Private Equity and leverage: How PE firms use mezzanine capital for higher returns and accept the danger of over-indebtedness

Download PDF Introduction A leveraged buyout is the acquisition of a company, either privately or publicly held, using borrowed funds to pay for the purchase price of the company. The main actor of a leveraged buyout transaction is a private equity firm or group of private equity firms, which will own the equity of the acquired company after the purchase has been completed. The acquisition of the target company is financed through a combination of Read more…

Market Recap 1/05/2021

Download PDF USA The main U.S. indexes gained this week after positive quarter releases and good economic data. Investors spent much of April grappling with two competing dynamics: signs of a strong economic rebound in the U.S., and worsening Covid-19 cases elsewhere in the world that threaten to hamper the global recovery. Robust corporate earnings helped major indexes hit records throughout the month. Data have also been encouraging, with figures released Friday showing U.S. household Read more…

Creative Debt Hedging: The Case for Redemption?

Download PDF In the previous article of our series, we highlighted the questionable use of cross currency swaps and concluded that this kind of window dressing techniques are a manifestation of the larger issue of problematic debt management on the sovereign entity scale. In this article, we delve deeper into the vital need for more economic realism and respond to the growing concern of debt unsustainability. We will propose GDP-linked bonds as a tool for Read more…

Not-so-Super League: Current state of the European football

Download PDF Football industry overview During the last couple of decades, football became a huge industry within the overall sports space. Ever-growing revenues of football clubs coming from advertising, broadcasting rights, and merchandising result in stellar salaries and exponentially rising transfer market prices, as such spending is considered as almost unavoidable by the best clubs to remain at the top. Consequently, large sums in the football industry became attractive for various groups of investors, and Read more…

Tod’s New Beginnings – LVMH increases its friendship with Tod’s to a 10% stake

Download PDF LVMH (MC.PA) Market Cap as of 30th April 2021 – €315.40bn Tod’s (TOD.MI) Market Cap as of 30th April 2021 – €1.30bn Introduction  On April 23rd the news broke that the luxury-powerhouse LVMH has acquired a 6.8% stake in Italian shoe and leather goods producer Tod’s. This increases the French maison’s ownership in Tod’s to 10%, up from the previous 3.2%. According to Della Valle, the Italian company’s chairman, LVMH’s €75m investment might Read more…

Investing in industrial metals: between cyclical and structural growth

Download PDF Introduction Industrial metals were in the news in the past few weeks because of the remarkable surge in prices. Copper has received most of the attention, with its spot price topping 10,000$/metric ton on April 29, close to the all-time high of 10,190$/metric ton reached in February 2011. Aluminum also climbed, reaching 2445$/metric ton, but remaining far from its historical high of 3065$/metric ton in June 2008, alongside Nickel, which jumped to 17653$/metric Read more…

Flipping the COIN: the largest US cryptocurrency exchange went public through the NASDAQ premier direct listing

Download PDF Coinbase Global Inc (NASDAQ: COIN) – Market Cap as of 24/04/2021: $58.09bn Introduction On April 14th Coinbase, the largest cryptocurrency exchange in the US, went public via a direct listing and reached a valuation of over $80bn. The NASDAQ assigned a pre-emptive reference price of $250 per share, however, at market open the shares traded for $381. The price rallied before descending in the evening, bringing the final price to $328 per share. Read more…

Microsoft to accelerate industry cloud strategy with the $19.7bn acquisition of Nuance

Download PDF Microsoft (NASDAQ: MSFT) Market Cap as of 23rd April 2021 $1.96tn Nuance (NASDAQ: NUAN) Market Cap as of 23rd April 2021 $15.16bn Introduction On April 11, 2021, Microsoft Corporation entered into a definitive settlement to acquire Nuance Communications in exchange for all-cash consideration of $19.7bn, representing the second-largest transaction for Microsoft, only behind the acquisition of LinkedIn. Upon completion, Nuance will be part of Microsoft’s Intelligent Cloud segment. The acquisition will allow Microsoft Read more…

Grab’s SPAC merger: the Southeast Asian superapp’s record-breaking listing

Download PDF Introduction Grab Holdings Inc., Southeast Asia’s leading app, announced on April 13th that it intends to go public in the US in partnership with Altimeter Growth Corp. in what is expected to be the largest-ever equity offering by a Southeast Asian company. The combined company expects its securities to be traded on NASDAQ under the symbol GRAB in the coming months following the deal’s completion. The Grab-Altimeter merger represents the biggest SPAC merger Read more…

Creative Debt Hedging: Cross-Currency Swaps in the Greek and Italian Cases

Download PDF There’s a Yiddish proverb fittingly saying: “interest on debts can grow without rain”. How can this be? In an ultra-low-rate environment, debt has become ubiquitous to sail through the COVID-19 pandemic and so has the fear related to its sustainability. Countries have taken the center stage in the debt management market, thus increasing the overall notional value of derivatives used as a hedge. The aim of this article is to give an overview Read more…

The Big (SPAC) Short

Download PDF What is a SPAC? A Special Purpose Acquisitions Company (SPAC) is a shell company set up by investors with the only purpose of raising money through an IPO in order to eventually acquire another company. They are also known as “blank-check companies” since they generally don’t have a merger target when they are formed. These companies have no commercial operations, their only assets are typically the money raised in their own IPOs. Once Read more…

Market Recap 24/04/2021

Download PDF USA It was a turbulent week for equities due to a flare-up in global coronavirus cases and to the fact that President Joe Biden will seek an increase in the tax on capital gains to 39.6% for those Americans earning more than $1 million to fund education and other priorities (formal proposal should be released next week) however market gained on Friday as new data confirmed that economic recovery is underway partially limiting Read more…

Market Recap 17/04/2021

Download PDF USA Volatility is at lowest levels since pre-pandemic, indeed, the stock market ended a pretty stable week. Major indexes rose slightly mainly due to upbeat economic data and the beginning of the US earnings season, the financial sector kicked off with positive results from Wells Fargo, Goldman Sachs, JP Morgan Chase. The week ended with profit above expectations from Citi, Bank of America, BlackRock and Morgan Stanley. PepsiCo also reported confident results with Read more…

The Private Credit Boom: The Next Big Thing in the Alternatives Market

Download PDF Introduction Private credit denotes any debt or extended to privately held companies. It comes in many different forms, but often involves non-bank firms making loans to private companies or purchasing their debt on the secondary market in a variety of ways. To be more specific, Private credit, also called private debt, non-bank lending or alternative lending, is an asset class that consists of high-return and illiquid investment opportunities which varies from senior secured Read more…

Market Cycles and Their Psychological Interpretation – Part 2

Download PDF As we said in the first part of the article, the market continually expands and contracts, going through periods of expansions, peak, decline and recovery. This, consequently, affects all type of assets, especially stocks that go through 4 different cycles. In the previous part, we discussed two of them: Accumulation: After a period of decline; it is the process of buyers fighting for control of the trend. Markup: Once buyers have gained control Read more…