Page 33 – The Business Pinnacle

Subway Chain Acquired by Roark Capital for $9.5 Billion

by Rahil M August 25, 2023

written by Rahil M

Subway boasts over 37,000 restaurants across more than 100 countries.

Private equity firm Roark Capital has reached an agreement to acquire Subway, the renowned U.S. sandwich chain, in a deal that sources familiar with the matter value at up to $9.5 billion, inclusive of debt. The completion of this deal follows a protracted auction process that began in February and attracted attention from multiple private equity firms. The utilization of an earn-out agreement proved pivotal in securing Roark’s deal for Subway.

The full valuation of the deal will be contingent on Subway’s cash flow attaining specific milestones over a span of two or more years post-closure, sources reveal. Excluding the earn-out stipulation, the deal is valued at $8.95 billion. Earn-out structures, though relatively uncommon in the consumer and retail sector, are gaining traction as a means to reconcile discrepancies in valuation in the current challenging M&A landscape.

This unique arrangement played a crucial role in bridging the gap between Roark’s valuation and the expectations of the DeLuca and Buck families, who have owned Subway since its inception nearly six decades ago. While the families had aspired for a valuation surpassing $10 billion, some private equity firms assessed the brand’s value as lower due to perceived saturation in its U.S. operations.

Roark Capital emerged triumphant over a competing consortium led by buyout firms TDR Capital and Sycamore Partners. The rival offer from TDR Capital and Sycamore Partners encompassed $8.75 billion with an earn-out provision and $8.25 billion without.

Roark, a holder of other restaurant franchises including sandwich chain Jimmy John’s, will provide Subway’s owners with a breakup fee equivalent to 4% of the deal’s value if antitrust regulators obstruct the agreement.

The deal’s contract encompasses a 12-month period for its finalization. Roark’s perspective is that the restaurant market’s fragmentation would mitigate any competition concerns.

With more than 2,600 establishments across 43 U.S. states, Jimmy John’s is another subsidiary under Roark Capital’s control. In contrast, Subway boasts over 37,000 restaurants across more than 100 countries.

While both Roark and Subway have refrained from commenting on the deal’s terms, Roark presently holds Inspire Brands, which oversees various restaurant chains including Arby’s, Baskin-Robbins, and Buffalo Wild Wings.

Roark’s expertise in nurturing restaurant brands is anticipated to be beneficial, particularly in the U.S. market where Subway’s performance has yet to regain its peak from previous years.

Tax considerations played a role in Subway’s decision to sell. Following the passing of co-founder Peter Buck in 2021, his estate donated his 50% stake in the privately owned company to his charitable foundation. This strategy served as a safeguard against taxes associated with the stake’s sale.

Founded in 1965 by Fred DeLuca and family friend Peter Buck, Subway’s ownership has remained with the founding families since its inception in Bridgeport, Connecticut. The company, headquartered in Milford, Connecticut, has initiated operational improvements to address outdated décor and profit challenges faced by franchisees.

Subway has been actively repositioning itself through menu overhauls and strategic marketing campaigns to drive growth. In a bid to evolve, the chain aims to shift away from its reliance on small franchisees operating only one or two outlets, a segment often family-run and financially strained.

Throughout the first half of 2023, Subway recorded a 9.85% surge in same-store sales. Its trailing 12-month earnings before interest, taxes, depreciation, and amortization stand at around $800 million.

JPMorgan Chase and the law firm Sullivan & Cromwell LLP have been advising Subway, while Roark Capital has received counsel from Paul, Weiss, Rifkind, Wharton & Garrison LLP. Morgan Stanley has led the acquisition financing efforts. In a transformative move for both entities, Roark Capital’s acquisition of Subway signifies a step toward restructuring and rejuvenating the iconic sandwich chain’s operations and growth trajectory.

August 25, 2023 0 comments

BRICS Announces Historic Expansion to Strengthen World Influence

Development Commerce Money Market

BRICS Announces Historic Expansion With 6 New Members to Strengthen World Influence

by Rahil M August 25, 2023

written by Rahil M

The expansion of the BRICS group also has profound implications for global economic affairs.

Leaders from Brazil, Russia, India, China, and South Africa, collectively known as the BRICS nations, have embarked on a historic endeavor to expand their bloc’s influence on the global stage. This momentous decision comes after a summit held in Johannesburg this week, where the inclusion of Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the United Arab Emirates (UAE) was confirmed. This expansion, slated to take effect from January 1, marks the first enlargement of the BRICS group since its inception in 2010.

The decision to include these major emerging market nations, along with the existing BRICS members, reflects a strategic move to enhance economic clout, reshape the global financial architecture, and foster an alternative to the prevailing international system centered around US hegemony.

South African President Cyril Ramaphosa, the host of the summit, announced the consensus reached among the leaders. As the world’s largest oil exporter, Saudi Arabia joins Russia, Iran, UAE, and Brazil in creating an amalgamation of powerful energy producers and prominent consumers from the developing world. This coalition not only holds significant sway in energy markets but also possesses the potential to reshape the dynamics of global trade.

The expansion of the BRICS group also has profound implications for global economic affairs. In contrast to the market-oriented approach of the Group of Seven (G7), the BRICS, with their diverse economies, brings a fresh perspective. As BRICS gains prominence, it could contribute to the formation of a more multipolar global economy.

Hasnain Malik, a strategist at Tellimer in Dubai, emphasizes the distinction between the use of the US dollar as a trading currency and its role as a reserve currency. While alternatives to the dollar in trade are being explored, its status as the world’s primary reserve currency remains largely unrivaled due to factors like institutional credibility and convertibility.

China’s pivotal role in driving this expansion is evident, backed by Russia and South Africa. However, the move has also raised concerns. India expressed apprehensions about becoming overshadowed by China’s dominance, while Brazil worries about potentially alienating Western nations.

Charlie Robertson, head of macro strategy at emerging-market investment firm FIM Partners, noted that the BRICS group, formed in 2009-10, has achieved relatively little thus far. However, the establishment of the New Development Bank (NDB) has been a significant achievement. The bank’s membership expansion holds promise for injecting capital and fostering cooperation among developing nations. Countries like Saudi Arabia, UAE, Egypt, Argentina, Ethiopia, and possibly Iran stands to both contribute to and benefit from the bank’s initiatives.

Beyond the immediate BRICS group, more than 20 nations from the Global South expressed their formal interest in joining this influential alliance. Indonesia, although deferring its membership for consultation with the Association of Southeast Asian Nations (ASEAN), is poised to potentially become a member in the near future.

Chinese President Xi Jinping hailed the expansion as a historic event that heralds a new era of cooperation among developing nations. Indian Prime Minister Narendra Modi pledged to work closely with aspirant members to facilitate their inclusion in the grouping.

Notably, the inclusion of Saudi Arabia, the UAE, and Egypt underscores their aspirations for global governance. Hasan Alhasan, Research Fellow for Middle East Policy at the International Institute for Strategic Studies, points out that these nations seek to exert leadership and further their global ambitions through this alliance. However, this strategic cooperation doesn’t entail a departure from their existing security partnership with the US. Instead, they are embracing a more nuanced approach, building coalitions based on specific issues, aligned with their national interests.

The expanded BRICS group ushers in a new chapter in global diplomacy and economic cooperation. The addition of Saudi Arabia, Iran, Egypt, Argentina, Ethiopia, and the UAE not only bolsters BRICS economic strength but also broadens its geographic and geopolitical influence. As these nations integrate into the alliance, the BRICS group assumes a more pronounced role in shaping the contours of the global economy, trade, and international relations. The challenges ahead, including aligning diverse interests and priorities, will require astute diplomacy and collaboration among the members. Nevertheless, this expansion reflects the evolving nature of international alliances and the quest for a more multipolar world.

August 25, 2023 0 comments

Industry Eng & Tech

India Sets Historic Milestone, Chandrayaan-3 Accomplishes Unique Moon Landing

by Rahil M August 24, 2023

written by Rahil M

The Chandrayaan-3 mission, aptly named after “mooncraft” in Sanskrit, has achieved an unprecedented lunar landing, making India the pioneer in reaching the moon’s elusive southern polar region.

Launched nearly six weeks prior, the Chandrayaan-3 mission garnered enthusiastic support from thousands of spectators around the globe.

India has soared to new heights in the realm of space exploration, accomplishing a remarkable feat that cements its position as a formidable contender in the global space race. The Chandrayaan-3 mission, aptly named after “mooncraft” in Sanskrit, has achieved an unprecedented lunar landing, making India the pioneer in reaching the moon’s elusive southern polar region.

With resounding success, the Chandrayaan-3 spacecraft gradually guided its Vikram lander to touch down at 4:34 pm UAE time near the enigmatic lunar South Pole. This monumental achievement not only adds a crowning jewel to India’s space program but also marks a historic milestone in the annals of space exploration, showcasing an unprecedented accomplishment that no other space agency has achieved.

This triumphant event follows India’s previous endeavor in 2019, a mission that faced setbacks. Remarkably, this achievement comes just days after Russia’s Luna 25 moon mission aimed at the same southern lunar region ended in an unfortunate crash landing.

Launched nearly six weeks prior, the Chandrayaan-3 mission garnered enthusiastic support from thousands of spectators around the globe. Unlike the expedited timelines of the Apollo missions of the 1960s and 1970s, India’s journey to the moon unfolded over an extended period, employing less powerful rockets compared to the ones employed by the US during that era.

Adopting a strategic orbit-around-Earth approach, the spacecraft gained crucial acceleration before embarking on its month-long trajectory to its lunar destination. The Vikram lander, a pivotal component of the mission, separated from its propulsion module and swiftly began transmitting lunar surface images after entering lunar orbit on August 5.

The Indian Space Research Organization (ISRO) effectively conveyed through social media that the mission was proceeding as planned, with the mission control complex teeming with energy and excitement in anticipation of this historic achievement.

Despite a relatively modest aerospace budget, India has made substantial strides in its space program since its inaugural moon orbit in 2008. The Chandrayaan-3 mission, with a cost of $74.6 million, underscores India’s cost-effective and ingenious approach to space engineering.

Experts attribute India’s cost-efficiency to its shrewd adaptation of existing space technology and the availability of a pool of skilled engineers.

India made history in 2014 as the first Asian nation to successfully place a satellite into Mars’ orbit. India’s ambitions continue to reach greater heights, with plans for crewed space flight initiatives, including uncrewed test flights slated for 2024.

The current Chandrayaan-3 lunar mission represents a significant leap in India’s exploration of the relatively uncharted lunar south pole, underscoring its profound contributions to advancing scientific understanding.

This triumphant landing, accomplished by the Chandrayaan-3 mission, places India in the esteemed company of the US, Russia, and China as the only nations to achieve a controlled landing on the lunar surface.

The mission’s robotic vehicle, the Pragyan rover, weighs 26 kilograms and is equipped with a range of cutting-edge instruments. Designed to operate for 14 days, equivalent to one lunar day, the rover’s primary mission involves analyzing the chemical composition of the moon’s surface and searching for water, a vital resource for further space exploration.

India’s ISRO has undeniably joined the elite league of space pioneers with this exceptional lunar landing achievement. As the Vikram lander’s side panel gracefully unfurls, revealing a ramp poised to deploy the Pragyan rover onto the lunar terrain, a new chapter in space exploration unfolds. Powered by solar energy, Pragyan is on a tight schedule to maximize its exploration before the moon’s frigid night descends. Crucially, the rover maintains constant communication with the lander, which in turn relays invaluable information back to Earth. This intricate interplay of technology demonstrates the collaborative effort and exceptional ingenuity that define India’s monumental achievement in reaching the moon’s southern polar region.

August 24, 2023 0 comments

Development Health Industry

Fukushima Prepares to Release Treated Wastewater into the Pacific Ocean on Aug 24 Amid Global Concerns

by Rahil M August 23, 2023

written by Rahil M

The need for releasing this substantial volume of water arises due to the projected depletion of storage tank capacity by early next year.

The Fukushima Dai-ichi nuclear plant, a site marked by twisted reactor units and damaged tanks, stands as a somber reminder of the catastrophic nuclear disaster that unfolded in 2011. This disaster has not only left its mark on the environment but has also come at a hefty cost of approximately 12 trillion yen ($83 billion). Despite ongoing efforts, the impact of this calamity continues to reverberate.

Within this grim landscape, massive cranes dot the vicinity of Tokyo Electric Power’s (Tepco) decimated facility, while enormous dome-like structures provide cover to certain areas. These measures are part of the painstaking work to handle the hazardous task of extracting radioactive fuel debris.

Amidst the physical remnants and extensive efforts lies a less conspicuous yet crucial element: a narrow 10-centimeter (4-inch) pipe. This unassuming conduit plays a pivotal role in channeling wastewater, a byproduct of the cooling process for the affected reactors, through a treatment procedure ultimately leading to its release into the Pacific Ocean.

This facet of Japan’s decommissioning process has ignited substantial controversy, particularly in relation to the nation’s plan to discharge over 1 million cubic meters of treated radioactive water into the sea. This volume is equivalent to filling 500 Olympic-sized swimming pools and is presently stored in around 1,000 tanks.

Prime Minister Fumio Kishida confirmed that this discharge, scheduled to begin on August 24, 2023, is subject to favorable weather and sea conditions. Kishida affirmed Japan’s commitment to ensuring the safe execution of the proposal, even if it takes several decades to complete the process.

Global Concerns and Tensions

China has vehemently opposed Japan’s plan, threatening restrictions on seafood imports, and sparking consumer boycotts of Japanese products. South Korea, while backing Japan’s strategy, has witnessed public protests against the discharge plan. The international implications of this decision are highlighted by South Korean President Yoon Suk Yeol’s statement, emphasizing that any issues would impact all countries across the globe.

Necessity of the Fukushima Wastewater Discharge

The need for releasing this substantial volume of water arises due to the projected depletion of storage tank capacity by early next year. Furthermore, the extensive decommissioning process restricts the addition of more massive vessels. Such discharges of cooling water from nuclear plants are commonplace in the industry.

The International Atomic Energy Agency (IAEA) noted that the controlled release of treated water into the Pacific Ocean would have minimal radiological effects on the environment and people. This assessment followed a comprehensive two-year safety review, providing approval for Japan’s approach.

Detailed Discharge Process

The release of treated water spans approximately 30 years and comprises several intricate stages:

Measurement and Confirmation – The contaminated water, a mix of rain, groundwater, and water used for cooling, is processed through the advanced liquid processing system (ALPS), reducing concentrations of radionuclides.
Transfer and Dilution – The treated liquid is mixed with seawater, ensuring tritium concentration remains within acceptable limits set by authorities.
Further Testing – Independent analysis and testing by entities like Kaken and the Japan Atomic Energy Agency span about two months.
Discharge – Diluted water is finally released into the Pacific Ocean through an underwater spout located approximately 12 meters below the sea surface.

This deliberate and gradual process aims to ensure safety and transparency. The capacity of Tepco to release treated water daily is only a fraction of the seawater intake, making the dilution process necessary.

Promoting Understanding and Transparency

Prime Minister Kishida recognizes the need to address both domestic and international concerns regarding the discharge process. This issue holds immense significance as Japan simultaneously seeks to reinvigorate its nuclear sector and enhance energy security. Kishida has pledged to provide transparent explanations and information to foster understanding, not only within China but also across the global community.

As the Fukushima disaster’s effects continue to linger, the challenging task of managing the site and its aftermath is underway. Japan’s decision to discharge treated wastewater into the Pacific Ocean carries weighty implications, sparking both global concerns and tensions. The approach, while rooted in a comprehensive safety review, necessitates careful execution to address the legitimate concerns of various stakeholders, both within and outside Japan.

August 23, 2023 0 comments

Industry Eng & Tech Money Market

SoftBank’s Arm Files for IPO, Anticipated To Be 2023’s Biggest

by Rahil M August 22, 2023

written by Rahil M

The triumph of Arm’s IPO would deliver substantial gains for SoftBank’s founder, Masayoshi Son.

Arm Holdings Ltd., owned by SoftBank Group Corp., has taken a significant stride towards what is anticipated to be the largest initial public offering (IPO) in the United States this year. The company, renowned for its design of phone chips, is venturing into the realm of artificial intelligence computing.

In a regulatory filing that has been long-awaited, Arm disclosed that the IPO is being spearheaded by prominent financial institutions including Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Mizuho Financial Group Inc. Notably absent from this list is Morgan Stanley, a detail that caught attention.

The triumph of Arm’s IPO would deliver substantial gains for SoftBank’s founder, Masayoshi Son. This would be a significant recovery following the $30 billion loss incurred by the Vision Fund, attributed to the events of the previous year. The success of Arm’s IPO could also serve as a catalyst for other companies, either motivating them to advance their IPO plans or prompting them to delay, including enterprises such as Instacart Inc., Klaviyo, and Birkenstock.

Arm is set to initiate its roadshow during the initial week of September, followed by the pricing of the IPO in the subsequent week. While the specific terms of the share sale were not revealed in the filing, market speculations estimate a valuation range of $60 – $70 billion. The company, headquartered in Cambridge, UK, has engaged in discussions with its major clients to explore their potential backing of the IPO.

Although Arm had initially aimed to raise $8 billion to $10 billion through the IPO, this target could be revised downwards due to SoftBank’s decision to retain a larger stake in the company post the acquisition of Vision Fund’s share. This transaction had valued Arm at more than $64 billion, as per the filing.

Despite this, the IPO has the potential to invigorate the subdued IPO market, providing it with a substantial boost after almost two years. If successful, this listing would become the largest in the US since Rivian Automotive Inc.’s $13.7 billion offering in October 2021. The IPO could potentially come close to, or even surpass, the largest-ever IPOs in the tech industry: Alibaba Group Holding Ltd.’s $25 billion offering in 2014 and Meta Platforms Inc.’s (formerly known as Facebook Inc.) $16 billion debut in 2012.

The target valuation for SoftBank’s Arm is indicative of the confidence in its prospects within the AI chip market. This aligns with the current industry trend toward artificial intelligence chips and generative AI. Notably, Nvidia Corp., a leading chipmaker, has achieved a staggering valuation of $1.2 trillion due to its engagement in this sector.

“A strong performance from Arm will not only be a major windfall for SoftBank but also reinforce its AI strategy by showing the market hype around AI hasn’t waned,” said Kyle Stanford, an analyst at PitchBook.

While Arm’s technology is instrumental in almost every smartphone, it may not be well-known among consumers. The company specializes in providing the blueprints necessary for designing microprocessors and licenses technology known as instruction sets, which dictate how software programs interact with these chips. Arm’s technology stands out due to its power efficiency, making it a ubiquitous choice for smartphones, where battery life is of utmost importance.

In the past year, Rene Haas assumed the role of Arm’s CEO, and his focus has extended beyond the smartphone domain, which has encountered stagnation in recent years. Haas has set his sights on advanced computing, particularly chips for data centers and AI applications.

Chips designed for these applications tend to be among the most lucrative and costly in the industry. Amazon.com Inc. has embraced Arm-based chips for its Amazon Web Services due to their efficiency in terms of energy consumption and economics. These chips are utilized by 40,000 AWS customers.

After its entry into trading, SoftBank will remain the majority shareholder of Arm. The Vision Fund, under the banner of SoftBank in Tokyo, has acquired the significant majority of the Vision Fund’s 25% stake in Arm for $16.1 billion. The filing cautioned that this transaction might not provide an accurate reflection of Arm’s share price post the IPO.

The filing also confirmed that Arm experienced a slight decline of approximately 1% in its revenue during the last fiscal year. The company’s sales reached $2.68 billion for the year ending March 31, according to the filing.

The wider chip industry continues to grapple with a sales downturn, compounded by excess inventory. The smartphone market, in particular, has been severely affected. Qualcomm Inc., one of Arm’s major customers, provided a disappointing forecast for the most recent quarter, leading to a decline in its stock value. Even Apple Inc.’s esteemed iPhone has witnessed a slowdown in demand.

Arm’s business could also be influenced by tensions with China. The company acknowledged export restrictions from the US and the UK as potential risks, as these restrictions could hinder the sale of its Neoverse processor in China.

As it prepares for trading on the Nasdaq Global Select Market under the symbol ARM, Arm intends to rename itself “Arm Holdings Plc.” The filing confirmed that the four top banks involved in the IPO will function as joint book-running managers of the offering. In an unusual departure from the norm, these four institutions will share the fees equally.

Describing itself as an “engineering-first company,” Arm emphasized its commitment to research, design, and technical innovation. With over 4,753 employees – around 80% of its global workforce – dedicated to these aspects, the company holds approximately 6,800 issued patents and has nearly 2,700 patent applications awaiting review on a global scale.

During the past fiscal year, Arm-based chips were adopted by more than 260 companies including industry giants such as Amazon, Alphabet Inc., Qualcomm, and Advanced Micro Devices Inc. The company maintains long-standing relationships with its top 10 customers, measured by royalty revenue, extending over two decades on average.

As the tech industry witnesses a surge in interest in AI, companies are increasingly seeking suitable chips to facilitate complex software operations. Arm underscores that each processor it designs is optimized for accelerating AI and machine learning technologies. The company’s processors already incorporate these capabilities, and Arm has initiated efforts to further enhance its performance.

In pursuit of this goal, SoftBank’s Arm is collaborating with Alphabet, Cruise (an autonomous driving company), Mercedes-Benz, Meta, and Nvidia to deploy Arm technology capable of running AI-based software.

Established in 1990 as a joint venture between Acorn Computers, Apple, and VLSI technology, Arm was publicly listed on the London Stock Exchange and Nasdaq from 1998 to 2016. In 2016, SoftBank acquired Arm for $32 billion.

SoftBank’s previous attempts to sell Arm to Nvidia in a $40 billion deal encountered regulatory challenges and opposition from Arm’s customers, leading Nvidia to abandon the deal. Subsequently, SoftBank devised a plan for the IPO.

August 22, 2023 0 comments

Financial Market Legal & Tax Money Market

China’s Evergrande Seeks Debt Relief in the US Amid $32 Billion Overhaul

by Rahil M August 21, 2023

written by Rahil M

Evergrande Group has sought protection under Chapter 15 of the United States bankruptcy code.

Evergrande Group, the Chinese real-estate developer has filed for bankruptcy protection in a US court. This decision comes as part of their debt restructuring process, as stress mounts over the country’s weakening economy and aggravating property crisis. The company is the world’s most heavily indebted property developer and an important piece of the country’s property crisis.

Evergrande Group has sought protection under Chapter 15 of the United States bankruptcy code, as a part of its restructuring process, which protects its US assets. Chapter 15 also provides mechanisms for dealing with insolvency cases involving more than one country. Even though the filing is procedural, the company had to do it as a part of its restructuring process since it is a developer with more than $30 billion in liabilities. The company’s offshore debt restructuring involves everything including collaterals, bonds, and repurchase obligations.

A series of misfortunes in the property sector

With Evergrande becoming the poster child of China’s unusual debt crisis in the property sector, a series of the country’s property developers have defaulted on their offshore debt obligations, causing incomplete homes, reducing investor confidence, and sales to go down in the world’s second-largest economy. Evergrande was China’s top-selling developer and slipped into a liquidity crisis in mid-2021.

Till then it accounted for a quarter of the economy. The crisis in the property sector also fueled the financial risk which could have a destabilizing impact on the economy that is already shattered by apathetic domestic consumption, increasing unemployment, faltering factory activity, and frail overseas demand. One of the major Chinese asset managers missed repayment obligations on some of the investment products, reports Reuters, and warned of a liquidity crisis. Country Garden, which is China’s largest private developer also flagged a liquid crunch recently. The crunching of the large players in the industry comes at a time when home sales, property investment, and new construction have shrunk for more than a year.

Morgan Stanley joined other major international brokerages in decreasing the prognosis for China’s economic growth in 2020; the firm now anticipates the nation’s Gross Domestic Product (GDP) to expand by 4.7%, a reduction from its previous forecast of 5%.

The Debt Restructuring Plan

In March, Evergrande unveiled its offshore debt restructuring strategy, anticipating a gradual revival of its operations and the generations of cash flow. At present, the company is actively seeking support from its creditors to finalize this process.

Later this month, Evergrande’s creditors are scheduled to vote on the proposed restructuring plan, potentially receiving approval from courts in Hong Kong and the British Virgin Islands during the initial week of September. In a significant move, an affiliated entity of the developer, Tianji Holdings, has submitted a request for Chapter 15 protection in the bankruptcy court situated in Manhattan.

According to the submission filed with the Manhattan bankruptcy court, Evergrande is in the process of seeking acknowledgment for its ongoing restructuring negotiations in various jurisdictions, including the Cayman Islands, Hong Kong, and the British Virgin Islands. As a part of its proceedings, the company has proposed the scheduling of a Chapter 15 recognition hearing, set to take place on September 20.

In a parallel occurrence last year, Modern Land (China) Co. Ltd, which is another Chinese developer, had also defaulted on the payments for its offshore bonds due in October 2021, leading to the filing of a Chapter 15 recognition petition under the bankruptcy code in New York. Trading of China Evergrande shares has been halted since March 2022. On Friday, the stock prices of Evergrande Services witnessed a sharp decline of over 12%, while China Evergrande New Energy Vehicle Group experienced an 8% drop.

August 21, 2023 0 comments

Development Commerce

BRICS Summit 2023: 5 Items On the Agenda to Look Out For

by Rahil M August 18, 2023

written by Rahil M

The BRICS Summit is scheduled for August 22-24.

Johannesburg, South Africa, is set to host a significant gathering next week as leaders from the BRICS group of nations, along with representatives from the Global South, convene to address the challenge of balancing Western dominance in the global order while simultaneously managing their own internal divisions. The summit, scheduled for August 22-24, will bring together more than 40 heads of state and government, including prominent figures like South Africa’s Cyril Ramaphosa, India’s Narendra Modi, China’s Xi Jinping, and Brazil’s Luiz Inacio Lula da Silva. Notably, Russian Foreign Minister Sergei Lavrov will be representing President Vladimir Putin, who will attend virtually due to concerns of potential arrest over alleged war crimes.

The following are the items on the agenda for the August Meet –

Expansion

At the forefront of the summit’s agenda is the discussion of expanding the current BRICS membership of Brazil, Russia, India, China, and South Africa. This proposal, previously deferred in earlier summits, is gaining renewed attention. Since its formation in 2009 and the subsequent inclusion of South Africa in 2010, BRICS has garnered interest from 23 additional nations, including Saudi Arabia, Indonesia, and Egypt.

However, tensions between China and India regarding the rapid expansion’s implications remain a point of concern, with India wary of the group potentially serving as China’s mouthpiece. Brazil is also cautious about alienating Western powers. Nevertheless, the opposition appears to have softened, with countries now advocating for transparent admission rules and predefined criteria for new entrants.

Challenging Dollar Dominance

The BRICS summit will rekindle discussions on reducing the dominance of the US dollar in global transactions, a topic that has emerged in past gatherings. The issue has gained prominence due to factors such as US interest rate hikes and Russia’s incursion into Ukraine, which led to a surge in the dollar’s value and commodity costs. Among the proposals to be considered are increased utilization of member countries’ national currencies in trade and the establishment of a common payment system.

While the prospect of a shared currency remains a long-term endeavor, several BRICS members have already initiated bilateral trade deals using local currencies. India, for instance, has partnered with Malaysia to enhance the use of the rupee in cross-border trade, while Brazil and China recently settled a trade agreement in their respective currencies.

Empowering Trade: The Role of New Development Bank

Over the past five years, trade between BRICS members surged by 56%, reaching a substantial $442 billion. The collective nominal GDP of these nations stands at $25.9 trillion, contributing 25.7% of global output. Central to facilitating these transactions is the New Development Bank (NDB), established in 2015 as an alternative to the International Monetary Fund and World Bank.

The NDB, headquartered in Shanghai, aims to diversify its funding sources and promote local currencies, with an estimated one-third of lending projected to be in local currencies by 2026. The summit will provide updates on these efforts and explore opportunities for capital contributions from Middle Eastern and Asian countries, expanding NDB’s influence.

Addressing Ukraine: Seeking Peaceful Resolution

Russia’s prolonged invasion of Ukraine, which spans over 18 months, remains a critical issue for discussion at the summit. While most BRICS nations have maintained a united front throughout the conflict, Brazil notably supported a United Nations resolution in favor of ending the war and Russia’s withdrawal. China, India, and South Africa, on the other hand, abstained. Former Brazilian President Lula emphasizes the bloc’s potential role in forging peace, and South Africa is driving an African initiative to resolve the combat.

Food Security: Battling Rising Prices

The summit will also address soaring food prices, a pressing concern for vulnerable populations worldwide. India’s and Russia’s recent actions have exacerbated the situation, with India imposing export curbs on rice to protect its local market and Russia discontinuing an agreement supporting safe Ukrainian grain exports. Such decisions impact regions like Asia and Africa, where rice contributes up to 60% of calorie intake. The summit will explore ways to enhance food security through initiatives like India’s hosting of an India Africa Forum and China’s plans for a similar event.

Anil Sooklal, South Africa’s BRICS ambassador, anticipates positive outcomes from these discussions, stating, “I believe both of them will make announcements, including around agriculture. I’m quite confident that some of these issues will be addressed positively.” As the leaders of BRICS and other Global South nations gather in Johannesburg, the world’s attention will be on their efforts to shape a more balanced global order while navigating internal complexities. The summit marks an opportunity for nations traditionally considered outliers to assert their presence on the global stage and challenge the established Western-centric framework.

August 18, 2023 0 comments

Development The Business Pinnacle

Dubai’s Journey to Becoming the Smartest City

by Rahil M August 17, 2023

written by Rahil M

Driving this vision forward is the Dubai Electricity and Water Authority (DEWA), a key governmental entity that has been at the forefront of delivering exceptional smart services since the inception of Dubai’s digital transformation strategy.

Dubai, the vibrant metropolis known for its towering skyscrapers, luxurious lifestyle, and boundless ambitions, is rapidly advancing towards its goal of becoming the world’s smartest city. At the heart of this transformation is the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Rule of Dubai. His Highness has initiated a unique digital transformation journey that aims to position Dubai as a global leader among smart cities, setting new benchmarks in innovation and sustainability.

A Vision for Elevated Quality of Life

Central to Dubai’s smart city vision is the commitment to enhancing the quality of life for its residents and visitors, striving to create the ultimate city for living, working, and tourism. Through the integration of cutting-edge technologies and the cultivation of a culture of continuous improvement, Dubai is dedicated to establishing a new standard of well-being that rivals that of the world’s most advanced urban centers.

Driving this vision forward is the Dubai Electricity and Water Authority (DEWA), a key governmental entity that has been at the forefront of delivering exceptional smart services since the inception of Dubai’s digital transformation strategy. A trailblazer in the integration of technology, DEWA earned the prestigious 100% paperless recognition from the Digital Dubai Authority in 2021, marking a milestone in its journey toward a digital future.

Revolutionizing Utility Customer Services

DEWA has harnessed the potential of disruptive technologies to revolutionize its digital services and create an unparalleled customer experience. With an array of digital channels including a user-friendly website and a comprehensive smart app available on platforms like Apple, Android, and Huawei, DEWA ensures accessibility to its services for everyone. Introducing innovations like Rammas, its virtual employee, DEWA provides services through channels such as Facebook, Google Home, robots, WhatsApp Business, and Amazon’s Alexa.

Recently, DEWA took a pioneering step by integrating ChatGPT into its services, becoming the world’s first utility to do so. This groundbreaking partnership with AI technology enriches customer interactions and exemplifies DEWA’s commitment to innovation. Additionally, DEWA’s venture into the Metaverse platform last year further underlines its dedication to shaping Dubai’s global digital leadership.

HE Saeed Mohammed Al Tayer, MD & CEO of DEWA, emphasizes the organization’s alignment with Shiek Mohammed’s digital vision: “DEWA continues to work to achieve the digital vision of His Highness Shiek Mohammed bin Rashid Al Maktoum… [we]seek to be a major contributor to achieving the Dubai Economic Agenda D33’s goal of turning the city into one of the top 10 digital economies in the world.”

Digital DEWA: Pioneering a Sustainable Future

At the core of DEWA’s ambitious digital strategy is its digital arm, Digital DEWA, launched in 2020. Comprising four pillars – Solar Energy, Energy Storage, Artificial Intelligence (AI), and Digital Services – Digital DEWA is empowered to create a sustainable and intelligent utility system. This includes optimizing energy and water resources, enhancing customer services, and ensuring a seamless customer experience.

Central to Digital DEWA’s operations is Moro Hub, a state-of-the-art data center and innovation hub that hosts data and provides services not only for DEWA but also for public and private entities in the UAE and the region. Offering advanced digital solutions such as cloud computing, big data, Internet of Things (IoT), and AI technologies, Moro Hub fuels DEWA’s digital initiatives and fosters excellence in service delivery.

Redefining Customer Care for the Digital Era

DEWA’s transformation extends to its Customer Care Centre, which has evolved into an interactive digital hub powered by Moro Hub. The Centre enables customers to smoothly complete transactions through multiple channels, supported by a 24×7 AI-powered Interactive Voice Response (IVR) system. This system streamlines services such as applications for electricity, water, and green charger services.

DEWA’s commitment to personalized service is exemplified by its digital database, catering to the specific needs of diverse customer groups, including people of determination and senior citizens. DEWA’s dedication to accessibility is evident through services like Ash’ir for speech and hearing-impaired customers, and Hayak, an online text & video-chat service available on DEWA’s smart app and website.

DEWA’s commitment to customer satisfaction is underscored by its recognition as one of Dubai Government’s top three call centers, as evaluated by the Dubai Model Centre in partnership with the Dubai Digital Authority.

Spearheading Sustainability Through Innovation

DEWA’s digital transformation goes hand in hand with its drive for sustainability. With a pledge to achieve carbon neutrality by 2050, DEWA actively promotes environmental awareness and the reduction of carbon footprint. Initiatives like ‘Smart Living’ empower customers to monitor and manage their energy consumption through digital dashboards, providing insights and timely alerts for potential leaks.

DEWA’s AI-powered IVR tool offers customers comprehensive surveys on electricity and water consumption. Campaigns such as ‘Make Smart Summer Choices Your Habit’ empower customers to make informed decisions, benefiting from smart apps and personalized tips to reduce waste and adopt sustainable practices.

Empowering the Community Digitally

DEWA’s commitment to excellence extends to its physical Customer Happiness Centers, which have transitioned into self-service hubs. Leveraging AI and robotic devices, these centers enable customers to independently complete transactions, while also providing video call assistance from Customer Happiness Officers.

With its commitment to customer-centric digital experiences, DEWA achieved a perfect score of 100% in the prestigious International Digital Customer Experience Standard (IDCXS: 2022) certification, further affirming its dedication to service quality. Maintaining an average speed of answering calls in just 15 seconds, DEWA ensures a swift response to customer needs.

Charting the Future with Artificial Intelligence

DEWA’s embrace of AI dates back to 2017 when it began incorporating AI into its services to enhance stakeholder experiences. With plans to utilize Generative AI, DEWA is continually enhancing its services. Furthermore, DEWA was the first utility globally and the first UAE government entity to implement ChatGPT technology, enriching its customer interactions.

The integration of ChatGPT has contributed to improving customer interactions, enabling efficient communication, understanding of needs, and prompt responses. This technology aligns with DEWA’s constant pursuit of excellence, echoing the forward-looking vision of Dubai.

Dubai’s journey to becoming the world’s smartest city is propelled by the innovation and vision of its leaders. DEWA, with its relentless commitment to technological advancement, sustainability, and customer satisfaction, plays a pivotal role in transforming this vision into reality. By embracing AI, fostering sustainability, and elevating customer experiences, DEWA exemplifies Dubai’s unwavering dedication to creating a smart and sustainable future for all. By combining visionary leadership, advanced technologies, and a dedication to excellence, Dubai’s transformation into a global smart city stands as a testament to what is possible when innovation and ambition converge.

August 17, 2023 0 comments

Money Market Banking Capital Market Financial Market

Global Wealth Faces First Decline Since 2008 Financial Crisis

by Rahil M August 16, 2023

written by Rahil M

Credit Suisse and UBS Jointly Release 2022 Global Wealth Report

Global wealth experienced an unprecedented decline of 2.4% in 2022, marking the first decrease since the 2008 financial crisis. The 14^th Global Wealth Report, a collaborative effort between Credit Suisse and UBS, revealed that the total global wealth dropped to $454.4 trillion last year. This decline was predominantly attributed to a substantial decrease in investment assets.

Wealth Per Adult Sees Drop, Inequality Declines

In tandem with the decline in global wealth, the report highlighted a 3.6% reduction in wealth per adult globally, reaching $84,718. Amidst these challenging figures, a silver lining emerged as wealth inequality also showed signs of abating. The report showcased a decrease in the wealth share of the global top 1%, which fell from 45.6% to 44.5%. This shift was largely driven by the losses incurred by the wealthiest individuals in the backdrop of tumbling stock and bond markets. In contrast, global median wealth, a more accurate representation of an average individual’s financial situation, experienced a positive trajectory, increasing by 3% to reach $9,167 per adult.

Millionaires’ Count and The Global Wealth Report

The report indicated a decline in the count of millionaires, measured in U.S. dollar terms, by 3.5 million, bringing the total to 59.4 million. However, this number doesn’t account for the 4.4 million individuals whose wealth crossed the $1 million mark due to inflation. Spanning approximately 200 countries and encompassing individuals ranging from blue-collar workers to billionaires, the Global Wealth Report’s 2022 edition offered insights into the wealth of around 5.4 billion adults. It is noteworthy that this report, a fixture conducted solely by Credit Suisse until now, was conducted jointly with UBS post the latter’s acquisition of Credit Suisse.

Insights into Global Private Wealth and the Shifting Economic Landscape

The primary objective of this meticulous research, regarded as one of the most comprehensive of its kind, is to provide insights into the landscape of global private wealth. Paul Donovan, Chief Economist of UBS Global Wealth Management, emphasized the significance of these insights, especially in light of the evolving global economy that’s increasingly considering sustainability and equity alongside material aspirations. Donovan underscored the pivotal moment the world is currently navigating, characterized by profound structural changes.

Impact of Market Fluctuations and Regional Disparities

The dynamics of global wealth are molded by a convergence of factors, including fluctuations in prices, currency valuations, inflation rates, and interest levels. The most substantial influence on global wealth in 2022 was the staggering 6.8 drop in global stock and bond markets, resulting in a staggering $19 trillion loss. The impact of this decline was particularly pronounced in North America and Europe, which collectively witnessed a staggering loss of $10.9 trillion. Leading the list of countries affected by these losses was the U.S., home to the largest population of ultra-rich individuals. Following suit were Japan, China, Canada, and Australia.

Rise of Middle-Income Countries and Projections for the Future

Interestingly, the report shed light on the ascent of middle-income countries, with Latin America witnessing a 2.4% surge in wealth attributed to both currency gains and robust economic growth. Despite the challenges posed by market volatility and inflation, the Global Wealth Report presented an optimistic outlook for the next five years. It projected a robust 38% increase in global wealth, amounting to a staggering $629 trillion by 2027. This growth trajectory is expected to be primarily fueled by a rapid expansion of wealth in emerging economies, contributing significantly to the drive for equity in wealth distribution.

The Global Wealth Report paints a picture of shifting dynamics in global wealth. The future trajectory of global wealth remains uncertain as various factors continue to shape this intricate tapestry of financial prosperity.

August 16, 2023 0 comments

Banking Commerce Financial Market

SoftBank in Talks to Acquire Remaining Stake in Arm Ltd from Vision Fund 1

by Rahil M August 14, 2023

written by Rahil M

Arm’s upcoming IPO holds promise not only for VF1 but also for SoftBank.

SoftBank Group Corp is reportedly in discussions to acquire the remaining 25% stake in Arm Ltd that it doesn’t directly own from Vision Fund 1 (VF1), a $100 billion investment fund raised by SoftBank in 2017. This move could potentially yield substantial returns for investors who have awaited strong profits. Currently, SoftBank holds 75% of Arm’s stake and plans to list the chip designer on Nasdaq next month at a valuation ranging from $60 billion to $70 billion.

If the negotiations succeed, VF1 investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, stand to gain an immediate windfall. Alternatively, selling VF1’s Arm shares in the stock market post the initial public offering (IPO) could take several years, posing higher risks due to possible share price fluctuations.

This move comes amidst SoftBank’s efforts to stabilize its financial position, especially after losses incurred from investments in startups like WeWork Inc and Didi Global. The potential windfall for VF1 investors could enhance SoftBank’s prospects of securing capital from them in the future, although there are no immediate plans for this.

CEO Masayoshi Son, who has hired investment bank Raine Group for advice, has recused himself from VF1’s deliberations on this matter to ensure an independent decision. VF1’s investment committee and SoftBank’s investment advisory board are currently handling the negotiations.

The exact valuation for the Arm transaction remains undisclosed, and there’s a possibility that no agreement will be reached. If a deal materializes, SoftBank could retain a stake of 85% to 90% after the IPO, selling fewer Arm shares.

Arm’s upcoming IPO holds promise not only for VF1 but also for SoftBank, which faced losses due to declining valuations of its major holdings. SoftBank initially acquired Arm for $32 billion in 2016 and later sold a 25% stake to VF1 for $8 billion in 2017.

Despite challenges, SoftBank’s plans for Arm’s IPO continue following the collapse of a deal with Nvidia Corp for $40 billion last year. Arm’s business, primarily centered around licensing designs, has proven more resilient than the broader chip industry. Its technology is pervasive in smartphones and data centers, generating substantial royalty payments. Arm’s decision to list in the U.S. rather than London underscores its global significance.

Expanding on the potential benefits of SoftBank’s acquisition, a successful deal with VF1 investors could mark a strategic move for SoftBank. Not only would it provide an immediate boost to VF1 investors, but it could also solidify SoftBank’s relationship with these investors, potentially paving the way for further collaboration in the future. This could be particularly relevant for SoftBank’s Vision Fund 2 (VF2), which initially struggled to attract outside investors due to the losses incurred by VF1.

Moreover, by retaining a larger stake in Arm through this acquisition, SoftBank could maintain more control over the company’s direction and future growth. As the chip industry continues to evolve and expand into areas like artificial intelligence and IoT, having a significant stake in a prominent chip designer like Arm could position SoftBank for Long-term success in these emerging markets.

Despite the potential advantages, it’s important to note that negotiations are ongoing, and the exact terms of the deal remain uncertain. Both SoftBank and VF1 have not provided official comments on the matter, making it crucial to await formal announcements regarding the outcome of these discussions. SoftBank’s discussions to acquire the remaining stake in Arm Ltd from VF1 mark a significant development in the tech investment landscape. If successful, this move could provide immediate benefits to VF1 investors, potentially bolster SoftBank’s relationship with them, and offer strategic advantages by allowing SoftBank to retain a larger stake in Arm. As the negotiations progress, the tech and investment communities will be eagerly awaiting further updates on this potential deal.

August 14, 2023 0 comments

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