CLOs

Recent cyberattacks around the world have prompted venture capitalists to invest in security startups, reports the New York Times (26 July, Woo). So far this year, investors have poured more than US$12.2 billion into startups that sell products and services such as cloud security, identity verification, and privacy protection — exceeding the US$10.4 billion tally from all of 2020 and more than double the US$4.8 billion raised in 2016. The surge in investor interest follows a spate of high-profile ransomware attacks, including against Colonial Pipeline, Kaseya, and JBS. The breaches have fueled concerns among companies and governments, leading to increased spending on security products. Accordingly, Gartner estimates that worldwide spending on information security and related services will reach US$150 billion this year.

From "As Cyberattacks Surge, Security Startups Reap the Rewards"
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During calls with Wall Street analysts last week, US airlines said business travel has picked up in recent weeks but is still down more than half from this time in 2019, reports the Associated Press (26 July, Koenig). Airlines have hoped that business travel will experience a sharper rebound in September when more schools and offices reopen, but that optimism has been tempered by the surge in coronavirus cases connected to the delta variant. Business travel is a key source of revenue and profit for airlines, as business travelers tend to pay higher fares. They also spend considerable sums of money on hotels, meals, and other things. The US Travel Association estimates that domestic and international business travelers spent more than US$300 billion in the United States in 2019, but forecasts that business travel spending won't fully recover to 2019 levels until 2024.

From "Business Travel Stirs, But Many Road Warriors Stay Grounded"
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A coalition of leading medical groups on Monday urged healthcare employers to mandate COVID-19 vaccinations for all their workers, reports NBC News (26 July, Li). About 60 percent of the adult US population has been fully vaccinated against COVID-19, according to the US Centers for Disease Control and Prevention (CDC), but millions of people have not received their jabs yet, leaving the United States vulnerable to the fast-spreading delta variant of the virus. "As the health care community leads the way in requiring vaccines for our employees, we hope all other employers across the country will follow our lead and implement effective policies to encourage vaccination," according to a joint statement from 56 health care associations. Signatories to the statement include the American Medical Association, the American College of Physicians, the American Nurses Association, the American Academy of Pediatrics, the American College of Surgeons, and the American Public Health Association.

From "Leading Medical Groups Urge Mandatory Vaccinations for All Healthcare Workers"
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The Wall Street Journal (26 July, McFarlane) reports that after years of touting hydrogen energy as a way to reduce carbon emissions, big oil companies are now grappling with how to make that a reality. Hydrogen made using renewable energy can be produced and used without emitting carbon dioxide. Accordingly, BP, Royal Dutch Shell, and TotalEnergies are all pursuing multimillion-dollar hydrogen projects — often with government support. But experts believe there are still challenges to overcome before hydrogen can fulfill its potential. For example, the oil giants must find a way to make hydrogen using renewable power and produce it on an industrial scale. Another complication is the fact that hydrogen is explosive, making it difficult to store and transport it. Some consultants and oil company executives believe an interim step to reaching large-scale green hydrogen production is to capture and store carbon generated by making hydrogen from natural gas to reduce emissions — making what is known as blue hydrogen.

From "Big Oil Companies Push Hydrogen as Green Alternative, but Obstacles Remain"
Abstract News © 2021 SmithBucklin

Workers of all ages have grown accustomed to remote work, but younger ones in particular are especially attached to the new way of doing business, reports the New York Times (26 July, Schwartz, Murphy Marcos). In a recent survey by the Conference Board, 55 percent of millennials questioned the wisdom of returning to the office. That number shrank to 45 percent of Generation X and 36 percent of baby boomers. In many cases, the decision to return to offices is creating tension between older managers and younger workers. While managers might prefer to have workers back in the office on a regular basis, they are wary of losing young talent at a time when churn is increasing, prompting some flexibility in policies.

From "Return to Office Hits a Snag: Young Resisters"
Abstract News © 2021 SmithBucklin

An Amazon job posting published online last week seeks a “Digital Currency and Blockchain Product Lead," suggesting the ecommerce giant may soon allow customers to pay for their orders with cryptocurrency, reports Bloomberg (26 July, Day, Chiglinsky). After the job posting hit media reports, Bitcoin surged near US$40,000. Amazon is a large company that backs a broad range of experiments, meaning initiatives cited in job postings don’t always become new products. But the company confirmed its interest in cryptocurrency, digital tokens popular with younger and tech-savvy shoppers. "We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like on Amazon," the company said in a statement.

From "Amazon Job Posting Hints at Plan to Accept Cryptocurrency"
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Three people with direct knowledge of the situation told Bloomberg (26 July, Schoenberg, Robinson, Faux) that US federal prosecutors are investigating whether Tether executives committed bank fraud. Tether is a major player in the cryptocurrency ecosystem, as its token is widely used to trade Bitcoin. But the probe by the US Department of Justice (DOJ) is focusing on conduct that occurred years ago, when Tether was in its more nascent stages. Specifically, the sources said, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto. Federal prosecutors have been eyeing Tether since at least 2018, and a decision on whether to bring a criminal case could be imminent.

From "Tether Executives Said to Face Criminal Probe Into Bank Fraud"
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The Wall Street Journal (26 July, Broughton) reports that there is strong demand for chief financial officers (CFOs) who work part-time for several companies. On-demand CFOs, also known as fractional CFOs, often find work through referrals from investors or former colleagues. They work across industries, but are especially in demand at startups after early funding rounds. According to investors and company leaders, many firms at that stage do not have a full-time CFO managing their finances because they mostly have basic accounting needs, but they increasingly need someone to fill the gap when more complex financial questions arise. Fractional CFOs are also in demand thanks to the recent deal-making craze. These part-time executives tout the benefits of their own personal gig economy, including the ability to take stakes in companies that might increase in value.

From "Demand for Part-time CFOs Heats Up as Startups Raise More Money"
Abstract News © 2021 SmithBucklin

Fidelity International has vowed to punish directors at more than 1,000 companies globally next year if they fail to address climate change and gender diversity, reports the Financial Times (25 July, Mooney). Large investors have traditionally been reluctant to vote against the reelection of directors at general meetings, but Fidelity — which oversees US$787 billion in client assets — said it would change its stance from 2022. "Ultimately, boards need to be held accountable," said Jenn-Hui Tan, the global head of stewardship and sustainable investing at Fidelity International. The investor plans to target about 1,000 companies that are larger emitters of greenhouse gases at a sector level or that contribute heavily to carbon emissions within Fidelity's own portfolios. It also plans to vote against directors in developed markets where boards are not at least 30 percent female, and in developing markets where boards are not at least 15 percent female.

From "Fidelity International Threatens Tough Stance on Climate and Gender"
Abstract News © 2021 SmithBucklin

Aon CEO Greg Case on Monday announced his company has scrapped plans for its US$30 billion acquisition of Willis Towers Watson in the face of opposition from the US government, reports the Financial Times (26 July, Smith). The US Department of Justice (DOJ) sued to block the all-share deal, which was first reached in March 2020. Case said Monday that the companies reached an "impasse" with the DOJ, arguing that the US government is "over[looking] that our complementary businesses operate across broad, competitive areas of the economy." As a result of the decision to drop the combination, Aon will pay a US$1 billion break free to Willis.

From "Aon's US$30 Billion Acquisition of Willis Towers Watson Collapses"
Abstract News © 2021 SmithBucklin

China’s Ministry of Industry and Information Technology, which oversees China’s telecommunications and industry policies, on Monday ordered the country's internet giants to fix certain anticompetitive practices and data security threats, reports the Wall Street Journal (26 July, Yang). The watchdog introduced a new six-month rectification program that Beijing hopes will correct a range of industry issues, including disrupting market order, infringing on users’ rights, mishandling user data, and violating other regulations. Monday's announcement about the program did not name any specific companies, but the ministry listed several infractions that have earned some of China’s largest tech platforms regulatory blowback in the past few months.

From "China’s Tech Regulator Orders Companies to Fix Anticompetitive, Security Issues"
Abstract News © 2021 SmithBucklin

The Financial Times (26 July, O'Dwyer) reports PwC has been sued by administrators of the racing car dealership JD Classics over allegations the firm negligently failed to spot fraud, causing losses of more than €41 million. Administrators from Alvarez & Marsal accused PwC of failing to audit JD Classics' 2016 and 2017 accounts competently, resulting in material misstatements of the dealership's finances. Before filing for administration in September 2018, JD Classics restored and sold classic cars and was associated with high-profile races such as the Le Mans Classic. The collapse of the dealership, which had showrooms in London, Essex, and California, led to the administrators claiming civil fraud against founder Derek Hood, who has denied wrongdoing. In their suit against PwC, the administrators alleged that despite identifying a "real risk of fraud," the audit firm failed to detect that the true state of the business was being concealed. As a result, the administrators argued, PwC negligently issued unqualified audit opinions of the 2016 and 2017 accounts. "Had PwC's audit been performed competently in accordance with the applicable accounting standards ... material misstatements in the financial statements would have been identified," lawyers for the administrators wrote. The claim in London's High Court comes as the audit profession faces continued scrutiny for failing to raise red flags ahead of company collapses in the United Kingdom.

From "PwC Sued for Failing to Spot Alleged Fraud at Racing Car Dealer"
Abstract News © 2021 SmithBucklin

US airlines are returning to profitability more quickly than their European counterparts thanks to generous government aid, a much larger domestic market, and a relatively speedy rollout of the coronavirus vaccine, reports the Financial Times (23 July, Bushey, Georgiadis). Three out of the four major US carriers reported a profit in the second quarter of 2021. United Airlines, the outlier, expects to return to profitability in the second half of the year. In Europe, meanwhile, airlines have racked up record losses during the pandemic as demand for air travel has collapsed. Investors in Europe see the low-cost carriers Ryanair and Wizz Air as best positioned to recover quickly from the COVID-19 pandemic.

From "US Airlines Return to Profit as European Counterparts Languish"
Abstract News © 2021 SmithBucklin

Mercedes-Benz maker Daimler on Thursday announced plans to invest more than US$47 billion between 2022 and 2030 to develop battery-electric vehicles (EVs), reports NBC News (22 July). The company is hoping to be ready for an all-electric car market by the end of the decade. Daimler said it would, with partners, construct eight battery plants as it ramps up EV production. From 2025, all new vehicle platforms would only make electric cars. Daimler CEO Ola Källenius indicated that spending on traditional combustion-engine technology would be "close to zero" by 2025. However, he stopped short of giving a hard deadline for ending sales of fossil-fuel automobiles.

From "Mercedes-Benz to Go All Electric by 2030"
Abstract News © 2021 SmithBucklin

Pfizer and BioNTech will supply the United States with another 200 million doses of their COVID-19 shot, Bloomberg (23 July, Griffin) reports, setting up a stream of vaccine deliveries through next April in a push to protect kids and potentially provide boosters. The Biden administration is focusing on immunizing children under the age of 12, who aren’t yet eligible, and potentially deploying booster doses if new data shows their necessity, according to an administration official. Of the new doses from Pfizer, 65 million will be tailored for the pediatric population, should the vaccine be cleared for kids younger than 12, the official indicated. In a statement Friday confirming the supply agreement, Pfizer and BioNTech said Washington also has the option to acquire an updated version of the vaccine to tackle potential variants if it’s available and authorized.

From "Pfizer to Supply United States with Millions of Shots for Young Kids"
Abstract News © 2021 SmithBucklin

The Delta variant, a more contagious version of the coronavirus, is causing companies to adjust their return-to-office plans, according to the New York Times (23 July, Hirsch, Browning). When companies first announced their tentative return-to-office plans this spring, there was a sense of optimism behind the messages. Now, however, the tone has suddenly shifted, as coronavirus infections surge and vaccines remain unavailable for children under the age of 12. These factors have created a tricky situation for US business leaders, who are now being forced to make tough decisions about potentially delaying reopening plans or instituting mandatory vaccine requirements for workers. Bob Sutton, a psychology professor at Stanford University who studies leadership and organizations, described the situation as "emotionally draining," and said some executives are “pulling their hair out” over what to do. Some employers initially wary of requiring vaccines have been persuaded by the persistence of the Delta variant and recent court decisions that upheld employers’ rights to require the jabs.

From "Delays, More Masks, and Mandatory Shots: Virus Surge Disrupts Office Return Plans"
Abstract News © 2021 SmithBucklin

About 61 percent of older millennials say they’re planning to work a second job or pick up part-time work during retirement, according to a recent survey conducted by the Harris Poll and cited by CNBC (22 July, Leonhardt). Millennials may be more focused on retirement than previous generations. About 15 percent of those ages 23 to 38 in 2019 reported their primary reason for saving was retirement, compared to just nine percent of the same age bracket of baby boomers in 1989, according to ICI analysis of data from the Federal Reserve Board Survey of Consumer Finances. Many millennials are juggling higher education and housing costs, but many are also taking advantage of investing and saving strategies, says Sarah Holden, ICI’s senior director of retirement and investor research.

From "61 Percent of Older Millennials Believe They’ll Be Working at Least Part-time During Retirement"
Abstract News © 2021 SmithBucklin

The number of people filing for unemployment benefits in the United States increased this month from the lowest point of the pandemic, the Associated Press (22 July, Rugaber) reports, even as the job market appears to be rebounding on the strength of a reopened economy. Jobless claims rose two weeks ago to 419,000 from 368,000 the previous week, according to the US Department of Labor. People are shopping, traveling, and dining out more as the pandemic has waned, boosting the economy and compelling companies to hire. Employers have posted the highest number of available jobs in the two decades that the data has been tracked, although companies say they often can't find enough workers at the wages they're willing to pay. At the same time, analysts are becoming concerned about the potential economic consequences of an increase in confirmed cases of COVID-19 as the contagious delta variant spreads, especially among the unvaccinated.

From "US Jobless Claims Rise"
Abstract News © 2021 SmithBucklin

Fox Business (22 July) has learned that Uber Freight has agreed to purchase Transplace, which powers one of the world's biggest managed transportation and logistics networks, for approximately US$2.25 billion. The total acquisition price consists of up to US$750 million in common stock of parent Uber Technologies Inc. and the remainder in cash from private equity firm TPG Capital. The deal comes as the nation's supply chains are crunched, delaying the delivery of such critical items as computer chips and furniture. Uber shares are down more than seven percent since 1 January as the company struggles to find drivers and as customers object to higher charges.

From "Uber Buying Transplace in US$2.25 Billion Logistics Bet"
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The Financial Times (23 July, Storbeck) reports Vonovia's €18 billion takeover of its residential property rival Deutsche Wohnen has collapsed after Vonovia narrowly missed the required level of support from shareholders. The bid was subject to the approval of 50 percent of Deutsche Wohnen's shareholders, but Vonovia only got support from 47.62 percent. Accordingly, said Vonovia CEO Rolf Buch, the acquisition "is dead in the water." The all-cash deal would have created a real estate juggernaut responsible for residential property in Germany, Austria, and Sweden. This is the second time in five years that a merger of the two companies has been rejected by shareholders.

From "Germany's €18 Billion Real Estate Merger Falls Apart as Investors Balk"
Abstract News © 2021 SmithBucklin