Connect with us

IPOs / FFOs

Trustly postpones $9bn flotation after regulator flags concerns

Published

on


Trustly has postponed its proposed $9bn stock market flotation after Swedish regulators raised concerns about the payment company’s lack of due diligence on its end customers.

The planned initial public offering was due to be one of the biggest by a fintech company in Europe this year and was set to take place this quarter but had now been postponed indefinitely, Trustly said on Monday.

Sweden’s Financial Supervisory Authority told Trustly in April that while it had until now conducted due diligence only on the merchants for which it provided payment services, it should now also check on some end-customers.

Johan Tjarnberg, Trustly’s chair, said the company needed to resolve all the questions from the regulator before pursuing an IPO. A listing remained “our ambition” but “there is today no timeplan set” for it, he added.

Trustly has pitched itself as an alternative to buy-now, pay-later companies such as Klarna, valued at $31bn, that rely on the card networks of Visa and Mastercard for payments. Trustly offers payments directly from the bank accounts of customers to those of merchants. It claims its fees are lower than fintech companies that use card networks because it cuts out the middlemen.

As well as ecommerce, Trustly is also known in the payments industry for having a large presence in the higher-risk betting sector. Rivals have questioned the company’s activities outside of online retail. “They are in riskier areas that many payment groups have just refused to go into,” said one European fintech executive.

Oscar Berglund, Trustly’s chief executive, said betting was one of five different merchants it dealt with. “As a matter of policy, we only serve licensed operators, and we also have clear exclusion criteria as regards other verticals,” he added.

Trustly flagged in its annual report in March that the Swedish regulator was conducting a supervisory review into its compliance with money laundering and terrorism financing prevention rules.

Asked by the Financial Times about the review, Berglund downplayed its significance, saying: “It’s not the first time they review us. It [won’t be] the last time.” He conceded that betting companies were “a higher-risk kind of merchant” and added “we need to do closer checks on them, which we do”.

Swedish regulators clearly have a different view, arguing that Trustly needs to run checks on the people who use its payments services in such cases, not just the betting companies themselves.

Tjarnberg said Trustly would “engage in a constructive dialogue” with regulators. Berglund said at the end of April that the regulator could “adjust its observations” based on Trustly’s response.

Trustly also disclosed first-quarter results on Monday, in which its revenues increased 46 per cent compared with the same period last year to SKr632m ($75m). Underlying earnings before interest, tax, depreciation and amortisation rose 31 per cent to SKr275m.

Growth was particularly strong in the US, where revenues increased 609 per cent compared with a year earlier and now account for a quarter of the group’s total revenue.



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

IPOs / FFOs

JD.com’s logistics arm seeks to raise up to $3.4bn in Hong Kong IPO

Published

on

By


JD Logistics, the delivery unit of Chinese ecommerce group JD.com, will seek to raise up to $3.4bn in what would be one of Hong Kong’s largest initial public offerings this year.

The company’s decision to list follows a boom in online shopping during the coronavirus pandemic. But a tougher regulatory environment for Chinese technology groups and a recent fall in the shares of SF Holding, one of JD Logistics’ largest competitors, pushed the company’s proposed IPO price down by about a quarter, according to a person close to the deal.

JD Logistics will sell 609.2m shares at HK$39.36-HK$43.36 ($5.07-$5.58) each. The final price will be set on Friday and the shares are expected to start trading on May 28, according to terms of the deal seen by the Financial Times.

The IPO would be the second largest in the city this year after Kuaishou, a Chinese viral video app, raised $5.4bn in February, and would be the third blockbuster listing by JD.com in Hong Kong in the past year. JD Health, which sells pharmaceutical and healthcare services online, completed a $4bn IPO in December and JD.com carried out its own secondary listing in the territory last June, which raised a similar amount.

Hong Kong has benefited from a flood of high-profile listings by Chinese technology companies in recent months and has hosted more than $20bn of IPOs this year, according to data from Bloomberg.

JD.com created its logistics and delivery arm in 2007 and spun it out into a standalone unit a decade later. The company operates more than 900 warehouses in China and provides delivery and warehousing services to third parties.

But the group is among those under pressure as China increases scrutiny of its largest internet groups. Last month, officials told 13 of the country’s biggest tech companies, including fintech subsidiaries of JD.com, Tencent and ByteDance, to “rectify prominent problems” on their platforms. The push was seen as a sign that regulatory focus on the sector was spreading beyond Jack Ma’s Ant Group, after the $37bn IPO of the fintech company was scuppered last November.

Separately, shares in SF Holding, China’s largest listed delivery company, fell sharply last month after a quarterly loss rattled investors and prompted scrutiny over the high valuations placed on Chinese companies.

“Competition in China’s logistics space is fierce, especially after [Indonesian company] J&T Express entered the market, which has had an impact on other logistics companies’ performance and will hit JD,” said Li Chengdong of Haitun, an ecommerce think-tank.

JD Logistics was initially the delivery arm of JD.com’s ecommerce site but an increasing portion of its business comes from ferrying packages on behalf of third parties.

Cornerstone investors in the JD Logistics IPO, including technology group SoftBank’s Vision Fund, Temasek Holdings, Singapore’s state-backed investment company, and investment firms Tiger Global and Blackstone have subscribed to about $1.5bn of the shares, according to the terms of the deal.

Bank of America, Goldman Sachs and Haitong International are the joint sponsors for the listing.

Additional reporting by Ryan McMorrow in Beijing

Weekly newsletter

Your crucial guide to the billions being made and lost in the world of Asia Tech. A curated menu of exclusive news, crisp analysis, smart data and the latest tech buzz from the FT and Nikkei

Sign up here with one click



Source link

Continue Reading

IPOs / FFOs

Volvo Cars: race to net zero marks revival of IPO plan

Published

on

By


Volvo Cars has been waiting at the lights for years. The Swedish carmaker’s journey back to the stock market was halted in 2018 when Chinese owner Geely scrapped flotation. A subsequent plan to merge and float the two businesses was dropped in February. Now the company is considering an initial public offering. Getting a green signal will require a sensible price.

The last IPO plan stalled when investors baulked at the $30bn sought by Geely. Volvo has advanced since then, particularly on electrification. Shares in peers such as Daimler, BMW, Stellantis and VW trade on an average trailing enterprise value-to-ebitda multiple of 9. If Volvo achieved the same, it would have an enterprise value of almost $20bn, using figures from S&P Capital IQ. The company is likely to argue that its success in China merits a higher valuation. But its operating profit margins are about half those of peers. 

Profitability should improve, as battery advances cut the cost of making electric cars. But Volvo has already benefited from a supportive owner. Geely, which paid $1.8bn in 2010 to buy Volvo from Ford, has given it access to funds and shared the capital costs of developing new platforms. That helped the return on capital shoot up to an average of 9 per cent over the past six years, well above that of BMW and VW. 

A lot depends on continued collaboration with Geely. An outright merger was deemed too complicated because the complexity of the ownership structure made it difficult to agree a price acceptable to Geely’s minority shareholders. But the Chinese company will retain a big stake. The two businesses will jointly own the legacy internal combustion engine business and each owns half of Polestar, the premium electric brand. 

Polestar aims to produce the first genuinely net zero car by 2030. That, and other goals, means that Volvo has some of the most ambitious climate plans in the car industry. Those green credentials could add some extra oomph. Even so, too racy a valuation will impede its chances of a successful float.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to sign up



Source link

Continue Reading

IPOs / FFOs

Commodities broker Marex looks to list on London Stock Exchange

Published

on

By


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.



Source link

Continue Reading

Trending