FT : Former Wirecard CEO Markus Braun rearrested and accused of long-running fra

Former Wirecard CEO Markus Braun rearrested and accused of long-running fraud
Executive detained weeks after collapse of once high-flying German technology group

Former Wirecard chief executive Markus Braun has been accused by Munich prosecutors of committing a multiyear fraud and arrested for a second time following the June collapse of the German payments group.

The prosecutors now suspect Wirecard’s accounting fraud started as early as 2015 when Mr Braun and other suspects allegedly agreed to inflate Wirecard’s revenue in an attempt to deceive investors.

Once a standard-bearer for Germany’s tech sector, Wirecard collapsed last month after acknowledging a multiyear accounting fraud and warning that the €1.9bn of cash on its books probably did “not exist”.

Investigators have widened their investigation into the downfall of the company to include other former executives, prosecutors said during a press conference on Wednesday.

A Munich judge revoked Mr Braun’s €5m bail after the investigation was widened against the former chief executive and other former Wirecard executives.

Wirecard’s former finance boss Burkhard Ley and the group’s head of accounting Stephan von Erffa have also been taken into custody, a spokeswoman for the Munich prosecution office said.

The new arrests mean four Wirecard employees have now been detained by the German authorities. Earlier this month, Oliver Bellenhaus, the Dubai-based head of a Wirecard subsidiary at the core of the fraud, reported himself to Munich prosecutors. A lawyer for Mr Bellenhaus said last week that Mr Bellenhaus “was facing his individual responsibility — unlike others”.

Jan Marsalek, the former chief operating officer, is wanted under an international arrest warrant. Mr Braun has previously denied wrongdoing.

The prosecutors say that banks and other investors in subsequent years put €3.2bn into Wirecard. “Due to Wirecard’s insolvency, those funds are most probably lost,” the spokeswoman said. “In interrogations, we were told about a strictly hierarchical system that was shaped by an esprit de corps and pledges of allegiance to the chief executive as a leader.”

The prosecutors said that one suspect had turned into a chief witness and that this person’s co-operation had helped to significantly advance the investigation.

FT : EU plans flurry of rule changes to boost market recovery

EU plans flurry of rule changes to boost market recovery
Tweaks to financial regulations, to be announced soon, follow €750bn relief package

Brussels is set to unveil a series of quick fixes to its financial market rules, including measures to ease trading in small-cap stocks and energy derivatives, in an attempt to boost the region’s recovery from the Covid-19 pandemic.

The planned measures, due to be announced in the coming days, include changes to the Europe-wide Mifid II regulatory regime, tweaks to standards for company prospectuses and exemptions to “formal [regulatory] burdens where they are not strictly necessary”, according to draft papers seen by the Financial Times.

The aim is to free up more capital and time for investors to deal with the consequences of coronavirus, the papers said. The European Commission also wants to adjust its regulations to allow EU companies to access foreign exchange benchmarks that are widely used overseas.

The targeted proposals are set to be published just days after European politicians agreed a landmark coronavirus recovery package that will change the face of the region’s capital markets, by making the EU one of the region’s top borrowers. The amendments come via so-called delegated acts, which give European authorities the powers to make changes more quickly than through the regular legislative process.

The commission did not provide an immediate comment.

The proposals include tweaks to controversial Mifid rules, which came into effect in 2018, that require fund managers to make a clean division between payments for trading and those for research. As asset managers now pay only for the research they want, cost-conscious banks have stopped providing coverage of smaller companies that are likely to provide fewer ancillary revenue streams.

Under the new plans, companies with a market capitalisation of less than €1bn will be exempt from these rules on “unbundling”, to encourage greater analyst coverage and thus trading in the stock. There will also be an exemption for fixed-income research, the documents said.

Brussels is also planning to boost liquidity in energy derivatives markets by revamping position limits, or the amount of trading that can be done in one particular security. Regulators are considering an exemption for investors whose open positions total less than 300,000 lots — a measure of contract size — over a year.

Agricultural commodities will not be included in that review, the documents said.

The EU also plans to amend regulations on financial market benchmarks, eyeing changes to come into effect from the end of 2021. Some of the rules will give regulators more powers to ensure a smooth transition from the tainted Libor lending benchmark by the end of next year. 

Brussels is also keen to reduce its dependence on oil benchmarks priced in dollars, while boosting euro-denominated alternatives like natural gas. The world’s biggest gas benchmark is based in the Netherlands.

Policymakers are planning an exemption to allow companies in the bloc to use overseas benchmarks for foreign exchange derivatives, the documents said. Rules currently stipulate that contracts such as swaps and non-deliverable forwards must be traded on EU-recognised venues or markets.

Without the exemption, EU institutions face being shut out of benchmarks like WM/R, one of the world’s most widely used benchmarks for foreign exchange rates, because it is administered outside of the bloc, in London.

Other planned changes include exemptions on costs and charges disclosures for wholesale clients like asset managers, and a requirement that banks and asset managers demonstrate they have tried to get the best price for their share deals will also be suspended. A formal Mifid II review in 2021 will decide whether to tweak or scrap these “best execution” reports.

FT : Silver Lake strikes latest French deal with €700m purchase from Goldman

Silver Lake strikes latest French deal with €700m purchase from Goldman
US-based private equity firm to buy financial services broker Meilleurtaux

Silver Lake has struck its latest deal in France by agreeing to buy financial services broker Meilleurtaux from Goldman Sachs for about €700m, people with direct knowledge of the matter said. 

The transaction for Meilleurtaux, best known among consumers for its mortgage comparison tools, marks the second investment into a French technology company by Silver Lake in recent weeks. 

It is also the latest sign that the US private equity group is looking to do more deals in Europe after spending much of the coronavirus crisis striking investments in the US and India.

Founded in 1999, Paris-based Meilleurtaux provides customers with comparisons on consumer financial products ranging from mortgages to credit cards. Financial details about its sales or revenue were not immediately available. 

The acquisition by Silver Lake marks the third time it will pass through private equity hands. In 2017, the buyout unit within Goldman Sachs acquired a majority stake in the business, which was previously owned by London-based Equistone Partners which used a series of bolt-on deals to expand the company. 

Silver Lake and Goldman Sachs may announce that the sides have entered into exclusive negotiations to finalise the agreement, which still needs to be approved by the company’s works council, as soon as Wednesday. The deal was first reported in France’s L’Agefi.

Silver Lake is one of a handful of mostly US-based private equity groups that have been particularly active in making deals since the outbreak of the pandemic, agreeing to invest in Airbnb, Twitter, Expedia, Alphabet’s self-driving unit Waymo and the Indian telecoms group Reliance Jio. 

This month Silver Lake agreed to buy the French payroll provider Silae in a €570m acquisition that marked its first European deal since the pandemic began. 

That deal and the Meilleurtaux investment — as well as a 2016 investment in the French enterprise management software group Cegid — were led by Christian Lucas, co-head of Silver Lake’s European business. 

Silver Lake and Goldman Sachs declined to comment, and Meilleurtaux did not immediately respond to a request to comment.

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • SNAP -7.1% (disappointing DAUs and no Q3 guidance weigh on stock), IBKR -4.4%, USNA -3.7%, COF -3.4%, HWC -2.8%, IRBT -2.6%, CNI -2.1%, WTFC -1.6%, AMTD -1.2%, NTRS -0.8%, UAL -0.5%, DOV -0.5%

Other news:

  • CASI -10.3% (stock offering)
  • FE -6% (discloses receipt of subpoenas)
  • OPCH -5.3% (prices offering of 18 mln shares of common stock by co and selling shareholders at $12.50 per share)
  • HTLD -3.1% (prices secondary offering 3,260,870 shares of common stock from a selling stockholder at $20.50)
  • ICLK -2.3% (files for offering by selling shareholders)
  • PINS -1.6% (in sympathy with SNAP earnings)
  • NKLA -0.8% (will redeem all of its outstanding warrants to purchase shares of the Company's common stock, $0.0001 par value per share)

Analyst comments:

  • SNAP -6.9% (downgraded to Neutral from Buy at Guggenheim)
  • IBKR -4.4% (downgraded to Neutral from Buy at Compass Point)
  • KSS -3.4% (downgraded to Sell from Neutral at UBS)
  • M -2.9% (downgraded to Sell from Neutral at UBS)
  • AMRC -2.7% (downgraded to Mkt Perform from Strong Buy at Raymond James)
  • CEQP -2.7% (downgraded to Underweight from Equal Weight at Wells Fargo)
  • OKE -2.3% (downgraded to Equal Weight from Overweight at Wells Fargo)
  • ET -1% (downgraded to Equal Weight from Overweight at Wells Fargo)
  • CL -0.8% (downgraded to Equal-Weight from Overweight at Morgan Stanley)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • NAVI +9.7%, HCA +6.5%, CALX +6.4%, FMBI +5.9%, AIR +5.3%, TER +4.5%, OLLI +4.5% (guides JulQ revs well above consensus), BBY +4.3% (provides JulQ update), ABB +4.1%, CHKP +3.5%, REXR +3.4%, SLGN +3.4%, SUM +2.9% (also names new CEO), KEY +2.9%, NDAQ +2.9%, FULT +2.7%, IQV +2.6%, HCSG +2.5%, CSTM +2.5%, BIIB +2.5%, ISRG +1.8%, TXN +1.6%, TMO +1%, NRZ +1%, AVNT +1%, MKTX +0.9%, BRKR +0.8%

Other news:

  • PERI +8.8% (to acquire Pub Ocean for up to $22 mln)
  • AKCA +8.2% (receives approval for reimbursement of TEGSEDI in Austria for the treatment of hATTR amyloidosis with polyneuropathy) AUPH +7.6% (FDA acceptance of NDA filing for voclosporin)
  • LMNX +7.1% (files for Emergency Use Authorization to FDA for expanded NxTAG respiratory panel test including SARS-CoV-2)
  • BNTX +6.5% (BioNTech (BNTX) and Pfizer (PFE) reach agreement with the US government for up to 600 mln doses of SARS-CoV-2 vaccine candidate)
  • CTSO +6% (prices public offering of 5,263,158 common shares at $9.50/share)
  • PFE +5.4% (BioNTech and Pfizer (PFE) reach agreement with the US government for up to 600 mln doses of SARS-CoV-2 vaccine candidate)
  • SPOT +4.6% (new multi-year global license agreement with Universal Music Group)
  • AGTC +4.3% (announced updated development plans for X-linked retinitis pigmentosa program)
  • BBBY +3.9% (BBBY and FLWS reach settlement to complete sale of PersonalizationMall.com)
  • KNSA +2.8% (upsizes and prices offering of 5,952,381 common shares at $21.00 per share)
  • MESO +2.4% (FDA schedules advisory committee meeting to review data for BLA for RYONCIL)
  • APT +2% (Trump says all Americans should wear masks in public places)
  • ACI +1.9% (tentative agreement with UFCW unions)
  • BSX +1.7% (FDA approval for the WATCHMAN FLX)
  • JAZZ +1.4% (receives FDA approval for Xywav oral solution)

Analyst comments:

  • CMRE +5.5% (upgraded to Buy from Hold at Stifel)
  • VVNT +4.4% (upgraded to Overweight from Neutral at JP Morgan)
  • AUTL +3.7% (initiated with a Buy at SunTrust)
  • ON +2.9% (upgraded to Buy from Neutral at B. Riley FBR)
  • NWN +1.1% (upgraded to Neutral from Sell at UBS)

>>> USEarly premarket gappers

Early premarket gappers

  • Gapping up:
    • AUPH +8.8%, NAVI +8.2%, PERI +7.9%, LMNX +7.1%, FMBI +5.9%, OLLI +5.5%, BBY +4.8%, AIR +4.8%, CALX +4.4%, TER +4%, REXR +3.4%, ABB +3.1%, FULT +2.7%, BBBY +2.5%, HCSG +2.5%, BSX +2.1%, ISRG +1.8%, TXN +1.5%, SUM +1.3%, ACI +1.1%, TMO +1%, APT +0.8%, PNFP +0.6%
  • Gapping down:
    • SNAP -8.4%, CASI -7.2%, HTLD -4.6%, COF -4.4%, FE -4.3%, ICLK -4.2%, OPCH -3.7%, USNA -3.7%, HWC -2.8%, IRBT -1.7%, WTFC -1.6%, PINS -1.4%, MESO -0.8%, IBKR -0.8%, UBER -0.5%

>>> Europe : Brokers Upgrades & Downgrades - 22nd of July 2020 - V2(+)

>>> Up
* Adidas Raised to Buy at Bryan Garnier (+)
* Altice Europe Raised to Overweight at JPMorgan; PT 4.70 euros
* Dechra Pharma PT Raised to 3,515 pence at Jefferies
* DP Eurasia Raised to Buy at VTB Capital; PT 50 pence
* EasyJet Raised to Buy at Berenberg; PT 800 pence
* Generali Raised to Buy at Berenberg; PT 18.50 euros
* Ipsen Raised to Overweight at JPMorgan; PT 96 euros
* Kaufman & Broad Raised to Buy at Oddo BHF (+)
* Polar Capital Raised to Buy at Investec; PT 620 pence (+)
* Proximus Raised to Buy at HSBC; PT 23 euros
* Reckitt Raised to Buy at Bryan Garnier; PT 9,000 pence (+)
* Resurs Holding Raised to Buy at Pareto Securities; PT 50 kronor (+)
* Sartorius PT Raised to 385 euros at Bankhaus Metzler
* Sobi Raised to Overweight at Barclays; PT 230 kronor
* Somfy Raised to Buy at SocGen; PT 124 euros
* Sunrise Raised to Overweight at Morgan Stanley
* UBS Raised to Buy at DZ Bank; PT 15 Swiss francs (+)

>>> Down
* Alrosa Cut to Neutral at Citi
* Axa Cut to Hold at Berenberg; PT 21.80 euros
* Koenig & Bauer Cut to Hold at LBBW; PT 21 euros
* Lindt & Spruengli Cut to Underweight at Barclays
* Sartorius Cut to Hold at M.M. Warburg; PT 330 euros (+)
* Uniper Cut to Hold at Bankhaus Metzler; PT 29.80 euros

>>> Initiation
* Hiag Immobilien Rated New Add at Baader Helvea

>>> Call
* ABB’s 2Q Beat ‘Impressive,’ With Motion Resilient: Jefferies (+)
* Akzo Nobel 2Q Shows ‘Excellent Job’ in Tough Times, Redburn Says (+)
* Britvic’s Stability ‘Impressive’ With In-Line 3Q Sales, RBC Says (+)
* Close Brothers Faces ‘Serious Headwinds,’ Jefferies Says (+)
* Investors Should Now Buy Generali and Hold Axa, Berenberg Says (+)
* Dechra Pharma Gets Street-High PT on Clearer Outlook: Jefferies
* EasyJet Upgraded at Berenberg on Restraint in Adding Capacity (+)
* Evolution Gaming Estimates Raised on Strong 2Q: Morgan Stanley
* Post-Virus Green Push Isn’t End of Big Oil, Citi’s Morse Says
* Software AG Results Show ‘Solid’ Bookings Trend, Baader Says (+)
* Sunrise Upgraded on Growth, Superior Visibility: Morgan Stanley

FT : SGX and Nasdaq seal pact to streamline secondary offerings

SGX and Nasdaq seal pact to streamline secondary offerings
Partnership comes as Sino-US tension pushes Chinese companies away from Wall Street

The Singapore Exchange has sealed a pact with Nasdaq to streamline dual listings for companies on both stock markets, as the Asian bourse seeks to offset the impact of delistings and governance scandals on its equities business.

SGX said the revised framework for the partnership would facilitate share offers in Singapore by Nasdaq-listed companies by allowing them to base applications for a secondary listing on US regulatory filings.

The agreement comes as rising tension between Washington and Beijing has prompted a number of US-listed Chinese companies, faced with legislation that could force them to delist from Wall Street, to undertake secondary share offerings in the rival Asia financial hub of Hong Kong.

Lock Yin Mei, a partner at law firm Allen & Overy, said the partnership would make the listing preparation process and regulatory clearance “much quicker and more efficient. This benefits issuers and the professionals, making time to market a lot faster”.

However, analysts said the arrangement was unlikely to have much impact on the exchange’s listings pipeline, which in recent years has been dominated by a steady drumbeat of delistings. Shares in SGX were down 1.5 per cent on Wednesday.

Ngoh Yi Sin, an analyst with CGS-CIMB Securities, said a far bigger barrier to secondary listings by tech groups in Singapore was that valuations in the city-state were unlikely to be as high as those commanded in Hong Kong or New York. The revised arrangement with Nasdaq “isn’t likely to change much [for SGX] in the near term”, she said.

SGX is the world’s third-largest foreign exchange trading hub after London and New York, and is planning aggressive expansion in currency markets over the next five years to solidify its position in Asia.

But its equities business has failed to keep pace with growth in Hong Kong. Nine companies have dropped off the Singapore Exchange this year as of June while just five have listed, according to Dealogic data, putting SGX on track for a second straight year of more departures than debuts.

Neither a previously agreed tie-up with Nasdaq to encourage secondary listings nor a separate similar agreement with the Tel Aviv Stock Exchange has produced any offerings in the city-state.

As a result SGX has struggled to capitalise on growing concerns over Hong Kong’s future as a financial centre, sparked by Beijing’s imposition of a sweeping national security law on the Chinese territory.

Years of delistings and governance scandals at Singapore-listed companies have taken a toll on investor enthusiasm, and industry experts say poor liquidity and low valuations have undermined SGX’s appeal.

Hong Kong’s stock exchange even managed to snatch a key derivatives licensing agreement from Singapore for options contracts based on MSCI equities indices. SGX warned that the loss of that agreement would dent its 2021 profits by as much as 15 per cent.

However, SGX’s purchase in June of a controlling interest in BidFX, a trading venue used by hedge funds and banks, could offset some of the lost revenue from the MSCI deal, Ms Ngoh said.

>>> Stoxx 600 Pre-MArket Indications

  • Evotec SE (EVT TH) +3%
    • Evotec Gets DoD Contract for Virus Treatment Process Development
  • Elis (7EL TH) +1.6%
  • Glaxo (GS7 TH) +1.5%
  • Altice Europe (6AT TH) +0.9%
  • Axa (AXA TH) +0.5%
    • Investors Should Now Buy Generali and Hold Axa, Berenberg Says
  • MTU Aero (MTX TH) -1.1%
  • ProSieben (PSM TH) -1.1%
  • Beiersdorf (BEI TH) -1.1%
  • TUI (TUI1 TH) -1.1%
  • Iberdrola (IBE1 TH) -1.2%
  • Kion (KGX TH) -1.4%
  • Fraport (FRA TH) -1.5%
  • AB InBev (1NBA TH) -1.5%
    • Craft Brew Falls Amid Scrutiny of AB InBev’s Plan for Kona (1)
  • Shell (R6C TH) -1.6%
    • Shell Says Its Deer Park Manufacturing Complex Stopped a Leak
  • Repsol (REP TH) -1.9%