Ahead of Bookbuild Latitude Financial IPO Set at 2
Stocks

Ahead of Bookbuild, Latitude Financial IPO Set at $2

By 6872 0

This has been the year of initial public offerings, and the one by Latitude Financial has been one of the most anticipated ones of the year so far. However, as everyone knows, the ultimate price of the share depends on the sort of interest that has been shown by investors during the roadshow. Latitude has now revealed that it is going to offer its share for $2 each at its IPO, and that is the lower range of the price band that it had specified in its prospectus. On Friday, the company informed fund managers about its decision.

The company’s brokers stated in its book message, “Based on investor feedback to date, the price for the Latitude Financial Group IPO has been fixed at $2.00 per share / 12.4x PE / 5.2% dividend yield.” It went on to add, “As previously advised, the bookbuild closes on Wednesday 16 October, however the issuer reserves the right to close the book early.” That being said, it is still on course to be the biggest listing in Australia in 2019, and at the stated share price, Latitude is going to raise as much as $1.24 billion. The sum reflects 12.4 times multiple of its future profits.

The IPO is going to give the financial firm a valuation of $3.54 billion and will make it one of the most valuable financial services company in Australia. Australia is on its way to become one of the most important markets for Fintech and overall financial innovation, which is why it is not a surprise to see such a big-ticket IPO being floated by a financial services company. Some of the biggest shareholders in Latitude Financial include Deutsche Bank and KKR, and it has grown at an impressive pace over the past few years.

business
Opinion & Analysis

Hold Dividends Payout, Use It To Reduce WildFire Risks: US Judge

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Due to PG&E’s ‘rampant wrongdoing’ of not trimming trees which touch power lines and causing many wildfires recently, a federal Judge has asked the utility company to suspend issuing dividends to its stockholders till the company shows that it will not cause any more wildfires. Judge William Alsup who is presiding over this case overturned the objections raised by PG&E and also issued five new conditions for probations in the San Bruno gas explosion case in 2010.

Apart from banning issuing of dividends till the company complies with clearance rules, it should also be open to getting audited by a monitor appointed by the court and also document all the efforts it is undertaking to not risk another wildfire in the state of California.

PG&E cases in court:

The court order comes after it is widely believed that the company’s equipment has caused wildfire and gas pipeline explosion. In 2010, a gas pipeline burst in San Bruno, California which left 58 injured and killing 8 people. Another major disaster the company is being held liable for is the deadly and destructive wildfire in 2018 where 86 people were killed making it the deadliest in the history of California. PG&E later filed for bankruptcy on Jan 29 anticipating compensation.

Judge expresses his concern:

Judge Alsup was not greatly impressed by the company’s efforts in containing future wildfires and was also concerned about it giving away $4.5 billion as dividends instead of spending on trimming trees away from power lines and also the replacement of faulty equipment. The fires caused in 2017 and Camp Fire in 2018 was due to power lines touching trees and a failure of a worn out hook. The judge added that the company troubles are their own doing he said, “The company is facing a problem of your own making and you have to undo that problem and make it square with the people of California.”

Judge Alsup added new terms and said that the company has to implement them to mitigate wildfire in California. As per the new goals set, the company had to remove 375000 trees that are dead or hazardous from areas that are at high risk of wildfire in 2019. Till the new terms are not accomplished, the company will not be able to pay its shareholders until then.

The shares of the company on the NYSE fell by 2% on Tuesday and was at $17.66 as concerns of liabilities rose.

Cost Cutting
Financial Planning

Cost Cutting in Focus as Kraft Heinz’s Problems Mount

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Cost cutting has often been regarded as a tried and tested method by large corporations, which want to generate bigger profits. Sometimes, those measures work, but sometimes they don’t, and in the case of American food and beverage, it hasn’t. The plunge in revenues and billions in write-offs for two of its biggest brands has cratered the stock since Thursday. Following the debacle, experts are now questioning whether the firm’s aggressive cost-cutting techniques are to blame for their declining fortunes.

On Friday, the Kraft Heinz’s stock plunged by as much as 27% amid widespread panic sell off and the announcement from the company that they were writing down $15.4 billion from the brand value of two key brands- Oscar Mayer and Kraft. Additionally, dividends had also been slashed from 63 cents to 40 cents and needless to say, investors are far from thrilled.

Kraft Heinz’s troubles regarding cost-cutting can be traced to the company’s decision to resort to zero-based budgeting, and many believe that this particular approach is at the basis of the company’s troubles. As per the zero-based budgeting approach, executives sit down and start budgeting with a clean slate, rather than using the budget from the previous year and while that has been successful for many companies, it has not been so for Kraft Heinz. The perils of zero-based budgeting were pointed out consultancy firm BCG back in 2017. According to the report, “The cuts can be impressive, and that’s a big win. When it’s applied clumsily, ZBB can have a demoralizing impact that distracts the organization from growth and value creation.” It seems the executives at Kraft Heinz have not been able to apply it well and according to many experts, cost cutting is something that is tough in the food industry. Any change in an ingredient can often lead to an alteration in the product, and it can be rejected by consumers.

That being said, it is important to point out that many other consumer giants like Mondelez International and Unilever have used this strategy. None of them have had such poor results thus far. According to many analysts, the executives at Kraft Heinz could be the fault here, and an analyst at Investec said as much. He said, “I think it’s a black eye for Kraft Heinz management for not implementing it in as a sophisticated way as might be necessary, or maybe they just implemented it too hard, too fast. I don’t think ZBB per se is the problem.”

Company News

Dutch payments platform, Adyen launches a new open banking alternative to card transactions

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With the recent enactment of EU’s Payment Service Directive (P2D2) requirement for banks to create APIs that let third parties initiate payments on behalf of consumers. Adyen has become an early adapter to this by introducing a new open banking payments method that will enable authentication of payments between the consumer and the bank avoiding chargebacks generated due to card frauds or an inability to capture funds. Upon selecting the payment type, the customers will be redirected to their bank’s online environment to securely confirm the transaction. Adyen with its latest financial technology will handle the payment flow between banks and merchants. Their latest offering is suggested to decrease transaction processing costs for higher value transactions while at the same time open banking will offer real-time credit transfers guaranteeing payments and enabling merchants to confirm payments and ship orders immediately.

It is constantly striving to innovate and simplify the payments process for consumers and merchants. Adyen is a unique payment solution provider that is the choice for many of the world’s leading companies. Fraud protection has been an increasing priority in today’s digital economy. Traditional card transactions are slow, charge higher processing costs and are prone to frauds. With this latest addition in the company’s offerings, Adyen has become the first payments provider to offer a fully compliant, direct payment solution in the UK and it has been continuously working with Open Banking Implementation Entities to bring the benefits of a digitized payments system to consumers and merchants alike.

“It is exciting to see another great example of open banking powering innovation and leading to new services which ultimately help drive efficiencies in payments,” said Imran Gulamhuseinwala OBE, Trustee of OBIE (Open Banking Implementation Entity). “Adyen is a great example of how consumers and organizations can benefit from increased collaboration and secure data sharing between financial institutions.”

Dutch airline KLM is the first major brand to roll out the new offering. The service is now live and accessible to all UK customers. After Brexit, UK has become the most important foreign market for EU nation companies. “It is great to see that KLM is the first airline to offer this open banking payment option to our UK customers. BY working with Adyen’s payment initiative, we are offering customers a wider choice of payment options securely and seamlessly,” said Pieter Groeneveld, Senior Vice President at KLM Royal Dutch Airlines.

Canopy Shows
Company News

Canopy Shows Immense Growth in Marijuana Sales

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The earnings report of the previous year was released on Thursday evening, and it revealed that Canopy, the leading pot seller, showed a 300% growth in revenue. The company’s shares also rose by 4.4% the same day following the announcement of the earnings report.

Co-Chief Executive Bruce Linton came out saying that the company hoped to continue being the leading pot producer in the world. He also says that they have a clear plan to stay at the top.

He caught up with MarketWatch on the phone the Friday morning and revealed the top three priorities that would help the company to achieve its targets.

According to him, a combination of the right people, good capital expenditures, and appropriate allocation of the company’s supply of cannabis will make the business hit all the necessary heights.

Those three things go together — they have a synchronizing effect,” Linton said.

Canopy has reportedly invested largely in increasing its employee base. The number of employees grew from 700 to 27,00 which is a whopping 285% growth.

“You do what can be done, by a group of people,” Linton said. “We are constantly scanning for new personnel — working against evolving priorities. There is never a week that goes by that we don’t.”

The recent success of the company is due to the legalization of recreational Marijuana in Canada last year.

Revenue for the fiscal third quarter hit as high as 282% compared to the previous year. Chairman and Co-CEO Linton said that the key to succeeding in the market was to make early calculated investments that would help the company to grab the share of the market while the law took effect.

Canopy Growth had claimed a wider loss this year following its heavy investment on research, development, and marketing. However, this did not bother the investors as the company’s stock rose 4% Friday. The shares are up by 80% this year.

Last year, the company managed to lock down a third of its rising recreational cannabis market. The company was confident that the investments and product development campaigns would keep it in that position.

BMO Capital Markets released a note on Friday saying that Canopy’s sales volume in terms of recreational Marijuana showed a market share of 30%.

Mr. Linton was asked if this was the position the company was expecting to hold on to in the coming years. He said that talk in the coming quarters would shift more towards the possibility of converting cannabis into more consumer products.

Meanwhile, there is a visible inclination towards legalization of recreational Marijuana in the United States. More states are legalizing the drug’s use for recreation. Besides, many brokerage firms have shown interest in the companies too.

Apples New Video
Company News

Apple’s New Video Streaming Service Expected to be launched in April, Video Partners Viacom, Starz, and CBS on Board

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Reports and speculation about Apple’s video streaming subscription where going around the corners for years now and finally Apple is all set to launch its new TV subscription service. Reports say that Apple is expecting to launch its new service in April or in May.

Apple currently is working in the final development phase and getting its new video streaming services ready for deployment. The new video streaming services include free original content feature basically for device owners and offer subscription service for users to subscribe to other digital services. Subscription TV series are offered by Viacom Inc., CBS and Lions Gate Corp’s Starz along with its original content.

Major video streaming partners like Netflix and HBO are not expected to be the part of it, while the services of Netflix Inc. and Amazon.com Inc. Prime video is most likely to be damaged, reports according to a few reliable persons.

Apple had planned about the new video services and is spending almost $2 billion in Hollywood to form its video content and singing content with star-like Oprah Winfrey. The new video streaming is to be launched worldwide.

The main goal of the service is to enable customers to sign up for the existing streaming products and allow them to access it on their iOS TV application, just like Amazon’s Prime Video Channels. Apple seeks to simplify the mobile video viewing feature by assembling all video content in a single app rather than allowing the user to install various apps for every service. It is quite an important step to counter its rivals Amazon’s Prime and Netflix Inc.

According to Bloomberg, Apple is expected to launch both of its service namely, new video service and subscription service on March 25 at a service event. Apple Inc. has already invited big Hollywood celebrities like Reese Witherspoon, Jennifer Aniston, director JJ Abrams and Jennifer Garner for the event.

The service is likely to be distributed across the various Apple App stores and will be available in 100 + countries.

Apple Inc. is careful about the plans and how is it going to distribute the shows is still a secret. The investors have started to focus on the revenue from the paid subscriptions as an alternative means for the increase in iPhone sales. From the holiday season onwards there is a decline in the sale of iPhone’s for the first time in its history during last year.

Some people say that Apple Inc. is negotiating with HBO, WarnerMedia owned by AT&T Inc. to be a part of its new service, although it is not yet been decided and may take a call before the launch of the new service while HBO has not rendered with the same terms that Amazon Inc. has offered it.

Apple Inc. has developed its own service segment which helped them for the plan to launch the television service; the service segment brought $37.1 billion during 2018 fiscal.

The accurate details about the disagreement between Apple Inc. and HBO are not known; however, media companies are worried about the data sharing and revenue split as Apple tries to offer the existing services to the customers in all new way.

Those customers who will subscribe for top video service by using it new streaming services will be applicable for 30 percent cut and Apple is pushing this plan forward. At present, Apple Inc. takes 15 percent cut on revenue from the users who have signed up to HBO Now and Netflix and also other video streaming apps via the App store, people mentioned.

People also say that neither Netflix nor Hulu are part of the Amazon Prime Video Channels and they are even not going to be the part of Apple’s product.

However, CBS, HBO, Starz, Viacom, and Netflix have not responded to the comments.

Apple has worked with various media companies for over the years now, only to access its content. Apple CEO Tim Cook, last month during its earnings conference call has viewed the new service offering.

The customer behavior has changed over time and is currently changing, we believe the change will be significant in the years to come, and there will be a decrease in the use of the cable bundle. We believe that the change will take place at a much faster level during the year, Tim Cook mentioned. We will be stepping into original content world.

We have signed a long partnership deal with Oprah, and as of now, I don’t want to go in-depth about the conversation. Highly motivated people have been hired who are superb confident enough and will be able to talk more on it later.

Apple has decided to play various movies and series on its new service which includes animated movies, reality shows, dramas and comedies which will be collected by Macworld.

Kiran Mazumdar Shaw Imposed With Fine Of 9.5 Lakh Rupees
Trading News

Duracell and Energizer Competing for Controlling Stake in India’s Eveready

By 5753 0

Eveready, one of the biggest manufacturers of flashlights and dry cell batteries, has been put on the market by India’s Williamson Magor Group due to a pile of debt that has crippled the holding company of the group. According to a report in India’s Economic Times, the fight for the controlling stake in Eveready is going to see be an intense one, and it is interesting to note that two American heavyweights, Duracell and Energizer, are both vying for it. However, what places Energizer in a far better bargaining position is the fact that the company already owns the Eveready brand in key markets like the United States and China. They are, without a doubt, in pole position.

That being said, Duracell is going to mount a serious challenge to their bid, according to sources that are familiar with the matter. The fact that Warren Buffett’s Berkshire Hathaway is the owner of Duracell also makes it a very interesting duel. Other than the two American companies, major private equity companies are also in the running for the controlling stake. Among them are India private equity outfit Kedaara and global giants like KKR and Blackstone. Eveready is an incredibly attractive asset, and the interest among investors is palpable.

The Willamson Magor Group, which has interests in a range of business, is led by the Khaitans, an Indian business family and as of now, they own 45% of the shares in the company. Having been saddled with debts to the tune of around $140 million in the group, the Khaitans now want to sell off their stake in Eveready, and they have contacted Indian bank Kotak Mahindra to look for buyers. Any bidder who manages to get his hands on 45% of the shares owned by the group will also have the option to enforce a clause by way of which they can acquire a further 26% stake in the company.

All bids are going to be sent in this week and out of those a set of entities will be selected. Once that is done, a concrete offer can be made. Everyone who is close to the developments refused to comment on the issue. Spokespersons for Eveready refused to comment, while it was the same with Duracell, Energizer and private equity players KKR and Blackstone. A source, however, pointed out that the Khaitan family might retain a stake of around 10% to 15% following the sale. He said, “They are flexible and are looking at all options and will take a final call based on the final offers on the table. There is significant traction for the asset for its scale and brand equity. Expect a 30-40% control premium to the current market price.” 

Microsofts Bing Search Engine is no longer Accessible in China
Company News

Microsoft’s Bing Search Engine is no longer Accessible in China

By 6179 0

Amid trade tensions between the United States and China, China has blocked the access of Microsoft’s search engine Bing. And with the blocking of Bing, China blocked all major non-Chinese search engines that had been operating there.

And according to the reports from the sources, the order to block the search engine had come from the Government.

Microsoft Spokesperson in reply said they have confirmed that Bing is currently not accessible in China and they have engaged experts to determine the next step.

It should be reported here that the Internet is heavily censored in China as a form of information control. Many non-Chinese techs and social media giants like Facebook and Twitter are blocked there.

The report of blockage of Microsoft’s Bing engine comes in the time of on-going negotiations for tariff between the two largest economies of the world. And experts believe that the trade war may have spillover effects on the technology world turning it into a tech war.

On Tuesday, the former deputy governor of the People’s Bank of China, Zhu Min said that China is also considering completely cutting investment into the Silicon Valley after the scrutiny episode with world’s largest telecom equipment maker, Huawei.

The issue with Huawei aggravated when its Chief Financial Officer was arrested in Canada last year. It is believed that the arrest was made on the request of Washington. The allegations on him were he violated American sanctions on Iran. Though he has been released on bail, the possibility of extradition is still substantial.

The United States along with many western countries including Canada, Germany, Britain, and Australia accuse China of data theft through its link with Huawei. They have even blocked Huawei’s equipment from sensitive infrastructure projects. However, Beijing denies these allegations.

In the past couple of years, China has declared openly its intention to become a world tech leader over the next decade, and it has been investing hundreds of billions of dollars in technologies like Artificial Intelligence and autonomous vehicles.

Spanish Auto Firm SEAT
Company News

Spanish Auto Firm SEAT to Use Blockchain for Driving Up Efficiency

By 21240 0

After the banking and financial technology firms, the blockchain technology has found a new client in the automobile industry. SEAT, a Spanish car maker, has joined hands with the Alastria consortium to develop products and services based on blockchain technology. The carmaker is looking to develop a system for exchanging its various product and services without the need of any third party, and hence, it has decided to embrace the concept of the blockchain. The company is of the view that the adoption of blockchain will help enhance procedural security of the system and make the transactions far safer for its clients.

SEAT and Alastria

SEAT is looking forward to testing and further developing its platform of blockchain-based products and services while seeking cooperation and synergies from the other participating companies in the consortium. So that you know, Alastria is a first blockchain infrastructure consortium promoted by the Spanish business institutions and companies belonging to a range of different business sectors. The primary objective of this consortium is the establishment and promotion of independent and neutral blockchain infrastructure that will work under the legal framework of Spain besides complying with regulations of the European Union. The consortium will help to make the funds and contacts available for the community members. It aims to develop a holistic blockchain ecosystem that will not only help the member companies but will also ensure that the benefits reach users and organizations outside the consortium.

Application Areas

The carmaker SEAT wants to make sure that different divisions in the company apprise themselves with the blockchain and the potential benefits they can derive from the technology. In the first phase of blockchain implementation, SEAT has chosen finance and production division for the blockchain implementation to improve the efficiency of procedural standards in the organization. The carmaker is looking forward to develop and implement digital solutions for improving the process of producing cars that will subsequently help it to become more flexible, agile, and efficient in the long run.

SEAT has already initiated the process of adopting and implementing blockchain technology. The company has recently collaborated with Telefonica, a Spanish telecommunication company, to implement the blockchain-based project to improve supply chain management at its Martorell factory. The project will help in traceability of the parts in the factory and will help SEAT to drive up the overall efficiency of its supply chain.

Global Growth a Challenge
Stocks

Global Growth a Challenge as Asian Shares and US Stock Slips Down

By 6339 0

On Tuesday, the shares of the Asian countries collapsed, and the prices of oil further slipped down. This has led for discouragement about world growth, and a group of investors is staying away from the risky assets whereas sterling ticked lower during the recent twists and turns that appeared in the Brexit.

After the announcement of Beijing, the world’s second-largest economic growth in 2018 has declined to its weakest level lowest in the decade since the report on Monday China started with an unstable week. Adding to this, the International Monetary Fund has lowered the global growth predictions while a survey that was conducted showed increased grief within business organization executives due to the overshadowing of the trade tensions.

The joyless news emphasized that policymakers from around the world are facing challenges and need to deal with the crisis especially with a current crisis or potential crisis from among the US-China trade war and with Brexit.

The ANZ analysts in morning news reported that it is the second decline of IMF in a row.

According to spreadbetters, there is another weak for Europe to start. During US stock futures the FTSE futures[FF1c1] was down by 0.2 percent that showed a sign regarding Wall Street and how the Wall Street will open, the [Esc1][1YMc1] were off to around 0.7 percent.

In Asia, most of the losses were headed by the Chinese shares and the blue-chip index showing at <.CSI300> which was off by 1.2 percent. The Hong Kong’s Hang Seng Index [.HSI] also noticed a downfall of more than 1 percent and Australia’s main Share Index [.AXJO] trembled at 0.5 percent

On Tuesday the broadest Index of Asia Pacific MSCI’s located outside Japan <.MIAPJ0000PUS> was dropped by 0.9 percent. It was almost top for seven weeks in its recent times.

Japan Nikkei [.N225] which had noticed a strong opening also dropped by 0.7 percent.

Due to the holiday, the US markets remained closed on Monday, so the trading was normally weak through the night. Although, due to inappropriate Chinese data the equity price in Europe and Latin America slipped down.

Nick Twidale is a Sydney based analyst working at Rakuten Securities Australia stated that because of the financial markets the stress related to slow global growth have started to trickle.

The worries made money to be sent for copper by using used electrical wire, vehicle and drifting lower.

To overcome the threat new strategy was used, the Australian dollar [USD=D3] most preferably used a liquid proxy for China investments which put the investment on track for almost three straight sessions of losses and eased it by 0.3 percent to around $0.7134.

No Brexit Deal?

The analyst Twidale of Sydney mentioned that once the London market opens then the focus will be totally on the UK while the Brexit news remains in the minds for investors.

Brexit still remains crucial for the UK markets, and the progress seems to be limited. The due date is approaching very fast, and everything looks like a real concern as there is no progress at all between the various aspects involved, the possibility is of the hard kind that seems like no deal will appear in Brexit and this is more like to happen in real time.

Teresa May the British Prime Minister declined to prevent the no- deal Brexit which further made the sterling to be weak at $1.2872. There are few indications that the Prime Minister can crack the deadline along with the parliament members only after the rejection of the Brexit deal last week.

May further offered to make some improvements in her rejected deal by allowing concessions from the European Union; this was a backup plan to escape the hard border of Ireland.

Liam Peach, the Capital Economic analyst, said that any upside for sterling could be limited in the coming days. Confusion will continue to remain throughout the long negotiations process, and there seems to be no assurance that the process will last for a short period.

The investors are in distress about creating positions in the pound because of Britain going away from EU without making any deal the analyst announced the state.

There was a demand for the safe haven that made greenback to stay under pressure beside the Japanese Currency was last bought at 109.41 per dollar. The euro was close to its last trading range and currently is trading at $1.1358[EUR=] range against different currencies, the dollar was stable and remained unchanged at 96.393[.DXY].

The global growth was a huge concern that pulled down the oil prices further lowering them in commodities. In stock Brent [LCOc1] was nearly down by 55 percent at $62.19 and the US crude futures [CLc1] falls off by 39 percent at 53.41 [O/R].