TheChek News Flow

ECB May Choose a Long, Slow Goodbye to Extraordinary Stimulus

Investors should know that how long bond purchases run matters as much as how big they are

The European Central Bank’s October date with destiny—a vital event for markets this year—is looming. Investors are wondering by how much the central bank’s monthly bond purchases, currently running at €60 billion ($70.4 billion), will be scaled back. But how long purchases run matters as much as how big they are.

The challenge the ECB faces is complex. While eurozone growth has picked up to well above trend levels, helping to narrow the output gap, inflation is adrift of its target of “below, but close to” 2%; the ECB forecasts the rate at 1.5% in 2019. But its bond-purchase program faces constraints due to the limits the ECB has set on how much government debt it can own from each eurozone country. BNP Paribas estimates that at the current pace, the ECB will run out of German bunds to buy by August; at €40 billion a month, by the end of 2018.

A recent speech by ECB executive board member Peter Praet points to another possible path: smaller purchases over a longer period. In particular, Mr. Praet noted that market conditions matter. In times of higher stress, a bigger monthly number carries more power in terms of easing conditions. But if markets are less tense, as they are now, investors can focus more on the persistence of the policy. The account of the ECB’s latest meeting also suggests that policy makers are eager to retain flexibility; this might be one way of achieving that aim.

The ECB, after all, surprised markets when it changed the settings of its bond-purchase program at the end of 2016. Many had expected the ECB to extend purchases at the then-prevailing pace of €80 billion a month, perhaps for six months. Instead, the ECB opted for nine months at €60 billion a month. The extension helped smooth the sticker shock of the reduction in pace, while also buying more time for the ECB. The 10-year German bond yield, a key benchmark for eurozone rates, is still ultralow at 0.48%.

Equally, markets need to think about the policy settings that aren’t changing for now. The ECB has stuck to its guns on its guidance that rates won’t be raised until after bond purchases stop, despite criticism from some of its negative deposit rate of minus 0.4%. A longer extension to the purchase program would underpin that guidance and the ECB’s commitment to persistence and prudence on policy. Meanwhile, the ECB’s continued presence in markets might further support eurozone equities and southern European government bonds.

Analysts at J.P. Morgan now expect the ECB to slow purchases to €20 billion a month but extend them over nine months to September 2018. Even after active purchases stop, there will be reinvestments, too. It might yet be a long, slow goodbye to quantitative easing in the eurozone.

Amazon Has a Luxury Problem

High-end retailers want firmer commitment to policing site for counterfeits, unauthorized sellers

Swatch Group SWGAY -1.12% executives earlier this year were planning to sell some of the Swiss conglomerate’s higher-end watches through Amazon.com Inc. AMZN 0.89%

But after months of talks, the two companies hit a wall. Swatch, whose brands include Longines, Omega and Blancpain, demanded a commitment that Amazon proactively police its site for counterfeits and unauthorized retailers. Amazon refused, according to Swatch Chief Executive Nick Hayek, putting a deal between the two on ice.

“We add value to them,“ Mr. Hayek said. ”But they should also add value to the brand.”

Amazon declined to comment on Swatch.

Amazon is courting companies across the retail spectrum, but one sector is still mostly holding out: the world’s club of luxury brands. Swatch and other high-end retailers say Amazon’s online marketplace undermines the strict control they say is key to maintaining a sense of exclusivity—and keeping prices high. While some makers of luxury products have decided to join Amazon, many of the industry’s biggest players—including Swatch, Gucci owner Kering, luxury-watch maker Cie. Financière Richemont SA and LVMH Moët Hennessy Louis Vuitton SE —are staying away for now.

The absence of high-end products has hampered Amazon’s push to be a force in the fashion industry, despite years of working to expand the merchandise it sells officially though its website. Adding luxury goods would help Amazon boost margins and build loyalty among customers of Amazon Prime, its premium service favored by higher-income shoppers that offers faster delivery and other perks, according to former executives familiar with the company’s shopper base.

Amazon has been investing heavily in the fashion industry in recent years. It opened a large fashion photo studio in Brooklyn, started its own private-label brands and sponsored glittering events such as the Met Ball at the Metropolitan Museum of Art. The company also has introduced a “luxury beauty storefront” within its site to draw customers looking for high-end brands.

Amazon has won over some of the world’s biggest lifestyle companies by pledging action against unauthorized retailers and knockoffs. Earlier this year, Nike Inc. agreed to make some of its products available for sale directly from Amazon, in exchange for a promise for limited policing. But Amazon typically only does that for the biggest brands, people familiar with the arrangements say. Nike sales the last fiscal year were $34 billion, nearly five times Swatch’s annual revenue.

Amazon is concerned about counterfeit goods, but it is also reluctant to help brands stop legitimate products from being sold outside approved distribution channels, said James Thomson, a former senior manager in business development at Amazon and now partner at brand consultancy Buy Box Experts. A multitude of third-party sellers—which often sell at discounts—helps keep prices low on the site with legitimate merchandise, too.

“Amazon will say to any brand, ‘your distribution problem is your distribution problem,’” Mr. Thomson said.

An Amazon spokeswoman said it works with brands and manufacturers to improve its counterfeit detection systems. She said the company has automated systems in place that constantly scan for and block potential counterfeiters. “We take this fight very seriously,” she said.

Amazon does have programs to help protect brands, such as one introduced last year requiring fees from third-party sellers and invoices proving goods are legitimate. But many sellers were grandfathered in under the old rules, and the programs offer brands varying levels of protection against unauthorized merchandise.

The Amazon spokeswoman said the Amazon Brand Registry program provides rights owners access to tools including proprietary text and image search and more authority over product listings.

Luxury brands want more. Swatch, in its talks with Amazon, demanded a written commitment from Amazon to deploy its “best efforts” to fight knockoffs. Amazon’s approach, former employees and analysts say, is often reactive, depending on brands to complain first before a listing is removed.

“Amazon doesn’t want to be a policeman,” says Cynthia Stine, president of eGrowth Partners, which works with third-party Amazon sellers to fight account suspensions and improve daily operations.

Some of the more affordable designer brands, including Nicole Miller and Calvin Klein, have moved to Amazon anyway. Kate Spade had, too, before shifting course in February, according to a spokeswoman, stopping the sale of handbags and small leather goods though the site. Joshua Schulman, a senior executive at Coach Inc., which bought Kate Spade in July, has said the company wants to focus on selling through its own e-commerce channels, rather than Amazon.

“For the time being, we don’t see [Amazon] as a true luxury play,” Mr. Schulman told analysts.

Representatives for Nicole Miller and Calvin Klein didn’t respond to requests for comment.

LVMH, which owns Louis Vuitton and Christian Dior , said it sees little opportunity for dealing with Amazon.

“We believe the business of Amazon does not fit with LVMH, full stop,” LVMH’s chief financial officer told analysts last October. Kering, owner of Gucci and Yves Saint Laurent, says it has no relationship with Amazon and declined to comment further.

One of the biggest worries for these luxury companies: The difficulty of segregating their product listings from the rest of the goods sold through the site. That means a $5,000 suit from luxury Italian menswear company Brioni, a subsidiary of Kering, can appear next to a $200 suit from Kenneth Cole.

“That contradicts the essence of luxury selling and shopping, where the product is the product also because of its environment,” says Jean Cailliau, executive adviser at Paris-based investment bank Bryan, Garnier & Co.

Some luxury companies have struck out on their own, funding e-commerce sites. LVMH recently launched 24sevres.com, which offers 24-hour delivery of select LVMH products in 70 countries. Richemont, the Swiss conglomerate whose portfolio includes Cartier, owns a 49% stake in Yoox Net-a-Porter Group, a London-based company that specializes in online luxury retail.

Still, Amazon’s massive customer base makes it difficult for the luxury industry to ignore. It now sells more than 40 cents of every dollar spent online in the U.S., according to market research firm Slice Intelligence. More than half of all product searches start on Amazon, too, according to BloomReach. No other retailer comes close.

Pressure Mounts at the Top of Deutsche Bank

CEO John Cryan’s resistance to engage with HNA has irked Chairman Paul Achleitner, who helped woo the big shareholder

Most CEOs are zealous about meeting and courting their largest shareholder.

Not Deutsche Bank AG’s John Cryan. He’s made a point of avoiding his.

That owner happens to be Chinese conglomerate HNA Group Co. , a controversial actor on the global scene, which in the spring built its stake in the German lender to nearly 10%.

Mr. Cryan has told associates he wanted nothing to do with the Chinese conglomerate. The iciness has raised eyebrows among Deutsche Bank supervisory-board members and clients, say people close to the bank. And it has irked Paul Achleitner, the company chairman who helped woo HNA. Mr. Achleitner doesn’t like executives airing negative views of individual shareholders, people close to the bank say.

The tensions between HNA, Mr. Cryan and Mr. Achleitner come as Deutsche Bank has struggled for most of a decade to revive profits and bring stability in its upper ranks. Undermining those rebuilding efforts are a slow turnaround and internal clashes over style and strategy that have spilled into meetings with clients and regulators, according to people close to the bank.

At the center is Deutsche Bank’s chief executive, Mr. Cryan, a Briton overseeing Germany’s largest lender. Mr. Cryan has had to mediate between German and U.K. managers vying for money and staffing in the bank’s reconfiguration for a post-Brexit world. He’s under pressure from investors to cut costs, update technology and resuscitate investment-bank profits. And in the background, he has shunned HNA.

Mr. Achleitner was the primary architect of Deutsche Bank’s existing executive suite and is known as a hands-on chairman. Some senior executives at times have bypassed Mr. Cryan to appeal to Mr. Achleitner for support on high-level decisions, people close to the bank say.

Early on, this muddied the management waters for Mr. Cryan, people close to the two men say. A bank spokesman says it is normal for a German chairman to have “regular interaction with all management board members.” Mr. Achleitner supports Mr. Cryan, and it is good for them to disagree at times, some of the people close to them say.

Over the past year, Deutsche Bank has survived legal battles that threatened its stability in the eyes of investors and clients, and raised $8.5 billion in capital. It also has flip-flopped on major strategy decisions, such as splitting and then recombining its trading unit and investment bank.

But this year brought other, fresh complications. Mr. Achleitner helped Deutsche Bank court HNA, before and during the German lender’s capital hike in March and April, people close to the bank say.

Mr. Cryan and HNA CEO Adam Tan haven’t met, the people close to the bank say. Mr. Achleitner and HNA representatives tried to bring the two together, but Mr. Cryan prefers to focus on clients and regulators, people close to the Deutsche Bank CEO say.

“Yes, he hasn’t met him, but of course he will,” a Deutsche Bank spokesman said.

HNA has drawn scrutiny well beyond Deutsche Bank. German and European regulators are reviewing the company, its funding and its Deutsche Bank holding, including what influence HNA might have over the bank as its largest shareholder. The closely held company had faced mounting questions about its ownership and potential ties to the Chinese government as it has ramped up overseas investment.

In the U.S. and elsewhere, some investment banks eager to profit from HNA’s deal fervor by funding and advising on more of its acquisitions have hit pause, people close to the firms say.

HNA uses derivatives to limit losses and gains on its Deutsche Bank holding. Mr. Cryan views the structure HNA used to invest in the lender as speculative, saying it creates risks for the lender and investors, people close to the bank say.

HNA said through a spokesman that it “continues to view Deutsche Bank as an attractive investment opportunity” and is “committed to supporting Deutsche Bank’s long-term success.” The company said it complies and cooperates with regulatory authorities and its relationship with banks remains strong. HNA has taken steps to restructure its ownership, including by setting up a New York foundation intended to be its biggest shareholder. The company spokesman said the foundation “looks forward to sharing more about its activities and ambitions in time.” A person familiar with HNA said the Chinese government doesn’t own a stake in HNA and none of its shareholders hold shares for any Chinese government officials.

HNA first disclosed in mid-February that it held a 3.04% stake in Deutsche Bank through Austrian asset manager C-Quadrat Investment AG . On March 5, Deutsche Bank announced plans to raise $8.5 billion through a share sale. HNA’s widely known interest in increasing its stake helped the capital hike go smoothly, by signaling support from a big new shareholder, bankers and investors say. This can encourage other potential new investors to follow suit.

On March 14, Mr. Tan had dinner in Frankfurt with Mr. Achleitner, Deutsche Bank’s then-Chief Financial Officer Marcus Schenck and a C-Quadrat executive, according to people familiar with the dinner. At the time, the HNA contingent expected Mr. Cryan to attend, some of the people say. He ended up not being in Frankfurt that night, according to people familiar with his schedule.

Two days later, Deutsche Bank announced that its supervisory board would nominate two new members, including one proposed by HNA: C-Quadrat’s CEO, Alexander Schütz. Mr. Schütz was advising HNA on other potential deals and had sold part of his firm to HNA.

In early May, HNA disclosed details of its nearly 10% Deutsche Bank holding in a regulatory filing. It showed that HNA used more than $2.8 billion in financing, mainly from UBS Group AG, to help purchase shares worth about $3.8 billion at the time. It also did a derivative deal with UBS. One portion of that deal protected HNA if the shares fell below €15. They have been below €15 since early August and closed Friday at €14.72.

Most Deutsche Bank executives learned about the structure from the filing, the people close to the bank say. HNA acquired most of its shares in the market, limiting Deutsche Bank’s control over the process, according to regulatory filings and the people close to the bank.

Mr. Cryan, a former UBS finance chief, told some people close to the bank that it couldn’t be certain how HNA is funded and that he didn’t like that the investor bought the bank’s shares and effectively bet against them.

On May 18, at Deutsche Bank’s annual meeting, shareholders overwhelmingly voted Mr. Schütz onto the supervisory board. While in Frankfurt, the board gathered for dinner. Afterward, chauffeured cars waited to take them to their homes and hotels.

Mr. Schütz was perplexed when no car appeared for him, and he caught a ride with a fellow board member, according to a story he and others recounted over the next few days. The ensuing banter was that someone at Deutsche Bank must have wanted the HNA guy to walk. Another version of events is that Mr. Schütz had declined a car, so Deutsche Bank planners hadn’t booked one.

Mr. Schütz tried again to arrange a dinner between Messrs. Cryan and Tan, suggesting they could meet in New York. Mr. Cryan didn’t respond to the invitations, people familiar with the matter said.

Consumer giant says activist’s campaign for board seat is driven by outdated views

Procter & Gamble has not worked out how to cater to consumer demand for smaller brands, fosters an insular corporate culture and is structured so that no one is held accountable — according to the activist investor seeking a seat on the consumer giant’s board this week.

As the largest proxy fight ever seen in the US nears a shareholder vote on Tuesday at P&G’s annual meeting in Cincinnati, Ohio, Nelson Peltz is making his final pitch.

Mr Peltz, fighting only the third proxy battle of his career, told the Financial Times that the company needed to regain its sense of urgency to take back the market share it has lost as its sales growth has continued to lag behind rivals.

P&G “have been losing market share for 10 years”, Mr Peltz said. “I’ve spent half my life in consumer [industries], and it’s easy to get a consumer to try your product. They’ll either like it or they won’t. But it’s really hard to get a consumer who’s been using your product and has chosen to go somewhere else to get them to come back.”

P&G contests Mr Peltz’s assertion, pointing to market share gains over the period for the Dawn, Febreze, Pampers and Tide brands.

But in Mr Peltz’s assessment, the company needs to find new, smaller brands to market to a younger audience, whether through its own research and development or through acquisitions; hire more outside executives to bring in fresh perspectives; and slim down, eliminating its “matrix” corporate structure. 

The 75-year-old has won the support of the most influential independent proxy advisers, ISS and Glass Lewis, and P&G investors including Yacktman Asset Management and Calstrs have stated they will vote for him and his investment firm, Trian Partners. While he denies it, he is clearly feeling confident. 

The company, which has fought Mr Peltz tooth and nail — taking aim at his record on previous boards he has served on — says chief executive David Taylor is already implementing changes that are addressing the issues, and that adding Mr Peltz would only disrupt the board. 

Mr Taylor said he thinks Trian’s information on P&G is “outdated and informed by somebody that left the company many years ago” and that Mr Peltz “hasn’t asked a lot of questions about our strategy”.

The group’s former CEO, AG Lafley, has also weighed in, calling Mr Peltz a “short-term speculator” and one of the last people he would call for insight into digital strategy. He called Mr Peltz’s proposal to change P&G’s organisational structure “a big step backwards” that would result in more costs and bureaucracy. 

Mr Peltz has sunk almost a quarter of his fund into P&G, buying a $3.5bn stake in February in the company, which has a market value of $232bn. P&G has brands including Tide detergent, Pampers nappies and Gillette razors, but has not launched a successful product in nearly 20 years, Mr Peltz says. 

“They tell us everything is going great now,” said Mr Peltz, who expressed surprise that the company was fighting his bid so fervently. “But during David’s tenure, cumulative sales growth has been 3 per cent. Their peers have grown 6 per cent and the market has grown 7 per cent. They’ll also tell you the stock has gone up 24 per cent since he became CEO in November of 2015. But what they’re not telling you is that the year before, the stock was down 31 per cent versus peers, and David was running half the company at that time.”

Mr Peltz sits among the senior statesman of activist investing, having taken on companies including Wendy’s, Mondelez, Heinz, DuPont, GE and BNY Mellon. He founded Trian Partners in 2005 and now manages around $13bn in assets. His record in proxy fights is split — he failed at DuPont but won at Heinz — but he is seen as one of the less aggressive activists, who often seeks board seats as a way to wield influence. 

He has stressed that Trian is not advocating a break-up, a cut to R&D spending or Mr Taylor’s exit.

Mr Peltz says the company has been restricted by its complex “matrix” structure, with 10 separate global business units and another six “selling and market operations” divisions. 

Under the current structure, “if you’re the CEO and you notice that your detergent sales are weak in Germany, you walk down the hall and you talk to the president who’s in charge of the GBU who’s in charge of detergent, and you say what’s happening in Germany?” he said.

“And he says: ‘Look, you know, we’re doing a great job marketing in Germany, the sales people in the SMO, they’re apparently not doing their job.’ So you walk down the hall and go to the president of that SMO . . . and he or she says: ‘We’re doing a great job, but media, wow, are they messing up.’ So then you go to media, and media says: ‘This message is resonating all over the place, but distribution — the trucks aren’t getting to the warehouses on time,’” he added. “So you can be walking up and down that hall and there is nobody responsible, there is nobody accountable.”

He envisions a slimmed down corporate office overseeing three global business units — family care, beauty and healthcare, and home care — with built-in sales and marketing functions.

“Now what happens is you have some man or some woman who is running a GBU who is totally accountable,” he said.

Another overarching issue, he says, is that nearly all of the company’s executives have been promoted from within, limiting external voices or experience.

Clayt Daley, the former CFO of P&G from 1998 until 2009 who is working with Mr Peltz on his campaign, told the FT that those who work for the company think the system works well, because it is the only one they know.

“I wish every person in the company before they made it to the president level would have to spend two years in private equity, and find out what shareholder mentality is all about,” Mr Daley said. “And that’s what’s missing there.”

Mixcloud strikes music streaming deal with Warner

London start-up also negotiating with other big record labels

A smaller but growing rival to SoundCloud has struck a licensing deal with Warner Music to start a subscription business in the hunt for a piece of the music streaming gold rush.

Mixcloud’s agreement with Warner, home to pop star Ed Sheeran, is the London start-up’s first direct licensing agreement, and it is negotiating with the other two big labels that control the majority of the world’s popular music.

With the deals in place, the audio streaming group is hoping to convince listeners to pay for shows and other content on the site. 

Mixcloud was started by Cambridge engineering graduates who ran a university radio show, and has built a following as a place for mixtape enthusiasts to share and find music. About 17m listeners a month tune in to 12m radio shows, podcasts and DJ sets by the likes of Carl Cox and Talking Heads’ David Byrne. 

The service’s scope until now had been limited, in part due to licensing laws. It used statutory radio licences and was therefore not allowed to offer online downloads, a key feature for people listening to music under ground or on a plane. 

Co-founder Nico Perez admits Mixcloud is leaping into a crowded field, as companies ranging from Tesla to Amazon have made moves into the music streaming market.

Streaming subscriptions have so far been fairly homogenous. For about $10 a month, a listener can rent access to 30m songs from several companies, including Spotify and Apple. 

“We don’t want to do the $9.99 a month. That’s done. That market is served,” says Mr Perez. “What we’re building is going to be very customised.”

With Mixcloud also in negotiations with Universal Music and Sony Music, pricing and the details of the subscription product are still being worked out. But the company will not try to replicate Spotify’s all-you-can-eat song catalogue, says Mr Perez. Instead they plan to offer subscriptions to specific radio personalities or programmes, who will also earn a cut of the sales. 

For the big record companies — which earn royalty payments each time their artists’ music is streamed — the more subscription players, the better. “If we do this right, you could see people subscribe to more than one service,” says Ole Obermann, chief digital officer of Warner Music. 

Record labels and the tech companies that distribute their music have spent years carving out a structure to share the money from streaming services they once fought.

While the labels have been hesitant to budge on a $10 a month price, Warner Music does not view Mixcloud as a direct threat to Spotify, which made the label more open to experiment, according to one person close to the deal. 

Mixcloud’s roots date back to 2005, when Mr Perez and his classmates, frustrated with the difficulty in sharing mixtapes online, founded the company with a quest to make a “YouTube for radio”. Mixcloud specialises in long-form audio, with the average programme running about 45 minutes, and like SoundCloud, it relies on user-uploaded content. 

Dow +1.65% S&P +1.19% Nasdaq +1.45% Russell +1.30% Nikkei +1.64% Hang Seng +2.95% CSI / Shanghai / Shenzen / Mexico +0.60% Brazil +2.37% EuroStoxx +0.24% FTSE +2.04% CAC +0.56% DAX +1.98% Ibex -1.89% MIB -1.34% SMI +1.03%

Equity markets ran up yet again this week to fresh highs before Friday’s September employment report induced some minimal profit taking. Outside of Friday's jobs numbers the economic data remained unambiguously strong; headlined by the highest ISM non-manufacturing composite since 2005. The September jobs report did suggest wage inflation may be taking hold as unemployment rates continue to dwindle. The figures came on the heels of a plethora of Fed speak which seemed to indicate Fed officials were gaining confidence in their ability pull the trigger and raise rates in December. Rates moved up and Treasury curves steepened while the US Dollar regained some upside momentum. The Pound came under pressure as Brexit concerns, and in particular, the fate of PM May weighed on traders psyche. Spanish stocks weighed on Europe as uncertainty surrounding Catalonia resulted IBEX weakness and a modest widening of peripheral yield spreads. WTI crude futures stumbled, dipping back below $50 and under the 50-day moving average even as another tropical storm, Nate, approached the Gulf of Mexico. Copper prices broke back above the 50-day moving average to the highest levels in more than a month, helped by a dearth of headlines out of China as markets were closed for Golden Week. In Washington DC, Republicans continued to press the case for tax cuts while speculation swirled surrounding the fate of Sec of State Tillerson. Democrats called for renewed gun regulation in the wake of Las Vegas suffering the worst mass shooting in US history. The VIX drifted lower yet again nearing the 9.00 mark midweek and overall stock volumes remained notably soft. For the week the DJIA gained 1.6%, the S&P500 was up 1.2%, and the Nasdaq added 1.5%.

Macro :

- German Government Raises 2017 Growth Forecast to 1.9%: HBMIB

- Fitch: Catalonia Confrontation Could Raise Spanish Bank Risks

- Spanish Bank Ratings Not Affected by Catalonia Crisis, S&P Says

- Spain’s Rajoy Said Art. 155 Not Justified for Catalonia: ABC

- U.K. Cabinet Reshuffle After Oct 19-20 EU Summit: Sunday Times

- House Speaker Ryan: Tax reform is on track for implementation by Jan 1st, 2018 - Ryan tweets 

Keep an eye on :

- ABE SM : Abertis Said to Study Moving Legal Base From Catalonia Monday

- ACS SM : ACS Says Has Funds to Rival Atlantia’s Abertis Bid: Confidencial

- AB1 GY : Air Berlin’s KfW Loan Due for Repayment on Dec. 4, BamS Says

- AIR FP : Airbus Sees ‘Significant Penalties’ Risk in Payments Probe : AFP

- AIR FP : Airbus Probes 100 Possible Bribery Payments: Spiegel

- AMZN US : Amazon Is Said to Decide Before Thanksgiving on Drug Sales: CNBC / (Amazon’s Pharmacy Dreams Sink Distributors)

- AGL IM : Autogrill ready to make new buys

- BOL FP : Bolloré Divested Of Benin-Niger Part Of Cotonou-Abidjan Project

- CABK SM : CaixaBank Board Agrees Move of Legal Base From Catalonia

- COL SM : Colonial Weighs Registered Office Move From Catalonia: Vozpopuli

- CBK GY : Credit Agricole Would Look at Commerzbank If Was for Sale: HB

- EDP PL : China Three Gorges Considering Repacing EDP CEO Mexia: Expresso

- ENI IM : Eni Says Water Tests at Costa Molina 2 Well Conformed With Norms

- GAS SM : Gas Natural Approves Temporary Legal Base Move to Madrid

- MDLZ US : Mondelez Holder Pershing Square Reports 4.97% Stake (from 5.6%)

- NEX FP :Prysmian, Nexans, NTK Are Said to Bid for General Cable: Reuters

- PRY IM : Prysmian, Nexans, NTK Are Said to Bid for General Cable: Reuters

- QIA GY : Qiagen NV Rises as Much as 5% to Highest Since July

- RIO LN : Rio Tinto considering sale of Dunkerque aluminum smelter

- SAB SM : Fitch: Catalonia Confrontation Could Raise Spanish Bank Risks

- TSLA US : Tesla Delays Semi Unveil, Says Diverting Resources for Model 3

- TEVA US : Cooper/Teva $1b Deal May Be Hurt by Birth Control Rule: JPMorgan

- UBSN VX : UBS Wins GBP11b Passive-Equity Mandate From U.K. Pension Funds

- VIV FP : Mediaset, Vivendi Start Talks to Resolve Pay TV Dispute: Sole

- VOW3 GY : German Transport Ministry Wants Hardware Diesel Fixes: Spiegel

- ZURN VX : Zurich to Lower Costs by $700m by Year End, CEO Greco Tells NZZ

Chauffeur Privé is in the final stages of a €50m funding to fuel French expansion

Uber’s rivals in Paris are cranking up efforts to steal market share from the car-booking app in France and across Europe, seeking to take advantage of the pressure on Uber’s brand.

Chauffeur Privé, the second-largest car-booking app in France by number of users, is in the final stages of a €50m funding round to fuel its expansion in France and beyond. It is looking to recruit an additional 70 to 100 people to its team of 150 people in the coming months.

In France, Uber’s continuous spats over pricing and employee rights with its drivers culminated in hundreds of them striking before Christmas last year and paved the way for the likes of Chauffeur Privé and Heetch to make inroads. Uber takes a 25 per cent commission from each journey, compared to Chauffeur Privé’s 20 per cent commission and Heetch’s 15 per cent.

Uber has also been seeking to repair relations with drivers in France, including by proposing temporary financial help for minicab drivers and offering insurance packages.

“Uber’s perception in the market and mistakes have allowed us to capture market share,” said Yan Hascoet, founder of Chauffeur Privé. Many drivers choose to use both the Uber and the Chauffeur Privé apps to give themselves a better chance of finding rides. Mr Hascoet said that if a driver declares himself unavailable but is still tracked driving around, it typically means that the driver has accepted a ride from the Uber app instead.

“What we see is that the share of time drivers spend is more with us and less with Uber,” he said. This year Chauffeur Privé’s number of users has grown about 50 per cent from about 1m to 1.5m, according to Mr Hascoet.

Meanwhile, Heetch, which started out as a carpooling service operating at night time in the Parisian suburbs, has relaunched six months after it was ruled illegal and fined €600,000 by French regulators in March.

Heetch has changed its business model and returned with two new services, including a car-booking app that is a director competitor to Uber, and last month announced it has raised €10m in a funding round led by venture capital firm Felix Capital. “Uber has had such a bad press, it’s helping us,” said Heetch founder Teddy Pellerin. Heetch’s new model is doing 70,000 rides per week in France, he said.

Estonian app Taxify last week launched in France, going head to head with Uber by offering sweeteners such as performance bonuses for drivers and huge price reductions for customers to try to lure business. Taxify recently launched in the UK but was banned because of licensing issues.

Alongside the UK, France is one of Uber’s key European markets and with more than 25,000 drivers and 2.5m users in France it remain the country’s largest player in the sector. Uber said the number of users in France is “growing strongly” while “things have slowed down on the driver side over the past few months due to new regulatory constraints and barriers to entry.” 

Other recent events have also weighed on Uber’s reputation including the ousting of chief executive Travis Kalanick in June and the removal of its London licence by the city’s transport authority.