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Wednesday, 10 August 2022

Capricorn / Tullow saga + a hard landing for SoftBank

Yet another Capricorn shareholder is against the Tullow merger: Palliser Capital UK, one of the biggest shareholders in Capricorn Energy — with an ownership stake of over 5% — has asked the company to scrap merger plans with rival producer Tullow Oil, Bloomberg reported, citing a letter by Pallisier’s CIO James Smith. Smith argues that Tullow’s offer undervalues Capricorn, adding that the plan amounts to a “nil-premium” takeover. UK-listed energy firm Tullow Oil had made an offer to merge with Capricorn Energy — formerly Cairn Energy — in an all-stock transaction worth GBP 1.4 bn back in June. Palliser now joins other shareholders, hedge fund Kite Lake and LGIM, in opposing the transaction.

Why should we care? Capricorn has had a presence in Egypt ever since it acquired Shell’s oil and gas assets in the Western Desert with partner Cheiron last year under an agreement worth up to USD 926 mn.

SIGNS OF THE TIMES-

#1- A hard landing for SoftBank as the tech bubble bursts: Tech investor SoftBank reported a record USD 23.1 bn loss in 2Q 2022 on the back of the ongoing rout in the tech market. In a press conference that he himself described as “depressing,” CEO Masayoshi Son admitted to taking too many big risks on tech stocks and startups and described his past behavior as “delirious.” SoftBank’s USD 100 bn Vision Fund lost USD 22 bn during the April-June quarter and since its peak has lost USD 50 bn in gains. Softbank will now slash headcount at Vision Fund. (Reuters | Bloomberg | WSJ | FT)

#2- How bad is it for Wall Street on the IPO front? More bankers have time to plan their weddings, according to the FT. The slowdown in IPOs in 2022 — down from a record year in 2021 — has given bankers more time to work on their personal lives, with more employees planning wedding announcements, managers, including Arps’s global head of capital markets, tells the salmon-colored paper. Companies raised USD 5 bn in traditional IPOs in the US this year, according to Dealogic — a 95% drop from the USD 105 bn raised during the same period last year.

ALSO WORTH NOTING-

  • More Russian oil disruptions in Europe: Flows of Russian crude through parts of the giant Druzhba pipeline — which transports oil to Central Europe — have been suspended for five days after EU sanctions blocked a payment of transit fees. (Financial Times)
  • Chip stocks are under pressure: Chipmaker Micron Technology’s gloomy 2Q revenue outlook rattled chip stocks yesterday, a day after Nvidia issued a similar warning, raising concerns about a downturn in the industry. (Reuters)
  • A USD 300 mn pay package wasn’t enough for Carlyle Group’s former CEO Kewsong Lee, who reportedly resigned from the private equity giant after the firm’s co-founders refused his demands. (Financial Times)

Down

EGX30

9,969

-0.8% (YTD: -16.6%)

Up

USD (CBE)

Buy 19.09

Sell 19.20

Up

USD at CIB

Buy 19.12

Sell 19.18

None

Interest rates CBE

11.25% deposit

12.25% lending

Up

Tadawul

12,330

+0.3% (YTD: +9.3%)

Up

ADX

10,120

+0.2% (YTD: +19.2%)

Up

DFM

3,385

+1.1% (YTD: +5.9%)

Down

S&P 500

4,122

-0.4% (YTD: -13.5%)

Up

FTSE 100

7,488

+0.1% (YTD: +1.4%)

Down

Euro Stoxx 50

3,715

-1.1% (YTD: -13.6%)

Down

Brent crude

USD 96.58

-0.1%

Up

Natural gas (Nymex)

USD 7.83

+3.2%

Up

Gold

USD 1,812.30

+0.4%

Down

BTC

USD 23,200

-2.6% (YTD: -49.8%)

THE CLOSING BELL-

The EGX30 fell 0.8% at yesterday’s close on turnover of EGP 593.55 mn (27.4% below the 90-day average). Foreign investors were net sellers. The index is down 16.6% YTD.

In the green: Palm Hills Development (+2.8%), Orascom Construction (+2.2%) and Telecom Egypt (+2.1%).

In the red: Qalaa Holdings (-4.6%), Ibnsina Pharma (-3.2%) and Orinetal Weavers (-3.0%).

Asian markets are almost all in the red this morning after fresh inflation data out of China provided more evidence that its economy is slowing. Stocks in Europe and the US look set to follow them later this morning.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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