Paul Albin

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.

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.”