Commercial Awareness Discussion Thread

Discussion in 'Commercial Awareness Forum' started by Jaysen, May 26, 2020.

  1. Helena

    Helena Legendary Member
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    This is a good point. In addition Intu- the shopping centre giant has entered administration and was struggling with a large debt pre COVID due to the general declining value of shopping centres. Worth looking into the story which concerns fall in rent collection for retail landlords as well as a change in shopping habits accelerated by the pandemic. Online sales reached a record high and there is a general “fall out of love” with the glossy sterile shopping centre. Intu is facing a regeneration challenge like no other.
     
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  2. Daniel Boden

    Daniel Boden Legendary Member
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    In today's news, it has been revealed that Wall Street Banks have received record fees for fundraisings during the pandemic. These fees have been largely boosted by debt fundraisings as companies have desperately attempted to source cash to tide over their finances during this difficult period.

    See more below:

    Wall Street banks net record fees for pandemic fundraisings
    https://www.ft.com/content/84ee3b24-c7f0-44ba-aeba-5ac9c57f810a
     
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  3. Daniel Boden

    Daniel Boden Legendary Member
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    Equally, following its failure to acquire Grubhub earlier this month, Uber is now in talks to acquire Postmates in an attempt to speed-up its consolidation of the currently-lossmaking US food delivery market.

    See more below:

    Uber in talks to buy food delivery start-up Postmates
    https://www.ft.com/content/eb600f18-acfa-4def-9fde-2135bf904b8a
     
  4. Daniel Boden

    Daniel Boden Legendary Member
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    There's an interesting feature in PE Insights today which summarises PE's increasing activity in the sports industry which I have mentioned in the last few months.

    Firms such as CVC, Advent, Bain Capital, KKR are all looking to invest in the sports sector and are confident that they will get significant returns on their investments due to the fact that the sports industry often has a very good 'bounce-back-ability' since many fans are itching to watch their beloved teams and stars play.

    Equally, now is a good time to buy for these PE firms because COVID-19 has reduced the valuations of teams and organisations and has increased the need for financing for teams/organisations previously not in the market for outside investors.

    The article is, as ever, linked below:

    Game on: Buyout firms aim to score big in sports
    https://pe-insights.com/news/2020/06/30/game-on-buyout-firms-aim-to-score-big-in-sports/
     
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  5. Jaysen

    Jaysen Legendary Member
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    Found this interesting: https://blogs.microsoft.com/blog/20...-digital-skills-needed-in-a-covid-19-economy/.

    Microsoft is seeking to provide digital skills to 25 million people by the end of 2020.

    "Within only a few months, COVID-19 has provoked a massive demand shock, setting off job losses that far exceed the scale of the Great Recession a decade ago. The world will need a broad economic recovery that will require in part the development of new skills among a substantial part of the global workforce.

    The pandemic has shined a harsh light on what was already a widening skills gap around the world – a gap that will need to be closed with even greater urgency to accelerate economic recovery. This longer-term disconnect between supply and demand for skills in the labor market appears to be driven by three primary long-term factors: (1) the rapid emergence of AI-powered technologies that are propelling a new era of automation; (2) the growing need for technological acumen to compete in a changing commercial landscape; and (3) the drop-off in employer-based training investments over the past two decades. Navigating these challenges to close the skills gap will require a renewed partnership between stakeholders across the public, private, and nonprofit sectors."

    Might be useful to consider how the pandemic will lead to long-lasting changes in the way we work (and live!).
     
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  6. Daniel Boden

    Daniel Boden Legendary Member
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    In today's FT, it has been announced that unsurprisingly due to COVID-19, M&A activity has fallen to its lowest level in more than a decade with companies looking to sure up their existing businesses and tapping up credit lines to ensure financial security during this difficult period.

    However, many bankers, lawyers and other dealmakers are confident that this will increase in Q3 & Q4 this year as this COVID-19 world becomes more understood and stable.

    It is important to note that Private Equity, due to the significant amount of dry powder PE firms are sitting on, has largely been immune from this drop in M&A activity, with firms such as KKR being very active in Q1 and Q2.

    See more below:

    Global dealmaking drops to lowest level in more than a decade
    www.ft.com/content/92c13865-6c67-4f48-b96b-3429194c2ea2
     
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  7. Daniel Boden

    Daniel Boden Legendary Member
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    Further to the above post, it isn't just PE firms who have been continuing to take a long-term view on transactions and continuing to invest in these uncertain times. Sovereign wealth funds have been very active this year so far and have invested $17 billion into venture capital deals in this year alone. The environment of very cheap debt has encouraged Sovereign wealth funds to continue to invest while others have chosen a path more geared towards consolidation.

    See more below:

    Sovereign Funds Pile Into Venture Capital Investments in 2020
    https://pe-insights.com/news/2020/0...ile-into-venture-capital-investments-in-2020/
     
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  8. Daniel Boden

    Daniel Boden Legendary Member
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    In today's news, Primark has announced that it will lose 2/3 of its profits due to COVID-19. The lack of an online presence clearly has hurt Primark significantly as it has had to continue to pay its suppliers throughout the lockdown.

    See more below:

    Primark to lose two-thirds of profits because of coronavirus
    www.ft.com/content/02764887-2539-4b52-8e37-5c46507d35d9
     
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  9. Daniel Boden

    Daniel Boden Legendary Member
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    Furthermore, EU competition regulators are investigating Google's acquisition deal and how much data Google will access and whether this will cross over to its search engine and advertising businesses. Google has said it has and will continue to be completely transparent throughout this process but it will be interesting to see how this plays out, especially since the questionnaires suggest that Brussels could step in and block the transaction...

    See more below:
    EU signals deeper investigation of Google Fitbit deal
    www.ft.com/content/aba45bc9-ffc8-411e-ac29-dbb3171f4886
     
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  10. Daniel Boden

    Daniel Boden Legendary Member
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    In other news, Daimler, the company behind Mercedes-Benz, has announced that its pending restructuring will be more dramatic and worse than previously expected, due to COVID-19. With its shares already falling 26% this year, with profits falling with them, it seems that Daimler could struggle for the foreseeable future. This is because the company struck a deal with its employees promising no compulsory redundancies until 2029 which makes restructuring much more difficult.

    See more below:

    Daimler: the best, bested
    https://www.ft.com/content/50df2125-170d-437a-8631-7b830c7736f7
     
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  11. Daniel Boden

    Daniel Boden Legendary Member
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    Apologies for the late stories today guys, my Gibson Dunn resources arrived today and I got a bit distracted! This will be my last day posting for the next two weeks as I start my scheme just so you are all aware.

    Further to yesterday's story regarding Daimler's restructuring, today it has been announced that Daimler is to take a stake in a Chinese battery manufacturer, Farasis, indicating that it is pursuing a new direction in electronic or hybrid cars which it hopes will boost its profitability in the future.

    See more below:

    Daimler to take stake in Chinese battery cell maker Farasis
    https://www.ft.com/content/baf2f5d9-a485-4e3a-9412-14d7c89c5ed9
     
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  12. Daniel Boden

    Daniel Boden Legendary Member
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    Furthermore, in another interesting article today, BNP Paribas has been featured as an investment bank that is really seeking to try and dominate Europe's investment banking space. This is a strategy which has been cursed with banks such as Nomura, RBS and Deutsche all seeking to try and control the European investment banking market in recent years but failing to do so.

    It will be interesting to see how this plays out in future months and years as the US powerhouses such as Goldman, Citi, JP Morgan Chase etc. could easily return to Europe when markets have stabilised post-COVID-19, just as they did after the last economic crisis.

    See more below:

    Can BNP Paribas beat the investment banking jinx?
    https://www.ft.com/content/75b26843-560c-4248-bde2-cf11b007be41
     
  13. CTST

    CTST Distinguished Member

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    Good luck with your vacation scheme, @Daniel Boden! I am sure you'll do well!
     
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  14. Daniel Boden

    Daniel Boden Legendary Member
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    Thank you so much! Fingers crossed :)
     
  15. elgeb

    elgeb Star Member

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    Thank you, Daniel!
     
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  16. Ayo Babatunde

    Ayo Babatunde Star Member

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    This article below is really useful in outlining the process of a company going into administration if anyone wants to know more about it:

    https://companieshouse.blog.gov.uk/2019/02/27/what-does-going-into-administration-mean/
     
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  17. Raam

    Raam Valued Member

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    Hi everyone, I spoke to Dan and I'll be covering for him whilst he's busy with his scheme for Gibson Dunn :)

    In today's news:

    1. The Big Four split: The Big Four (Deloitte, PwC, EY and KPMG) have been told to outline plans for audit split by October. The Financial Reporting Council has issued principles for the operational separation of the audit units and the firms must complete the measures by June 2024. This is in light of a number of audit scandals, most recently Wirecard, with regulatory bodies feeling the need to preserve the audit sector’s reputation.

    Link: https://www.ft.com/content/4464e0a3-9ba2-47d2-9f85-3f2912a22f25

    2. Pret A Manger job cuts: Pret has announced plans to cut 1,000 or more jobs and close 30 stores as the effect of COVID-19 becomes clearer. Sales are roughly 25 per cent of normal levels and the company is burning through more than £20m in cash a month. Pret’s business model is to cater to commuters and office workers - this has obviously been disrupted by the lockdown, with footfall only expected to increase to a manageable level towards the end of the summer.

    Link: https://www.ft.com/content/2e63acc5-7000-4745-8e5a-960ade9c5617

    3. Activism: Bankers on both sides of the Atlantic have warned companies that Covid-19 has highlighted the flaws in many companies’ business models and pushed down their share prices. As a result, they should expect a wave of activist campaigns, given the economic fundamentals are picking up. This means hedge funds such as Elliott Management or Third Point (both renowned for activist campaigns against AT&T and Nestle) will be on the look out to acquire stakes in public companies before forcing changes.

    Link: https://www.ft.com/content/aab4e07e-6148-4900-b9d9-3aed15cbd384
     
    #157 Raam, Jul 6, 2020 at 12:34 PM
    Last edited: Jul 6, 2020 at 3:12 PM
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  18. STWO

    STWO Star Member

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    Does anyone know of any companies that have been doing really well lately and have shown flexibility in these challenging times? (Not Zoom plzz) thank you!
     
  19. S87

    S87 Legendary Member

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    Yes I think ikea did better than they expected and it reshaping its business model (more online retail but still with in store experiences)
    Another successful business is bohoo (I can’t remember how to spell it).
    Primark business model has been a total failure and already lost millions.
     
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  20. CTST

    CTST Distinguished Member

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    Hi, companies in gaming, pharmaceuticals and e-commerce have done well. The coronavirus pandemic helped boost Nintendo Switch sales to record levels, with sales having been doubled in March 2020 compared to the same month in 2019 (I am very guilty of this :D)!

    You can also add video-streaming services, such as Netflix to the list.
     
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