TheChek News Flow

IPO brings to fruition fight spearheaded by Marble Ridge Capital founder Dan Kamensky

Mytheresa Group GmbH, the European luxury e-commerce platform and former Neiman Marcus Group Ltd. subsidiary, went public Wednesday at a $2.2 billion valuation, vindicating creditors who waged a two-year campaign to win back the asset after a 2018 spinoff placed it out of their reach.

The fast-growing e-commerce business was the subject of a costly fight between Neiman, its private equity owners and its creditors that started with the 2018 spinoff and continued into the company’s bankruptcy last year.

The initial public offering far exceeded the $1 billion value expected by Marble Ridge Capital LP and its founder Dan Kamensky, the most vocal among Neiman’s creditors to challenge its private equity owners when they took control of Mytheresa.

With Neiman struggling in 2019 with coming debt maturities, its private equity owners agreed to split up ownership of Mytheresa in a broad settlement with its creditors. But Mr. Kamensky and some others held out for more. Later in bankruptcy court, they argued it was worth more than Neiman’s owners, Ares Management Corp. and the Canadian Pension Plan Investment Board, were letting on.

The owners said in court documents they viewed creditors’ estimates of Mytheresa’s worth as ‘astronomically high’, pointing out the unit had been shopped in 2019 and generated offers of no more than $500 million.

But under pressure to settle, the owners agreed to give up some more shares in Mytheresa to creditors under a broad bankruptcy deal.

Just before the chapter 11 plan took effect, Mr. Kamensky was arrested and charged with fraud by U.S. prosecutors over an alleged scheme to edge out a competitor to buy out Mytheresa shares from fellow creditors. His criminal case is pending, and he was forced to wind down his hedge fund in the midst of inquiries into his actions. Mr. Kamensky isn’t entitled to Mytheresa shares.

Mytheresa’s strong IPO, however, is a win for other Neiman creditors who took part in the settlement Mr. Kamensky pushed for, as well as for Ares and CPPIB.

Under the settlement, once Neiman’s lenders and bondholders have collected roughly $450 million from Mytheresa share sales, Ares and CPPIB will be in line for payouts from any further sales of stock.

Any sale proceeds over $700 million will be split evenly between them and the creditors who agreed to the deal before Neiman filed for bankruptcy.

The IPO on Wednesday raised over $300 million, with over $50 million going to Ares and CPPIB.

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A tougher regulatory approach—and probably slower growth—now look inevitable

Chinese billionaire Jack Ma, once the richest man in the country, has resurfaced after being out of the public eye for months. But his real troubles—and those of his business empire—may be just beginning.

Mr. Ma made his first public appearance in nearly three months on Wednesday, speaking to a group of rural teachers in an online philanthropic event. Speculation about his whereabouts has been rife since his last public appearance in October, when he gave a speech that angered regulators. Since then, the record initial public offerings of fintech firm Ant Group, which Mr. Ma controls, were both pulled at the last minute. China’s antitrust regulator launched a probe into the business practices of e-commerce giant Alibaba, BABA -2.07% another company in Mr. Ma’s empire, last month

Investors took Mr. Ma’s reappearance as an auspicious sign—Alibaba’s Hong Kong-listed shares jumped 8.5% Wednesday. They may have inferred that Mr. Ma is now back in Beijing’s good graces and the regulatory storm will be over. But there doesn’t seem to be a letup: on the same day Mr. Ma made his public appearance, China’s central bank released draft rules governing nonbank payment systems, in which Ant’s Alipay is a major player.

There are still uncertainties about what some of the draft rules mean. The rules, for example, say if two players have more than half of the nonbank payment markets—Alipay and Tencent’s WeChat TCEHY 0.42% Pay dominate China’s mobile and internet payments—then the central bank would hold talks with the companies. It’s unclear what the exact consequences or remedies would be after such warnings, though. The rules also seem to use a broader definition of market—possibly including some traditional payment channels—to determine whether a payment company is market-dominating.

But the overall direction seems clear: the government wants stricter regulation of fast-growing online financial services, which could add systemic risks to the country’s state-dominated financial system. Beijing likely views China’s ubiquitous mobile payment systems as a positive contribution to society, but it is more skeptical when companies like Ant leverage their user base and consumer data to jump into online lending.

Mr. Ma’s latest public appearance is a new episode in the continuing saga, but the drama is far from over.

Nikkei -0.44% Hang Seng -1.37% CSI -0.01% Shanghai -0.35% Shenzen +0.23%

Eur$ 1.2166 CNH 6.4787 CNY 6.4728 JPY 103.63 GBP 1.3697 CHF 0.553 RUB 74.0983 TRY 7.3972 WTI4 52.46 -1.26%

S&P -0.27% Nasdaq -0.31% EurosStoxx -0.41% FTSE -0.12% Dax -0.27% SMI -0.06%

Macro :

- ECB Seeks New Gauges by March to Aid Pandemic Stimulus Debate

- Lagarde Signals New Recession Even as ECB Holds Stimulus

- Portugal to Halt Flight Connections With U.K., Premier Says

- Bitcoin Drops Below $30,000 in Ominous Sign for Crypto Rally

Keep ane eye on :

- AD NA ; People’s United Won’t Renew Pacts With Stop & Shop in NY, Conn.

- AIR FP : Airbus Slows Production Ramp-Up, Citing Virus Hit to Demand

- AF FP : KLM to Cut as Many as 1,000 Jobs as Travel Recovery Hopes Fade

- ATL IM : Atlantia Board Sees 31 Jan. as Autostrade Bid Deadline: Radiocor

- AV/ LN : Aviva Shortlists Allianz, Apollo, Cinven, CNP for Italy Unit

- BDRILL NO : Borr Drilling to Offer up to $40M New Depository Receipts

- COM GY : Compleo Share Sale by Holder Likely to Price at EU80 Each: Terms

- DOC AV : Do & Co Prices EU100M 1.75% Convertibles; Premium Set at 32.5%

- ECONB BB : Econocom FY Adjusted Ebita EU122.5M

- EDP PL : EDP 2020 Power Generation Falls 4%; Output From Coal Units Drops

- EDPR PL : EDP Renovaveis 2020 Clean Energy Production Falls 5% Y/y

- EKTAB SS : Elekta Sold All of Its Viewray Stake at $4.65 a Share

- RF FP : Eurazeo Says It Raised EU2.8B in 2020, Up 18%

- EFUELME NO : Everfuel Offering Prices 4.8m Shares at NOK125/Share

- WAF GY : Globalwafers Lifts Tender Price for Siltronic to 140 Euros/Share

- GVNV NA : GrandVision Continues to Back EssLux in Getting Regulatory Nod

- GJF NO : Gjensidige 4Q Net Income Beats Estimates

- HUBN SW : Huber + Suhner FY Revenue Misses Estimates

- INZILE SS : Inzile to Offer 2.6m Shares via Carnegie Investment Bank, 2.6m Shares at SEK49/Share

- KUD SW : Kudelski Sees FY Ebitda Above $45M to $55M, Saw $45M to $55M

- MB IM : Bollore Reduced Stake in Mediobanca to 2.77% From 4.35%: Consob

- KN FP : Natixis to Cut 245 Roles in France as Jobs Moved to Portugal

- NXT LN : Next, Davidson Kempner Withdraw Topshop Bid, Sky Says

- OBEL BB : Orange’s EU22/Share Offer for Orange Belgium Includes Dividend

- PHAR LN : Pharos Energy to Offer Up to 9.9m Shares Via Primarybid

- PRS SM : HSBC Continental Conducts Placement of At Least 35m Prisa Shares

- PSM GY : ProSieben Prelim FY Sales About EU4.04B, Est. EU3.95B

- REIN LX : Reinet Net Asset Value Per Share 28.02 Euros at End-December

- RCO FP : Remy Cointreau 3Q Rev. Beats Ests., Keeps FY Guidance

- SZG GY : Salzgitter Sees 2021 Pretax Profit EU150M to EU200M

- SAN FP : Sanofi Union Calls for Strike From Feb. 1 Over Job Cuts: AFP

- SK FP : SEB FY Sales Beat, Company Sees Smaller Drop in FY Op. Profit

- SIE GY : Siemens Says Earnings Beat By a Wide Margin on China Growth

- SONG LN : Hipgnosis to Raise as Much as $830 Million in Share Issue

- VOW GY : VW Emissions-Data Relief Helps Carmakers: EMEA Industrials Wrap

Diversions, political polarisation and conspiracy thinking have all contributed to this new era

Has there been a moment in modern history where so many people in free societies have believed such damaging lies?

It’s easy to point to the US, where nearly 90 per cent of people who voted for Donald Trump believe Joe Biden’s election victory was not legitimate. No surprise, then, that there is considerable support for the recent violent attempt to prevent the democratic transfer of power.

But it’s not just the US. In France, a minority of adults are confident that vaccines are safe, which explains why only 40 per cent say they plan to get a Covid-19 shot. This hesitancy also goes some way to explaining why France’s vaccine rollout has started so slowly.

Meanwhile, across the world, substantial minorities believe that the Covid-19 fatality rate has been “deliberately and greatly exaggerated”. The proportion of Covid-19 deniers is 22 per cent in the UK; in many other countries, it is even higher.

How did it come to this? The simplest explanation — to repurpose a phrase from former US Treasury secretary Larry Summers — is: “There are idiots. Look around.” But while there is a certain visceral satisfaction in that explanation, there is much more going on.

Robert Proctor, a historian, coined the term “agnotology” to describe the academic study of ignorance. He became interested in the phenomenon after studying Big Tobacco’s all-too-successful effort to seed doubt about the scientific evidence on the risks of cigarettes.

Proctor once told me “we are living in a golden age of ignorance”. That was in 2016; the golden age had barely started to dawn. Three elements of it are worth highlighting — none of them entirely new.

First, distraction. It’s possible for people to spend hours every day consuming what is described as “news” without ever engaging with anything of substance. Some distractions are obvious: doing the sudoku will not help you understand the implications of the post-Brexit trade deal, and neither will gazing at pictures of celebrities.

At least such diversions are marketed thus. Others are more insidious. Consider “scotch-egging”, the oddly British pastime of arguing over whether a particular activity (driving to beauty spots to go for a walk, cycling in east London when your home address is in Downing Street, treating a scotch egg as a “substantial meal” with your drink in a pub) does or does not violate the letter or the spirit of pandemic rules. Scotch-egg stories are emotionally salient and easy to understand, and superficially they seem to be about important matters of public health. But they suck attention away from the real questions: how can I live life while protecting myself and others? When I cast my vote, does the government’s response deserve praise or blame?

Second, political tribalism. In a polarised environment, every factual claim becomes a weapon in an argument. When people encounter a claim that challenges their cultural identity, don’t be surprised if they disbelieve it.

It is obvious that political polarisation might shape our beliefs about questions of politics (do you approve of Boris Johnson’s handling of the pandemic?) and government (was the US election fair?) and policy (should we provide a universal basic income?). But it also shapes our beliefs about apparently unrelated scientific questions, such as whether humans are causing dangerous climate change, or whether the human papillomavirus (HPV) vaccine is safe. Logically, the answers to these questions should not skew left or right — but they do.

The HPV vaccine is a fascinating example. A team of researchers at Yale’s Cultural Cognition Project concluded that many Americans had sharply different views about HPV compared to the hepatitis B vaccine (HBV). What explains the difference? They tended to learn about HBV from their doctors, while they learned about HPV from cable news. Not everything is polarised — but almost anything can be polarised, and it will be if a prominent political or media figure sees advantage in doing so.

Distractions stop us from paying attention to what matters, and political tribalism makes us reject evidence that casts our tribe in a bad light. Combine the two, add steroids and you get the third element of the age of ignorance: conspiracy thinking.

Conspiracy thinkers devote enormous mental energy to extracting meaning from trivia. Overwhelming evidence can be dismissed as fake news manufactured by the conspiracy.

So can ignorance be banished? It isn’t easy. David McRaney, creator of the You Are Not So Smart podcast, and Adam Grant, author of Think Again, each offers similar advice: don’t lead with the facts. Instead, establish rapport, ask questions and listen to the answers. (Needless to say, this is much easier in a real-life conversation than on social media.) You won’t be able to bully someone out of fringe views, but sometimes people will talk themselves around.

This is wise advice, but my own recent work has a more modest goal. Instead of trying to enlighten someone else, I suggest that each of us starts with our own blind spots. We are all distracted. We all have tribes too: social if not political. We are all vulnerable, then, to believing things that aren’t true. And we are equally vulnerable to denying or ignoring important truths.

We should all slow down, calm down, ask questions and imagine that we may be wrong. It is simple advice, but much better than nothing. It is also advice that is all too easy to ignore.

Tim Harford’s new book is “How to Make the World Add Up”

Promising innovations in battery technology have to be mass produced to change driving habits

Science has hastened to the rescue in the coronavirus pandemic at a remarkable pace, with vaccinations now rolling out in many countries. But another scientific challenge that is vital to the world’s health is taking a frustratingly long time: making better batteries for electric vehicles.

“Battery cell production is the fundamental rate-limiter slowing down a sustainable energy future. Very important problem,” tweeted Elon Musk, Tesla’s founder and a man with his foot pressed to the floor, this week. If only money and enthusiasm were enough to solve it.

Carmakers are eager: Volkswagen sold more electric vehicles in western Europe last year than Tesla, despite VW’s struggles with the technology in recent years. Governments are pushing the transition: Carlos Tavares, chief executive of Stellantis, the company formed by a merger of Fiat Chrysler and PSA, complained of “narrow-minded regulations” favouring electric cars.

Investors are excited: Tesla’s market capitalisation of around $805bn this week was higher than most of its rivals put together. The valuation of QuantumScape jumped to almost $50bn last month (before falling again) after the company unveiled a prototype solid-state cell that can be charged to 80 per cent in 15 minutes. 

But scientists still labour over the decades-long challenge of developing a practical alternative to petrol. Nature created an efficient form of power over millions of years with fossil fuels — energy-dense and portable. Were it not for the environmental damage they cause, they would be hard to beat.

Beaten they must be, and there is little time left to replace internal combustion engines: the UK wants sales phased out by 2030. The lithium-ion batteries packed into electric cars are a huge advance on the lead acid batteries in milk floats, but far from ideal.

The materials science behind batteries is very different from the mRNA technology in the BioNTech/Pfizer vaccine. Yet the traditional timescales of battery and drug development are similar: a decade or more from the discovery of a new technology through development to approval and manufacture.

There are exciting innovations in batteries, from QuantumScape’s ceramic layer to the “extreme fast charging” of lithium-ion cells offered by StoreDot, an Israeli start-up. But Mr Musk is right to focus on production — there is still a leap needed to make millions of batteries that are ready to put into vehicles.

“What Tesla does is quite different to laboratories — we make grammes while they produce tonnes,” says Billy Wu, a senior lecturer at Imperial College, London, “It is relatively easy to produce prototypes, but difficult to bring them to market.” Replacing liquid electrolytes in batteries with ceramics improves performance but can make them harder to manufacture.

Batteries need to advance because fossil fuels are remarkably well suited to powering cars, partly thanks to the infrastructure built since the launch of the Ford Model T in 1908. We take it for granted that we can fill a car with petrol in a few minutes and drive for hundreds of kilometres on a single tank.

The energy density of petrol — the amount of energy stored in each kilogramme — is very high compared with the most advanced lithium-ion batteries. Even when adjusted for the inefficiency of internal combustion engines, petrol produces more than 10 times the watt-hours per kilogramme.

The contest is unequal. Energy is released from fossil fuels by burning them, and emitting harmful carbon dioxide, but batteries cannot be allowed to catch fire. Petrol is only used once, batteries are recharged many times. But the driver still wants an electric vehicle to match the performance of a petrol one.

So, more energy has to be packed into each battery; they need to be cheaper; they need to recharge faster without damage; their lifetimes need to be extended; they need to work at a wider range of temperatures. Beyond all this, they must be charged with clean electricity rather than coal-fired power, and become easier to recycle.

That is a huge array of challenges and plenty of capital is needed — more than $300bn has been committed to building electric vehicles, according to one estimate, and salaries are high for anyone who can help in the effort. But meeting the targets for revolutionising transport requires more than cash.

This is where vaccines are instructive. The idea that drug discovery and development could be compressed into less than a year appeared far-fetched last January. But scientists leapt into action, drugs companies formed partnerships, regulators worked faster. A global public-private effort triumphed.

There are lessons in that acceleration. Changing not only a power source but an entire transport infrastructure is even harder, but there is no time to spare.