Investor Relations Week: Potential profit in Russia’s ADR delistings, Mifid II made research less competitive and Musk in Twitter’s takeover bid
– Reuters said Russian companies and a number of global banks could benefit if Moscow decides to delist Russian companies’ certificates of deposit from foreign markets, citing “two people familiar with the matter”. The potential windfall is due to the fees that bank issuers of certificates of deposit can contractually charge investors when they cancel the product, the news agency explained, adding that “it is not clear how much companies and banks might win or whether banks will charge the fee and risk angering investors who say it would be unfair given the extraordinary circumstances that were triggered by Russia’s invasion of Ukraine.”
– The exchange reported on the results of a survey which shows that competition for the provision of investment research has diminished due to Mifid II, “with the dominance of bulge providers”. According to the Substantive Research study, 52% of search budgets went to the top 10 providers in 2019, falling to 51.6% in 2020. But in 2021, that figure jumped again to 53.1% – “suggesting that the incumbents actually become more powerful”. , and competition decreases due to Mifid II”.
– In the week that The Wall Street Journal (paywall) reported that Elon Musk decided not to join the company’s board, and that Musk was sued for the late disclosure of his stake in Twitter, Reuters reported that Musk had offered to buy the social media company for $41.39 billion, according to a regulatory filing. The news agency said Musk’s offer price of $54.20 per share represents a 38% premium to Twitter’s closing stock price on April 1, the last trading day before the public announcement of Tesla CEO’s 9.2% investment in the company.
– A growing body of research proves the benefits of focusing on long-term value and ESG, wrote former Unilever CEO Paul Polman and sustainable business adviser Andrew Winston in harvard business review. Just Capital, for example, has created a list of stakeholder-first companies (not just shareholders) that it calls the Just 100. This group has outperformed the market. It should also be clear that there is also a big payoff awaiting those who embrace the global shift to ESG: multi-trillion dollar markets in clean energy, electric and autonomous vehicles, plant-based proteins, precision agriculture, AI-based efficiency technologies. , and much more. Yet the pair asked why do so many business people still think sustainability isn’t “in pencil”?
– The FinancialTimes (paywall) reported that JPMorgan Chase’s profits fell 42% in the first quarter – impacted by a slowdown in transactions, an increase in reserves to protect against a US recession and a loss of $ 524 million suffered “in the middle market turmoil sparked by the war in Ukraine.’The largest US bank by assets kicked off banking earnings season this week by reporting net profit of $8.28 billion for the first three months of 2022 , a significant decrease compared to the same period last year.
– In other investment banking news, FT, reported that in a previously “unthinkable” move for a successful German IPO, Volkswagen has chosen a US quartet of Goldman Sachs, Bank of America, JPMorgan and Citi to act as global IPO coordinators. planned partial purse from Porsche. “The IPO will likely eclipse Deutsche Telekom’s record 1996 offering in terms of cash raised and any other German IPO in terms of media excitement,” the newspaper said.
– Nikkei Asia reported that foreign money is “beginning to withdraw from Chinese markets after the risk of investing in autocratic countries was highlighted sharply by steep declines in the Russian currency and securities prices following its invasion of Ukraine”. He said market data showed foreign investors sold 38.4 billion yuan ($6.04 billion) worth of Chinese stocks and bonds in the January-March period, one the highest quarterly figures ever recorded.
– “This M&A boom is not like the previous one,” said The Economist, describing how the pandemic has “reinvented” deal-making. “It used to be thought that investment bankers, like sharks, had to keep moving to survive,” he said. Then the pandemic shutdowns ended that “perpetual motion” between headquarters, airports and meetings. Greasing the wheels of mergers and acquisitions has taken precedence over corporate concerns about their survival. Transactions were canceled or put on hold and bankers focused on customers they already knew. Virtual trading has become the norm. The post asks the question: “As in-person interaction returns, will new ways of working persist?”