Paul Albin

Cepsa To Sell 30% Of Its Stake To Private Equity Firm Carlyle

There is a partial buyout deal with private equity giant Carlyle and Cepsa which is an oil and gas company in Spain. Carlyle has agreed to buy 30% stake in Cepsa from a sovereign wealth fund from Abu Dhabi which is a $3.6 bn deal according to sources who have information about this transaction. Earlier the Mubadala fund which was looking for a listing in the stock market had failed in its attempt due to the wrong valuation. Now with the sale, the total value of the enterprise is the same as it had earlier attempted and is at $12 bn. The owner of Cepsa is Abu Dhabi wealth fund Mubadala Investment company.

Cepsa happy with the result

A source from the company said it was happy with the partial buyout and added, “This is the greatest outcome for Cepsa because public markets only seem to pay attention to the short term movement in oil prices and don’t appreciate a company like this.” The oil and gas company produces 175,000 barrels of oil a day worldwide and has stakes in two of the fields in Abu Dhabi. It has also many power-generating assets, operates chemical plants and refineries in Spain and other parts of the world.

Deal with Carlyle

The deal to buy 30% of the stakes of Cepsa comes with an agreement that says Carlyle having the right to buy up to 40% of Cepsa. Last year, Cepsa had rejected the bid by the US equity giant as it thought the stock listing would be a better option than selling its stakes. But, after the listing on the exchange was pulled out due to lack of interest in the company and also coupled with a bad global market Mubadala owners who has been the head of the company for three decades have agreed to sell its stakes. If the deal is approved by the regulatory bodies it will close by the end of the year.

The investment in Cepsa is part of its diversification program outside its North American shores. The equity group is raising $4 bn for assets in oil and gas and has to invest $2.4 bn on this deal. As per the deal agreement, at least two board seats will be allocated to Carlyle, but Musabbeh Al Kaabi who is a senior executive at Mubadala will continue to be the chairman of the company.

The oil has seen a recovery this year and has reached $70 for a barrel which had reached $30 in 2016 and Cepsa is making the most of it.

Paul AlbinCepsa To Sell 30% Of Its Stake To Private Equity Firm Carlyle
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Snap Shares Soar as User Numbers Beat Estimates

Multimedia messaging service Snap Inc beat analysts’ estimates of plunging user numbers in the last quarter, and the good news has sent the stock price soaring by around 20%. In the days leading up to the announcement, there had been worries that the company would continue to bleed users, but the company announced that the current levels are going to be maintained. Analysts had estimated that more Snap users were going to flock to its rival, the Facebook-owned Instagram, but that has not come to pass.

The Chief Financial Officer of Snap Inc said, “We do not foresee a sequential decline in daily active users in Q1 2019.” In the fourth quarter, the company recorded a total of 186 million active users daily. It beat analysts’ estimates of 184.91 million daily active users. However, at the same time, it should be pointed out that the number is down 1 million from the same quarter a year ago.

The photo messaging app grew in popularity back in the first half of the decade and its unique feature that removes photographs in seconds made it particularly useful for users who are concerned about their privacy. On top of that, the app’s filters that can turn people into a range of objects or even animals made it incredibly appealing to younger users. However, much of its unique features were later incorporated by Facebook’s Instagram, and it ate into Snap’s user base.

Instagram’s rise has been one of the biggest reasons why Snap has not been able to perform that well since its initial public offering back in 2017. Although its shares soared 22% and touched $8.62, it is hard to overlook that its IPO price was $17 back in 2017. However, Snap did not have to face the ignominy of a third straight stock price decline after a quarterly result ever since its controversial redesign. An analyst at Forrester, Jessica Liu, said, “Snap’s biggest issue continues to be that it lacks appeal beyond its core user base and has no visible direction on how to expand or pivot its app beyond that under-35 demographic.”

The app’s next big frontier is to corner at least a portion of the Android market and to that end; Snap has given access to the Android app to a small pool of users as of now. The Android app is vital for any company which wants to gain a toehold in the developing economies. In those geographies, Android phones are far more popular than Apple’s iPhone. Snap’s Chief Executive Officer Evan Spiegel echoed those thoughts regarding the Android app as well. He said, “There are roughly 2 billion people (internationally) who are on Android and do not have Snapchat. If we can take even a small percentage of that, it would make a big difference.”

Paul AlbinSnap Shares Soar as User Numbers Beat Estimates
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Trump Speech: Asian Shares Subdued, Aussie Dollar Falls

The US President Donald Trump speech at the State of the Union failed to give any fresh trading catalysts to the market due to which the Asian shares ended on a subdued note, and the Australian dollar saw a slump after Central Bank’s possibility of a rate cut.

With the markets around China and several markets closed for Lunar New Year Holiday, the MSCI’s broadest index of Asia-Pacific shares did not move much outside Japan. While Nikkei gained by 0.3%. In the other markets, Dow ended with a rise of 0.68%, Nasdaq increased by 0.74 % and S&P 500 gained by 0.47%. The treasury bonds also increased due to the US data showing US service sector index of 56.7. The US dollar held firm and ended at 96.104 above last week’s 95.162. However, it fell short by 0.1% compared to yen.

What was said in Trump’s State of the Union Speech?

Trump in his Tuesday speech vowed to build the border wall in the Mexican border and said that the Democratic attempts at ‘ridiculous partisan investigations’ could potentially dent US prosperity. Moreover, there was no mention of any real progress made between China and the US in the trade negotiations which did not help the investors in any way. COO at Rakuten Securities, Sydney said that ‘The market had much more hopes that he would come up with something concrete. We didn’t get it’.

There is another round of negotiations and trade talk that is likely to start in Beijing next week to look for a deal on averting the increase in taxes on Chinese products by the United States and also look for a deal on the American IP row. The talks are to be held before the Mar’ 2 deadlines. There is also reports that the talks will be headed by Steve Mnuchin who is the Treasury Secretary and by Robert Lightizer who is the US Trade Representative.

Why Aus Dollar slumped?

The Australian shares rose by 0.5%, but the Australian dollar fell by 1% to reach its one-week low of $0.7153 after Reserve Bank Of Australia said that there might be rate cuts if unemployment increases and inflation is low though the bank is optimistic about the economic growth. The RBA governor in his speech said that ‘Over the past year, the next-move-is-up scenarios were more likely than the next-move-is-down scenarios. Today, the possibilities appear to be more evenly balanced’.

Paul AlbinTrump Speech: Asian Shares Subdued, Aussie Dollar Falls
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Quadriga Founder Dies And Millions Of Dollars Frozen

Gerold Cotten aged 30 who is the founder of a Canadian digital platform that trades cryptocurrencies died prematurely in December and about $137.21 million in digital currency is now frozen in user’s accounts as he was the only person who had the password to gain access. According to the Facebook page of the company, Quadriga CX, Cotten died due to issues which resulted from Chron’s disease. The company’s Facebook page that announced the death of its founder on Jan 14 said that he died while he was volunteering in an orphanage in India.

Quadriga which trades in Litecoin, Bitcoin, and Ethereum has about 363,000 users registered on the platform and of which 115, 000 users are affected as their accounts are frozen which is worth Canadian $250 million. An affidavit was filed for creditor protection last week in the Nova Scotia Supreme Court. In the affidavit filed on behalf of the company by Cotten’s wife Jennifer Robertson, she said that the main computer on which he worked on has a ‘cold wallet’ of cryptocurrencies and that it is only accessible physically and not online. That essentially means that after the founder’s death, more than C$180 million coins are in cold storage. She said that she is not aware of the password or the recovery key and that she had no involvement in her husband’s business. Even after searching repeatedly and thoroughly she could not find the password written down anywhere. Robertson in the same affidavit has claimed that she has contacted experts and has had ‘limited success in recovering a few coins and some information from the computer and cell phones.

The reason behind the company being in the crisis is in the light now, is because of the way the cryptocurrency funds are stored. For quicker access and for making payments or withdrawals the currency is stored in hot wallets and to protect it from hackers, and stealers funds are kept in cold wallets. Cold wallets contain more money and are used only when there is a shortage of funds in the hot wallets. In this particular case, the CEO of Quadriga has stored all the currencies in cold wallets, and he is the only person who has the password for these transactions. The laptop that was used for moving finds from hot wallet to cold wallet by Cotten is locked and encrypted, and that leaves the exchange paralyzed after his death.

Paul AlbinQuadriga Founder Dies And Millions Of Dollars Frozen
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Chinese Government to use Blockchain for Food and Drug Administration

As per a leading official newspaper, the Food and Drug Administration of the Chinese Chongqing Yuzhong District is looking forward to making use of blockchain technology for its day to day operations.

Primarily, the idea is to apply the blockchain technology for a robust supervising process which would in a way strengthen food and drug quality assurance with better control on the product life cycle and steps for anti-counterfeiting measures.

Deng Ke, who is the CEO of Prime Number Chain Technology Chengdu Co confirmed that the company is in the process of developing blockchain which will be used by the government. This would not only help improve the government’s various regulatory steps and measures but will also improve the efficiency of the supervision to a great extent. The blockchain traceability system will provide a centralized management system for managing traceability information. This would make it easy for enterprises seeking permit queries and information about products.

In one of the latest developments, China’s Cyberspace Administration has designed new regulations for blockchain firms that are operating in the country.

Recently, it was in the news that China’s self-regulatory financial institutions and the China Banking Association is looking forward to launching a blockchain-based platform for greater efficiency across sectors. It is called “China Trade Finance Inter-bank Trading Blockchain Platform” which aims at using blockchain to make transactions, trade finance and other financial services very efficient.

Paul AlbinChinese Government to use Blockchain for Food and Drug Administration
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