other countries comprise the remaining 15 percent of volume, Capstick said. The five-year plan is to increase the U.S. business to match that of the U.K.

The August opening of an Elizabethtown, Pa., warehouse is one of the ways that the Boohoo-owned e-tailer aims to serve more U.S. shoppers. Naomi Campbell helped to raise the brand’s profile globally by collaborating on a collection earlier and headlining a New York Fashion Week runway show in September.

Having surveyed 1,400 women in the U.S. through a U.K. research agency, PrettyYoungThing has been using some of the information that it mined from their responses to move ahead. For example, Harvey, who is already a brand ambassador, is someone PrettyLittleThing customers “have been crying out for for a long time” via consumer research. Her capsule collection debuts Wednesday, as will ads, billboards and social media that were shot by Alexandra Alva. “We think she will really resonate with the 16- to 25-year-old demographic that we’re going for,” Capstick said of Harvey.

With that in mind the company had an 11-state tour of 19 East Coast college campuses to stage pop-up events. At each stop students could climb aboard a unicorn-adorned converted school bus to check out PrettyLittleThing merchandise, play games, post photos and pick up vouchers. That initiative was in response to survey respondents indicating that they wanted to see and touch the products and engage with the brand, Capstick said. They could not, however, walk away with new products, but they could use the iPads on the bus to order some. Describing the response as “so crazy,” she said the company is looking to do that again next year.

“It’s really important to ensure we’re differentiating ourselves from the online field of fashion players in the market,” Capstick said.

Asked to quantify the response to Naomi Campbell’s collaboration, which featured designs from Victor Anate and Theophilio’s Edvin Thompson, Capstick said, “There are multiple ways of looking at these things. It’s not always direct return on investment. We generate that understanding over time. The press coverage and the social media reach that we attained was much bigger than we have ever seen from any previous campaigns. We had the 360[-degree] marketing approach to make sure we were hitting the customer with every single touch point. The product sold really well and we’ve reordered a lot of the items.”

A black blazer dress, a studded dress and a jumpsuit were bestsellers from Campbell’s collection, Capstick said. With the party season and the holidays approaching, the e-tailer expects dresses and other festive looks from the range to be popular.

Declining to identify key competitors, Capstick said the brand is constantly monitoring the wider landscape, including which other brands have emerged onto the market, pricing and promotional perspectives and how others are using social media to advertise. That said, PrettyLittleThing is focused on its growth through Gen Z-ers. Opening freestanding retail stores is not being planned, but pop-ups are being considered for the U.K., U.S. and possibly Europe.

In response to many consumers’ tightened spending and “cost challenges,” the fast-fashion resource has maintained its entry-level price point of $7, but is offering more styles for that amount compared to a year ago. “Everyone probably has less disposable income than they did pre-pandemic. We want to be sure that we’re bringing those affordable prices to the customer. We’re constantly learning from what she is buying and what she wants to see on the website,” Capstick ahead.

Next year the company wants to tap into the U.S. music scene with emerging artists on TikTok, where many PrettyLittleThing shoppers engage, being of particular interest. Potential partnerships are being explored with musicians. Separately, brand partnerships, something that PrettyLittleThings has dabbled in, are being considered.

This is the first acquisition of an atelier by the Kering-owned jeweler, as luxury groups continue to secure know-how and supply chains.

PARIS — Boucheron is the latest jeweler to join the fray of luxury houses scooping up specialized ateliers in an effort to secure supply chains and know-how.

The Kering-owned jeweler on Monday revealed its first acquisition, a Paris-based workshop that has the Belter, Etablissements E. Blondeau, Chanson & Cie. and FG Développement companies under its umbrella, with an eye to reinforcing its high jewelry capabilities.

Financial terms of the deal, which became effective Oct. 31, were not disclosed.

Boucheron chief executive officer Hélène Poulit-Duquesne said the move marked a new chapter in the jeweler’s history. “It will reinforce the production capacity of Boucheron’s historical workshop on Place Vendôme, enabling us to meet the increasing demand of our clients while maintaining the excellence of our craftsmanship,” she said.

The atelier is expected to remain in its current location.

Some 60 craftspeople, who range from computer-assisted design specialists and jewelers to lapidaries and stone setters, will be working on Boucheron’s high jewelry collections alongside the members of the jeweler’s existing atelier located at 26 Place Vendôme.

Its founder Cédric Gangemi, who trained as a jeweler, worked at Chanson & Cie, established in 1961, and Blondeau, founded in 1978, before taking them over. In 2017, he regrouped the workshops under one roof, with another called Belter joining the atelier’s portfolio. FG Développement became the fourth workshop in the structure when it was created in 2019.

Reporting third-quarter results in October, parent group Kering highlighted Boucheron’s positive performance, attributing it to the success of its high jewelry and mainline collections. Overall group revenue saw double-digit declines in the period amid a wider luxury slowdown and geopolitical unrest.

Having a high jewelry atelier on or in the vicinity of Place Vendôme remains a sign of hard luxury prestige, with houses such as Louis Vuitton and Chanel installing them in their respective boutiques in 2012. As part of its revamp of its 13 Rue de la Paix flagship, Cartier carved out space for 18 workbenches dedicated to high jewelry, bathed in natural light both from the interior skylight and the street outside.

In parallel, luxury conglomerates have been snapping up suppliers while securing the skills and know-how of the jewelry eco-system through training programs, in a bid to increase manufacturing capabilities in the long run.

In April, LVMH Moët Hennessy Louis Vuitton revealed its intent to purchase the Platinum Invest group in order to strengthen its high and fine jewelry manufacturing capabilities — with a particular focus on enhancing Tiffany & Co.’s production output.

The group previously acquired Italian jewelry manufacturer Pedemonte, which employs some 350 people in northern Italy, while Christian Dior snapped up Oteline and FG Manufacture, two France-based companies that have the “Entreprise du Patrimoine Vivant” (or living heritage company) status.

While Cartier had no plans to acquire its partners, according to CEO Cyrille Vigneron, it made training or reskilling an integral part of its latest jewelry plant in Turin.

Its Richemont stablemate Van Cleef & Arpels said in April it would open two new jewelry workshops in France within the next three years, extending its existing training programs to these new locations.