FT : Hollywood mogul Ari Emanuel’s Endeavor valued at $10bn

Hollywood mogul Ari Emanuel’s Endeavor valued at $10bn
Company raises $1.9bn in private placement and initial public offering

Hollywood talent agency-owner Endeavor raised $1.9bn through its public listing and a simultaneous private placement of its shares on Wednesday, valuing the company at just over $10bn and cementing the wealth of its founder Ari Emanuel.

It sold shares at $24 apiece, at the top of the range it set earlier this month.

Emanuel and Patrick Whitesell, Endeavor’s executive chair, together with other executives, will own a pot of 37.7m of Endeavor’s 429.7m shares, a stake worth more than $900m at the IPO price.

Emanuel founded Endeavor in 1995 as a talent agency and the company has expanded and diversified through a number of acquisitions, buying rival William Morris Agency and sports agency IMG and adding the Ultimate Fighting Championship and the Miss Universe beauty pageant to its portfolio.

Endeavor raised $511m from stock market investors in the IPO and another $1.4bn through a simultaneous private placement of its shares. Investors in the private placement include New England Patriots owner Robert Kraft, Abu Dhabi state fund Mubadala and Elliott Investment Management.

KKR, which bought a slice of UFC in 2016, also raised roughly $437m through a sale of its Endeavor stake through the concurrent private placement.

Endeavor was hit hard by the pandemic last year, after live events were halted and movie and television productions were shut down. Losses widened in 2020 to $625m on $3.5bn in revenue.

UFC, the mixed martial arts franchise that Endeavor bought in 2016 in partnership with private equity groups, has been a more reliable part of the group’s business. Although UFC was also affected by the cancellation of events, the company is relatively stable thanks to a long-term licensing deal with Disney, netting it $300m a year to air UFC events on ESPN and its streaming service.

Endeavor plans to use some of the IPO proceeds to buy the remaining 49.9 per cent of UFC that it does not already own.

It previously attempted to float in 2019, when it sought to raise as much as $712m at an $8bn valuation, before shelving the plan because of limited investor appetite.

Morgan Stanley, Goldman Sachs, JPMorgan Chase and Deutsche Bank advised on the 2021 offering.

>>> US After Hours Summary: Busy earnings night, notable names: FB +6.2%, QCOM +

After Hours Summary: Busy earnings night, notable names: FB +6.2%, QCOM +5.4%, AAPL +2.3% on upside; NOW -7.3%, EBAY -5.5%, F -3.1% on downside

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CCS +9.8%, CAKE +7.6%, MTH +7.5%, ECHO +6.9%, FB +6.2%, LC +5.5%, QCOM +5.4%, ALGN +4.5% (also extends deal with DECA Dental thru early 2025), CYH +4.3%, PEGA +4%, TROX +3.3%, TWOU +3.1%, WELL +2.8%, CLR +2.5% (also reinstates dividend), AAPL +2.3%, ORLY +2.1%, MC +2% (also also declares special dividend of $2/sh), CCOI +2% (also increases dividend), WRE +1.9%, MGM +1.6%, OPK +1.2%, AVT +0.8%, PGRE +0.8%, OCN +0.8%, AR +0.7%, CHX +0.7%, PSA +0.5%, EQIX +0.4%, AVB +0.3%, CNMD +0.3%, VVV +0.3%, CREE +0.2%, NGVT +0.2%, WH +0.2%, AGI +0.1%, ATUS +0.1%, BHE +0.1%, EXR +0.1%, RJF +0.1%, WCN +0.1%

Companies trading higher in after hours in reaction to news: GRTX +23.9% (provides updated data from Phase 1/2 pilot trial of GC4419), AKBA +8.1% (NEJM publishes Phase 3 clinical program of vadadustat), TWTR +3.3% (in sympathy with strong FB earnings), CLII +1.7% (EVgo confirms opening of first fast charging stations in collaboration with GM), AXTI +0.8% (supplies first 8-inch gallium arsenide wavers to major customer; also reports earnings), AMZN +0.8% (to roll out pay increases of $0.50-3.00 per hour; also AWS announces general availability of Amazon Nimble Studio), BHLB +0.2% (approves stock repurchase program for up to 2.5 mln shares), CW +0.1% (selected by Scientific Research to provide its Fortress flight recorder system for USAF and Navy)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AZPN -14.3%, BCOV -13.4%, FORM -9.6%, PI -8.6%, NOW -7.3%, HOLX -7.1%, EBAY -5.5%, TDOC -5.2%, OIS -4.2%, F -3.1%, MOH -2.8%, PTC -2.6%, IR -2.4%, CDE -1.5%, OII -1.5%, AUY -1.3%, AM -0.9%, UCTT -0.7%, KALU -0.6%, ALSN -0.3%, GRUB -0.3%, CABO -0.3%, MTDR -0.2%, NLY -0.2%, PDM -0.2%, URI -0.2%, ASH -0.1%, AVTR -0.1%, AXS -0.1%, CNO -0.1%, FIX -0.1%, HNI -0.1%, INVH -0.1%, MAA -0.1%, NTB -0.1%, OI -0.1%, TTMI -0.1%, TYL -0.1%, CLS -0.1%

Companies trading lower in after hours in reaction to news: ADVM -52.8% (announces suspected adverse reaction of hypotony in INFINITY clinical trial), PLBY -7.4% (stock offering), OMF -3.1% (stock offering), ALDX -3.1% (prices 10 mln share offering at $12.50/sh), GM -1.2% (in sympathy with F earnings, chip shortage), BIIB -1% (receives CRL from the FDA for sBLA for subcutaneous administration of TYSABRI), CVX -0.2% (increases dividend), VZ -0.1% (exploring a sale of certain media assets including Yahoo and AOL, according to WSJ)

>>> US Close Dow -0.48% S&P -0.08% Nasdaq -0.28% Russell +0.13%

Closing Stock Market Summary

The S&P 500 decreased 0.1% on Wednesday in another tight-ranged session, as the broader market showed little reaction to the Fed's policy decision or earnings news. The Nasdaq Composite (-0.3%) and Dow Jones Industrial Average (-0.5%) also closed lower, while the Russell 2000 (+0.1%) closed slightly higher. 

The FOMC did as everyone expected by keeping rates near zero and leaving the pace of asset purchases unchanged by at least $120 billion per month. In his press conference, Fed Chair Powell said it wasn't time to start talking about tapering asset purchases and reiterated it'll take substantial further progress until the Fed's employment and inflation goals are reached, meaning those discussions will have to wait a while longer.

There was some uncertainty if the Fed was going to hint at these tapering discussions, but Mr. Powell made it clear throughout this Q&A session that the Fed was assured with its current policy stance. Mr. Powell also downplayed inflation risks and acknowledged some things in capital markets are frothy. 

The initial reaction to the tapering comment was modest: a 15-point gain in the S&P 500 to the 4200 level (record high), which was consequently met with selling pressure. Overall, the index moves were tame, respecting the recent consolidation trend in the market. 

The communication services (+1.2%) and energy (+3.4%) sectors saw notable strength today, keying off their own catalysts in Alphabet's (GOOG 2379.91, +72.79, +3.2%) blowout earnings report and a bullish call on oil ($63.86, +0.91, +1.5%) out of Goldman Sachs. The firm said it expects crude prices to reach $80 per barrel over the next six months due to strong demand. 

Conversely, the information technology sector (-1.0%) was the weakest link with a 1% decline, predominately due to a disappointing earnings reaction in Microsoft (MSFT 254.56, -7.41, -2.8%). Semiconductor stocks also lagged, particularly Texas Instruments (TXN 181.82, -8.39, -4.4%) despite reporting positive earnings results. 

Amgen (AMGN 236.71, -18.42, -7.2%) and Boeing (BA 235.46, -7.01, -2.9%) joined Microsoft as earnings laggards in the Dow. Visa (V 233.45, +3.54, +1.5%), however, provided offsetting support in the Dow, and tech sector, following its earnings report.

U.S. Treasury yields declined from session highs, settling little changed, following the release of the FOMC statement and Fed Chair Powell's affirmation of the Fed's view that inflation will be transitory. The 10-yr yield was unchanged at 1.62%, and the 2-yr yield was unchanged at 0.17%. The U.S. Dollar Index decreased 0.4% to 90.58. 

Reviewing Wednesday's economic data:

  • The Advance report for International Trade in Goods for March showed a deficit of $90.6 billion versus $86.7 billion in February. The Advance report for Retail Inventories for March decreased 1.4%, while the Advance report for Wholesale Inventories for March increased 1.4%.
  • The MBA Mortgage Applications Index decreased 2.5% following an 8.6% increase in the prior week.

Looking ahead, investors will receive the advance estimate for Q1 GDP, the weekly Initial and Continuing Claims report, and Pending Home Sales for March on Thursday. 

  • Russell 2000 +16.7% YTD
  • S&P 500 +11.4% YTD
  • Dow Jones Industrial Average +10.5% YTD
  • Nasdaq Composite +9.0% YTD

FT : BaFin cracks down on crypto exchange Binance’s ‘stock tokens’

BaFin cracks down on crypto exchange Binance’s ‘stock tokens’
German regulator points to lack of correct documentation for foray into tracking share movements

Germany’s financial watchdog has warned investors that Binance, one of the world’s biggest cryptocurrency exchanges, has probably violated securities rules over its launch of trading in stock tokens, in a crackdown on the crypto industry’s foray into highly regulated markets.

Bonn-based BaFin published a note on its website on Wednesday afternoon stating that tokens tracking the movement of shares in Tesla, Coinbase and MicroStrategy represent securities requiring a prospectus that has not yet been issued.

BaFin points out that such a violation represents a criminal offence that can be punished with a fine of up to €5m or 3 per cent of the issuer’s last annual revenue. The issuer may be liable for any investor losses.

The watchdog also has the legal power to ban the sales of the securities.

Its move comes after the Financial Times reported last week that European financial regulators were examining Binance’s launch of a service to allow investors to trade fractions of shares through products that use a German broker as an intermediary. Since last week’s report, Binance has widened the stock programme to include other shares such as Apple.

BaFin’s pushback underscores the challenge authorities face as they decide how to oversee businesses specialising in cryptocurrencies such as bitcoin and ethereum when they encroach in to highly regulated markets like equities.

At the time of the tokens’ launch earlier this month, chief executive Changpeng Zhao said they “demonstrate how we can democratise value transfer more seamlessly”. In a recent interview with Bloomberg, he described his business as “very regulated”.

Binance did not immediately respond to a request for comment on BaFin’s statement.

Booming prices of digital currencies and heavy interest from retail investors for share trading have encouraged cryptocurrency exchanges to explore new products that mimic those found in the traditional financial industry. Binance, which claims to be the world’s biggest cryptocurrency exchange by volume, lets its users trade a full suite of crypto derivatives, including futures and options.

In marketing material, it said each token represented a “share in a stock corporation” and provided the “economic returns” of owning those shares. Tokens were bought and sold using Binance’s own cryptocurrency, and Binance said a German group, CM-Equity, was responsible for handling services such as custody for acquired shares, as well as compliance and know-your-customer checks. It was not named in BaFin’s statement on Wednesday.

CM-Equity said the product was Mifid II compliant because it was an over-the-counter swap and the tokens were not transferable to other customers, like shares.

The product had been live for several months and had never had any objections or feedback from BaFin, it added. A representative for the company added that it was considering legal action as BaFin’s ruling was “damaging”.

Binance says it has no formal headquarters, but has subsidiaries that are registered with regulators in countries including the UK. The UK’s Financial Conduct Authority told the FT last week that it is “working with the firm to understand the [tokens] product, the regulations that may apply to it and how it is marketed”.

The exchange’s stock token trading platform was still accessible on Wednesday afternoon through internet protocol addresses in the UK and Germany. The main Binance stock token trading website said only listed residents of China, the US and Turkey were banned from using the service.

Bitcoin has tumbled around $10,000 from its record high above $64,000 reached earlier this month, with concerns over the potential for new regulations to dent sentiment. Turkey, home to a large and active crypto market, banned the use of digital coins for buying goods and services on April 16. The country has also launched a sprawling investigation in to several local exchanges.

9to5 : Next-gen Apple Silicon ‘M2’ chip reportedly enters production, included i

Next-gen Apple Silicon ‘M2’ chip reportedly enters production, included in MacBooks in second half of year

According to Nikkei, the next-generation of Apple silicon — tentatively dubbed “M2” — has entered the production cycle. Chip ramps are slow, and Nikkei indicates that beginning production now means the chips would be available in mass supply as soon as July. This schedule likely means they will be included in new MacBook models in the fall, probably the upcoming revamped MacBook Pro line.

The 8-core CPU, 8-core GPU M1 chip architecture delivered impressive performance and battery life when it debuted in the first Apple Silicon Macs last fall. Apple used the same chip in the just-announced iMac and 2021 iPad Pro. However, the chip has some limitations that pro users are hoping will be addressed in the second-generation.

Most notably, the M1 chip only supports a maximum of two Thunderbolt ports and allows for just one external display output. For instance, in the fall Apple launched the two-Thunderbolt-port 13-inch MacBook Pro model with the M1chip, but the 4-port 13-inch MacBook Pro remains in the lineup.

Also while the M1 chip delivers incredible power efficiency and raw power, it does not outstrip higher-end Intel Macs on all benchmarks. Specifically, the integrated graphics of the M1 chip do not match up to dedicated graphics cards included in high-spec iMacs or MacBook Pros. The expectation is that the M2 chip (or “M1X,” however it is branded) will add more CPU and GPU performance, more Thunderbolt lanes, and allow for at least two external displays.

The M1 chip is made up of an 8-core CPU and an 8-core GPU with unified RAM architecture. Last year, Bloomberg said Apple was developing a successor to the M1 featuring 20 CPU cores destined for its high-end laptops. ARM Mac desktops like the Mac Pro or iMac Pro could feature 32-core chip designs.

In today’s report, Nikkei says that the M2 will continue to integrate CPU, GPU and the Neural Engine on the same chip. However, it does not go into any more detail on the chip’s specifications.

Apple is widely rumored to be readying new 14-inch and 16-inch MacBook Pro models, featuring Apple Silicon internals in a new chassis design, featuring the return of MagSafe, SD card reader and HDMI ports. Schematics of the as-yet-unannounced products were released in the recent REvil ransomware leak.

Forbes : CEO Of $2 Billion Startup Fired After Experimenting With LSD At Work

CEO Of $2 Billion Startup Fired After Experimenting With LSD At Work - https://bit.ly/3eBygOw

TOPLINE The co-founder and chief executive of the multi-billion dollar marketing startup Iterable says he was ousted from the company after micro-dosing on LSD in the workplace, a controversial but not uncommon trend in the entrepreneurial enclave of Silicon Valley.

KEY FACTS
Iterable notified employees Monday that the company’s board had dismissed Justin Zhu, an alumnus of Google and Twitter who co-founded the $2 million San Francisco-based startup along with Andrew Boni in 2013.

While the message to employees cited unspecified violations of company policy, Zhu told Bloomberg he was ousted for taking LSD, a drug that is still illegal in the U.S., before a meeting in 2019.

The former chief executive said he was experimenting with micro-dosing (taking a low dosage of the drug) to boost his focus.

Zhu has been replaced as chief executive by Boni, who wrote in an email to staff that his co-founder’s behavior “undermined the board’s confidence in Justin’s ability to lead the company going forward.”

A spokesperson for Iterable did not immediately respond to a request for comment.

BIG NUMBER
$2.1 billion. That’s how much the marketing company was valued at as of March of this year, according to PitchBook.

SURPRISING FACT
Iterable has been highlighted by Forbes multiple times since its 2013 debut. The company has attracted big-name customers like DoorDash and Zillow Group, and in 2021 landed on Forbes’s list of the Best Startup Employers at #89.

KEY BACKGROUND
Silicon Valley has a long history with psychedelic drugs like LSD, with some of the country’s entrepreneurs citing them as a source of creativity. Both Bill Gates and Steve Jobs have publicly acknowledged experimenting with LSD, with the late Apple co-founder describing taking the drug as “one of the most important things in my life.”

WSJ : Mortgage Refinancing Initiative to Help Lower-Income Borrowers

Mortgage Refinancing Initiative to Help Lower-Income Borrowers
Federal housing regulator says program could help more than two million mortgage borrowers refinance at a lower interest rate

WASHINGTON—The federal regulator of Fannie Mae FNMA -0.83% and Freddie Mac FMCC -0.42% is expected to unveil a new program Wednesday aimed at helping more households lock into historically low interest rates, targeting lower-income borrowers who have missed out on the refinancing boom of the past year.

The Federal Housing Finance Agency, which oversees the two government-controlled mortgage giants, is expected to announce plans to ease credit requirements, simplify documentation and waive certain fees for borrowers seeking to refinance their loans. The program is expected to get off the ground by the summer.

“Last year saw a spike in refinances, but more than two million low-income families did not take advantage of the record low mortgage rates by refinancing,” FHFA Director Mark Calabria said.

To benefit from the changes, borrowers would need to make 80% or less of their area’s median income and not have missed more than one mortgage payment in the past 12 months. The program only applies to borrowers with existing loans backed by the mortgage giants and it will be up to lenders to participate in it.

Mr. Calabria said in an interview that the program might help borrowers who suffered a decline in income during the pandemic and who wouldn’t have otherwise qualified for refinancing due to the companies’ underwriting requirements. FHFA estimates that borrowers who take advantage of the new refinance program could save an average of between $100 and $250 a month.

SHARE YOUR THOUGHTS
Did you take advantage of the past year’s refinancing boom? Share your experience and join the conversation below.

Fannie and Freddie don’t make home loans. Instead, they buy mortgages and package them into securities, which they sell to investors. Their promise to make investors whole in case of default underpins the popular 30-year fixed-rate mortgage.

Despite the pandemic, 2020 brought good news for the mortgage market. The 30-year fixed mortgage rate fell below 3% in July and stayed there for months.

Low rates spurred about 8.8 million homeowners to refinance in 2020, according to Black Knight Inc., a mortgage-technology and data company. Of those, 6.1 million refinanced into loans backed by Fannie and Freddie.

Yet borrowers with less-than-pristine credit—who tend to be lower income—have had trouble refinancing. Mortgage credit availability, a measure of lenders’ willingness to issue mortgages, is near its lowest level since 2014, according to the Mortgage Bankers Association.

The tight lending environment illustrates a growing cleavage in the market: Business is booming for mortgage lenders, but their loans are almost exclusively for borrowers with excellent credit histories, especially for those backed by Fannie and Freddie.

In January 2019, 29.3% of Fannie Mae refinancings were for borrowers with credit scores below 700, according to the Urban Institute. That share dropped to 14.8% in January 2020 and to 9.4% in January 2021. The best rates for loans backed by the companies are generally for borrowers with credit scores above 740.

“Tight credit is a major barrier for many borrowers who want to refinance their mortgages, even though they already have a loan and the rate reduction would make borrowing less risky,” Urban’s Laurie Goodman and Edward Golding wrote this month.

Democratic lawmakers, consumer advocates and industry officials have pressed FHFA officials in recent months to help lower-income borrowers.

“As rates have fallen, lower income and lower credit score borrowers who may disproportionately benefit from savings on their mortgage seem to be the least likely to receive low-rate refinance loans,” Ohio Sen. Sherrod Brown and a group of Senate Democrats wrote in a November letter to Mr. Calabria.

Among other benefits in the new program, borrowers with loan balances at or below $300,000 wouldn’t have to pay a modest refinancing surcharge imposed by Fannie and Freddie in December. They would also receive an appraisal credit of up to $500.