What You Need To Know This Week — November 7th, 2020
What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
CHINA EXERTS ITS INFLUENCE AND FORCES CANCELLATION OF THE $37 BILLION ANT GROUP IPO
In what was largest initial public offering of all time, Ant Group’s $37 billion IPO was pulled at the last minute after the Chinese government suspended the listing. Essentially, the Chinese Communist Party’s power move represented a slap down of Ant Group’s founder Jack Ma, who spoke negatively about the Chinese state-owned banks at an event last month. This criticism of the Chinese government put Ma in the crosshairs of regulators. The refusal to “toe the party line” was a costly mistake, as shares in Ant’s parent company, Alibaba Group, dropped -7.1%, reducing Ma’s net worth by nearly $3 billion. The flopped IPO had retail investor demand of $3 trillion.
SPAC INTERPRIVATE ACQUISITION STRIKES MERGER WITH 4D LIDAR COMPANY AEVA
Silicon valley-based lidar company Aeva is set to go public through its merger with special purpose acquisition company InterPrivate Acquisition. Aeva, founded by two former Apple engineers and backed by Porsche, will be valued at $2.1 billion once the transaction closes. The deal continues the trend of SPACs merging with private companies in the automotive technology sector. Aeva’s technology enables the functioning of driverless cars, and the lidar company will be the third of its kind to go public via a SPAC, following recent deals for Velodyne Lidar and Luminar Technologies.
DUNKIN’ BRANDS TO GO PRIVATE IN ONE OF THE LARGEST LEVERAGED BUYOUTS OF THE YEAR
Inspire Brands, owned by private equity firm Roark Capital, announced the friendly acquisition of coffee and donut shop Dunkin’ Brands for $106.50 per share, representing a premium of 19.9%. The $11.3 billion leveraged buyout represents the largest LBO of the pandemic era and the second largest restaurant buyout on record. In addition, it is the second leveraged buyout of Dunkin’. It was first LBO’d by Bain Capital, Carlyle Group and Thomas H. Lee Partners for $2.4 billion deal in 2005. Including Dunkin’ Brands, Inspire will triple its number of restaurants to 31,600 global locations, trailing only Yum! Brands’ 50,000 restaurants worldwide.
Notable Insights, Articles, Podcasts, and Tweets
Listen to Julian’s chat about his best investment idea, SPAC arbitrage, on the Meb Faber Show podcast.
Did you miss our latest Alternative Point of View webinar series on SPAC investing? You can view the replay here.
This year, merger arbitrage funds are benefiting from the SPAC boom. Due to this, Lyxor Asset Management is overweight the strategy.
There are some counter-cyclical players in the oil patch, continuing to acquire companies during the bear market. Tourmaline Oil announced the acquisitions of both Jupiter Resources and Modern Resources for $426 million and $100 million, respectively. In addition, Waterous Energy Fund announced a $126 million unsolicited offer for the shares of junior oil sands company Osum Oil Sands. These are some of the most contrarian plays I’ve seen during the current energy bear market, which has caused most investors and international companies to flee the sector.
Chinese lenders are on the hook for 16 billion yuan of outstanding loans because the collateral backing the loans, 83 tons of gold, turned out to be nothing but gilded copper.
The U.S. Department of Justice is suing to block Visa’s $5.3 billion acquisition of fintech firm Plaid.
It has been a challenging year for evidence-based systematic strategies. The average quant hedge fund lost 5.7% this year up to the end of August.
How is a club of multimillionaires election-proofing their money? Alternative investments.
Sign up for next week’s Alternative Point of View webinar, Merger Arbitrage: How to Generate High Yield with Low Risk, which is live on Thursday, November 12th at 12:00pm MST / 2:00pm EST.
