Barclays launches £100m fund for fast growth UK tech firms

Barclays launched a new £100 million pound (S$203.3 million) fund on Friday to lend cash to fast growing British technology firms who may not want to sell an equity stake. 

PHOTO: BLOOMBERG

1 May8:03 AM

[LONDON] Barclays launched a new £100 million pound (S$203.3 million) fund on Friday to lend cash to fast growing British technology firms who may not want to sell an equity stake.

Barclays said it will lend up to 5 million pounds for three years to technology firms that have secured venture capital financing, filling what it said was a gap in the way technology firms were financed in Britain.

It represents a debt finance option similar to those available to US tech firms but not widely available in Britain. It may be an attractive alternative for entrepreneurs who do not want to sell equity and create a more efficient capital structure, the bank said.

There has been strong growth in technology firms in Britain in recent years. Banks face competition from other sources such as peer-to-peer lenders and private equity firms to fund their growth, which is typically far more rapid than the traditional 15-year growth cycle for a business.

There has been a particular boom in financial technology start-ups in London, and investment in this area in Britain and Ireland was US$623 million last year, more than double the amount in 2013, consultancy Accenture estimated.

REUTERS

    
 

Telsa unveils battery to 'transform energy infrastructure'

      

1 May1:30 PM

[LOS ANGELES] Electric car pioneer Telsa Motors unveiled a "home battery" Thursday which its founder Elon Musk said would help change the "entire energy infrastructure of the world." The Tesla Powerwall can store power from solar panels, from the electricity grid at night when it is typically cheaper, and provide a secure backup in the case of a power outage.

In theory the device, which typically would fit on the wall of a garage or inside a house, could make solar-powered homes completely independent of the traditional energy grid.

"The goal is complete transformation of the entire energy infrastructure of the world, to completely sustainable zero carbon," Mr Musk told reporters shortly before unveiling the Powerwall in a warehouse outside Los Angeles.

Initially the device, which will cost US$3,500, will go on sale in the United States later this year. But the aim is to roll it out internationally some time next year.

Germany is seen as a key market for the product - which is about 6 inches thick, 4 feet tall and 3 feet across - because it has among the highest take-up of solar energy in the world, Musk said.

But it could also be a huge boon for under-developed regions, where power is often unreliable at best, despite abundant solar energy - and he compared the potential to that of the way cellphone technology has expanded.

"It's analogous to the way mobile leap-frogged landlines," Mr Musk said.

"This is going to be really great for the poorest communities in the world," he said. "This allows you to be completely off grid."

AFP

      

British companies to invest US$400m in Cuba

Co-President of The Cuba Initiative, John Hutton, speaks during the inauguration of a business seminar in Havana, Cuba, on April 28, 2015.

PHOTO: EPA

1 May7:05 AM

[HAVANA] British companies will invest US$400 million in Cuba initiatives, in areas that reportedly include agriculture, tourist infrastructure and energy, a business delegation said Thursday.

Agreements were signed in Cuba during an economic forum that brought together 32 British companies.

British politician John Hutton, chairman of the Cuba Initiative project which brought the businesses together, said in Spanish-dubbed televised remarks that "we arrived at the right moment."

Local media reported that the investments would be made in agriculture as well as energy and tourist infrastructure, including a new golf course.

The golf course will be the island's second British-built facility after a US$350-million course in the resort town of Varadero, some 140km west of Havana.

The British delegation's trip follows on the heels of similar missions from the US states of Texas and New York.

Since the historic rapprochement between the United States and Cuba was announced in December, economic and diplomatic delegations have scrambled to send missions to the communist island.

Previous to the thaw, however, Cuba had already adopted a series of tax breaks for foreign investors in March 2014 in a bid to attract new investment.

Bilateral trade between Britain and Cuba totaled US$168 million in 2013, according to latest figures.

Britain sends more tourists to Cuba than any other European country, with around 150,000 visitors per year.

The Cuba Initiative has worked to strengthen relationships between the two countries since 1995.

AFP

    
 

Nepal earthquake toll climbs to 6,204: official

The death toll in Nepal from last weekend's devastating earthquake has risen to 6,204, the National Emergency Operations Centre said in its latest update on Friday. 

PHOTO: REUTERS

1 May11:39 AM

[KATHMANDU] The death toll in Nepal from last weekend's devastating earthquake has risen to 6,204, the National Emergency Operations Centre said in its latest update on Friday.

A further 13,932 people were injured in Saturday's 7.8-magnitude quake, added the centre.

More than 100 people in neighbouring India and China also died in the quake, officials say.

The Red Cross has warned of "total devastation" in remote areas near the epicentre, as Nepal's government struggles to deal with the scale of the disaster.

AFP

   
 

Bitcoin: It Is More Important Than You Think By Jason Voss, CFA

29 April 2015

Bitcoin: It Is More Important Than You Think

By Jason Voss, CFA

Few topics have captured the imagination of the financial press and the financial community over the last several years more than bitcoin and the tangent subject of alternative currencies. Despite the widespread coverage, alternative currencies remain poorly understood by investment professionals. At the 68th CFA Institute Annual Conference in Frankfurt, Charles G. Cascarilla, CFA, CEO and co-founder of itBit, a global digital currencies exchange, sought to advocate for the future of these money alternatives.

At first, Cascarilla explained, he thought of bitcoin as a global transaction network comparable to those that process credit card transactions. Now he believes it is much more than that.

Understanding Bitcoin and Digital Currencies

Open

Key to understanding bitcoin is the word open. Its open-source code is similar to that of Linux, so it is a living, breathing code base. It is open always. In addition, it is an open network with a distributed ledger where everyone can see what is taking place on the network and what has occurred in the past. By contrast, all previous and current transaction-processing networks are opaque and owned by individual entities.

Rapid Transaction Settlement

Transactions on the bitcoin network are settled every 10 minutes. This nearly instantaneous process removes much of the counterparty risk present in the current orthodox financial system. Also, the open and distributed network minimizes fraud because buyer and seller directly interact. This drives down costs in a very significant way — in a manner similar to how the internet changed how information was distributed. The internet facilitated the vast digitization of text, audio, images, video, and other content and made the exchange of such media nearly instantaneous. Yet, value remained very difficult to transfer. With bitcoin and other digital currencies, that is now changing: value can be instantly transmitted among multiple parties.

---

---

Sources of Bitcoin Value

Cascarilla emphasized that thinking of bitcoin solely as a currency is incorrect and leads to misunderstanding and questions like, “What is the value of bitcoin?” or “Is bitcoin a Ponzi scheme?” Cascarilla said that the real value of bitcoin (and other digital currencies) is the open ledger (which he referred to as capital “B”), as well as the nodes on the open ledger (which he referred to as little “b”). In bitcoin’s case, there will only ever be 21 million nodes on the network. The limited supply of these nodes leads to bitcoin’s value (so long as there is demand, of course). Currency is only one way to use the open ledger.

When looked at in this way, investors can recognize the opportunity offered by bitcoin: namely, its ability to disintermediate the closed ledgers of the global payment networks of Visa, American Express, MasterCard, Capital One, and so on — all of which represent $500 billion in market capitalization.

Bitcoin’s structure suggests three natural use cases:

1. Retail merchant processing
2. Remittance
3. Un(der)banked individuals

Retail Merchant Processing

Current closed-ledger payment networks charge 2.5%–3.5%, whereas bitcoin costs less than 1%. These fees are then contrasted with retail gross margins of just 5%–15%. So, the ability to lower the cost of payment network access can improve margins by 16%–50%! In fact, at $289 billion of annual processing, bitcoin is currently moving about as much value each year as the PayPal and Discover networks. However, the potential savings to the network is a whopping $210.9 billion, according to research conducted by Goldman Sachs.

Remittance

Bitcoin also has the potential to change the $550 billion global remittance network that moves moneys between countries via Western Union, MoneyGram, and the like. It is believed there is another $200-plus billion of hidden transactions. Here, the average transaction processing fee is around 10%. So, bitcoin could save the world around $70 billion if used for remittances. Much of that value is due to these networks touching, on average, nine transaction nodes, instead of bitcoin’s likely two or three nodes.

Un(der)banked Individuals

Even in the United States, approximately 20% of people do not have access to a bank account. In other nations, especially in the developing world, unbanked or underbanked communities are likely much larger. But bitcoin allows people to use their smartphones — which nearly everyone in the world has or will soon have available to them — to access a payment system. This is analogous to the situation in many of the emerging markets where people never had a land-based phone line before having a cellular-based phone. In emerging markets, people can now use a payment network without first having a credit or debit card.

Bitcoin and Digital Currencies in the Future

Blockchain technology can be used in many other applications, including the following examples:

• Smart contracts
• Certificates of authentication
• Issuing securities
• Micropayments

Smart contracts, certificates of authentication, and issuing securities are obvious applications for open-ledger technology. Currently, when buying assets (e.g., securities, real estate, art, and collectibles), it is difficult to assess the original source of these goods and the modifications to contracts and covenants or to ensure provenance. Other applications are copyrights, licenses, and authorship rights. Open ledgers could remove these obstacles.

Micropayments are a very interesting use case and have the potential to change the entire content world. Currently, all advertising is a form of rent on content usage. When you read an article on a non-subscriber site, you are served up advertisements to pay for that content because sites have been unable to ask for a micropayment for the content usage in a fast and convenient fashion. It is possible that, in the future, content will be charged for using micropayments and blockchain technologies. This dramatically changes the business model of content going forward.

Another example is the slow settlement periods of securities transactions. The slow exchange of capital is dealt with by collateral being pledged against trades as they settle over the course of three days. Clearly, having this much capital tied up on the sidelines is hugely inefficient.

Summary

Bitcoin and its blockchain technology are misunderstood by most investors. Specifically, its value lies not in its worth as a currency but in its open-ledger technology, as well as in the fixed number of nodes within that ledger. Ingenuity applied to this technology promises uses that are currently beyond human imagination.

---

All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo credit: W. Scott Mitchell

More Canadian families are highly indebted: Statscan

Tavia Grant, The Globe and Mail
11:23 AM, E.T. | April 29, 2015
Personal Finance

Tags: Household Debt

Follow this

A growing segment of Canadian families is highly indebted, leaving them more vulnerable to any economic shift such as a job loss, illness or rising borrowing costs.
More than a third, or 35 per cent, of families had a debt-to-income ratio above 2.0 as of 2012, meaning their overall debt level was at least twice that of their annual after-tax income, a new paper by Statistics Canada finds. Back in 1999, that share was 23 per cent.
The findings are similar to the Bank of Canada’s assessment of debt trends in Canada, which suggests much of the country’s debt is concentrated in a few households. It noted in December that 12 per cent of households have a total debt-to-income ratio above 250 per cent, and that though this portion has been steady in recent years, it is almost double 2000 levels. These one-in-eight households hold about 40 per cent of overall debt.
The Statscan paper come as Canada’s debt-to-income ratio has risen further, hitting a record 163.3 per cent in the fourth quarter of last year. The central bank has long cited household debt as a key risk to the economy, though it cut interest rates in January to counter another threat: lower oil prices.
The Statscan paper looks at trends in both household debt and assets held by Canadian families. It finds the value of both rose in the 1999-to-2012 period, though there were differences within types of families. Debt grew at a faster pace, for example, among those aged 35-to-44, couples with children under 18 and among people with mortgages.
By 2012, 71 per cent of all families had some debt, up from 67 per cent in 1999. (Its measure of debt includes mortgages and consumer debt like car loans, lines of credit, vehicle loans and student debt).
The median debt held by indebted families grew to $60,100 in 2012 from $36,700 in 1999, in constant dollars.
On the other side of the ledger, however, assets rose too. Median assets of families with debt rose by $179,800 over the same period to $405,200. (Its measure of assets include real estate and employer pensions).
This suggests “that the value of assets rose at least as rapidly as the value of debt for many Canadian families,” the study said.
In fact, it said, median assets climbed by 80 per cent while median debt rose by 64 per cent.
“Most of the increases in debt values were attributable to rising mortgage debt,” the paper said, adding that for assets, a big part of the increase was due to rising real estate values.
Thus the median debt-to-asset ratio remained “relatively stable” over the period, as the median Canadian family “had a debt corresponding to about one-quarter of its assets in both years. “
Such results suggest that Canadian families became more indebted over the period, “but did so against a backdrop of rising asset values, notably real estate worth.”
Though both debt and assets increased for nearly all types of families, the size of the changes wasn’t the same for all family types.
Here are some of the differences:

• among couple families with kids under 18, median debt more than doubled, while median assets increased by 86 per cent.
• families without children under 18 saw their median debt grow 88 per cent and median assets rise 78 per cent.
• among families whose major income earner was between 35 and 44 years old, median debt rose by 126 per cent while median assets grew 77 per cent.
• “for some family categories, increases in debt were not matched with a statistically significant rise in assets,” the paper said. This includes non-homeowners, single people and families whose main income earner was between 15 and 34 years old.
• net worth rose the fastest among families in the top income quintile as they saw relatively big increases in their assets and smaller growth in debt levels.

The study is based on the 2012 survey of financial security, which was also conducted in 2005 and 1999. It was written by Sharanjit Uppal, senior analyst at the agency’s labour statistics division, and Sébastien LaRochelle-Côté, Statscan’s editor-in-chief of Insights on Canadian Society.

GM puts the brakes on Camaro production at Oshawa plant

Jeff Lagerquist, BNN.ca
2:09 PM, E.T. | April 30, 2015
Industrials

Tags: Autos, Unifor (formerly CAW - Canadian Auto Workers), General Motors (GM), Jeff Lagerquist, U.S. Auto Industry

Follow this

General Motors of Canada Ltd. is putting the brakes on production of the Chevrolet Camaro at its Oshawa Ont. assembly plant as of Nov. 20, according to an according to an announcement Thursday. Approximately 1,000 positions - over a quarter of the Oshawa plant’s hourly workforce - will be eliminated throughout 2015 as parent company General Motors Co. (GM.N -1.27%) shifts Camaro production to its Grand River plant in Michigan.
GM plans to invest $5.4 billion into U.S. factories over the next three years.
GM Canada says it's working with Unifor, the union representing GM's assembly line workers, to offer retirement incentives to eligible staff. The Oshawa assembly plant currently employs approximately 3,600 workers, 2,100 of which are eligible for retirement incentives.
The move eliminates one shift on the plant’s “Flex Line” that also produces the Chevrolet Impala, Buick Regal, and Cadillac XTS. The Oshawa plant also assembles the Chevrolet Equinox and Chevrolet Impala Limited on its “Consolidated Line.”
Moving the Camaro to Michigan will cost GM about $200-million, which will most likely be felt in second quarter of 2015.
Filling the void left by the Camaro will have to wait until the company’s next labour contract with Unifor according to GM. That contract will be negotiated next year.
“GM Canada continues to examine a range of longer-term opportunities and competitiveness enhancements for [the] Oshawa Assembly working with Unifor, government, supplier and community partners to ensure our operations are as innovative and efficient and competitive as they can be,” said GM Canada in a statement to the media.
In addition to the Oshawa manufacturing operation, GM Canada owns the CAMI assembly plant in Ingersoll, Ont., which recently received an $800-million investment commitment from the company.
“I’m disappointed in the decision that GM made, obviously because there’s a 1,000 families tonight who are going to be worried. I understand some of these are going to be retirements and they will be voluntary, so that’s on the brighter side. GM is investing in Canada in the larger sense and it’s good to see investments in R&D, but overwhelmingly, I’m disappointed and I feel families are feeling it today,” said Transport Minister Lisa Raitt.
Finance Minister Joe Oliver downplayed the notion that the loss of the Camaro is connected to Ottawa’s sale of its remaining nearly 73.4 million shares in General Motors for about $3.26 billion ahead of the latest federal budget. He's denying the stock position was ever intended as a bargaining chip for labour issues.
“Every single government that owned shares sold them. We happen to sell them later at a higher price. We did save 50,000 jobs when we invested in the company and we always said this would be a temporary investment and it isn’t appropriate for the government of Canada to own private sector companies over the long term. And we wanted to reduce exposure of taxpayers,” said Oliver.

Japan's airlines diverge as ANA soars and JAL dips 

30 Apr4:02 PM

[TOKYO] Japanese carrier ANA said Thursday its annual net profit more than doubled on robust international business, but rival Japan Airlines saw its bottom line worsen as the weak yen undercut lower fuel prices.

ANA Holdings, the parent company of All Nippon Airways, said the soaring profit came after logging record revenue as an expansion at a downtown Tokyo airport allowed it to run more overseas routes.

It recorded a net profit of 39.2 billion yen (S$436.9 million), up 107.8 per cent from the previous year.

But Japan Airlines (JAL) said its fiscal-year net profit sank 10.3 per cent to 149.0 billion yen.

For the fiscal year to March 2016, ANA expects net profit to grow 32 per cent to 52 billion yen while JAL is bracing for a 3.4 per cent drop to 144 billion yen.

"JAL's profit decline for the fiscal year to March was partially due to a weak yen, which boosted fuel costs," said Katsuhiko Suzuki, analyst at Mizuho Securities.

A sharp drop in oil prices is good news for airlines, which often count fuel as their single-biggest expense.

But the Japanese yen weakened sharply from September and aviation fuel prices dropped dramatically only from October, JAL said.

For ANA, Suzuki said its expansion at Haneda Airport offset the negative impact of the weak yen.

For the current fiscal year, the two firms are expected to benefit from the sharp decline in oil prices, he said.

In the past year, ANA's revenue rose 9.1 per cent to a record 1.71 trillion yen, boosting operating profit by 38.7 per cent to 91.5 billion yen.

The robust earnings were "driven by further expansion of the group's international route network, tight cost control and the continued gradual recovery of the Japanese economy," the company said in a statement.

Domestic passenger revenue edged up 1.2 per cent to 683.3 billion yen while international passenger income rose a faster 18.5 per cent to 468.3 billion yen, ANA said.

JAL's overall revenue in the year increased 2.7 per cent to 1.34 trillion yen and operating profit climbed 7.7 per cent to 179.7 billion yen.

ANA has been in a spat with JAL over the allocation of landing slots at Haneda, after the one-time flag carrier emerged from one of Japan's biggest-ever bankruptcies following a government rescue.

ANA expects to grow bigger after throwing a lifeline to bankrupt domestic rival Skymark Airlines by taking a nearly 20 per cent stake.

Skymark, Japan's third-biggest airline which flies on domestic routes, filed for bankruptcy protection in late January in the face of potentially massive penalties linked to a cancelled US$2.2 billion jet order with Airbus.

The Skymark deal would expand ANA's landing slots and give it the upper hand in setting airfares, a factor likely to stabilise the firm's income, Suzuki at Mizuho Securities said.

AFP

      

VW gets new supervisory board members after Piech goes   

Volkswagen appointed two members of the Piech family to its supervisory board on Thursday, seeking to regain the initiative ahead of what is likely to be a tense shareholder meeting after a damaging public row at the helm of the carmaker. 

PHOTO: EPA

30 Apr9:24 PM

[LONDON] Volkswagen appointed two members of the Piech family to its supervisory board on Thursday, seeking to regain the initiative ahead of what is likely to be a tense shareholder meeting after a damaging public row at the helm of the carmaker.

Chairman Ferdinand Piech, a towering figure at VW for more than two decades, resigned last Saturday after losing a showdown he had provoked with Chief Executive Martin Winterkorn.

Louise Kiesling, MrPiech's niece, and Julia Kuhn-Piech, a board member at truckmaker MAN SE and also a member of the Piech family will take up their posts immediately, VW said.

The Piech family and the Porsche clan together hold a majority of voting shares in VW.

Mr Piech's departure has left a void at the top of Europe's largest automaker and a host of questions about the future of the company ahead which will be aired at VW's annual shareholder meeting on May 5. His wife Ursula also quit her board post.

"The search for a successor to Piech at the top of the supervisory board has utmost priority for investors," said Ingo Speich, a fund manager at Union Investment which holds 0.6 per cent of VW preference shares.

VW said the new members were appointed by a court in Braunschweig, Germany to fill the vacancies following a request by the carmaker's top management. VW's 20-seat supervisory board is evenly split between stakeholder and labour representatives.

REUTERS

      

Francois Michelin, who took French tiremaker global, dies at 88

Francois Michelin, the grandson of Michelin & Cie.'s founder and head of the French tiremaker for almost half a century, has died. He was 88. 

PHOTO: AFP

30 Apr7:30 AM

[PARIS] Francois Michelin, the grandson of Michelin & Cie.'s founder and head of the French tiremaker for almost half a century, has died. He was 88.

The company, based in Clermont-Ferrand in central France, confirmed the death in an emailed statement on Wednesday. No other details were given.

Under Michelin's leadership, the 126-year-old manufacturer expanded its global operations, especially in the United States, opening 25 factories outside France from 1960 through 1979. The success of its radial tire, called the Michelin X, was crucial in boosting revenue outside Europe and helped the company become the region's biggest tiremaker. He ran the tiremaker from 1955 to 2002.

"He was one of the greatest French industrialists in the postwar years," President Francois Hollande said in a statement. "He understood the importance of innovation and of long-term industrial development. By developing the radial tire, he transformed a family and regional company into one of the biggest French groups and one of its best-known."

Michelin also took the strategic decision, in 1976, to withdraw from the car business by selling French automaker Citroen to Peugeot. The merger led to the creation of PSA Peugeot Citroen, now Europe's second-biggest car manufacturer after Germany's Volkswagen. He decided to buy Uniroyal Goodrich Tire Co. in 1990 to strengthen his company's position in America. Michelin & Cie is also the publisher of restaurant and hotel guides.

"I would like to pay special tribute to this exceptional man who was universally respected for his values, his convictions and his vision," Michelin Chief Executive Officer Jean-Dominique Senard said in a written statement.

One of the former Michelin CEO's notable hirings was Carlos Ghosn, now CEO of both Renault and Nissan. Ghosn, who took up his first job in 1978 and stayed at Michelin for 18 years, helped develop its activities in North America.

"I want today to pay tribute to the memory of a humble and honest man, a humanist boss and captain of industry deeply attached to the global performance of a French industry with solid French roots," Mr Ghosn said in a statement Wednesday.

Francois Michelin only gave interviews to Clermont- Ferrand's local newspaper and never chaired the company's annual general meeting during his time as CEO. He was the father of Edouard Michelin, who led the tiremaker with him from 1999 to 2002 and then on his own from 2002 until his death at age 42 in a boating accident in 2006.

Francois Michelin was born in 1926 in Clermont-Ferrand, a city in France's Auvergne region, to Etienne Michelin and the former Madeleine Callies, according to Marquis Who's Who.

In later years, Francois Michelin lived in EHPAD Ma Maison, a retirement home managed by Petites Soeurs des Pauvres, a Catholic religious institute for women.

He married the former Bernadette Montagne in 1951.

BLOOMBERG