TheChek News Flow

Deal is latest in a series of American acquisitions in English football

An American investment group has agreed to take control of Burnley football club, the latest English Premier League side to attract US owners.

ALK Capital has agreed to buy an 84 per cent shareholding in Burnley, which was established as a football club in 1882. A person close to ALK said the deal values the club at more than £200m and that the takeover is being funded by a number of private individuals.

Existing shareholders include chairman Mike Garlick and director John Banaszkiewicz, who together owned a majority. Alan Pace, managing partner of ALK, who will chair the club, praised the outgoing leadership for making it “financially stable”.

ALK is buying the club through Velocity Sports Partners, its sports investment vehicle.

As the coronavirus pandemic hits the finances of the sporting world, US investors have hunted deals in European sport, including football leagues and teams.

“With a rich heritage, a brilliant academy, and a passionate fan base, this club has solid foundations to build upon,” said Mr Pace.

Mr Pace, who previously worked for Citigroup and Lehman Brothers during more than two decades in finance, is a former chief executive of Real Salt Lake, which plays in Major League Soccer, the US and Canada’s top tier for football.

Earlier this year, ALK invested in AiScout and Player Lens, two London-based football technology companies. Data and technology have become critical to success on the pitch and profit in the transfer market.

Burnley made a pre-tax profit of nearly £5m on stable revenue of £138m — driven largely by its share of the Premier League’s lucrative broadcasting contracts — in the year to the end of June 2019, the latest available accounts. Burnley’s pre-tax profit of £45m a year earlier was inflated by selling players.

Despite the impact of the coronavirus pandemic, which continues to blight club revenues because of government restrictions on fan attendance, overseas investors are showing keen interest in Premier League clubs.

However, Saudi Arabia’s £300m takeover of Newcastle United fell through earlier this year, which led the club and billionaire owner Mike Ashley to accuse the Premier League of blocking the deal.

The Premier League, which said the Saudi-led consortium withdrew voluntarily, has approved the acquisition of Burnley, ALK said.

In previous US acquisitions, the Glazer family took control of Manchester United in 2005 and John Henry’s Fenway Sports Group acquired Liverpool, the reigning Premier League champions, five years later. Stan Kroenke, another US billionaire, took control of Arsenal, the London-based team, in 2018.

Josh Harris, a billionaire who helped found private equity firm Apollo, and David Blitzer, a senior executive at Blackstone, have stakes in Crystal Palace, while the San Francisco 49ers NFL team, which is owned by the York family, has a minority stake in Leeds United through its investment arm. Pakistani-American billionaire Shahid Khan owns Fulham.

US private equity firm Advent International has teamed up with Luxembourg-based CVC Capital Partners on a €1.6bn deal to buy into Serie A, Italy’s top football competition. This year, the US billionaire Krause family bought Parma, following Texan billionaire Dan Friedkin’s purchase of AS Roma.

Bitcoin’s price hit a record Wednesday. A strategist at Fundstrat sees even more upside from current levels in the next six to 12 months.

The cryptocurrency touched $28,871.87 earlier Wednesday, its highest level on record, according to Dow Jones Market Data. It has since pulled back a touch to $28,819.92, up 7.3% from its levels at 5 p.m. on Tuesday. Bitcoin has soared more than 493% from its 2020 bottom around $4,857 on March 12.

David Grider, lead digital strategist at Fundstrat, said Bitcoin’s positive momentum is being fueled by institutions and corporations purchasing more of the asset and retail demand driven by the latest wave of stimulus checks, among other factors. He raised his six- to- 12-month target on Bitcoin to $40,000, up from his prior target of $25,000.

“Conditions are in place for a continued rally in cryptocurrency prices over the course of the next year,” Grider wrote. “We remain bullish and are raising our Bitcoin price target from $25,000 to $40,000, while again noting that we recommend investors seeking to add exposure should favor pull backs given the recent run and corresponding higher valuations.”

“We wouldn’t view these events as long-term negatives for Bitcoin, but if such events unfold, they may negatively impact broader market sentiment and prices,” Grider added.

While Bitcoin certainly has its skeptics, others have also raised their price targets for the cryptocurrency. Citing similar catalysts, ARK Investment Management CEO Catherine Wood in November said that Bitcoin prices could eventually climb to $500,000.

Strategists have turned positive on the asset, too. Jim Paulsen, chief investment strategist of Leuthold Group, told clients last month that Bitcoin could be a way to balance their portfolios. As Barron’s noted earlier this month, there are numerous ways to invest in Bitcoin, so long as you watch out for fees.

Estate agency had been weighing rescue options to reverse long decline in share price

Connells has reached an agreement to buy rival UK estate agency Countrywide, drawing a line under a long-running battle for control of the company. 

The deal is a lifeline for Countrywide, which has been weighing rescue options to reverse a decline during which its shares have fallen 98 per cent over the past five years.

Connells has agreed to pay 395 pence per share, valuing Countrywide at £134m. The majority of Countrywide shareholders have indicated their support for a sale at that price, clearing the way for the acquisition to complete in the first quarter of 2021. 

Countrywide shares rose 12 per cent to 388 pence after news of the deal on Thursday morning.

The agreement concludes months of wrangling over Countrywide, which appointed former William Hill boss Philip Bowcock as interim chief executive in November and owns a vast network of high street estate agency brands including Bairstow Eve, Hamptons and John D Wood.

Countrywide first revealed it was the subject of takeover interest from Connells in November. Connells opened with a bid which valued the company at 250 pence per share, as it attempted to see off a rival offer from UK private equity group Alchemy Partners.

Alchemy, an existing Countrywide shareholder, had proposed a bid at 135 pence per share in October which also involved injecting £90m cash into the company. 

Connells’ latest offer values Countrywide at almost treble its market capitalisation in early November. Having plummeted as coronavirus restrictions were announced in March, shares in Countrywide were trading at 145 pence on November 5, the day before Connells’ original offer was revealed.

David Livesey, chief executive of Connells, said that the estate agency’s aim was “to invest in and grow” Countrywide’s business.

“We believe that we have the right management team, strategy and investment firepower to work with the talented teams at Countrywide and lead Countrywide into a bright future.” 

David Watson, acting non-executive chairman of Countrywide, said that Countrywide shareholders had been “encouraged by their recognition of the need to put in place a sustainable capital structure and a willingness to support the company, which is a great business that has been constrained by too much debt”.

Countrywide launched a three-year turnround plan in 2019, having amassed a substantial debt pile during an acquisition spree which followed an initial public offering in 2013. At the time of the IPO, the company was valued at £750m.

Connells’ offer “puts the company on a stronger footing, securing the future of the business, its customers and its employees,” said Mr Watson.

{DE} Danemark| {FI} Finland | {GE} Germany| {SW} Sweden| {NO} Norway| {IT} Italy | {PD} Poland | {AS} Austria| {SZ} Switzerland

*** Half-days (Paris time) ***

{GB} UK closing auction 13h30 – 13h35

{FR} Euronext closing auction 13h55 -14h

{IR} Irlande closing auction 13h28 -13h30

{SP} Espagne closing auction 13h55 -14h

{SA} Afrique du Sud closing auction 10h50 -11h00

{GR} Grèce closing auction 14h00 -14h10

Nikkei Closed Hang Seng +0.31% CSI +1.32% Shanghai +1.16% Shenzen +1.32%

Eur$ 1.2291 CNH 6.5039 CNY 6.5386 JPY 103.14 GBP 1.3625CHF 0.8820 RUB 74.2830 TRY 7.3723 WTI$ 48.36 -0.08%

S&P +0.04% Nasdaq +0.05% EuroStoxx Closed FTSE -0.71% Dax Close SMI Close

Macro :

- Bond-Guzzling ECB Will Shield the Market From Next Debt Tsunami

- London’s Luxury New Home Slump Stings Asian Developers

- MSCI Confirms Final List of Chinese Securities to Be Deleted

- U.K. Ports Prepare for Close-Up as Brexit Break Finally Arrives

- Johnson’s Brexit Deal Clears Parliament With Just Hours to Spare

- U.S. Investor Bull-Bear Spread 19.3: AAII

Keep an eye on :

- AIR FP : U.S. Posts Details of EU Tariff Change in Boeing, Airbus Dispute

- ATL IM : Abertis Completes Acquisition of Elizabeth River Crossings

- AZN LN : AstraZeneca Submits Data Package to European Medicines Agency

- CS FP : Generali Agrees to Buy Axa’s Greek Operations for EU165m

- CPRI US : Capri Holdings, Brooks Automation to Join S&P Midcap 400

- CNP FP : CNP Finalizes Distribution Deal With Caixa Economica in Brazil

- DBG FP : Derichebourg in Exclusive Talks to Buy Groupe Ecore Holding

- EDF FP : Edison Signs Agreement to Sell Edison Norge to Sval Energi

- FCA IM : Chrysler Heir Presents Competing Proposal to Fiat; Shares Spike

- G IM : Generali Agrees to Buy Axa’s Greek Operations for EU165m

- GFS LN : Iran Accuses U.K.’s G4S of Role in Soleimani Killing, Mizan Says

- IMMU SS : Immunicum Granted FDA Orphan Drug Status for Ilixadencel

- KORI FP : BNP, EDF Invest EU336m in Korian Real Estate Vehicle

- MC FP : Enphase Energy to Join S&P 500, Replacing Tiffany

- TIF US : *TIFFANY TO BE DROPPED FROM S&P 500

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>>> Down

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>>> Initiation

* Stillfront Reinstated Buy at Goldman; PT 145 kronor

>>> Call

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Pope Francis strips Holy See’s central administration office of assets

Pope Francis has stripped the Vatican’s powerful central administration office of an investment portfolio worth hundreds of millions of euros following a scandal linked to luxury London real estate development in Chelsea.

The Vatican said that all of the financial assets of the Secretariat of State, the Holy See’s state bureaucracy, would be placed under the control of APSA, the Vatican’s existing centralised asset manager, from the start of the new year.

The announcement follows Pope Francis requesting the resignation of Cardinal Giovanni Angelo Becciu, who oversaw the investments of the Secretariat from 2011 to 2018, earlier this year amid an ongoing Vatican police investigation into how these funds were managed. Cardinal Becciu has denied any wrongdoing.

The Vatican also said Pope Francis had ordered the Secretariat’s management of the so-called Peter’s Pence charitable donations made by Catholics around the world would now also be placed under the control of APSA.

The Financial Times has reported extensively on how hundreds of millions of assets held in Swiss bank accounts by the Secretariat were invested in assets, including a property development scheme in Chelsea, that the Vatican has said resulted in the Catholic Church suffering large losses.

Gianluigi Torzi, a London-based Italian businessman who acted for the Secretariat in its London property investments, was earlier this year arrested and charged by the Vatican with “extortion, embezzlement, aggravated fraud and self laundering”. Mr Torzi, who was later released from custody, denies any wrongdoing. 

Last month Italian financial police, acting on a request by the Vatican judicial authorities, executed a search and seizure warrant against a group of people linked to the Secretariat’s investments including a suspended Vatican official and Raffaele Mincione, a London-based fund manager who oversaw the Chelsea property development.

Mr Mincione, who denies any wrongdoing, said he had “co-operated fully and beyond what was requested”, and that he was certain the investigation would “confirm the lack of [his] involvement with respect to what may be envisaged by the authorities of the Holy See”.

Nunzio Galantino, president of APSA, said the Secretariat’s investment in the London development scheme had directly influenced the decision to strip the office of its financial assets.

“The affair of the London property helped us to understand what control mechanisms needed to be strengthened,” he said in comments to the Vatican’s state news outlet. “It made us understand many things: not only how much we lost — an aspect that we are still evaluating — but also how and why we lost it”.

Mr Galantino also said the Pope had long requested that there was a “more marked distinction” between the Peter’s Pence charity money managed by the Secretariat and other funds.

Goldman Sachs delighted in December at being the first to strike a deal to own 100% of its Chinese onshore operations. Others are also building on their 51% stakes just as many local companies seek fresh capital. More than 800 of them are queued up to go public, KPMG reports, while others are selling additional shares to beef up balance sheets. It can be no coincidence that Beijing has widened access just as it encourages greater use of markets and less dependence on bank loans.

The most lucrative work, however, is in New York, where fees average about 5% of the amount raised. Those opportunities are increasingly threatened by Washington’s hostility, including efforts to delist Chinese companies that don’t allow American regulators to scrutinise audits. The new geopolitical order has helped make Shanghai’s STAR board the fastest-growing equity market. Initial public offerings there, however, require sponsors to back their clients financially – an extra layer of risk that makes U.S. and European firms blanch.

Banks generated some $6.5 billion in 2020 by selling shares for Chinese companies like financial technology outfit Lufax, according to Refinitiv. Foreign ones collected roughly a third of the sum, Breakingviews estimates. Despite dominating in Manhattan and competing in Hong Kong, they only claim about 5% of the mainland China market. Morgan Stanley’s joint venture worked on the $7.7 billion Shanghai listing of chipmaker Semiconductor Manufacturing International, but that was only enough for the bank to take 13th place in preliminary year-end domestic equity rankings to lead its overseas peers.

One of the old big ideas about expanding into China was to use their international networks to help companies find acquisition targets abroad. Such work is becoming increasingly constrained because of protectionist governments. That means finding fresh ways to crack the market. For the time being, it will be a harder slog for less money as the China gravy train makes fewer stops on Wall Street.