LA LEttre A : Des créanciers assignent Orpea et la CDC pour obtenir l'annulation

Des créanciers assignent Orpea et la CDC pour obtenir l'annulation de l'accord

Le groupe Orpea et la Caisse des dépôts sont assignés devant le tribunal de commerce de Paris par un groupe de financiers non sécurisés. Dans leur ligne de mire : l'accord du 14 février qui a créé, selon eux, une classe d'actionnaires favorisée.

Une partie des créanciers d'Orpea demande au tribunal de commerce de Paris de prononcer la nullité de l'accord présenté par le groupe de maisons de retraite le 14 février. Consultée par La Lettre A, cette assignation est portée par un ensemble de douze créanciers financier non sécurisés, parmi lesquels les fonds Whitebox, Kyma Capital, LMR Partners ou Fortress Investment Group. Ces derniers contestent à la fois le processus ayant abouti à cet accord et plusieurs de ses clauses. L'assignation a également été délivrée à la Caisse des dépôts et consignations (CDC).

Au centre de cet épisode judiciaire, figure cet accord dit de "lock-up" ou de blocage intervenu après des mois de discussions tendues. Ce deal grave les engagements pris le 1er février entre Orpea, le groupement d'investisseurs mené par la CDC et les cinq principales institutions appelées le "SteerCo", Anchorage Capital Partners, Boussard & Gavaudan, Carmignac, Eiffel Investment Group et Schelcher Prince Gestion. Le groupe d'actionnaires Concert'O avait proposé de son côté le 13 février, soit la veille du fameux accord, un projet alternatif présenté comme plus favorable aux créanciers et aux actionnaires.

Tromperie possible des marchés financiers
En préambule, les fonds assignant Orpea et la CDC demandent au tribunal de lever le voile sur l'identité de l'ensemble des parties signataires de l'accord de lock-up. Cette liste avait fait l'objet d'un caviardage après avoir été demandée par le groupe de créanciers non sécurisés emmenés par le fonds anglais Whitebox.

Par ailleurs, l'assignation évoque également "une tromperie des marchés financiers". Dans un communiqué de presse du 1er février, Orpea avait en effet annoncé que le SteerCo et un groupe élargi de créanciers "détenant environ 50 % de la dette non sécurisée" donnaient leur accord de principe. Ce qui était inexact. Une nouvelle communication évoquait le 23 février ce même ensemble de créanciers élargis en estimant qu'il "détiendrait environ 45 % de la dette non sécurisée d'Orpea". Ce nouveau taux et l'emploi du conditionnel montrent que le groupe dirigé par Laurent Guillot naviguait bien à vue en matière de com' financière.

Avantages particuliers
La saisie du tribunal de commerce de Paris vise à démontrer que la stratégie d'Orpea et de la CDC a consisté à créer une classe de créanciers privilégiés, SteerCo inclus, en amont des discussions sur la restructuration du groupe de maisons de retraite. Ce qui a établi un déséquilibre entre les créanciers non sécurisés, selon Whitebox et ses alliés. Ces avantages particuliers auraient ensuite été accordés à une minorité de créanciers au détriment des autres, d'où une accusation d'achat de vote (LLA du 21/02/23).

Ouverte le 25 octobre pour quatre mois par le président du tribunal de commerce de Nanterre, la procédure amiable de conciliation de quatre mois - prolongée d'un mois - doit s'achever le 25 mars.

Business OF Fashion : The Niche Sport Driving Sneaker Sales

The Niche Sport Driving Sneaker Sales
Brands, retailers and investors are betting on trail running, the fast-growing endurance sport, to become activewear’s next big category.
In February, Italian luxury house Ermenegildo Zegna took a minority stake in Norda, a Canadian trail running start-up founded in 2020 by footwear industry veterans Willa and Nick Martire. (Zegna)

KEY INSIGHTS
  • Trail running, an off road endurance running sport which takes place across hills, forests and mountains, is seeing its popularity soar.
  • Brands like Nike, Asics and On are investing in their trail assortments, while start-ups like Norda and Satisfy are experiencing booming demand for their fashion-forward take on trail gear.
  • Sales of trail products are being boosted by interest from fashion consumers, drawn to their durability and gorpcore aesthetic.

The $150 billion sports footwear market is veering off road.
Trail running, an endurance running sport which takes place on uneven terrain across hills, forests and mountains, is seeing its popularity soar. In 2022, global participation grew by 106 percent compared to the year before, according to World Athletics. The specialised footwear needed to withstand the gruelling physical trial, accounts for a tiny but fast-growing segment of the performance footwear category.

While still very much a niche sport, megabrands and start-ups alike are betting on trail running to be activewear’s next big category.

Back in 2020, fashion industry veterans Willa and Nick Martire founded Norda to make an ultra-lightweight sneaker which looked good and performed well on dirt tracks (trail races can range from anywhere between five to over 160 kilometres long), said Nick, a former president of Authentic Brands Group and Canadian fashion group, Aldo.

The Norda 001 trail running shoe, designed in their home outside of Montreal, caused an instant buzz among running enthusiasts and fashion insiders when it launched in July 2021, hitting the shelves at Dover Street Market, Kith and Ssense.

Three months later, they received a surprise phone call from the Italian luxury house Ermenegildo Zegna, asking to work on a product collaboration.

Norda’s $210 trail shoes are now stocked in over 160 speciality running and fashion retailers worldwide, and in February, Zegna took a minority stake in the fledgling footwear brand. On Monday, the pair launched their first collaboration, a capsule comprising trail-inspired footwear designed by the former alongside outerwear designed by the Italian luxury menswear brand, to be sold at Zegna stores worldwide and at retailers including Harrods and Ssense.

Choosing not just to collaborate, but to invest in a small trail footwear brand operating in a tiny market niche was an interesting decision. The Italian luxury group is on a hot streak as it repositions itself as a luxury leisurewear brand, rather than a formalwear specialist. Its newfound presence in the outdoors andThe Niche Sport Driving Sneaker Sales
Brands, retailers and investors are betting on trail running, the fast-growing endurance sport, to become activewear’s next big category.
TK
In February, Italian luxury house Ermenegildo Zegna took a minority stake in Norda, a Canadian trail running start-up founded in 2020 by footwear industry veterans Willa and Nick Martire. (Zegna)
By DANIEL-YAW MILLER
07 March 2023
BoF PROFESSIONAL
KEY INSIGHTS
Trail running, an off road endurance running sport which takes place across hills, forests and mountains, is seeing its popularity soar.
Brands like Nike, Asics and On are investing in their trail assortments, while start-ups like Norda and Satisfy are experiencing booming demand for their fashion-forward take on trail gear.
Sales of trail products are being boosted by interest from fashion consumers, drawn to their durability and gorpcore aesthetic.
The $150 billion sports footwear market is veering off road.

Trail running, an endurance running sport which takes place on uneven terrain across hills, forests and mountains, is seeing its popularity soar. In 2022, global participation grew by 106 percent compared to the year before, according to World Athletics. The specialised footwear needed to withstand the gruelling physical trial, accounts for a tiny but fast-growing segment of the performance footwear category.

While still very much a niche sport, megabrands and start-ups alike are betting on trail running to be activewear’s next big category.

Back in 2020, fashion industry veterans Willa and Nick Martire founded Norda to make an ultra-lightweight sneaker which looked good and performed well on dirt tracks (trail races can range from anywhere between five to over 160 kilometres long), said Nick, a former president of Authentic Brands Group and Canadian fashion group, Aldo.

The Norda 001 trail running shoe, designed in their home outside of Montreal, caused an instant buzz among running enthusiasts and fashion insiders when it launched in July 2021, hitting the shelves at Dover Street Market, Kith and Ssense.

Three months later, they received a surprise phone call from the Italian luxury house Ermenegildo Zegna, asking to work on a product collaboration.


Norda’s $210 trail shoes are now stocked in over 160 speciality running and fashion retailers worldwide, and in February, Zegna took a minority stake in the fledgling footwear brand. On Monday, the pair launched their first collaboration, a capsule comprising trail-inspired footwear designed by the former alongside outerwear designed by the Italian luxury menswear brand, to be sold at Zegna stores worldwide and at retailers including Harrods and Ssense.

Choosing not just to collaborate, but to invest in a small trail footwear brand operating in a tiny market niche was an interesting decision. The Italian luxury group is on a hot streak as it repositions itself as a luxury leisurewear brand, rather than a formalwear specialist. Its newfound presence in the outdoors and performance-wear categories is designed to further help the brand diversify its appeal amidst menswear’s casualisation.

The partnership will allow the company to access a consumer base focussed on the “luxury outdoors” category, Zegna’s artistic director, Alessandro Sartori, told BoF.

Tapping into a business at the forefront of the fast-growing trail category could also boost the group’s bottom line, in the long-term.

Zegna's investment in Norda comes as the luxury Italian house is shifting its product offering to focus on lifestyle, rather than formalwear.
Zegna's investment in Norda comes as the luxury Italian house is shifting its product offering to focus on lifestyle, rather than formalwear products (Zegna)
Trail footwear, clothing and accessories are beginning to drive meaningful sales for larger activewear brands like On and Asics as they scale their trail assortments and sign professional trail athletes as brand ambassadors.

Fashion brands and retailers are co-opting trail running’s gritty outdoor aesthetic through collaborations with specialist incumbents like Salomon and Merrell. Buzzy brands like Soar Running and Paris-based Satisfy are making fashion-forward trail apparel and accessories like breathable balaclavas and hydration vests to capitalise on the sport’s growing appeal among regular running and lifestyle consumers drawn to the durability and technical elements of trail products, such as water resistance, insulation and ultra-light materials like the Dyneema fabric used for the upper of Norda’s running shoes.

Meanwhile, the gorpcore-friendly outdoors aesthetic of trail products has led to attention from fashion consumers. Salomon’s recent evolution from a niche outdoors equipment brand to a sneaker powerhouse was predicated on the sudden popularity of its XT-6 model, the now-famous trail shoe worn by celebrities like Rihanna and Bella Hadid. TikTok has also helped to spread the aesthetic and wellness credentials of the sport: #trailrunning has over 400 million views on the platform.

“Whenever an activity gets hot, especially one drawing a wide-ranging demographic, product will follow,” said Tim Newcomb, a journalist and sports footwear specialist. “In the same way we have seen tennis and basketball impact footwear, trail is beginning to have a similar influence.”

A Merchandising Gold Mine
For Japanese sportswear giant Asics, trail accounts for one of its fastest growing performance categories in terms of sales, with an average annual growth rate of 10 percent over the last three years, according to Magdalena Gassebner, the brand’s product marketing specialist for trail. In 2018, trail inspired the first iteration of Asics’ most famous lifestyle sneaker collaboration, with menswear designer Kiko Kostadinov, which borrowed the upper of the “GEL-VENTURE 6″ trail shoe.

Since 2020, Asics has invested heavily in the category, adding new performance products and scaling its roster of sponsored trail athletes from six to 45 trail runners, adding the likes of 24-year-old rising star Sara Alonso.

Last week, Nike announced an expansion of its own trail category, introducing new footwear models like the “Nike Kiger 9″ and the water-resistant “Pegasus Trail 4 GORE-TEX”.

Swiss running brand On is also “dedicating more and more resources” to its trail category, said Annaleigh Hockaday, the brand’s global head of product, performance outdoor. After launching trail footwear in 2016, On will debut a head-to-toe apparel line for the sport this summer. “Trail accounts for a small but significant amount of On’s business — this segment is growing year-over-year and we plan to evolve and grow to cater to more trail users,” Hockaday said.

As participation in the sport increases, there are endless merchandising opportunities for brands with dedicated trail offerings like Nike, On and Asics, thanks to the range of equipment needed by participants. Due to the extreme nature of trail running competitions, many of which last for over 100 kilometeres and take place in sub-zero or sweltering temperatures, each race comes with a list of mandatory equipment, including hydration vests which allow runners to drink through a tube and store essential food and medical equipment, as well as breathable jackets, shorts, visors, thermals and sunglasses, depending on the conditions.

Alongside the growing popularity of trail running itself, Gassebner credits the adoption of trail products by regular runners and lifestyle consumers for the uptick in sales.

So too does Brice Partouche, founder of fast-growing luxury running brand Satisfy, which raised $2.5 million in late 2021 in a funding round led by public investment bank Bpifrance.

Satisfy, trail running, BoF, activewear
Satisfy's campaigns centre the fashion-forward elements of the trail running aesthetic. (Satisfy)
Over 70 percent of Satisfy’s clothing is made for trail competition use and is compliant with the industry-wide gold standard known as the UTMB, named after a famous trail race in the French Alps. These days, a growing portion of the brand’s sales comes from casual road runners who see the durability and quality of trail gear as worth the added investment, said Partouche. (A Satisfy windbreaker will set you back €390 ($419), for example, and the brand’s shorts cost €180 — far more than what consumers fork out for performance running gear at Nike or Adidas.)

Gorp-Friendly Gear
When Partouche founded Satisfy in 2015, he “made it a clear strategy to align ourselves with the fashion calendar,” hosting showrooms and group runs with buyers and friends of the brand during Paris Fashion Week Men’s each year, he said. The brand’s visually stimulating marketing campaigns, often shot mid-race in deserts and forests, feature many of the long-haired, tattooed, hipster ultrarunners that make up its community. Meanwhile, the popularity of trail products as fashion items has soared over the last few years as trends such as gorpcore-centred technical footwear and clothing.

It’s Satisfy’s fashion-forward take on the trail aesthetic, combined with its reputation for creating technologically advanced gear for experienced trail athletes, that has led the brand to be stocked at market-leading speciality running stores such as Glasgow’s Achilles Heel, as well as luxury fashion retailers like Browns, Mytheresa and Mr Porter.

“Trail culture is like skateboarding — even when you are not out practising the sport, people still want to display they are part of the community, by wearing trail shoes or the technical clothing,” Partouche told BoF.

Brands are betting that demand trail products will long outlive the trends like gorpcore which helped bring the niche sport into the wider fashion industry.

It’s no longer about the watch you own, it’s about what the sneakers on your feet say about you as a person.

Merrell, a 40-year-old Michigan-based hiking and trail footwear manufacturer, has become an unlikely in-the-know gorpcore favourite over the last two years, co-creating colourful iterations of its footwear with brands like Sweaty Betty, and recently launching a capsule collection in collaboration with celebrity stylist Jason Bolden.

“Performance is a lifestyle now,” said Nick Martire of Norda. “Particularly in menswear, it’s no longer about the watch you own, it’s about what the sneakers on your feet say about you as a person.” performance-wear categories is designed to further help the brand diversify its appeal amidst menswear’s casualisation.

The partnership will allow the company to access a consumer base focussed on the “luxury outdoors” category, Zegna’s artistic director, Alessandro Sartori, told BoF.

Tapping into a business at the forefront of the fast-growing trail category could also boost the group’s bottom line, in the long-term.
Zegna's investment in Norda comes as the luxury Italian house is shifting its product offering to focus on lifestyle, rather than formalwear products (Zegna)

Trail footwear, clothing and accessories are beginning to drive meaningful sales for larger activewear brands like On and Asics as they scale their trail assortments and sign professional trail athletes as brand ambassadors.

Fashion brands and retailers are co-opting trail running’s gritty outdoor aesthetic through collaborations with specialist incumbents like Salomon and Merrell. Buzzy brands like Soar Running and Paris-based Satisfy are making fashion-forward trail apparel and accessories like breathable balaclavas and hydration vests to capitalise on the sport’s growing appeal among regular running and lifestyle consumers drawn to the durability and technical elements of trail products, such as water resistance, insulation and ultra-light materials like the Dyneema fabric used for the upper of Norda’s running shoes.

Meanwhile, the gorpcore-friendly outdoors aesthetic of trail products has led to attention from fashion consumers. Salomon’s recent evolution from a niche outdoors equipment brand to a sneaker powerhouse was predicated on the sudden popularity of its XT-6 model, the now-famous trail shoe worn by celebrities like Rihanna and Bella Hadid. TikTok has also helped to spread the aesthetic and wellness credentials of the sport: #trailrunning has over 400 million views on the platform.

“Whenever an activity gets hot, especially one drawing a wide-ranging demographic, product will follow,” said Tim Newcomb, a journalist and sports footwear specialist. “In the same way we have seen tennis and basketball impact footwear, trail is beginning to have a similar influence.”

A Merchandising Gold Mine
For Japanese sportswear giant Asics, trail accounts for one of its fastest growing performance categories in terms of sales, with an average annual growth rate of 10 percent over the last three years, according to Magdalena Gassebner, the brand’s product marketing specialist for trail. In 2018, trail inspired the first iteration of Asics’ most famous lifestyle sneaker collaboration, with menswear designer Kiko Kostadinov, which borrowed the upper of the “GEL-VENTURE 6″ trail shoe.

Since 2020, Asics has invested heavily in the category, adding new performance products and scaling its roster of sponsored trail athletes from six to 45 trail runners, adding the likes of 24-year-old rising star Sara Alonso.
Last week, Nike announced an expansion of its own trail category, introducing new footwear models like the “Nike Kiger 9″ and the water-resistant “Pegasus Trail 4 GORE-TEX”.

Swiss running brand On is also “dedicating more and more resources” to its trail category, said Annaleigh Hockaday, the brand’s global head of product, performance outdoor. After launching trail footwear in 2016, On will debut a head-to-toe apparel line for the sport this summer. “Trail accounts for a small but significant amount of On’s business — this segment is growing year-over-year and we plan to evolve and grow to cater to more trail users,” Hockaday said.

As participation in the sport increases, there are endless merchandising opportunities for brands with dedicated trail offerings like Nike, On and Asics, thanks to the range of equipment needed by participants. Due to the extreme nature of trail running competitions, many of which last for over 100 kilometeres and take place in sub-zero or sweltering temperatures, each race comes with a list of mandatory equipment, including hydration vests which allow runners to drink through a tube and store essential food and medical equipment, as well as breathable jackets, shorts, visors, thermals and sunglasses, depending on the conditions.

Alongside the growing popularity of trail running itself, Gassebner credits the adoption of trail products by regular runners and lifestyle consumers for the uptick in sales.

So too does Brice Partouche, founder of fast-growing luxury running brand Satisfy, which raised $2.5 million in late 2021 in a funding round led by public investment bank Bpifrance.
Satisfy's campaigns centre the fashion-forward elements of the trail running aesthetic. (Satisfy)

Over 70 percent of Satisfy’s clothing is made for trail competition use and is compliant with the industry-wide gold standard known as the UTMB, named after a famous trail race in the French Alps. These days, a growing portion of the brand’s sales comes from casual road runners who see the durability and quality of trail gear as worth the added investment, said Partouche. (A Satisfy windbreaker will set you back €390 ($419), for example, and the brand’s shorts cost €180 — far more than what consumers fork out for performance running gear at Nike or Adidas.)

Gorp-Friendly Gear
When Partouche founded Satisfy in 2015, he “made it a clear strategy to align ourselves with the fashion calendar,” hosting showrooms and group runs with buyers and friends of the brand during Paris Fashion Week Men’s each year, he said. The brand’s visually stimulating marketing campaigns, often shot mid-race in deserts and forests, feature many of the long-haired, tattooed, hipster ultrarunners that make up its community. Meanwhile, the popularity of trail products as fashion items has soared over the last few years as trends such as gorpcore-centred technical footwear and clothing.

It’s Satisfy’s fashion-forward take on the trail aesthetic, combined with its reputation for creating technologically advanced gear for experienced trail athletes, that has led the brand to be stocked at market-leading speciality running stores such as Glasgow’s Achilles Heel, as well as luxury fashion retailers like Browns, Mytheresa and Mr Porter.

“Trail culture is like skateboarding — even when you are not out practising the sport, people still want to display they are part of the community, by wearing trail shoes or the technical clothing,” Partouche told BoF.

Brands are betting that demand trail products will long outlive the trends like gorpcore which helped bring the niche sport into the wider fashion industry.

It’s no longer about the watch you own, it’s about what the sneakers on your feet say about you as a person.
Merrell, a 40-year-old Michigan-based hiking and trail footwear manufacturer, has become an unlikely in-the-know gorpcore favourite over the last two years, co-creating colourful iterations of its footwear with brands like Sweaty Betty, and recently launching a capsule collection in collaboration with celebrity stylist Jason Bolden.

“Performance is a lifestyle now,” said Nick Martire of Norda. “Particularly in menswear, it’s no longer about the watch you own, it’s about what the sneakers on your feet say about you as a person.”

FT : Fed’s Jay Powell faces high-stakes appearance in Congress amid troubling in

Fed’s Jay Powell faces high-stakes appearance in Congress amid troubling inflation data
Testimony before Senate Banking Committee comes as central bank is still struggling to cool US economy

Jay Powell is set for a high-stakes appearance before Congress on Tuesday, as the Federal Reserve weighs how aggressively to keep raising interest rates in the face of stubbornly high inflation.

Powell’s testimony before the Senate Banking Committee will be the Fed chair’s first public remarks since troubling inflation data releases showed the central bank is still struggling to cool the US economy despite its year-long campaign of monetary tightening.

The Fed’s main interest rate is at a target range between 4.5 and 4.75 per cent, compared to near-zero at this time last year. But Fed officials have increasingly signalled they will have to lift it more — and keep it higher for longer — to ensure a more rapid decline in inflation towards the central bank’s 2 per cent target.

Lawmakers and investors will be looking for clues from Powell as to whether he favours another one-notch 25 basis point rate increase at the next Federal Open Market Committee meeting on March 21-22 or if he might consider a more hefty 50 basis point increase.

They will also be looking for signals of a shift in the Fed’s expectations of how high it will have to raise rates overall this cycle. In December, Fed officials projected interest rates will reach a peak of 5.1 per cent this year.

But Powell may want to withhold judgment on both fronts because there is still one important monthly jobs data report due on Friday, and another month of inflation data next week, before the FOMC decision.

“Powell will stick to hawkish themes, but will he be more hawkish than what’s already priced into rates?” Tim Duy, chief US economist at SGH Macro Advisors, wrote in a note on Monday.

Krishna Guha and Peter Williams of Evercore ISI said: “We think the Fed chair will open the door to a calibrated upward move in the estimated peak interest rate in March if the next batch of data confirms the strength from January, but will not turn max hawkish or fuel speculation of a 50bp move.”

Politically, Powell is likely to face renewed pressure from Republicans to be aggressive and not fall behind the curve in tackling inflation. But Democrats have been growing increasingly anxious that the Fed will go too far in tightening monetary policy, triggering a recession that could undermine many of the labour market gains achieved during the recovery out of the pandemic.

Meanwhile, Powell is also expected to face questions on banking regulation, with Democrats pressing the Fed to tighten capital standards for the largest institutions, and Republicans pleading for a looser treatment. Michael Barr, the Fed’s vice-chair for supervision, is leading a review of capital rules.

FT : Is AI hype the new crypto?

Is AI hype the new crypto?
Sarah Guo moved on quickly from the crypto winter.

Six months ago, she was leading investment into the sector for venture capital firm Greylock, alongside her role as an angel investor in cryptocurrency exchange FTX.

FTX has since collapsed, along with cryptocurrency values. Guo hasn’t. Instead, she has raised more than $100mn for a new fund with a new focus: artificial intelligence.

Guo isn’t alone in pivoting fast towards a technology that has lit up Silicon Valley and given investors something to talk about other than the downturn. But a sizeable group remains unpersuaded, the FT’s George Hammond reports.

A string of “generative AI” platforms, aka tools such as OpenAI’s ChatGPT chatbot, which is capable of answering complex questions with text in natural-sounding language, have raised fresh cash in the past few months, at far higher valuations than in previous rounds.

Sceptics don’t doubt the technology’s potential. But they can’t see how to make money from it.

The money is going into “foundation models”, machine-learning systems that have the potential to disrupt everything from copywriting to medical diagnostics, but require huge amounts of data and computing power to operate.

They also require huge amounts of cash, and the layer of applications built on top of them — which many venture capitalists regard as the easiest way to make money on the technology — has yet to be developed.

With the chastening experience of the crypto crash in the recent past, some investors aren’t ready to place bets.

“Sometimes the bubble moves from one place to the other, the money has to go somewhere,” said one venture capital investor who saw a crypto bet sour last year. “During these hype cycles there will be many things which are overvalued — there are many toys.”

FT : How a Saudi Prince lost a £250mn London mansion

For sale: a £250mn mansion with a convoluted past
No property has embodied London’s lucrative, decades-long love affair with Saudi money quite like The Holme.

But the sprawling 40-room Regent’s Park mansion could also come to symbolise financial pressure on Saudi Arabia’s royal elite and their overseas investments.


The sale stems from a 2016 lease by Prince Khaled bin Sultan al-Saud for a private jet. At the time, his Swiss wealth advisers pulled together a list of assets to secure financing that included the crown jewel of his family fortune: The Holme.

But to collect unpaid lease payments on the jet, a company managed by London hedge fund Attestor has appointed receivers for the property, pushing the 205-year-old house back on to the market, the FT reports.

The sale offers a rare glimpse into Britain’s normally discreet high-end property market, as DD delved into last week.

A lawsuit from a second lender, Yuntian 10 Leasing Company — an Irish subsidiary of China Minsheng Bank that leased Prince Khaled his private jet via a Bermuda company — has only increased the public scrutiny.

Yuntian claims that Prince Khaled, who transferred $43mn in cash to Guernsey-registered Quendon Limited to buy The Holme back in 1991, has retained a beneficial ownership interest in the property. Therefore, it argues, the house can be used to collect unpaid lease payments on the jet.

The £250mn that The Holme may fetch would be London’s most expensive residential deal on record. His father’s estate was the previous record holder when it sold a £210mn home in London to Evergrande billionaire Hui Ka Yan in 2020.

Even so, Prince Khaled has mostly remained under the radar until recently.

After being dubbed the “Father of Saudi Arabia’s missile” for his work procuring weapons for the kingdom, the former Saudi deputy defence minister and eldest son of Saudi Arabia’s former Crown Prince Sultan bin Abdulaziz al-Saud left his military career behind to pursue marine conservation.

Described by his foundation as an “avid scuba diver”, the ocean enthusiast has hosted research expeditions on his Golden Odyssey yacht. That same vessel made an appearance in the “Paradise Papers” — which listed Prince Khaled as having registered at least eight companies in Bermuda, “some of which were used to own yachts and aircraft”.

The real estate saga has also shed light on the number of investors that have backed the Guernsey vehicle Quendon over the years.

Quendon has borrowed more heavily against the house in recent years, using funds from Standard Chartered to repay a loan from Citibank, and a new loan from Attestor-managed Trinity Investments to repay that one.

An adviser to Saudi royalty said Prince Khaled “was in a very good position” financially after the 2011 death of his father, receiving the “lion’s share” of the inheritance.

But they pointed to one major catalyst as to where things went south: “his financial circumstances changed massively” around 2017, the adviser said.

That year marked a big change in the finances of Saudi royals, as Crown Prince Mohammed bin Salman became the kingdom’s de facto ruler and began to rein in lavish state spending on princes and marginalise those not closest to him.

>>> US After Hours Summary: WW +6.2%, AVAV +2%, TCOM +1.9% all up on earnings; C

After Hours Summary: WW +6.2%, AVAV +2%, TCOM +1.9% all up on earnings; CARA -28.2%, CVGW -15.7%, DOMO -4.4% (also names new CEO and CFO) all down on earnings, DXC -3.6% falling after ending discussions regarding possible buyout

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: WW +6.2% (also buying Sequence for $106 mln net), AVAV +2%, TCOM +1.9%, GWRE +0.7%, HPK +0.3%

Companies trading higher in after hours in reaction to news: GSAT +2.6% (collaborating with Qualcomm), TELL +0.7% (appoints new CFO), BBIO +0.3% (proposes $150 mln public offering), SO +0.1% (subsidiary reaches step prior to electricity generation), RIO +0.1% (to pay penalty to settle SEC charges)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CARA -28.2%, CVGW -15.7%, DOMO -4.4% (also names new CEO and CFO), CHRS -4%, NTNX -3.5%, KEY -2.5% (reduces FY23 net interest income outlook)

Companies trading lower in after hours in reaction to news: ZYXI -12.7% (postpones Q4 results), GSBD -5% (stock offering), DXC -3.6% (terminates discussions regarding potential takeover), HLNE -1.1% (stock offering), AMRN -1.1% (all independent board members resigning), PBR -0.6% (expands partnership with Equinor), CDNA -0.2% (not participating in scheduled conference), SLVM -0.1% (stock offering)

FT : Telecom Italia: shareholders deserve a competitive auction

Telecom Italia: shareholders deserve a competitive auction
State-owned lender’s bid is similar to KKR’s, but it attributes less value to FiberCop

Italian takeovers are rarely straightforward affairs. It is not uncommon for “patriotic” national bidders to wade in with government backing. Telecom Italia shareholders must hope Prime Minister Giorgia Meloni is not tempted to add the telecoms company to that list.

State-owned lender Cassa Depositi e Prestiti has made an offer for Telecom Italia’s infrastructure unit NetCo. This follows a bid from private equity giant KKR in February, which reportedly valued the network at €18bn plus a €2bn earnout.

CDP’s bid is similar to KKR’s, but it attributes less value to FiberCop, the NetCo unit that runs the last-mile network between streets and homes. KKR, which already has a 37.5 per cent stake in FiberCop, appears to be pencilling in some €10bn. That would cut net proceeds to TI shareholders to around €14bn. CDP reportedly thinks FiberCop is worth less than €7.7bn, which would increase the overall payout for TI itself

CDP’s offer comes with added uncertainty. As it owns rival network Open Fiber any deal would need antitrust clearance. This may take time and require disposals. TI has €25.5bn of net debt, equivalent to 4.4 times expected ebitda for 2022. It needs to close a deal in a timely fashion.

TI will now be trying to start a competitive auction. KKR’s €18bn offer is certainly no knockout, valuing TI at nine times ebitda. Other infrastructure deals in the sector have achieved mid- to high-teen multiples.

True, TI’s network is mostly copper, and will need some €7bn of capex in the next three years to upgrade to fibre. But there might still be room to sweeten the overall terms. KKR may want to use its position as a minority shareholder of FiberCop to angle for a higher CDP bid.

This would all be to the benefit of TI shareholders — unless the Italian government queers the pitch. Meloni should make it clear that this is one for the market to call and leave the bidders to slug it out.

FT : SAP/Qualtrics: valuation is a victim of market history in the making

SAP/Qualtrics: valuation is a victim of market history in the making
Markets have changed their minds about high-growth, low-profit companies

Wheeling and dealing is a lot more fun than takeover integration. That seems to be the lesson from SAP’s rollercoaster ride with Qualtrics.

The German software titan first acquired the Utah software start-up in late 2018 for $8bn in cash. On Monday, Qualtrics disclosed that private equity firm Silver Lake had made a $12bn bid in partnership with Canada’s largest pension fund.

This would appear more impressive if SAP had not floated a stake in Qualtrics in early 2021 at a $15bn group valuation. Amid the frenzy in growth stocks, Qualtrics at one point boasted a market capitalisation of nearly $30bn.

SAP justified its ownership of Qualtrics with the idea that its massive sales team would sell Qualtrics products to its big established client base. Qualtrics makes software that helps customers create surveys and analyse the resulting data.

Qualtrics grew quickly enough. In 2018, the company recorded $400mn in annual revenue. By 2022, that figure had hit $1.5bn. SAP’s efforts to become more cloud-based and lift the valuations of both businesses further have, however, fallen short.

The evolution of Qualtrics’ valuation shows how markets have changed their minds about high-growth, low-profit companies. SAP’s initial $8bn acquisition valued Qualtrics at roughly 20 times trailing annual revenue. The 2021 IPO was roughly at that same highly elevated price.

Silver Lake is looking to pay well under 10 times trailing annual revenue. As for profits, Qualtrics forecasts an operating margin for 2023 of just 10 per cent. That is on an adjusted basis which suppresses a massive stock-based compensation expense.

SAP is in a position to sell Qualtrics for a higher price than it paid. Securities filings show that SAP also wrung out a $2bn dividend from the start-up.

Still, supplementary cash flows aside, big companies undertake blockbuster M&A to make big strategic leaps. If SAP merely sells after a few years for less than double Qualtrics’ purchase price, it should chalk the deal up to experience.

>>> US Close Dow +0.12% S&P +0.07% Nasdaq -0.11%

Closing Stock Market Summary

Today's trade started on a more upbeat note. The main indices enjoyed a positive standing in the early going, supported by gains in some mega cap stocks. Apple (AAPL 153.83, +2.80, +1.9%) led the charge in that respect after Goldman Sachs initiated coverage with a Buy rating and a $199 price target.

Things were more shaky under the surface, though, as investors played a waiting game ahead of key events later this week, including Fed Chair Powell's monetary policy testimony before Senate and House committees on Tuesday and Wednesday, respectively, followed by the February Employment Report on Friday.

Even at midday, when the main indices traded near their best levels of the day, decliners led advancers by a 4-to-3 margin at the NYSE and a 5-to-3 margin at the Nasdaq. 

Underlying weakness became more apparent as mega cap strength started to fade. This coincided with selling efforts ramping up in the Treasury market. The 2-yr note yield, which stood at 4.83% before the stock market opened, rose five basis points to 4.91%. The 10-yr note yield, which stood at 3.90% before the stock market opened, rose two basis points to 3.98%.

The main indices spent most of the afternoon in a slow grind lower, ultimately settling near their lows for the day. At the close, decliners led advancers by a roughly 2-to-1 margin at both the NYSE and the Nasdaq. 

Roughly half of the 11 S&P 500 sectors closed with a gain, but moves in either direction were modest in scope. The only sector to move more than 1.0% was materials (-1.7%), reflecting potential concerns about China providing a 2023 growth forecast of around 5.0% that was more conservative than expected. On the flip side, gains in Apple propelled information technology (+0.5%) to the top spot on the leaderboard. 

Separately, small cap and mid cap stocks underperformed by a notable margin today presumably on concerns about the U.S. economy weakening in the months ahead as the Fed continues to raise rates. The Russell 2000 fell 1.5% and the S&P Mid Cap 400 dropped 1.2%. 

  • Nasdaq Composite: +11.6% YTD
  • Russell 2000: +7.9% YTD
  • S&P Midcap 400: +7.9% YTD
  • S&P 500: +5.4% YTD
  • Dow Jones Industrial Average: +0.9% YTD

Today's economic data was limited to the January Factory Orders, which declined 1.6% month-over-month in January (consensus -1.8%) following a downwardly revised 1.7% increase (from 1.8%) in December. Shipments of manufactured goods increased 0.7% month-over-month after declining 0.6% in December. 

  • The key takeaway from the report was the strength (and rebound) seen in nondefense capital goods orders, excluding aircraft. Shipments of these same goods, which factor into GDP forecasts, were up 1.1% after declining 0.6% in December.

Market participants will receive the following economic data tomorrow:

  • 10:00 ET: January Wholesale Inventories (consensus -0.4%; prior 0.1%)
  • 15:00 ET: January Consumer Credit ( consensus $22.90 bln; prior $11.60 bln)

FT : ENRC seeks £21mn in legal costs from SFO and Dechert in dispute over fraud

ENRC seeks £21mn in legal costs from SFO and Dechert in dispute over fraud probe
Kazakh mining company tells court that anti-graft agency would not have opened investigation had it not breached its duties

Kazakh mining group ENRC asked a judge in London on Monday to award it more than £21mn to cover legal costs it incurred just prior to the UK’s Serious Fraud Office launching an ongoing probe a decade ago into claims of fraud and corruption.

The court was asked to find the SFO, law firm Dechert and one of its former partners Neil Gerrard liable for the fees and cost of “unnecessary work” paid by ENRC for two years up to 2013 when the SFO launched its probe into claims of alleged fraud and corruption.

The move follows a partial legal victory in May last year by the company over the way the agency handled the investigation. At the time, the court ruled that the SFO had breached its duties by accepting information that Gerrard, a lawyer at Dechert who had been hired by ENRC to run an internal investigation into corruption allegations, was not authorised to give.

Mr Justice David Waksman found that the SFO had also induced Gerrard to breach his own duties to his client. The judge, however, cleared the SFO of other wider wrongdoing, including misfeasance in public office.

The £21mn claim by ENRC is part of a wider £70mn lawsuit over the SFO’s probe into the company. The company plans to pursue the remainder of its claim for damages at a separate hearing.

At the start of Monday’s hearing to determine liability for damages, ENRC argued that the SFO would not have opened the criminal probe had it not breached its duties by accepting confidential information from a “dishonest” lawyer.

ENRC’s barrister Nathan Pillow said “unauthorised” meetings between Gerrard and the SFO caused the agency to become “jaundiced” towards ENRC.

The SFO denies causing any loss to ENRC and argued that it would have opened a criminal probe whether or not it had accepted unauthorised information from Gerrard.

The agency argued in its court filings that evidence, including that handed over by ENRC and complaints raised by non-profit group Global Witness “provided ample basis for opening a criminal investigation”. It added that any losses incurred by ENRC were “solely and exclusively” caused by Gerrard and Dechert.

In skeleton arguments, Dechert urged the judge to consider the “ramifications of the SFO’s conduct in this affair” when considering how to apportion blame between it and the agency. Dechert said it had already paid ENRC £8.9mn in damages.

In his filing, Gerrard said he adopted “Dechert’s position as against both ENRC and the SFO”.

The two-week hearing will determine what loss, if any, the conduct of the agency, Dechert and Gerrard caused ENRC, and set the level of any damages. The trial continues.