Finance

“Equities in Dallas,” cried the traders in “Liar’s Poker”, an account by Michael Lewis of his life as a junior banker in the late 1980s. Demotion from New York to the backwater of Texas would be a humiliation. Who wants to sling shares to yokels?Times may be changing. On June 4th an upstart Texas Stock Exchange (TxSE) said it had received $120m in funding from financial giants including BlackRock, a fund manager, and Citadel Securities, a marketmaker. The TxsE will, its boss wrote, be the best-capitalised challenger to the New York Stock Exchange. More

Days after Vladimir Putin’s invasion of Ukraine, Raiffeisen, an Austrian bank, said it was considering selling its business in Russia. Twenty-seven months later, the lender’s unit in the country is doing rather well. Its staff has grown to nearly 10,000, a 7% rise since 2022. Last year its profit reached €1.8bn ($2bn)—more than any of the bank’s other subsidiaries and a tripling since 2021. Raiffeisen is one of a dozen lenders that Russia deems “systemically” important to its economy. The bank also matters to the Kremlin’s own finances, since it paid the equivalent of half a billion dollars in tax last year.Raiffeisen is the biggest Western bank in Russia, but not the only one. The combined profits of the five EU banks with the largest Russian operations have tripled, reaching nearly €3bn in 2023. Success makes the banks a target. In May America threatened to curb Raiffeisen’s access to its financial system because of the bank’s Russian dealings. On June 10th, in an attempt to placate critics, the lender plans to stop making dollar transfers out of the country. Russia, for its part, is starting to seize the assets of Western banks it deems “unfriendly”. Western lenders’ Russian paper profits are at risk of turning to ash. More

Many people have experienced the joy of finding some spare change down the back of the sofa. On May 30th the World Bank experienced something similar, if on a grander scale. After rooting around in 176 countries, it discovered almost $7trn in extra global GDP—equivalent to an extra France and a Mexico.In fact, there may be a better analogy. What the World Bank discovered was not additional money to spend, but the equivalent of a discount voucher, which cuts 4% off the price of every good and service the world buys in a year. That means global spending can stretch further than previously thought. More

Bulgarian-founded corporate card startup Payhawk said it is searching for startups in the world of corporate spend management to acquire.
Payhawk’s acquisition drive comes after considerable growth for the fintech, which said it saw an 86% increase in revenue in the first quarter.

Saravutvanset | Room | Getty Images

AMSTERDAM, Netherlands — Corporate payments startup Payhawk told CNBC it is planning mergers and acquisitions to grow its footprint in the corporate spend management world and take on big players like SAP.
The startup said it is looking to acquire a company or companies at the series A stage of their development, referring to early-stage startups that have already raised a significant round of funding.

In an interview with CNBC, Hristo Borisov, Payhawk’s CEO and co-founder, said he thinks his firm has a better “product-market fit” than its rivals, which have gained multibillion-dollar valuations by handing out free corporate cards to other startups.
“We see an opportunity to have much better unit economics in this business,” Borisov told CNBC at the Money 20/20 conference in Amsterdam, Netherlands, this week. “We believe companies like Brex and Ramp still haven’t found strong product market fit for what this potential market is going to be.”
Payhawk is a corporate spend management platform that issues smart cards for clients’ employees to make payments and keep track of their expenses. Decathlon and Vinted are among its customers.

Consolidation the name of the game

Payhawk recorded huge growth in the first quarter, the company told CNBC. It revealed that revenue climbed 86% globally year-over-year, and sales jumped 127% in the U.K. — a market that now makes up 27% of overall revenue.
Payhawk’s growth came off the back of a significant increase in clients. The firm said it saw a 58% increase in customers year-over-year in the three months ending March, with the U.K., again, a major driver.

Now, Payhawk wants to build on that growth — with M&A key to unlocking future opportunities, according to Borisov.
“Many businesses that got funded in last two or three years are now in a position where they’re looking at strategic options,” Borisov said. “This is something we’re actively doing. We’re looking for companies to buy.”
“Our vision is to be able to provide a single platform that provides a homogeneous environment your corporate expense needs with a single provider,” Borisov said. “There is going to be some market consolidation.”
Borisov isn’t looking for companies in the U.S. market to acquire, Borisov said, adding that in the U.S., Payhawk is partnered with American Express under the credit card giant’s Sync Commercial Partner Program.

Goal to become a public company

Asked whether his firm was looking to raise new venture funding to achieve its objectives, Borisov said that Payhawk is always in fundraising conversations.

He added that its renewed growth over the past year had garnered interest from external investors, after a tougher 2022 and early 2023.
“Fundraising is everyday,” he said. “It’s not because we need money. The worst time to fundraise is when you need the money.”
“We’re speaking to investors daily, understanding where the market is,” Borisov added. “Partners who do believe in that vision see the same way.”
Payhawk may look to raise a new venture round either this year or next year, Borisov added. The firm, backed by venture firms Lightspeed, Greenoaks, and Earlybird, has raised $240 million to date.
He said his ultimate goal is for Payhawk to become a publicly listed company, though there’s no date yet for the firm to launch a public market debut.
“Our ultimate goal is to IPO the company, this is something we’re focused on,” Borisov said. “This really depends on the market conditions and market realities.” More

On June 7th each share in Nvidia is due to become many. In one sense such stock splits ought not to matter much: they merely lower the share price, usually returning it to somewhere near $100, in order to make small trades easier. Yet for the company and its longtime backers this administrative exercise is cause to pop the champagne. For a split to be necessary in the first place, the share price must have multiplied, commonly by two or three, prompting each share to be divided by the same factor. Each Nvidia share, however, will become ten. Two years ago both Alphabet and Amazon split each of their shares into 20. Investors in big tech have had plenty of opportunities to let the corks fly.All three firms have made traditional valuation measures look hopelessly outdated. Dividend yields, for instance, were once a popular tool for assessing prospective returns. But Amazon has never made such a payout and Alphabet will make its first ever on June 17th (of 20 cents per $175 share). Nvidia’s quarterly dividend after the split will be just one cent per share, each priced at around $120. Plainly, there is no stretch of the imagination by which these payouts explain the stocks’ spectacular returns. More

On June 7th each share in Nvidia will become many. In one sense such stock splits ought not to matter much: they merely lower the share price, usually returning it to somewhere near $100, in order to make small trades easier. Yet for the company and its long-time backers this administrative exercise is cause to pop the champagne. For a split to be necessary in the first place, the share price must have multiplied, commonly by two or three, prompting each share to be divided by the same factor. Each Nvidia share, however, will become ten. Two years ago both Alphabet and Amazon split each of their shares into 20. Investors in big tech have had plenty of opportunities to let the corks fly.All three firms have made traditional valuation measures look hopelessly outdated. Dividend yields, for instance, were once a popular tool for assessing prospective returns. But Amazon has never made such a payout and Alphabet will make its first ever on June 17th (of 20 cents per $175 share). Nvidia’s quarterly dividend after the split will be just one cent per share, each priced at around $116. Plainly, there is no stretch of the imagination by which these payouts explain the stocks’ spectacular returns. More

Starwood Capital Group CEO Barry Sternlicht defended his decision to cap how much money investors could pull from his real estate fund.
Starwood introduced new restrictions that cap monthly withdrawals at 0.33% of net asset value.
Sternlicht said he decided to implement the cap to protect loyal clients who never redeemed.

Barry Sternlicht, chairman and CEO of Starwood Capital Group, speaks at the Milken Conference 2024 Global Conference Sessions at The Beverly Hilton in Beverly Hills, California, on May 7, 2024.
David Swanson | Reuters

Barry Sternlicht, Starwood Capital Group chairman and CEO, defended his decision to cap how much money investors could pull from his real estate fund amid mounting losses and redemption requests.
“With all the hysteria in the media, people are saying, ‘I want to get out now and I’ll come back in later when the coast is clear.’ So we took a very tough decision,” Sternlicht said on CNBC’s “Squawk Box” Wednesday. “I decided that for the benefit of the 80% of people who’ve never redeemed we would slow down redemptions. … We hope this is going to be a six-month thing.”

The investor’s $10 billion Starwood Real Estate Income Trust, which invests in multifamily, industrial and office properties, has suffered from steep declines as it became difficult to refinance loans in light of the Federal Reserve’s aggressive rate hikes.
In a letter to shareholders on May 23, Starwood introduced new restrictions that cap monthly withdrawals at 0.33% of net asset value, compared with the previous 2% limit. Meanwhile, the firm also decided to waive 20% of its management fee.
Sternlicht said he decided to implement the cap to protect loyal clients who never redeemed, which represents 80% of his investors.
The firm said the real estate trust, one of the largest in the world, maintained $752 million of immediate liquidity as of the end of April.
Sternlicht called the Fed’s monetary policy “unbelievably ineffective,” but he believes interest rates will come down soon.

“The real estate asset class is probably the biggest victim of the unintended consequence of his actions,” he said. “The spreads are coming in, which means the markets are healing, the future’s getting clearer.”

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Hanesbrands said Wednesday that it signed a deal to sell its Champion brand to Authentic Brands Group.
The deal could reach up to $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met.
This comes after Hanesbrands announced it was considering selling the business in late September.

A shopper walks past the American sportswear fashion brand Champion store in Hong Kong.
Budrul Chukrut | Getty Images

Hanesbrands agreed to sell its global Champion business to Authentic Brands Group in a transaction valued at $1.2 billion, including a contingent cash consideration, the company announced on Wednesday.
The deal has the potential to reach $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met, according to a press release from Hanesbrands.

The company expects to receive net proceeds of $900 million from the deal, the release says. Hanesbrands said the company plans to use the net proceeds to accelerate debt reduction.
Hanesbrands shares popped more than 5% during Wednesday’s trading session.
As of the end of the first quarter of 2024, Champion generated around $75 million of adjusted EBITDA over the past 12 months.
“We believe this transaction will enable the company to accelerate its debt reduction while positioning Hanesbrands to deliver consistent growth and cash flow generation through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain,” said board chairman Bill Simon.
The agreement, which the Hanesbrands’ board of directors approved unanimously, comes months after the company said it was considering a sale of Champion.

CNBC reported in November 2023 that Authentic Brands Group and fellow brand management firm WHP Global were both interested in buying Champion.
Hanesbrands first announced it was considering offloading Champion in late September, which was just over one month after activist firm Barington Capital Group began pressuring Hanesbrands to cut costs and generate cash amid declining sales.

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