TheChek News Flow

DAX:

MDAX:

SDAX:

Nikkei +1.27% Hang Seng +1.53% CSI -0.10% Shanghai -0.20% Shenzen +0.05%

Eur$ 1.1717 CNH 6.7450 CNY 6.7910 JPY 105.55 GBP 1.2936 CHF 0.9173 RUB 78.1026 WTI$ 37.01 -4.42%

S&P +0.69% Nasdaq +0.94% EuroStoxx +0.91% EuroStoxx +0.94% FTSE+0.96% Dax +0.85% SMI

Macro :

- Fed’s Mester Says Next Phase of Recovery Will Be Hardest: Rtrs

- Fed’s Kashkari Sees Slow GDP, Labor-Market Recovery With Vaccine

- Swiss Finma Has ‘a Few Dozen’ Banks on Risk List, Head Tells NZZ

- Bank of France Governor Villeroy Warns About Government Spending

- France’s Le Pen Could Top First Round of 2022 Elections: Poll

Spacs :

- FMAC/U to Price Monday, KROS Lock-up Expires: U.S. ECM

- Cerberus Telecom Acquisition Files for $400m Blank-Check IPO

- Lefteris Acquisition Corp. Files for IPO, Focuses on Fintech

- Battery Maker Romeo Said in Talks to Go Public Via RMG Merger

Keep an eye on :

- AIRBNB IPO : Airbnb Plans to Go Public in December, Raise About $3b: Reuters

- AIR FP ; Air Liquide Sees Currency Impact on 3Q Rev -3.5%, on FY Rev -2%

- ATL IM : Autostrade Open to Italy Deal Without Sale Condition: Messaggero

- ARGX BB : Argenx Sees ‘Clinically Meaningful Responses’ From Efgartigimod

- BBVA SM : Sabadell Mulls Potential Merger W/ BBVA, Kuxtabank: Confidencial

- BMPS IM : Monte Paschi’s Shareholders Approve Its Sale of Soured Debt

- BIO GY : Biotest Says Talks With Private Equity Investor at Early Stage

- CINE LN : Cineworld Drawing Up Plans to Close All U.K. Sites: Sunday Times

-CNHI IM : Class 8 Truck North American Orders Rise 164% YoY in September

- CSGN SW : Credit Suisse Hires Ex-HSBC Private Banker for Asia Wealth Push

- DB1 GY : DAX Index Owner Proposes Enlargement, Profit Requirement

- Deliveroo IPO : Deliveroo picks Goldman to steer restaurant app to London float

The food delivery app is unveiling new services as it picks bankers to work on a public listing, Sky News learns.

- DUFN SW : Alibaba Plans Equity Investment in Dufry, to Hold Up to 9.99%

- DSV DC : DSV CEO Is Still Looking for Acquisitions: Berlingske

- EMSN SW : EMS-Chemie Nine Month Net Sales CHF1.30 Bln

- ENGI FP : Engie Picks Oil Veteran MacGregor as CEO to Quicken Green Push

- ENGI FP : Engie’s New CEO Says Simplifying Operations Will Be a Priority

- ENGI FP : Suez Says It Still Considers Veolia Takeover Proposal ‘Hostile’

- EQNR NO : Equinor Shuts Down 4 Fields in North Sea Due to Strike

- HPOLB SS : Hexpol Says 3Q Adj. Operating Profit Above Market Expectations

- HIK LN : Hikma Granted FDA Orphan Drug Status for Phenobarbital Sodium

- ISP IM : Intesa Sanpaolo May Cut 100 Jobs in Switzerland, IP Reports (1)

- SDF GY : K+S Said to Near $3 Billion Sale of Morton Salt Unit to Kissner

- LBK SM : Spain’s Unicaja Is Said to Move Closer to Liberbank Takeover (1)

- LHA GY : Lufthansa’s Swiss Unit May Cut About 1,000 Jobs, CEO Tells SamW

- NEXI IM : Italy’s Nexi, SIA Boards Said to Meet to Approve Merger (1)

- NWL IM : Newlat Food Makes Non-Binding Offer for Hovis

- SAABB SSS : Saab Shares Attractive Again, DI Says; Recommends to Buy

- SAB SM : Sabadell Mulls Potential Merger W/ BBVA, Kuxtabank: Confidencial

- DIM FP : Sartorius Stedim Biotech to Buy BIA Separations for EU360M

- SAE GY : Shop Apotheke Europe Preliminary 3Q Sales Rise 40%

- SHL GY : Siemens Healthineers Announces 160 Million Euro Share Buyback

- SEV FP : Suez Says It’s Working to See If Veolia Plan Is ‘Acceptable’

- DEV FP : Suez Says Veolia Talks Failed, Takeover Bid Still Hostile (2)

- TEMN SW : NEC Agrees to $2.2 Billion Takeover of Bank Software Firm Avaloq

- TIT IM : Telecom Italia, Ardian Complete Wireless Towers Unit Deal

- TSLA US : Tesla Inches Closer to 2020 Goal With Quarterly Sales Record

- 8TRA GY : Class 8 Truck North American Orders Rise 164% YoY in September

- VIE FP : Suez Renews Support for Ardian’s Bid Ahead of Veolia’s Deadline

- VPK NA : Chandra Asri, Royal Vopak Plan Joint Venture in Petrochemical

- VOW3 GY : U.K. Car Sales Stumble Again, Erasing Hopes of Quick Recovery

- WMH LN : Betfred Denies Plans to Bid for William Hill, Times Says

- WDI GY : Finance News: How EY missed the chance to stop Wirecard’s fraud https://t.co/uHgEb6zKLw

HPS raises $9bn as investors race into direct lending

Large investment vehicle underscores continued demand for riskier loans

HPS Investments has raised $9bn for one of the largest-ever funds to supply riskier corporate loans, as struggling companies increasingly turn to private investment groups for debt.

The US specialist debt investment group, which manages $65bn in assets, has completed fundraising for its latest “mezzanine” debt fund, a term for higher-risk corporate loans that typically rank behind those that banks provide, according to a statement seen by the Financial Times.

Its closure is the latest sign of how large investment funds can still draw strong demand to offer debt to companies, even as the spread of coronavirus has driven a record wave of US bankruptcies.

The New York-based company began raising the mezzanine debt fund in April 2019 with a target size of $8bn and has already invested about half of its capital, according to the statement.

While the fund closed with about $9bn of commitments from investors, its total firepower will exceed $11bn, due in part to its use of a borrowing facility — a common practice among private equity and debt investors.

Medium-sized businesses have for years raised debt from so-called “direct lenders” such as HPS, but a recent rush of inflows from deep-pocketed investors like Middle Eastern sovereign wealth funds has given some funds the ability to lend to larger companies.

HPS has emerged as one of a handful that can single-handedly underwrite loans as large as $1bn. While many of these direct lenders are part of larger private equity groups, such as Apollo or Blackstone, HPS is an independent group that spun out of JPMorgan’s hedge fund unit Highbridge in 2016.

HPS notably led a $1bn loan deal for Canada’s Bombardier in July, plugging a potential funding gap for the aircraft maker as it awaited regulatory approval to sell its €7.5bn train division.

While this debt was secured on some of Bombardier’s assets, the higher-than-typical interest rate meant HPS’s mezzanine fund provided some of the financing, according to people familiar with the matter. The investment vehicle also helped fund last year’s buyout of Montreal-based security group GardaWorld, which last week began a £3bn hostile takeover of UK rival G4S.

Apollo in July unveiled a new direct lending partnership with Abu Dhabi sovereign wealth fund Mubadala, with the aim to deploy $12bn in just three years. Blackstone’s GSO Capital began fundraising on its own new mezzanine debt fund earlier this year, which public filings show has a target size of $7.5bn.

HPS’s mezzanine fund is also able to provide so-called preferred equity, which ranks ahead of common stock and can pay larger annual distributions to holders. The investment firm provided $600m of such financing to Canadian waste management GFL Environmental in August, while also taking part in a $1.75bn preferred equity deal for US grocer Albertsons in May.

LVMH executive to launch Asian private equity fund

Ravi Thakran’s Asia 3.0 will take minority stakes supporting entrepreneurs in the region

The former head of the Asian arm of a private equity firm backed by LVMH plans to launch his own fund this year, having already joined the latest Wall Street trend with a “blank cheque” company listing in New York.

Ravi Thakran will launch Asia 3.0, a private equity fund of between $1bn and $1.5bn targeting Asia’s consumer industry, he told the Financial Times.

The Singapore-based fund will focus on taking minority stakes to support Asian entrepreneurs “who are ready to go from [a] local to regional and eventually global journey”, said Mr Thakran, who founded the Asian division of LVMH’s private equity arm, formerly known as L Capital, more than a decade ago.

Mr Thakran continued leading the Asian unit after LVMH and Groupe Arnault joined forces in 2016 with US private equity firm Catterton to form L Catterton.

The fund will attempt to capitalise as Asia’s growing middle class spend more on sectors such as personal care, hospitality, “experiential retail” and lifestyle. Those markets are forecast to grow from being worth $20tn to $36tn in the next decade, according to the Brookings Institution.

The India-born private equity veteran remains chairman emeritus of L Catterton Asia, and former colleagues have joined him to help establish the new fund. L Catterton declined to comment.

“The idea is to create 25 $1bn global brands from Asia,” said Mr Thakran, who while running L Catterton Asia helped develop six companies that passed $1bn in sales. They include PVR Cinemas, the cinema operator with most screens in India, and Chinese beauty brand Marubi. 

The plans for the fund come after Mr Thakran, who is also LVMH chairman for south-east and south Asia as well as the Middle East and Australia, last week joined one of the hottest trends on the US equity market by raising $225m via a special purpose acquisition company (Spac) listing on the New York Stock Exchange.

The vehicle, in which LVMH, the world’s largest luxury goods group, and L Catterton hold minority stakes, will use proceeds to invest in “businesses with premium brands that offer an aspirational lifestyle experience to consumers”, according to its prospectus.

“It most likely will be an American brand or a European brand which is already well known but has underpenetrated, under-leveraged Asia,” Mr Thakran said of the target for the Spac, adding it would have a valuation of at least $1bn. Companies involved in wellness — fitness, natural organic skincare or plant-based foods — or premium spirits are among potential targets.

Proceeds from Asia-backed Spacs listed in the US have surged threefold to $1.1bn this year from 2019, according to Refinitiv. But they still account for less than 3 per cent of total funds raised via “blank cheque” US listings in 2020.

Critics argue these vehicles lack transparency, benefit founders disproportionately and may attract investors with no interest in becoming long-term shareholders.

Johan Sulaeman, academic director of the National University of Singapore business school's finance programme, said the fact that Spac sponsors often receive compensation regardless of the long-term performance of the target firm generates potential conflict of interest. 

The recent boom in Spac listings will also add to the dry powder already accumulated in private equity, potentially pushing up valuations for target companies, he added. “It is very fertile ground for a bubble".

But according to Mr Thakran, Spacs backed by industry veterans offer target companies access to public capital, experience in running a business and a chance to grow globally while also retaining a stake in the firm.

“We do not want to invest in something we don't know,” he said. “We only invest in something . . . [where] we can be there at the board level, at the company level” to help on anything from product design to marketing, branding and strategy.

Purchase marks Japanese group’s biggest foray into global fintech space

Japan’s NEC has agreed to buy Switzerland’s largest software provider to banks for SFr2.05bn ($2.2bn) in its biggest foray into the global fintech space.

The sale of Avaloq to the Japanese technology group ends a three-year investment by Warburg Pincus, which paid close to SFr300m for a 35 per cent stake in 2017. The private equity group now owns 45 per cent of the privately held group, with the rest in the hands of Avaloq’s founder Francisco Fernández and its employees. 

NEC’s acquisition follows years of restructuring involving the loss of 3,000 jobs and the offloading of unprofitable businesses. The deal, which is expected to close by April, builds on NEC’s purchase last year of KMD, a Danish IT services group, for Dkr8bn ($1.2bn), and its £475m takeover of UK’s Northgate Public Services in 2018.

Earlier this year NEC also sealed a capital tie-up with Japan’s largest telecoms operator NTT to better compete in the global race to supply 5G equipment.

Shares in NEC briefly rose more than 2 per cent on Monday morning following the announcement of the deal. 

Avaloq has about 2,300 employees and serves more than 150 banks and wealth managers in financial centres including London, Frankfurt and Paris. 

At an online news conference, Takashi Niino, NEC’s chief executive, said the company planned to use its blockchain and facial recognition technologies to serve the security and privacy needs of Avaloq’s clients. 

The fintech deal comes as the pandemic has accelerated the trend towards digitalisation both in the banking sector and within government agencies. 

“We can expect long-term growth in the market,” Mr Niino said.

Though richly valued at around 20 times adjusted earnings before interest, tax, depreciation and amortisation, Takayuki Morita, NEC’s chief financial officer, argued the purchase price was justified by Avaloq’s expected annual growth rate in ebitda of 15 per cent. 

The Swiss group was lossmaking last year partly due to investment costs in data centres. It recorded a net loss of SFr29.8m in 2019 while revenue increased 6.4 per cent from a year earlier to SFr609m, 70 per cent of which came from Europe.

In a statement, Juerg Hunziker, Avaloq’s chief executive, said the deal would help the Swiss group expand its geographical footprint beyond Europe.