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L’Oréal may not stay the world’s No. 1 cosmetics group forever. LVMH could eventually gobble up all or parts of the Estée Lauder Companies (ELC) even though the French luxury giant has denied any interest – for now, as Miss Tweed reported last week. Competition from rival groups Coty, Shiseido, Interparfums and Puig is set to intensify and new challengers are emerging such as Cartier owner Richemont and French luxury group Kering.

In September, Richemont announced the creation of a beauty division called Laboratoire de Haute Parfumerie et Beauté but it has yet to explain how it plans to build it up. After having lost more than €4 billion in the Yoox-Net-A-Porter (YNAP) and Farfetch debacle, the Swiss group may want to pause and think hard about investing more money into a high-stakes project such as beauty, industry insiders say.

“It’s not the best time to invest in beauty when part of your business is on fire,” one senior beauty industry insider said about Farfetch and YNAP. Richemont appears to have put on hold plans to sell Farfetch a minority stake in YNAP and use its e-commerce technology for its brands (see today’s Weekly highlights Nov. 27-Dec.1 for more details).

The Swiss group has hired Boet Brinkgreve from the fragrance and nutrition group DSM-Firmenich to lead its push into beauty. Brinkgreve is studying various options and preparing proposals he is due to submit to the board early next year, industry sources say.

“Boet is currently gathering intelligence and evaluating different proposals he will make to the board,” one senior industry source said. Richemont is expected to make a decision after Christmas, in the first quarter of next year, he said. “They want to become a bigger player in beauty and fragrance,” the source said. “This sector naturally complements their jewelry, watch and fashion brands.”

CARTIER

Cartier is a hugely successful jeweler, the biggest in the world in terms of sales, but its perfumes – like its handbags – were never a huge commercial hit. It’s not been able to stretch the brand much beyond watches and jewelry. Yet in the 1970s and 1980s, Cartier was making a lot of money with Les Must de Cartier items such as perfumes, accessories, lighters and watches. It was another era then.

Cartier has developed its perfumes internally for decades. It has legitimacy in the field. Its in-house nose Mathilde Laurent, previously at Guerlain, has been creating the brand’s fragrances since 2005.

Cartier’s “Panthère” and “Pasha” perfumes sell well, but the brand’s fragrance business is small relative to that of other big brands. Industry experts estimate Cartier generates around €70 million from its perfumes. It could easily bring that to €300 million if it invested in its distribution and in the brand’s marketing. But as of now, the activity is too small to serve as a basis to help launch other brands, beauty experts say.

It sells its perfumes mainly in its Cartier jewelry boutiques and through a few selected distributors such as Sephora in France and in duty-free shops in airports. Richemont does not publish separate figures for each of the brand’s category, but industry experts estimate that the wholesale business does not represent more than 30 percent of total turnover from Cartier fragrances.

BUYING BACK LICENSES

If Richemont is serious about making a push into perfume and cosmetics, it will have to make acquisitions and buy back some of its biggest licenses, industry analysts say. Richemont’ s two most important fragrance licenses are for French fashion brand Chloé and for luxury pen and watchmaker Montblanc. The Chloé license is being exploited by Coty and according to industry sources, its contract with the U.S. beauty company lasts at least another nine years. Industry insiders predict it will not be easy for Richemont to buy back the license from Coty. Chloé generates more than €300 million in fragrance sales. It would cost at least that amount to buy back the license, experts estimate, and Coty would have to agree – which is not a given.

Same for Montblanc, a top moneymaker for French fragrance maker Interparfums. In 2022, it generated revenue of €184 million for the Paris-based company, up 30 percent against the previous year. Buying back the Montblanc license could cost Richemont more than €700 million, or at least four times the annual sales the Montblanc license generates for Interparfums, sources close to Interparfums say. The amount of €700 million is exactly the loss Richemont reported for YNAP in the six months to Sept. 30.

The Montblanc license expires in seven years. Whatever deal is agreed, it is likely that Richemont will want to continue using Interparfums’ distribution network and work with the French company.

The business Interparfums makes with Richemont’s other brand, Van Cleef & Arpels, is much smaller at around €22 million. It is unlikely Richemont will be interested in taking that one in-house. Its ambition has never been to build this perfume activity into a big business. The French jeweler makes good volumes with “First”, a fragrance created in 1976 by Jean-Claude Ellena, Hermès’ former in-house nose, and which sells for around €75 a bottle. It also developed with Interparfums a high-end, more confidential collection of perfumes with names such as “California Rêverie” or “Santal Blanc” that sell for €175 a bottle. “I think Richemont and VCA CEO Nicolas Bos do not want to change anything regarding that particular license with Interparfums,” a senior source close to Interparfums told Miss Tweed.

Richemont should be able to strike a deal with Interparfums. “Relations are good between Interparfums and Richemont, so they will be able to come to an agreement if Richemont wants to buy back licenses,” that source said.

The one fragrance license Richemont has available is for Alaïa. The French fashion brand has been enjoying a steady renaissance under designer Pieter Mulier. It’s on its way to generating annual sales close to €100 million. To leverage the brand’s popularity, Richemont may consider launching an Alaïa perfume collection – if it has the right teams and distribution in place. For that, it may also need Interparfums’ help. That’s one of the many options Richemont will be reviewing next year.

Investors may not be as enthusiastic about this new beauty venture as Richemont Chairman Johann Rupert. The Geneva-based group knows how to run jewelry and watch brands. It does not have a strong track record in fashion and its venture into e-commerce proved a disaster. Chloé, its biggest fashion brand, has been through two designers that were not cut out for the brand. As a result, Chloé lost six years in terms of reaching its full growth potential. Fashion critics hope Chemena Kamali, the brand’s new designer, will be better suited. Kamali will present her first collection at Paris Fashion Week next spring.

“I am not sure Richemont understands how complex the perfume business is,” a senior manager at one of the world’s biggest perfume companies told Miss Tweed on condition of anonymity. “It’s not just about putting a juice in a bottle, there are many sanitary norms you need to worry about and managing the supply chain is not easy either.”

Taking back licenses and producing in-house is a costly gambit. Burberry spent €181 million buying back its license from Interparfums in 2012 only to throw in the towel a few years later and sell the business to Coty. Two years ago, Dolce & Gabbana internalized its cosmetics and fragrance operations, but the company is such a black box from a financial point of view, it’s not clear yet how successful that move has been.

KERING

Richemont is not alone in wanting to bet big on beauty. Kering has similar plans. The owner of Gucci and Saint Laurent this year spent €3.5 billion on high-end fragrance maker Creed, its first acquisition in the sector. The price was very high, but industry sources say Creed is the biggest of so-called “niche brands” and its distribution network will be used to help other fragrance brands Kering plans to bring to the market.

The Creed acquisition is part of Kering’s ambition to build a beauty unit from scratch and produce in-house the fragrances of its own stable of brands including Alexander McQueen, Balenciaga and Bottega Veneta. The ultimate goal is to be big enough and ready in terms of distribution and brand portfolio to take back the Gucci license from Coty, which runs until the end of 2028. It is estimated to generate around €500 million in annual sales, as Miss Tweed reported in February. Kering will want to wait for its own beauty business to grow and to have the right people in place before it starts discussing the possibility of buying back the Gucci license, industry sources predict.

Kering aims to build a sizable fragrance and cosmetics business that generates at least €1 billion in annual sales, industry sources say. To achieve that, it will need to make more acquisitions. However, there are not that many brands with revenue of at least €100 million. In the past few years, major players such as Puig, L’Oréal, LVMH and The Estée Lauder Companies have already bought most of the strong and promising brands available. Puig has recently announced plans to do an IPO next year that could value the company at €8 billion. The flotation is designed to help Puig pay down its debt, taken on to finance its acquisition of Charlotte Tilbury for nearly €1 billion in 2020 and Byredo for roughly the same amount in 2022.

SCENT BEAUTY

Scent Beauty is a new player that harbors big ambitions in beauty. Founded in 2019 by former Coty CEO Bernd Beetz and Steve Mormoris, who was chief marketing officer at the U.S. beauty company, it aims to rival big groups.

Scent Beauty specializes in the celebrity fragrance market, a segment on which most big groups have turned up their noses. It’s too mass-market and cheap for them. They prefer to focus on best-selling designer brands and expensive niche fragrances. “This has created opportunities for smaller players to recuperate brands the big groups no longer want and give them the love and care they need to grow,” one adviser to beauty executives told Miss Tweed.

Scent Beauty is growing fast by developing fragrances named after celebrities such as singers Dolly Parton, Kylie Minogue, Whitney Houston and Sabrina Carpenter and brands such as Stetson, the hat maker. The latter name is one of its strongest-selling labels. It makes good money selling gift boxes during the holiday and festive seasons. “I believe in celebrity perfume. It has a strong connection with customers. It allows them to be part of that celebrity’s story,” explains Beetz.

Scent Beauty took several brands from Coty including Kylie Minogue and Stetson. Mormoris said about the famous hat maker: “We built it as a transgender brand. The story is that ‘my father used it, my grandfather used it’ and we moved it from cowboy to hipster.” Sabrina Carpenter’s Caramel Dream, launched in the spring, has been a top best-seller at Walmart, he said.

“We are brand builders,” Mormoris told Miss Tweed. “I feel that we are like the Warner Brothers in the 1950s.” Mormoris said that the company did not have a distribution bias and was raking in big sales at stores such as Walmart. Scent Beauty is looking to take on more licenses and, like Coty and the Estée Lauder group, it plans on opening an office in Paris to be closer to perfume and marketing creatives and production and distribution partners. After having secured growth with mass-market brands, Scent Beauty is looking to expand into high-end niche fragrance brands - the sweet spot of the market. Only it’s not alone. Puig, LVMH and L’Oréal are also keeping their eyes peeled for the next target. “Everybody’s on the prowl for acquisitions,” Mormoris said.

HIGH-END PERFUME

Every major player wants higher exposure to the fast-growing market of high-end perfume brands. Coty and Interparfums have plans to create their own exclusive fragrance brands. “There is a premiumization of the market with high valuations attributed to niche brands such as Creed and Parfums de Marly and the company is not yet very present in that segment,” a senior source close to Interparfums said. Interparfums is going unveil its new brand in 2025.

Coty, on the other hand, is ready to launch its new brand next year. Called Infiniment Coty Paris, it will feature a collection of 14 fragrances. The initiative unveiled at an event in Grasse, France’s perfume Mecca near Cannes, was described by Coty CEO Sue Nabi as “its most ambitious and most premium fragrance project to date.”

The company twinned the announcement of its new fragrance line with the launch of a new serum product by Orveda, a high-end skincare line founded in 2014 by Nabi and her partner Nicolas Vu, a hip-hop music producer and boxing and judo champion.

Coty and Nabi declined to comment on the fact that there could an ethical issue around Coty’s relationship with Orveda. Nabi is the CEO of Coty, which is exploiting the license for Orveda, and she is spending a lot of Coty’s money on advertising the brand. Coty declined to reveal how much Nabi’s partner still owns in Orveda, saying only that the Coty CEO no longer has a stake in the company.

Orveda is Nabi’s pet project. Even though Coty says she is no longer involved in the company, she is the one in charge of the license.

When Coty hired Nabi, it agreed to invest in Orveda. The move was a smart one since Coty is under-exposed to skincare, one of the best performing segments of the beauty industry. Orveda uses natural prebiotics from fermented potatoes, which feed the good bacteria on skin, as well as bio-fermented marine enzymes and bio-fermented Kombucha black tea. In skincare, Coty only has Lancaster, a brand strong in sunscreens, and Philosophy, which also sells perfume.

The maps of the beauty industry are being redrawn. The battle for world domination by the biggest luxury groups has only started. L’Oréal cannot rest on its laurels.

Google has quietly delayed the public debut of Gemini, a conversational artificial intelligence that aims to compete with OpenAI, to January, two people with knowledge of the decision said.

Google CEO Sundar Pichai recently decided to scrap a series of Gemini events, originally scheduled for next week in California, New York and Washington, after the company found the AI didn’t reliably handle some non-English queries, one of these people said. The planned events, which hadn’t been publicized, would have marked Google’s most important product launch of the year, after it strained its computing resources and merged large teams in an urgent pursuit of OpenAI.

• Gemini postponement underscores the challenge of catching OpenAI

• Gemini’s performance is comparable to that of GPT-4 in some ways

• But the model underperformed on some non-English language tasks

The delay underscores how difficult it’s been for Google—which has 200,000 employees and was long considered an AI leader—to catch up to an 800-person startup that has developed one of the fastest-growing software businesses in history. OpenAI also has buoyed Microsoft, a Google Cloud rival that has gotten traction selling OpenAI technology to cloud customers. The Information reported last month that Google told some cloud customers and business partners not to expect to receive access to the primary Gemini model until next year, but the scrapped events also imply that other products such as search (which now has generative AI results), Bard, Google Assistant and Google Docs may not get a boost from the new technology until 2024.

It’s rare for Google to launch a major product between Thanksgiving and the end of the year, but Google intended to make an exception for Gemini because it’s arguably the company’s most important initiative in a decade. The Gemini event in Washington was intended to showcase the technology to policymakers and politicians, which have increasingly discussed potential regulations involving AI, one of the people said. Pichai and other executives have been concerned that OpenAI’s ChatGPT has become a household name and that Microsoft’s Copilot features for productivity software, including for software developers, are turning into a significant business too, people with knowledge of the situation have said.

Companies use the technology, known as large language models, for tasks like automating software coding, summarizing long reports, generating marketing campaigns and building specialized apps that make use of its predictive capabilities.

Last month, Pichai, who in May confirmed The Information’s earlier reports about Gemini, said at a public event that the company is “focused on getting Gemini 1.0 out as soon as possible, make sure it’s competitive, state of the art, and we’ll build from there on.” A Google spokesperson did not immediately have comment for this article.

Google has had all year to develop Gemini, its answer to OpenAI’s most advanced LLM, GPT-4, which debuted in March and is the backbone of the paid version of ChatGPT. Google’s ChatGPT rival, Bard, which uses a more primitive LLM than Gemini, has failed to take off with consumers. That’s bad news for Google because ChatGPT’s millions of customers generate valuable data that helps OpenAI track and improve the quality of its products, and Google is missing out on that opportunity.

Gemini also aims to power new tools for YouTube creators and for advertisers that want to generate text and imagery. Gemini is “mulitmodal,” meaning it can work with images and text alike, producing code for a website just by seeing a sketch of what a user wants the site to look like, for instance, or spitting out a text analysis of visual charts. See the Gemini team here.

Google has developed several versions of Gemini to handle different tasks, depending on their complexity. Outside developers have already tested smaller versions of the model, measured in terms of the number of parameters, or calculations, they do. But the company is still finalizing the primary, biggest version of Gemini, said people who have been involved in the effort. (A big LLM typically is made up of smaller models that work together.)

A key challenge for the Gemini team is making sure the primary model is as good as or better than GPT-4. It has met that standard in some respects, said one of the people familiar with it, but the company is still making improvements because it wants the technology to work well globally, in numerous languages. Model developers frequently test the capabilities of their models while they work on them, but it’s not uncommon for them to miss some of the tech’s limitations during those checks.

OpenAI, meanwhile, has had its own challenges in improving GPT-4 meaningfully, and it quietly canceled a major new model it was developing earlier this year, called Arrakis. But recently OpenAI made a breakthrough, known as Q*, giving the company hope that it can develop a significantly better LLM, The Information reported. The company is still recovering from a near- implosion following the firing and rehiring of CEO Sam Altman.

A little activism from Elliott Management nudged Phillips 66 stock to a record close, and if the firm gets its way, there may be more upside ahead.

Elliott unveiled a roughly $1 billion stake in Phillips 66 earlier this week, arguing that the integrated oil and gas company’s decision to de-emphasize refining meant that it missed the refining supercycle of the last two years, leading it to underperform peers such as Marathon Petroleum and Valero Energy .

But while Elliott criticized Phillips 66’s underperformance and missteps in a letter to the company’s board, it appeared to be supportive of plans laid out by Chief Executive Mark Lashier, which include selling some $3 billion of noncore assets and planning to return more capital to shareholders. Still, Elliott believes Phillips 66 could use more prodding and is seeking two seats on the board.

With changes in place, Elliott believes Phillips 66 shares could advance 75%. Wall Street is similarly bullish.

“An activist shareholder, Elliott, can be a positive catalyst for shareholders,” wrote Wells Fargo Securities analyst Roger Reed, adding that Elliott’s letter might push Phillips “to take actions they otherwise might not.” Reed has an overweight rating on the shares and a $143 price target.

Representatives from Phillips 66 acknowledged receiving Elliott’s letter and recent conversations with the activist hedge fund. “The Phillips 66 board and management team welcome the perspectives of our shareholders and value their input,” the company said.

Fisker, the California-based EV startup, cut its annual production guidance in an effort to free up $300 million in working capital, the company said in a business update Friday.

Fisker said it expects to produce about 10,000 vehicles this year. The decision comes less than a month since Fisker cut its production target to between 13,000 and 17,000 vehicles for 2023. The production guidance is just a quarter of Fisker’s bullish forecast from a year ago. In November 2022, Fisker said it planned to produce 42,400 Ocean SUVs by the end of 2023 due to strong demand in the U.S. and Europe. That rosy projection was slashed in May to 32,000-36,000 vehicles and then cut again in August to 20,000-23,000 vehicles. This latest update makes four reductions since the spring.

The production cut will allow the company to access $300 million in working capital, giving the company “flexibility,” according to the business update.

“Our teams have worked hard to overcome some early delivery challenges and are now setting an impressive pace as we prepare to close out 2023,” Chairman and CEO Henrik Fisker said in a statement. “We may not have hit our original forecast but taking current market conditions and negative sentiments around EV sales into account, I would say we are doing quite well, as we continue to accelerate sales and deliveries. This is yielding considerable revenue as we ramp up our business. I expect by the end of this year we will have delivered more customer cars than any Western EV startup did in their first year of deliveries. The company continues to sharpen its focus on growing its current markets and enhancing our sales and service offerings for the Fisker Ocean.”

Fisker said in its business update that it has also launched a new strategy to improve deliveries in the U.S. and Europe, which helped it overcome early logistics hurdles. While Fisker didn’t elaborate on exactly what those challenges were, it appears the strategy involves adding more transportation logistics companies to speed up deliveries, increased outreach to reservation holders and opening more facilities dedicated to retail, deliveries and service.

The company said it’s also launching a leasing program in the U.S., Canada and Europe, but didn’t include details on when that might occur.

Fisker also provided an update around hiring, importantly Dan Quirk as its new executive vice president of finance and accounting. The hiring comes after Fisker lost two chief accounting officers in short succession and delayed the filing of its quarterly earnings report with the Securities and Exchange Commission. Other hires include Axel Buhr as vice president of finance and controller operations, Ram Iyer as senior VP of EE integration and validation and Wolfgang Hoffmann as country manager in Canada, where Fisker is about to begin deliveries.

Genetic testing company 23andMe announced on Friday that hackers accessed around 14,000 customer accounts in the company’s recent data breach.

In a new filing with the U.S. Securities and Exchange Commission published Friday, the company said that, based on its investigation into the incident, it had determined that hackers had accessed 0.1% of its customer base. According to the company’s most recent annual earnings report, 23andMe has “more than 14 million customers worldwide,” which means 0.1% is around 14,000.

But the company also said that by accessing those accounts, the hackers were also able to access “a significant number of files containing profile information about other users’ ancestry that such users chose to share when opting in to 23andMe’s DNA Relatives feature.”

The company did not specify what that “significant number” of files is, nor how many of these “other users” were impacted.

23andMe did not immediately respond to a request for comment, which included questions on those numbers.

In early October, 23andMe disclosed an incident in which hackers had stolen some users’ data using a common technique known as “credential stuffing,” whereby cybercriminals hack into a victim’s account by using a known password, perhaps leaked due to a data breach on another service.

The damage, however, did not stop with the customers who had their accounts accessed. 23andMe allows users to opt into a feature called DNA Relatives. If a user opts-in to that feature, 23andMe shares some of that user’s information with others. That means that by accessing one victim’s account, hackers were also able to see the personal data of people connected to that initial victim.

23andMe said in the filing that for the initial 14,000 users, the stolen data “generally included ancestry information, and, for a subset of those accounts, health-related information based upon the user’s genetics.” For the other subset of users, 23andMe only said that the hackers stole “profile information” and then posted unspecified “certain information” online.

TechCrunch analyzed the published sets of stolen data by comparing it to known public genealogy records, including websites published by hobbyists and genealogists. Although the sets of data were formatted differently, they contained some of the same unique user and genetic information that matched genealogy records published online years earlier.

The owner of one genealogy website, for which some of their relatives’ information was exposed in 23andMe’s data breach, told TechCrunch that they have about 5,000 relatives discovered through 23andMe, and said our “correlations might take that into account.”

News of the data breach surfaced online in October when hackers advertised the alleged data of one million users of Jewish Ashkenazi descent and 100,000 Chinese users on a well-known hacking forum. Roughly two weeks later, the same hacker who advertised the initial stolen user data advertised the alleged records of four million more people. The hacker was trying to sell the data of individual victims for $1 to $10.

TechCrunch found that another hacker on a different hacking forum had advertised even more allegedly stolen user data two months before the advertisement that was initially reported by news outlets in October. In that first advertisement, the hacker claimed to have 300 terabytes of stolen 23andMe user data, and asked for $50 million to sell the whole database, or between $1,000 and $10,000 for a subset of the data.

In response to the data breach, on October 10, 23andMe forced users to reset and change their passwords and encouraged them to turn on multi-factor authentication. And on November 6, the company required all users to use two-step verification, according to the new filing.

After the 23andMe breach, other DNA testing companies Ancestry and MyHeritage started mandating two-factor authentication.

Sometimes November is a slow month for startup deals, as the beginning of the holiday season can shut off the venture funding valve. However, this year the 11th month was strong, with some huge raises. In fact, several $100 million-plus rounds couldn’t even crack the list.

1. Juul, $1.3B, consumer goods: E-cigarette maker Juul leads the way this month. The San Francisco-based company raised about $1.3 billion in funding, according to a regulatory filing reported on by Reuters. Earlier this year, Juul laid off about 250 people to reduce operating costs and agreed to pay $462 million to settle claims by six U.S. states that it unlawfully marketed to minors. Investors were not disclosed for the new round. The company also raised cash in November 2022, after cutting jobs and costs.

2. Firefly Aerospace, $300M, aerospace: Space tech funding isn’t what it used to be, but that didn’t stop Firefly Aerospace from snatching up a $300 million Series C. To be fair, it’s unclear exactly how much the Cedar Park, Texas-based space transportation startup raised last month, but it said it closed the third tranche of what was now a $300 million Series C. The new cash values the company at $1.5 billion pre-money. The round was led by existing investors including AE Industrial Partners, as well as new investors including Mitsui & Co., Ltd. Founded in 2014, the company has raised $572 million, per Crunchbase.

3. Next Insurance, $265M, insurtech: Next Insurance raised a $265 million strategic round from insurance giants Allstate and Allianz’s investment arm, Allianz X. The Palo Alto, California-based startup, which specializes in small business insurance products, says it has now raised more than $1.1 billion since being founded in 2016. The deal forms a new strategic partnership with Allstate and deepens an existing reinsurance relationship with Allianz. Interestingly, Next did not offer a valuation with the new round. The company was valued at $4 billion in April 2021 when it raised a $250 million Series E led by FinTLV and Battery Ventures. Many valuations of startups, however, have dropped since then. Next, which uses AI and machine learning to help with the purchasing process and provide coverages, serves more than 500,000 business owners. The round is one of the largest raised this year in the insurtech industry.

4. Divergent Technologies, $230M, manufacturing: Divergent Technologies raised a massive $230 million Series D to accelerate the commercialization of its digital manufacturing system that uses generative AI and 3D printing. The round was led by Hexagon AB, which invested $100 million of the $230 million total. New and existing institutional and family office investors also participated in the round. The Los Angeles-based firm has developed a software-hardware production system for industrial digital manufacturing that replaces traditional design, manufacturing and assembly solutions. Divergent’s system uses in-house-developed AI-driven generative design software and 3D printing to create the products and structures used in a variety of industries, including the automotive, aerospace and defense sectors. Divergent already works with automotive customers such as Aston Martin and Mercedes-AMG. In the aerospace and defense industry, the company is actively working with six U.S. government contractors. Just last month, another 3D printing startup raised significant cash. 3D metal-printing startup Seurat Technologies locked up a $99 million Series C led by NVentures — Nvidia’s venture capital arm — and Capricorn’s Technology Impact Fund.

5. DataBank, $188M, information technology: Consulting and tech services firm DataBank announced a big raise that most folks likely missed. The Dallas-based firm raised $533 million in a combination of debt and equity to fund the construction of new data centers. The deal consisted of $188 million from existing and new investors, and a $345 million loan to construct a new data center being developed in the Atlanta market. Equity investors were not disclosed. The new financing comes after the company announced a $350 million credit facility in March, and $715 million in secured notes in April. A year ago, Swiss Life Asset Management led a $2.2 billion recapitalization of the company.

6. Infinitum Electric, $185M, industrial automation: This was a big round that may have gone unnoticed by some. Infinitum, which creates light air-core motors, raised a $185 million Series E led by Just Climate. The raise brings the Austin, Texas-based startup’s total funding to date to a whopping $350 million, according to the company. The new cash will be used to expand business and increase production of its motors to help meet decarbonization demand in the industrial sector. New motor tech is important, as the implementation of such in the U.S. industrial and commercial sectors has the potential to save 127 terawatt-hours per year — a cost savings of $14.7 billion, according to the U.S. Department of Energy. Another way to think about that; the equivalent of the annual electricity use of all households in California and North Carolina combined.

7. Terremoto Biosciences, $175M, biotech: South San Francisco, California-based biotech firm Terremoto Biosciences closed a big $175 million Series B. No lead investor was announced, but those taking part in the round include Novo Holdings and OrbiMed. The startup is developing targeted, small molecule medicines for a wide variety of severe diseases. The new round brings Terremoto’s total amount raised to $250 million, per the company.

8. BlueVoyant, $140M, cybersecurity: Managed detection and response startup BlueVoyant announced last month it had closed a $140 million-plus Series E led by Liberty Strategic Capital. The round was used to facilitate the acquisition of Herndon, Virginia-based Conquest Cyber, which protects the nation’s defense industrial base and critical infrastructure sectors. The acquisition is BlueVoyant’s fifth since 2020, and seems to be further evidence of the growing interest in the defense tech industry. Founded in 2017, the company has raised nearly $666 million, per Crunchbase.

9. Enable, $120M, finance: We don’t write about many rebate management platforms on this list, but when you raise $120 million that changes. San Francisco-based Enable raised a $120 million Series D led by Lightspeed Venture Partners that values the company at $1.2 billion. The startup platform helps manufacturers, distributors and retailers manage their rebate offerings to help push growth and optimize sales with automated real-time data and forecasting. Everybody loves a rebate, but companies need to manage what they offer. Founded in 2016, Enable has raised $276 million, per the company.

10 (tied). May Mobility, $105M, autonomous vehicles: Just a couple weeks after Cruise’s announcement it will suspend its self-driving taxi program rocked the autonomous vehicle industry, another AV startup raised big money from some big-name investors. Ann Arbor, Michigan-based May Mobility closed a $105 million Series D led by NTT Group. The new cash brings May Mobility’s total funding to approximately $300 million since being founded in 2017. The company last raised a $111 million round in July 2022. May Mobility develops AV technology and deploys fleets of vehicles to municipal and business customers. Funding to autonomous vehicle startups have been having a rough year to date, raising less than $4.6 billion — which puts the sector on pace for its lowest funding total since 2020, per Crunchbase data. The sector saw a high for funding in 2021 when the industry received $12.5 billion. Last year, that number dropped to $5.9 billion.

10 (tied). RefleXion Medical, $105M, biotech: Biotech was hot last month — especially for companies trying to figure out ways to fight cancer. Hayward, California-based RefleXion Medical announced the initial close of a $105 million equity raise led by The Rise Fund, TPG’s multisector global impact investing strategy. The fresh cash will be used by the company to extend commercialization of its therapy for treating all stages of indicated solid tumor cancers, including metastatic disease. Founded in 2009, the company has raised $675 million, per Crunchbase.

Not surprisingly the largest round abroad went to an AI startup.

UK digital pound could put financial stability and privacy at risk, MPs warn

Treasury committee urges BoE and Treasury to ‘proceed with caution’ over new currency

Backers of a UK digital pound have yet to make a convincing case that its benefits would outweigh risks to financial stability and personal privacy, an influential group of MPs warned on Saturday. 

The House of Commons Treasury committee said the Bank of England and HM Treasury should continue exploring a central bank digital currency, but urged both to “proceed with caution” because of “significant risks and challenges”.

These included questions over how the authorities would use digital pound holders’ personal data, and the possibility of households pulling savings from traditional accounts and converting them in periods of bank stress.

Like authorities in other economies including the eurozone, the Treasury and BoE have been examining the case for a central bank digital currency amid falling cash usage and the threat of competition from Big Tech companies. 

Around the world, 100 countries are exploring CBDCs, while 11 have already launched one, according to the Atlantic Council think-tank.

The idea is to create an electronic alternative to cash that is riskless and universally accepted. Publicly backed digital currencies would sit in wallets on smartphones, fending off the threat that privately controlled digital currencies created by tech groups gain too much traction.

However, officials and politicians around Europe have yet to conclude that the case for CBDCs is convincing enough to outweigh the hazards they could create.

A consultation paper from the Treasury and BoE in February found current trends and technological advances made it likely that a digital pound would be needed by the end of the decade, although the project has yet to be given the go-ahead. 

In its report, the TSC sounded a sceptical note without arguing against continued investigation of the idea. “It is not clear to us at this stage whether the benefits are likely to outweigh the risks,” the committee said. 

Harriett Baldwin, Conservative MP and committee chair, said: “It must be clearly evidenced that a retail digital pound will provide benefits to the UK economy without increasing risks or leading to unmanageable costs before any decision is taken to introduce it into our financial system.”

The committee noted that the UK could become more susceptible to bank runs if people were able to transfer large quantities of savings into digital pounds quickly in times of market turmoil.

It also raised concerns that if enough bank deposits were moved into digital pounds, interest rates on bank loans might be driven up by 0.8 percentage points or more. 

One way of reducing these risks would be to adopt a lower initial limit on the size of individual holdings than the BoE’s proposed £10,000-£20,000 ceiling, the TSC noted. The European Central Bank has discussed a €3,000 digital euro limit per person.

Calling for “strong privacy safeguards” to address concerns that government authorities could snoop on digital pound users, the TSC said it was vital any CBDC did not worsen financial exclusion by accelerating the demise of cash.

In a joint statement on Saturday, the Treasury and Bank of England said they would respond formally to the report in due course.

“We will also shortly publish the response to our consultation paper setting out the next steps,” they said. “We have always been clear [that] a digital pound would only ever be introduced alongside cash and that protecting individual privacy is paramount in any design.”

Thames Water faces prospect of fresh parliamentary inquiry into finances

Concerns growing over financial health of UK’s biggest water company

Thames Water is facing the prospect of a fresh parliamentary inquiry after being accused of misleading MPs over the state of its finances.

Sir Robert Goodwill, chair of the cross-party environment, food and rural affairs committee, said the panel was considering a fresh investigation after the Financial Times revealed that Thames Water had presented a loan from its shareholders to its parent company as fresh equity.

Alastair Cochran, finance director of Thames Water, told a hearing by MPs in July that its “incredibly supportive shareholders” had provided “£500mn equity, which it had fully drawn”. Instead it came from a £515mn convertible loan, charging 8 per cent interest payable in March each year, according to the accounts of Thames Water’s parent entity, Kemble Water Holdings.

Goodwill said the disclosure “leads us to question the accuracy of evidence provided to our committee by Thames Water in July”. It also “raised further concerns about the stability of the company’s finances and the actual ability of the company to invest the sums of money required to implement its turnaround plan”, he said.

“Our committee will consider whether we need to call Thames Water back before us to explain how the evidence we heard stacks up against the recently reported revelations,” he added.

Thames Water said it had not misled the committee. In a statement to the committee seen by the FT it said that it was “entirely correct and accurate” to describe the £500mn as new equity.

Thames said that external shareholders loaned £500mn to Kemble Water Holdings in March 2023. Kemble Water Finance then purchased £500mn of shares in Thames Water Limited and Thames Water Limited purchased £500mn of shares in Thames Water Utilities Holdings. Thames Water Utilities Holdings then passed the £500mn to Thames Water Utilities Limited — the regulated company — as repayment of an existing intercompany loan.

“TWUL has no obligation in respect of this loan therefore it does not increase the debt burden of TWUL . . . These funds were provided by our external shareholders not third parties,” it said.

The prospect of a fresh investigation will add to pressure on Thames Water, which provides water and sewerage services to around 15mn households in London and surrounding areas. The company has faced rising financing costs on its £14.7bn of debt, as well as soaring prices for energy and labour. 

Financial pressure on the group is mounting according to company data. In accounts signed off on in July and published by Companies House last month, auditors PwC warned that Kemble Water Holdings was yet to confirm refinancing arrangements for a £190mn loan from external lenders due in April at one of the group’s many subsidiary companies — Kemble Water Finance.

PwC also warned there was “material uncertainty” about whether the group could continue as a going concern.

The government is on standby for a temporary renationalisation of Thames Water.

The utility provider and its regulators have been under scrutiny since June when chief executive Sarah Bentley quit abruptly following a boardroom bust-up just two years into an eight-year turnaround plan. Cathryn Ross, a former head of water regulator Ofwat, is acting as interim head until a new chief executive is appointed.

The company has asked Ofwat to approve a 40 per cent increase in customer bills by 2030 in addition to its annual inflation-based increases, which would take average household charges to at least £614 a year.

Separately from the £500mn financing, shareholders have agreed to invest £750mn in equity by the end of next year, Thames Water said in October that this was subject to a range of conditions including restrictions to regulatory fines for poor performance such as sewage pollution, an increase in permitted returns and higher bills.

The company admitted this week it was running behind on promised improvements to the pipe and sewage treatment network. The need for maintenance of its ageing infrastructure was diverting investment from bigger projects, it has said.

The Liberal Democrats called on Friday for a public inquiry into both Thames Water and Ofwat, saying it was not up to the job. Tim Farron, Lib Dem environment spokesperson, said Thames Water’s financing arrangements were “scandalous”.

“Conservative ministers must haul Thames Water in for emergency talks to demand answers, as well as launch an independent inquiry,” Farron said. “If a single penny of this is passed on to bill payers then it will be nothing less than a national scandal.”

Ofwat declined to comment.

More than 8mn people blacklisted by authorities after missed payments on mortgages and business loans

Defaults by Chinese borrowers have surged to a record high since the outbreak of the coronavirus pandemic, highlighting the depth of the country’s economic downturn and the obstacles to a full recovery.

A total of 8.54mn people, most of them between the ages of 18 and 59, are officially blacklisted by authorities after missing payments on everything from home mortgages to business loans, according to local courts.

That figure, equivalent to about 1 per cent of working-age Chinese adults, is up from 5.7mn defaulters in early 2020, as pandemic lockdowns and other restrictions hobbled economic growth and gutted household incomes.

The soaring number of defaulters will add to the difficulty of shoring up consumer confidence in China, the world’s second largest economy and a crucial source of global demand. It also throws a spotlight on the country’s lack of personal bankruptcy laws that might soften the financial and social impact of soaring debt.

Under Chinese law, blacklisted defaulters are blocked from a range of economic activities, including purchasing aeroplane tickets and making payments through mobile apps such as Alipay and WeChat Pay, representing a further drag on an economy plagued by a property sector slowdown and lagging consumer confidence. The blacklisting process is triggered after a borrower is sued by creditors, such as banks, and then misses a subsequent payment deadline.

“The runaway increase in defaulters is a product of not only cyclical but also structural problems,” said Dan Wang, chief economist at Hang Seng Bank China. “The situation may get worse before it gets better.”

The personal debt crisis follows a borrowing spree by Chinese consumers. Household debt as a percentage of gross domestic product almost doubled over the past decade to 64 per cent in September, according to the National Institution for Finance and Development, a Beijing-based think-tank.

But mounting financial obligations have become increasingly unmanageable as wage growth has stalled or turned negative in the midst of the economic malaise.

As a growing number of cash-strapped Chinese consumers have struggled to make ends meet, many have stopped paying their bills. More Chinese residents are also struggling for work: youth unemployment hit a record 21.3 per cent in June, prompting authorities to stop reporting the data.

“I will pay my Rmb28,000 ($4,000) credit card balance when I have a job,” said John Wang, a Shanghai-based office worker who defaulted on his payments after being laid off in May. “I don’t know when that will happen.”

China Merchants Bank said this month that bad loans from credit card payments that were 90 days overdue had increased 26 per cent in 2022 from the year before. China Index Academy, a Shanghai-based consultancy, reported 584,000 foreclosures in China in the first nine months of 2023, up almost a third from a year earlier.

Life for blacklisted borrowers can be difficult as they navigate dozens of state-imposed restrictions. Defaulters and their families are barred from government jobs, and they can even be prohibited from using toll roads.

Jane Zhang, owner of an advertising company in south-eastern Jiangxi province who defaulted on a bank loan, said she panicked when a local court banned her in May from using WeChat Pay to buy meals for her toddler.

“I thought my son was going to starve since I didn’t have any cash at hand and all my daily purchases were made through WeChat,” said Zhang, who later persuaded the court to drop the mobile payment ban while keeping other punishments in place.

As defaults climb, legal experts have proposed the introduction of personal bankruptcy laws with debt relief for individual insolvencies.

“We need to figure out a way to help individual defaulters rise up again,” said Liu Junhai, a law professor at Renmin University who helped draft China’s corporate bankruptcy law.

But a lack of transparency concerning personal finances has made such measures difficult to implement. Policymakers have made little progress in passing regulations on individual asset disclosures due to a backlash from government officials and other interest groups who fear the rules may reveal corruption.

With little hope of relief, many blacklisted borrowers have given up on restoring their financial health. Zhang decided to close her advertising business after losing accounts from local government departments, which are banned from working with blacklisted companies.

“The court said my life will return to normal if I pay off the debt,” she said. “But how can I make money when I am facing so many restrictions?”

Insurer Aspen chooses New York over London for planned $4bn IPO

Concerns about lower valuations and stringent listing requirements pushed management away from UK

Insurer Aspen is targeting New York instead of London for its planned $4bn initial public offering next year, partly because of management concerns about valuations and more stringent listing requirements in the UK, according to people familiar with the decision.

A listing by Aspen in New York, rather than on the London Stock Exchange alongside competitors such as Beazley, would be a fresh blow to the UK market. A number of companies have chosen to switch their listing to the US or float there over the past years.

Aspen is owned by private equity group Apollo and sells insurance and reinsurance through the Lloyd’s of London market as well as in Bermuda and the US.

It was founded in 2002 and is domiciled in Bermuda, but has more than half of its 1,100 employees in London. It was listed in New York until it was bought by Apollo five years ago. It is now being advised by Goldman Sachs, Citi and Jefferies on an IPO planned for the first half of next year, targeting an enterprise value at listing of up to $4bn, according to people familiar with its view.

The company conducted work to compare listing venues. The factors pushing management against London, according to people familiar with their deliberations, included a diminishing valuation premium over similar New York-listed insurers in recent years — and other technical requirements in London, such as that the company would have had to have one year’s worth of figures reaudited because of a change in auditor. It would have also been likely to have to do some work on translating its figures from their US accounting basis.

“As the relative valuations narrowed, then the technical issues become more impactful,” said one of the people, adding that greater liquidity in the US was also “an important factor”.

However, people familiar with Apollo’s position said the owner’s base case was always to relist in New York, given its historic ties, its US accounting basis and that the US is its biggest market. They highlighted Watches of Switzerland, the retailer that was more than 90 per cent owned by Apollo before a successful IPO in London in 2019.

Aspen, Apollo, Goldman, Citi and Jefferies declined to comment. Industry title Insurance Insider previously reported Aspen was planning a US IPO.

Aspen’s chief executive Mark Cloutier was previously the boss of Brit Group, which was also backed by Apollo and chose London for its 2014 IPO, before its acquisition a year later by Canadian group Fairfax Financial.

The number of big specialist insurers listed in London has dwindled with the acquisitions of groups such as Catlin, Amlin and Novae over the past decade. In recent months, Bermuda-based insurers Hamilton and Fidelis have opted for New York IPOs.

The head of the London Stock Exchange Group said last month that it was a “myth” that valuations were higher in the US and that there were no problems with liquidity in the London market.

Conduit Re, a Bermuda-based reinsurer, listed in London in late 2020. Chief executive Trevor Carvey told the Financial Times that a listing in the US would have been a “step too far” at the time, but the same decision today would have been more “50/50” because of liquidity considerations.

“What the US does offer for insurers, and specialist reinsurers, is a greater pool of specialist investor knowledge.”