Commercial Awareness Discussion Thread

[Daniel Boden]

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

 

[IntrepidL]

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

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

 

[Daniel Boden]

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

Thank you so much! Fingers crossed

 

[EEE]

Thanks for your question!

I can't say I'm all too familiar with PE Real Estate specifically but I would assume that the PE Real Estate industry could have a fair few opportunities in the next few months due to the fact that house prices have fallen significantly due to COVID-19. Equally, the fact that the BoE Base Rate is now at a record-low means that debt finance would be incredibly cheap and so PE firms would be able to continue to leverage their transactions with a high amount of debt at a very minimal cost and then load this debt onto the target company/acquisition as has occurred in recent years.

I hope that helps? Feel free to ask if you have any other queries

Thank you, Daniel!

 

[Ayo Babatunde]

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.

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/

 

[STWO]

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!

 

[S87]

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!

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.

 

[IntrepidL]

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!

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 )!

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

 

[Mjames12]

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!

The FT currently has a really interesting series at the moment called 'companies prospering in the pandemic'. It provides a detailed analysis of what companies/sectors have flourished during the pandemic and will more than answer your question. I would recommend checking it out.

https://www.ft.com/content/844ed28c-8074-4856-bde0-20f3bf4cd8f0

 

[IntrepidL]

Found this very interesting article too about how certain boutique banks have been doing well during the current pandemic: https://www.ft.com/content/b46e5240-6007-4adf-ad47-51db72b32936

 

[gricole]

Hi everyone,

Can someone help me gain a better understanding of this FT article relating to debt capital markets: https://www.ft.com/content/bcebd77c-057b-4fd0-bd99-b97e0e559455?

I struggle to understand in what way the Calabrian ’Ndrangheta mafia group is involved with the bonds that purchased by Banca Generali. The article mentions that the bonds were bought by international investors between 2015 and 2019. So how did they end up with the mafia group? Another question I have is who should be paying back the bonds to Banca Generali? My understanding is that Italian public health authorities are waiting to be paid by companies providing medical services to them. They will later use that income to pay the bonds. Is that correct?

Thank you so much for your help!

 

[halftime]

Hi everyone,

Can someone help me gain a better understanding of this FT article relating to debt capital markets: https://www.ft.com/content/bcebd77c-057b-4fd0-bd99-b97e0e559455?

I struggle to understand in what way the Calabrian ’Ndrangheta mafia group is involved with the bonds that purchased by Banca Generali. The article mentions that the bonds were bought by international investors between 2015 and 2019. So how did they end up with the mafia group? Another question I have is who should be paying back the bonds to Banca Generali? My understanding is that Italian public health authorities are waiting to be paid by companies providing medical services to them. They will later use that income to pay the bonds. Is that correct?

Thank you so much for your help!

Hi – I’m not sure if you are familiar with securitisation but I think it is pretty key to understanding this story. I’m certainly no expert but my understanding of the answers to your questions would be as follows:

The mafia group are involved with the bonds through their connection to companies providing some of the underlying assets backing the bonds. The bonds in this instance are asset-backed securities – i.e. securities which pay out from a pool of underlying assets. In this particular case the underlying assets are accounts receivables – money owed to various companies by the Italian public health authorities for providing medical services (though I can understand why you might interpret it as being the other way around from reading the FT article). The controversial issue here is that some of the receivables which make up the portfolio of assets backing the bonds have been provided by companies which are actually front companies being used by the mafia group for illegal activities. To be clear, the mafia group do not own the bonds.

With regard to payment, the bonds are paid by a special purpose vehicle (SPV) which holds the underlying assets and issues the bonds. Put simply, as the underlying unpaid invoices are settled by the Italian public health authorities, this cash flows through the SPV and is paid to the bondholders.

Hopefully I have explained it a little better but if not feel free to drop me a message!

 

[IntrepidL]

Hi friends, I was wondering what key things we should know in relation to the oil and energy sector? I'm aware of the Paris Agreement, and the Russia-Saudi Arabia oil war. Are there any other topical issues/recent developments that may be worth reading on?

 

[Jaysen]

Today's news in the FT:

1. More job cuts: Boots and John Lewis announced more than 5,000 job losses as the impact of COVID on the high street becomes clearer.
Link: https://www.ft.com/content/5260e2e3-b4d6-4dd5-be22-7f712a425436

Expecting to see plenty more redundancies/insolvencies coming soon, especially as the furlough scheme is phased out.

 

[IntrepidL]

Have a look at the energy bankruptcies in Texas and elsewhere in the US - the FT did a great read on Chesapeake energy.

Oh, yes! I just read the article! Thanks, @Raam

 

[IntrepidL]

Also, was reported on FT just a few hours ago - following security and data concerns, Amazon has asked its employees to remove TikTok from its devices. TikTok's popularity exploded during the pandemic and is roughly valued at $75bn, making it one of the most valuable start-ups in the world, but there are currently concerns about how data is handled by TikTok, thus triggering the action by Amazon:
(https://www.ft.com/content/3f73c7c7-1516-4486-a8ac-8d2f564fa74a).

 

[thecorporatelawyer]

Hi All, anyone know whether to subscribe to FT or the Economist? I'm mainly curious which has more analysis in the article rather than just simply stating a story.

 

[Daniel Boden]

Hi All, anyone know whether to subscribe to FT or the Economist? I'm mainly curious which has more analysis in the article rather than just simply stating a story.

I'd go FT personally. The 'Lex' feature they do, in conjunction with the 'Due Diligence' newsletter is really excellent in my opinion. I'm pretty sure the FT is cheaper as well (at least if you're a student)?

 

[cgs97]

I'd go FT personally. The 'Lex' feature they do, in conjunction with the 'Due Diligence' newsletter is really excellent in my opinion. I'm pretty sure the FT is cheaper as well (at least if you're a student)?

If you're a student, see if your uni/law school has a subscription to the FT - I got free access to it through BPP!

 

[Jaysen]

A good snapshot of the recent antitrust hearings with the Big Tech firms:

If anyone watched this, would be curious to hear you felt the different tech founders held up!