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Companies raise $400bn over three weeks in blistering start to 2021



This article is part of the FT’s Runaway Markets series.

Companies have raised $400bn in funds in the first three weeks of 2021 as the torrent of government and central bank stimulus to rescue global economies cascades across capital markets.

The global bond and equity fundraising spree marks one of the biggest hauls of the past two decades for the comparable period and is about $170bn above the average for this time of year, a Financial Times analysis of Refinitiv data shows.

The clamour for fresh cash underscores how unprecedented economic interventions have helped boost financial markets despite the deep economic blow from coronavirus and continued spread of new virus variants.

Corporate debt and equity markets have remained unfazed while much of Europe and the US grapples with a deadly winter wave of Covid-19, allowing company executives to use record low and stable interest rates and rallying stock prices as a chance to expand their businesses, reorganise their shareholder base or simply cash out.

“The only thing that matters to markets is global fiscal and monetary policy,” said John McClain, portfolio manager at Diamond Hill Capital Management. “Markets are priced as though coronavirus doesn’t matter any more.” 

Column chart of Volume raised ($bn) showing Spac mania boosts equity fundraisings in 2021

Companies have raised $337bn in debt markets in the year to January 22 and a record $64bn through IPOs and secondary equity offerings. The pace of fundraising in equity capital markets is more than double the amount raised in the same period last year, in part due to the boom in blank-cheque companies, or Spacs, according to figures from Refinitiv. 

Israeli mobile games company Playtika holds the crown for this year’s biggest listing so far, raising $2.2bn, according to Refinitiv, while Warren Buffett-backed Chinese electric vehicle company BYD’s $3.9bn share sale last week made it January’s biggest equity market transaction.

Dating app Bumble and online card retailer Moonpig are among the companies planning to go public soon, in New York and London respectively, with bankers expecting more to follow.

The easy conditions have been supported by the fiery rebound rally in equity markets since the sharp sell-off in March. The Nasdaq Composite, home to many of America’s large technology and healthcare companies, has doubled since its March nadir.

Jeff Thomas, head of western US listings and capital markets at Nasdaq, described the trillions pumped into the financial system by the US Federal Reserve as a “watershed”.

“When you put all that capital into the system, it’s got to go somewhere,” he said. Rapidly rising stock market valuations have enticed companies to pivot from private to public markets much sooner, he added. “We saw a lot of companies saying ‘look, let’s take advantage of the valuations in the public markets to go raise capital there.’”

Runaway Markets

In a series of articles, the FT examines the exuberant start to 2021 across global financial markets

In Asia, Chinese technology and healthcare companies are leading the fundraising frenzy. “This has been happening for a couple quarters now because China was first out of the gates from a Covid recovery perspective,” said Udhay Furtado, co-head of Asia equity capital markets at Citigroup.

“There are clearly investment tailwinds for growth companies who have been proven resilient through Covid,” said Alex Watkins, co-head of Emea equity capital markets at JPMorgan. “If you can trade well through this period you can trade well through most reasonable periods.”

The frenzied listing of Spacs has also continued in 2021, despite some warning that their surging popularity is unsustainable. Globally, 61 blank cheque companies have listed so far this year, raising $16.9bn and dwarfing the number of Spacs to debut across any other comparable period.

Central bank actions have also propelled companies to raise debt at cheap borrowing costs to help shore up balance sheets and get through prolonged periods of closure. Record-low interest rates have pushed investors to search for income in even the riskiest parts of the market. Global high-yield bond issuance for the first three weeks of January hit a historic high for the period of $49.8bn. 

Meanwhile, the yield on ICE BofA’s US index of triple-C rated bonds, tracking some of the riskiest debt trading on the public market, sank to 7.6 pent on Friday, nearing an all-time low, as investors continued to pile in to the debt.

Column chart of Global corporate bond fundraising ($bn) showing Companies race to raise debt to stay afloat

“Investors cannot fight the global, co-ordinated monetary policy. It’s almost disheartening,” said Mr McClain, adding that “the only place in the world that pays any kind of real yield is US fixed income”.

Some companies are capitalising on frothy markets to raise debt and pay chunky dividends to their owners in a further sign of the thirst among investors for deals offering relatively juicy returns.

Junk-rated building material company US LBM issued a $400m bond to fund a payout to its private equity owner Bain Capital, people familiar with the matter said. Bain declined to comment.

In Europe, Swedish alarms company Verisure raised €2.5bn worth of high-yield bonds and paid a €1.6bn dividend to its buyout owner Hellman & Friedman, as well as other shareholders.

One UK-based fund manager said investors are buying low-rated companies for returns despite the bleak pandemic backdrop.

“The sense and feeling is just sheer nervousness that surrounds the market at these levels.”

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Commodities broker Marex looks to list on London Stock Exchange




One of the brokers with rights to trade on the historic trading floor London Metal Exchange is heading for an initial public offering as commodity markets enjoy the biggest boom since the early 2000s.

Marex, a brokerage controlled by two former Lehman Brothers investment bankers, said on Friday it was considering listing on the main market of the London Stock Exchange.

Should it proceed, Marex said the offer would consist of a sale of shares by existing investors and that it was aiming for a free float of at least 25 per cent, meaning it would be eligible for inclusion in widely followed FTSE indices.

London-based Marex employs about 1,000 people and is one of nine members of the Ring, the LME’s historic open outcry trading floor that is now threatened with closure after more than 140 years. It has a 16 per cent market share on the LME.

The company is controlled by JRJ Group, a private equity firm founded by Jeremy Isaacs, the former head of Lehman’s European operations, and Roger Nagioff, the bank’s ex-head of global fixed income.

JRJ has a 41 per cent indirect economic interest in Marex. It is expected to reduce that stake through the London IPO although it will remain a large shareholder.

People familiar with the plans said Marex was seeking a valuation of $650m-$800m. The company is about half the size of US rival Stonex Group, which has a market capitalisation of almost $1.4bn. The IPO could come as soon as June.

The company, which has been expanding aggressively through acquisitions, made pre-tax profits of $55m in the year to December, up from $46.6m a year earlier, on net revenue of $414.7m.

However, in 2018 pre-tax profits were just $13.4m after Marex took $31.9m of legal provisions related to a warehouse receipts fraud.

Marex makes more than half its revenue from commodity hedging services that help big commodity producers, consumers and traders manage price risk. Commissions from the group’s top 10 clients increased by 17 per cent to $49m in 2020.

“The attractiveness and resilience of our business model is demonstrated by our latest set of results, which showcase continued strong performance despite the obvious macro headwinds,” said Marex chief executive Ian Lowitt, who was paid $4m last year. His basic salary is almost twice that of the LSE’s CEO David Schwimmer.

JRJ Group and its partners Trilantic Capital Partners and BXR Group acquired a majority stake in Marex in 2010. A year later it bought Spectron to create one of the biggest commodity brokers in the world. The company has been up for sale for several years as JRJ has sought an exit from its investment.

It emerged in November that Marex had appointed Goldman Sachs and JPMorgan to help advise on a possible stock market listing. One of its no- executive directors is Stanley Fink, former CEO of hedge fund Man Group.

Marex said on Friday that acquisitions and expanding into “adjacent products” would continue to form a “central pillar of its strategy”. In November, Marex acquired Chicago-based equity derivatives firm XFA.

Commodity markets have boomed over the past year on the back strong demand from China, a post-pandemic pick up in other big economies and bets on the “greening” of the world economy.

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‘A real man of mystery’: how Ian Osborne built a $1.5bn venture capital firm




When tech financier Ian Osborne invests in a company, executives must agree to an unusual clause: not to talk about it without his permission.

Such tactics have helped Osborne and his firm Hedosophia largely fly under the radar despite his involvement in high-profile investments and takeover bids over the past decade.

With early support from funds linked to media baron Michael Bloomberg, Hong Kong tycoon Li Ka-shing and the Burda family of Germany, the 38-year-old Osborne has quietly created a $1.5bn venture capital business.

According to people familiar with the matter, companies from Spotify, TransferWise and Raisin in Europe to Alibaba, Ant Financial and Airwallex in Asia have all received investment from Osborne.

One tech investor compares the urbane but reticent British investor to the well-connected PR fixer Matthew Freud: “He knows everyone.” Another, who carried out due diligence before working with Osborne, said: “He is the sort of guy who will turn up behind you on a flight to Rio. He is a real man of mystery.”

As one of the architects of the boom for special purpose acquisition companies (Spacs) — which raise cash in listed funds that then hunt for a company to take public — Osborne has helped turbocharge tech valuations.

Even as the US market cools on the phenomenon and regulatory scrutiny grows, Osborne is hoping to popularise such blank cheque vehicles in Europe with plans to raise as much as €460m with a Spac listing in Amsterdam.

Michael Bloomberg
Michael Bloomberg became a connecting thread through Ian Osborne’s career © Joe Raedle/Getty

Described by contacts as “obsessively secretive”, Osborne fiercely protects his privacy and allows publicity to be drawn to high-profile partners such as Chamath Palihapitiya, a venture capitalist.

Palihapitiya, a brash former Facebook executive, with a large social media following and a love of making provocative comments on TV, describes Osborne as “a very good yin to my yang”.

The moonshot machine

It is for the relaunch of Spacs in 2017 that Osborne is becoming best known — teaming up with Palihapitiya’s Social Capital to back the listings of companies such as Virgin Galactic, Clover Health and Opendoor.

Along the way, Osborne has amassed shares worth as much as $300m, according to a person familiar with the matter, boosted by the juicy “promote” share awards given to sponsors of the listings.

To friends and investors, he is a canny dealmaker and consummate networker, connecting rich family offices to founders needing funds to expand.

Others worry he has been at the vanguard of a wave of speculative cash, bestowing stratospheric valuations on unproven companies.

Virgin Galactic — which he helped take public in 2019 — opened the floodgates for moonshot companies with little by way of revenues to list through Spacs. More than 300 Spacs have raised $97bn this year, according to Refinitiv.

With the action now shifting to Europe, it marks a homecoming for Osborne, who splits his time between houses in London and Hong Kong, where he is a resident.

Chamath Palihapitiya
Chamath Palihapitiya describes Osborne as ‘a very good yin to my yang’ © David Paul Morris/Bloomberg

From Bloomberg to Zuckerberg

Born and raised in Richmond, London, the son of a lawyer and a doctor, Osborne studied at St Paul’s school, King’s College and London School of Economics, graduating in 2005 and going to work as an adviser to Bloomberg, who became a connecting thread through Osborne’s career.

Kevin Sheekey, Bloomberg’s longstanding campaign manager and communications chief, said Osborne began working for the then New York mayor after co-hosting a dinner in London whose guests included actress Claudia Schiffer and media scion James Murdoch.

By 2007, thanks to Osborne’s connections, Bloomberg was addressing the Conservative party conference in Blackpool. “It sounds an easy thing to do but connecting people is a rare talent,” said Sheekey. “Dozens of people around the world that Mike and I have good relationships with were introduced by Ian. Global business leaders never meet without a go-between. There is no Yellow Pages for that.”

He describes a Zelig-like quality to Osborne: “His nature is not to promote himself.”

As international adviser to Bloomberg for the next four years, Osborne continued to unleash his networking skills, gaining access to people who would become his ticket to the world of tech finance.

“At first it was like, ‘what is this British 20-something doing in the midst of US politics?’ It didn’t make much sense,” said Daniel Ek, founder of Spotify, who met Osborne in this period.

Initially, Osborne offered “advice, connections with people”, according to Ek. “But his Rolodex was off the charts for someone so young. The connection between politics and business today seems like an obvious fit but at the time no one was making the link.”

Osborne began to advise, and later invest in, Palihapitiya’s Social Capital after meeting him with Mark Zuckerberg in 2008.

Palihapitiya described Osborne as “extremely, exceptionally discreet and unbelievably trustworthy. He’s unbelievably connected. He is our modern version of a homeless billionaire. Ian is constantly working, is constantly travelling, and he collects people.”

Virgin’s spaceship
Osborne teamed with Palihapitiya’s Social Capital to back the listing of Virgin Galactic © Virgin Galactic

In 2009, he set up his own consultancy, Osborne and Partners, that took on clients including DST Global, the venture capital firm run by Yuri Milner, the Israeli-Russian billionaire.

By 2010, he was helping DST lead investments in Spotify and Alibaba — where he had forged relationships with founders Ek and Jack Ma, respectively. 

Through his time working with DST and afterwards, Osborne continued to run a PR and business development consultancy, advising the businesses of US tech billionaires from Travis Kalanick and Evan Spiegel to Zuckerberg. He remained close to Bloomberg, helping on an attempt to buy the Financial Times from Pearson in 2013.

That year, he was firmly established on the tech scene as one of the organisers of the hottest party in Davos — a “taxidermy” themed bash thrown with Napster co-founder Sean Parker and Salesforce CEO Marc Benioff.

He had also started to work informally for then UK prime minister David Cameron and chancellor George Osborne, to whom he remains close, helping open doors in the US. During the 2010 election campaign, he helped prepare Cameron for TV debates. Around the same time, he organised a trip to the US for Boris Johnson, then mayor of London.

Osborne became the “ultimate co-host” — according to one person familiar with the period — gathering people from politics, tech, finance and the arts. It was at a dinner hosted by Osborne in 2014, attended by actor Ed Norton and Arianna Huffington, that an Uber executive landed in trouble for suggesting that the company could dig up dirt on a critical journalist.

Taking ‘IPO 2.0’ to Europe

Osborne set up Hedosophia in 2012 — named after Greek gods of pleasure and wisdom — aiming to specialise in earlier stage tech firms. 

Early backers included family offices such as Germany’s Burda and funds related to Li, the Hong Kong tycoon, said a person close to the group, who added that it now has a more institutional investor base of university endowments, public pension funds and insurance companies from the US, Japan, Canada and Sweden.

Daniel Ek, founder of Spotify
Daniel Ek, founder of Spotify, recalled thinking Osborne’s ‘Rolodex was off the charts for someone so young’ © Drew Angerer/Getty

It was at a dinner in Hong Kong in early 2017 with Palihapitiya that he pitched the idea for a new sort of Spac to give tech founders an easier public listing without the risk and regulatory baggage of a traditional IPO. 

Despite being partners in the sponsor company, the pair did not split earnings equally, said people with knowledge of the situation, with Palihapitiya taking the majority of profits but also putting in greater capital. Palihapitiya also coined the new term for the Spac — “IPO 2.0” — which was draped over the New York Stock Exchange at the launch in 2017.

Since then, hundreds of Spacs have followed this strategy, launched by former bank executives, athletes and politicians keen to enjoy the almost risk-free upside of the Spac sponsor model. But even those operating around Osborne wonder whether the market has now gone too far. “The bubble is definitely bursting now,” said one.

The Osborne/Palihapitiya Spac franchise has been hit as the market has turned — with Clover’s shares falling more than 50 per cent from their highs and shares in Virgin Galactic — which has yet to make a commercial flight — down more than 70 per cent from the peak.

Osborne is determined to get his European Spac right, according to those close to the plans, cutting the financial rewards for the sponsor and bringing together a heavyweight board.

This month, he will also return to an early passion in the theatre, producing one of the first musicals to open after the end of pandemic restrictions in the West End — Everybody’s Talking About Jamie.

He will need to get used to being centre stage — in Europe at least, he has no Palihapitiya to hide behind, and the scrutiny over Spacs in the US has started to raise questions for investors and sponsors alike over whether the market has gone too far, too fast.

Additional reporting by Tim Bradshaw and Arash Massoudi

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Chip specialist Alphawave drops 10% on London debut




Shares in Canadian semiconductor group Alphawave fell as much as 24 per cent on their first day of trading in London, the latest in a string of underwhelming public-market debuts in the UK capital.

Alphawave, which launched four years ago, sold £856m worth of shares at 410p apiece, giving it an opening valuation of £3.1bn — the largest new technology listing since Deliveroo’s disastrous London launch in March. Shares closed at 370p per share, a decline of about 10 per cent.

While analysts and bankers said the fall reflected global trends rather than any underperformance of the London market, some have also questioned the group’s valuation.

“This has been an unlucky week [for IPOs],” said Russ Mould, investment director at AJ Bell. “[But] £3bn even for a well-understood industry, and even though it’s growing rapidly, you could argue was pretty punchy.”

Alphawave is relocating from Canada to the UK, with plans to build a research facility in Cambridge, an established centre for the industry. The UK boasts a number of prominent companies in the field, including Arm, which chipmaker Nvidia acquired last year, CSR and Wolfson Micro. 

Several analysts and bankers said Alphawave had fallen victim to a recent wobble in tech stocks. The technology-focused Nasdaq Composite on Monday closed down 2.6 per cent as inflation fears grow, though it has since regained some of that ground.

“The post-open dip reflects worldwide volatility in trading of high-growth and high-value stocks in recent weeks, and some investors shorting IPOs in this environment, in particular where there are low trading volumes,” said Markus Bauman, corporate securities attorney at law firm Goodwin.

Others also pointed out that rising prices for the raw minerals and metals needed in the chip industry could erode future revenues.

Alphawave’s woes come after Deliveroo’s London listing, dubbed “the worst IPO in London’s history” by one of its bankers. Shares in the food delivery app are down more than 38 per cent from their IPO price.

“There’s probably a lot of wailing and pointing of fingers, but I’m not sure it’s fair,” said Mould, pointing to more successful recent IPOs such as ecommerce company The Hut Group or cyber security firm Dartktrace. “London does like entrepreneurs and it has a good record of providing risk capital, unfortunately there’s been a bit of a bad run.”

Other chipmakers such as US-listed Nvidia have also struggled amid the recent fall in tech stocks, with its share price declining 5 per cent in the past week.

Barclays and JPMorgan acted as joint bookmakers alongside BMO Capital Markets on the Alphawave flotation. Funds managed by BlackRock and Janus Henderson agreed to buy $510m as “cornerstone” investors in the offering.

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