Mail.ru Group examines targets in telemedicine sector, sources says
23 APR 2019
Russia’s Mail.ru Group [LON:MAIL], which operates a range of Internet services, is examining potential targets in the telemedicine sector, a source close and a source familiar with the matter said.
The company, which reported RUB 75bn (USD 1.17bn) revenue in 2018, may use acquisitions to expand its operations in the sector, the source close said. It has been approached by several potential targets, and Mail.ru Group has conducted due diligence on some of them, he said, declining to give details.
Mail.ru Group is specifically interested in local telemedicine-sector players catering to patients with chronic diseases and children, as these are the only two market segments that would support viable business models, the source close said. The company may scale up operations at acquisition targets by supplying traffic from its other online business, which includes email platforms and social networks, both sources said .
The company, which reported RUB 75bn (USD 1.17bn) revenue in 2018, may use acquisitions to expand its operations in the sector, the source close said. It has been approached by several potential targets, and Mail.ru Group has conducted due diligence on some of them, he said, declining to give details.
Mail.ru Group is specifically interested in local telemedicine-sector players catering to patients with chronic diseases and children, as these are the only two market segments that would support viable business models, the source close said. The company may scale up operations at acquisition targets by supplying traffic from its other online business, which includes email platforms and social networks, both sources said .
The source close declined to disclose the size of Mail.ru’s war chest, methods of financing the future deals and possible targets sizes.
There are more than 30 companies providing telemedicine services in Russia, the source close said, which is expected to narrow to several large players in the next two or three years as a result of consolidation. The local telemedicine market grew to RUB 3bn (USD 45m) in 2018, from RUB 1bn in 2017, local media report.
Founded in 1998, Moscow-headquartered Mail.ru Group employs more than 5,000. Its shareholders include South African media group Naspers [JSE:NPN] (28%), Russian mobile operator Megafon [MCX:MFON] (10%) and Chinese investment holding Tencent[HKG:0700] (7%), while 50% of shares are in free float.
Mail.ru Group declined to comment. Naspers, Megafon and Tencent did not return requests for comment.
Founded in 1998, Moscow-headquartered Mail.ru Group employs more than 5,000. Its shareholders include South African media group Naspers [JSE:NPN] (28%), Russian mobile operator Megafon [MCX:MFON] (10%) and Chinese investment holding Tencent[HKG:0700] (7%), while 50% of shares are in free float.
Mail.ru Group declined to comment. Naspers, Megafon and Tencent did not return requests for comment.
China's wannabe Starbucks brews a muddy IPO
HONG KONG (Reuters Breakingviews) - China’s Starbucks wannabe is in an unseemly rush to deliver a New York listing. Luckin Coffee’s draft prospectus argues, unconvincingly, that its fair value doubled in three months; an April funding round puts the company’s worth even higher, at a frothy near-$3 billion. Even with a rapidly-expanding chain of cheap outlets, it is still losing more than it rings up in cappuccinos. Add an unnecessarily complex corporate structure, and founder Qian Zhiya’s offer will leave investors worrying about a bitter aftertaste.
Luckin, established in 2017, has proven excellent at two things: opening new stores as rapidly as possible in a race to overtake Starbuck’s China footprint, and convincing backers like BlackRock that this is a financially meaningful achievement.
The speed comes at a cost: Luckin subsidises its offerings. The strategy delivered some $125 million in net revenue in 2018, and a $475 million net loss attributable to shareholders.
Frantically adding users at all costs is a common ploy among Chinese tech startups, but there other alarm bells too. In the prospectus filed on Monday, the company argues that its fair value roughly doubled to $530 per share between December and the end of March. It then raised funds a month later at nearly $866. To explain the sharp rise, it points to the pending initial public offering, and the ensuing conversion of preferred shares to ordinary shares, which hardly justifies the jump. It also notes rising customer numbers and an anticipated acceleration in revenue growth, which would come naturally from opening new stores.
In terms of governance, investors were given cause to worry in March, when Chairman Lu Zhengyao demanded banks loan him $200 million personally in exchange for a role in the IPO, Reuters reported. The prospectus does not reassure on this point either. Luckin has offshore holding companies and a China unit has 49 subsidiaries. It also has a variable interest entity owned by founder Qian and an employee, which will house permits and licenses.
Chinese startups are often tempted to race to market before models are fully tested. Luckin may be a case in point.
French retailer Casino expands Amazon partnership
Supermarket group will sell its brands on the site and will deploy pick-up service
Casino said on Tuesday that it has expanded its partnership with e-commerce group Amazon as the French retailer seeks to tap into new distribution channels.
In March last year Casino became the first French retailer to unveil an alliance with Amazon. Under the terms of the deal, which began in September, groceries from upmarket brand Monoprix were made available to customers of Prime Now, Amazon’s high-speed delivery service.
Casino, which is grappling with tough competition at home, said on Tuesday that the expanded joint venture with Amazon will focus on three areas.
It will deploy “Amazon lockers” in 1,000 Casino group stores across France, which allow customers to collect their Amazon orders. Casino-branded products will also be available on Amazon’s website and app, a move that allows Casino to access new pools of customers with its own-brand products.
And finally Amazon will extend its partnership with Prime Now outside the Paris area, and make Monoprix’s selection available to Prime Now customers in new cities in the next 12 months.
“With this new partnership, we will be able to offer the greatest number of customers the best products and services whenever and wherever they wish,” said Jean-Charles Naouri, chief executive and majority shareholder of Casino, in a statement. “This announcement represents a new step in strengthening Casino’s omnichannel strategy to always be a little more in the heart of consumers’ lives.”
Casino is in the middle of a €2.5bn asset disposal plan as it seeks to reassure investors and shore up its financial position and that of its parent company Rallye. On Sunday Casino announced that it has sold a portfolio of 32 stores to private equity group Apollo Global Management for €470m.
Links of London could be put up for sale by Folli Follie
Links of London, a UK-based jewellery retailer, could be put up for sale by its owner Folli FollieGroup , The Daily Telegraph reported on Monday (22 April).
The newspaper cited unspecified sources, who said Folli Follie may decide to cut off support to Links of London that could trigger a sale of the jewellery chain.
According to a Sunday Times report on 17 March, Links of London is close to collapse and is thought to have considered a company voluntary arrangement (CVA), involving shop closures and lower rental payments.
However, The Daily Telegraph reported, citing company insiders, that the accountancy firm Deloitte is advising Links of London, in order to improve its performance. Links of London reported a 3% increase in like-for-like sales in the year to date, the item said.
The article went on to say that Links of London’s management team is believed to have hired Deloitte to advise on its options.
Folli Follie, a Greece-based retailer, overstated its sales in Asia by 90% in FY17 and had in fact made a USD 45m (GBP 34.6m) loss, rather than the USD 316m profit the company reported.
Folli Follie is also in talks with its bondholders about a potential debt refinancing, the report added.
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Thomas Cook attracts short-sellers including Whitebox Advisors - report
23 APR 2019
Thomas Cook [LON:TCG] a UK-based travel company, has attracted short-sellers including Whitebox Advisors, The Daily Telegraphreported. The newspaper did not cite a source for the information.
News last weekend that several parties are interested in buying Thomas Cook or some of its businesses could prompt a “short squeeze,” the report said. Expectations of a bid battle for Thomas Cook may push the company’s share price up, which would force short-sellers to close out positions, which would prompt a further increase in Thomas Cook’s share price, the item explained.
Whitebox has a 0.81% short position in Thomas Cook, which is worth about GBP 3m (EUR 3.46m), the report said.
A Sky News report on 21 April said the China-based leisure group Fosun International [HKG:0656] had indicated interest in Thomas Cook’s tour operating business, while analysts cited by the newspaper suggested that buyout groups such as Kohlberg Kravis Roberts & Co [NYSE:KKR] and EQT could be interested in Thomas Cook.
Neither Thomas Cook nor Whitebox replied when asked for comment, the report said.
Thomas Cook’s market capitalisation stood at GBP 376m at the close of trading in London on Thursday, 18 April.
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French retailer Casino sells 32 stores to Apollo Global
Latest deal in disposal plan as group seeks to shore up financial position
Casino, the French retailer, has sold a portfolio of 32 stores to private equity group Apollo Global Management for €470m, the latest deal in an ongoing asset disposal plan as Casino seeks to shore up its financial position and reassure investors.
Casino said on Monday the portfolio of stores is made up of 12 Géant Casino hypermarkets and 20 Monoprix and Casino supermarkets properties, located primarily outside of Paris. It expects to receive €374m from the sale by the end of July when the transaction is due to close. Apollo will create a special purpose vehicle to acquire Casino’s real estate portfolio and Casino will receive an interest in this new entity.
For almost a year Casino, which is which is run and controlled by Jean-Charles Naouri, has been selling off assets in response to concerns about the group’s debt levels and its ability to generate cash. In its home market of France, a highly-competitive market for food retail continues to bite Casino and its competitors Carrefour, Auchan and E. Leclerc.
After Casino announced last June a €1.5bn plan to dispose of non-core assets, in March it raised its targets for asset disposals by an additional €1bn by the first quarter of 2020, and set out new targets to increase profits and cash flow in France.
However Casino has so far struggled to assuage the concerns of analysts and rating agencies. “We don’t see an end in sight yet to the continual cash drainage in the French business, but rather additional risk from an increasingly hollowed-out business,” analysts at Bernstein said earlier this month.
Earlier this month Moody’s cut Casino’s long-term rating to ‘Ba3’ from ‘Ba1’ and kept a negative outlook on the company. It expressed concerns over Casino’s weak cash flow generation, which it said would limit the company’s ability to reduce its gross debt despite asset disposals.
This was followed by a downgrade by Standard and Poor’s, which then cut Casino’s financial rating from BB negative outlook to BB- negative outlook, pushing the retailer’s rating further into junk territory. On Saturday Casino responded to Standard & Poor’s downgrade by saying the change in rating has no impact on the availability or cost of the group’s financial resources.
Casino said on Saturday that as of December 31, it had €5bn of available liquidity in France, made up of a gross cash position of €2.1bn and confirmed credit lines of €2.9bn with an average maturity of 2.4 years.
Traders Wager on Calm as Volatility Evaporates
VIX index has fallen 9.4% in April after recording one of the biggest declines in history to start the year
Volatility in the stock market has continued to drop in 2019, a sign that some investors are embracing riskier assets again.
The Cboe Volatility Index, a yardstick for expected swings in equities, has fallen 9.4% this month after recording one of the biggest declines in history to start the year.
The gauge measures the speed and severity of the stock market’s moves and tends to fall when equities are rising and demand for hedges on the S&P 500 slips. Volatility measures tracking currencies, bonds and oil have also retreated.
“Sentiment is incredibly bullish,” said Nancy Davis, chief investment officer at Quadratic Capital Management. “So many people are chasing performance now.”
Ms. Davis said investors have turned to selling options on equities and other assets—income-boosting strategies that typically profit when market volatility stays low.
They also have bet against the VIX, which is akin to taking a bullish stance on stocks. This is a profitable but risky wager that tends to pay out when stocks are rising but can go haywire if sentiment flips.
Major U.S. stock indexes have rallied this year and are on the cusp of fresh highs as Federal Reserve Chairman Jerome Powell said the central bank would be patient with its path of interest-rate increases, leading some to expect a rate cut this year.
Investors also have grown more optimistic about the U.S. economy after worries about its health pulled stocks into a bruising late-2018 selloff. Last week, fresh data showed a rebound in retail spending and strength in the country's labor market.
“We have seen these periods before where the coast is sufficiently clear and market psychology stabilizes,” said Dean Curnutt, chief executive officer at brokerage Macro Risk Advisors, in an email.
The so-called short volatility wagers mark the latest signal of how quickly investors have pivoted toward riskier assets. Market volatility recorded one of the biggest falls in history earlier this year, according to Macro Risk Advisors, and leveraged funds such as hedge funds have steadily ramped up bearish bets against the VIX, Commodity Futures Trading Commission data as of April 16 show.
Wall Street’s “fear gauge” fell from about 36 on Dec. 24 to 17.8 on Jan. 18, one of the fastest drops of at least 50% in history, according to Macro Risk Advisors. The firm calculated the time it took for the VIX to fall by that much after it had darted above 20. The latest incident ranks fourth in the top five, the data show, among other major events that shook markets such as the U.K.’s referendum to leave the European Union in 2016, and the jolt of volatility that hit Treasury markets in October 2014.
Some analysts said the speedy return of calm shows how enthusiastic investors are to execute the so-called short volatility trade, which they said can help keep a lid on swings. As soon as the VIX jumps to a certain level and begins to edge lower, investors race to bet against it.
Though this can be a profitable trade, some cautioned that it can be incredibly risky. Jitters among stock-market investors can drive up turbulence, quickly burning a hole in an investor’s portfolio. That is what happened at several points in 2018. Traders can use VIX futures to make directional bets or hedge other exposure.
Short, or bearish, bets against VIX futures by leveraged funds outnumber bullish ones by about 3 to 1, CFTC data as of April 16 show. The net short positions recently hit the highest level since early October, before stocks started falling toward the worst quarter in at least seven years.
The VIX futures activity shows that some institutional investors are betting that the market is going to go up, said Mark Sebastian, managing partner at Option Pit.
Mr. Sebastian said he has been buying bearish options on a volatility exchange-traded product—contracts that would profit if turbulence stays mild. “I’ve been able to book some decent profits,” Mr. Sebastian said. “I don’t think [volatility] is going up.”