Finance

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.”

Don’t miss these exclusives from CNBC PRO More

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.

Don’t miss these exclusives from CNBC PRO More

Alphabet’s new chief financial officer is Anat Ashkenazi, who will join the company after more than two decades at pharmaceutical giant Eli Lilly.
Ashkenazi will replace current CFO Ruth Porat, effective July, as the latter shifts to a new role as president and chief investment officer of Google.
Google’s finance unit has undergone restructuring as the company devotes more resources to the AI race.

A view of Google Headquarters in Mountain View, California, United States on April 16, 2024. 
Tayfun Coskun | Anadolu | Getty Images

Eli Lilly Chief Financial Officer Anat Ashkenazi will become Alphabet’s new CFO effective July 31, Google’s parent company announced Tuesday, almost a year after Alphabet first announced that current CFO Ruth Porat would move into a new role as president and chief investment officer.
Ashkenazi had a 23-year career at Eli Lilly, which in a separate release confirmed her departure.

“We’re very pleased to have found such a strong CFO, with a track record of strategic focus on long-term investment to fuel innovation and growth,” Alphabet CEO Sundar Pichai said in a release.
Ashkenazi joined Eli Lilly in 2001 and has been CFO since 2021. She will continue to serve on the pharmaceutical company’s executive committee until her departure. She previously served as CFO for several of the company’s global business areas, helping manage the revenue windfall from Eli Lilly’s weight loss and diabetes drugs.
Porat had a nearly three-decade career as an investment banker at Morgan Stanley, culminating as its CFO, before joining Google in 2015. She helped Google grow into one of the most valuable companies in the world, including while the company has recently contended with threats ranging from the artificial intelligence race to antitrust investigations.
The leadership shuffle has long been in the works. Google first announced in 2023 that Porat would step down and has since been mounting a search process.
Google’s finance unit has been grappling with other changes in recent months as well. Porat announced earlier this year that Google was restructuring its finance unit as the company pushed to favor investments in AI, CNBC previously reported, with layoffs and relocations that would impact teams worldwide.

Other top executives at the firm include Chief Business Officer Philipp Schindler, Head of Google Search Prabhakar Raghavan and Google Cloud CEO Thomas Kurian.
Google’s “old guard” has experienced shifts beyond just Porat, CNBC has previously detailed. YouTube CEO Susan Wojcicki, former Chief Business Officer Robert Kyncl and widely respected AI authority Geoffrey Hinton are among those who have departed or announced their departure since 2023.
Google shares were slightly up in premarket trading Tuesday.
— CNBC’s Jenn Elias and Annika Kim Constantino contributed to this report. More

Billionaire investor Ron Baron, longtime Tesla bull and shareholder, wrote an open letter in support of CEO Elon Musk’s controversial $56 billion pay package.
The Baron Capital chairman and CEO said Musk’s compensation contract in 2018 included “aggressive” performance metrics that few believed could be achieved. Musk would have earned nothing if these ambitious goals had not been met, he said.

“Elon is the ultimate ‘key man’ of key man risk,” Baron said in the letter. “Without his relentless drive and uncompromising standards, there would be no Tesla. Especially considering how he slept on the floor of Tesla’s Fremont factory when the company was going through what he called ‘production hell!'”

Ron Baron, founder of Baron Capital
Anjali Sundaram | CNBC

The pay package, proposed by Tesla’s board of directors, has repeatedly come under fire for its close ties with Musk. The package has no salary or cash bonus and sets rewards based on Tesla’s market value rising to as much as $650 billion over the 10 years from 2018.
If passed, it would be the largest pay package for a CEO in corporate America. Tesla’s shareholder meeting is scheduled for June 13.
“I’m voting for the pay package,” Baron said on CNBC’s “Squawk Box” Wednesday.
In January, Judge Kathaleen McCormick of Delaware’s Court of Chancery voided the original pay package. Musk then sought to move Tesla’s state of incorporation to Texas from Delaware.

Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. Tesla is the biggest holding in Baron’s oldest and biggest fund, Baron Partners Fund (BPTIX), accounting for nearly 30% of the portfolio.
“At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon,” he said. More