Coinbase listing marks latest step in crypto’s march to the mainstream

LONDON (Reuters) – Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, will list on the Nasdaq on Wednesday, marking a milestone in the journey of virtual currencies from niche technology to mainstream asset.

The listing is by far the biggest yet of a cryptocurrency company, with the San Francisco-based firm saying last month that private market transactions had valued the company at around $68 billion this year, versus $5.8 billion in September.

It represents the latest breakthrough for acceptance of cryptocurrencies, an asset class that only a few years ago had been shunned by mainstream finance, according to interviews with investors, analysts and executives.

“The listing is significant in that it marks the growth of the industry and its acceptance into mainstream business,” said William Cong, an associate professor of finance at Cornell University’s SC Johnson College of Business.

Bitcoin, the biggest cryptocurrency, hit a record of over $63,000 on Tuesday. It has more than doubled this year as large investors, banks from Goldman Sachs to Morgan Stanley and household name companies such as Tesla Inc warm to the emerging asset.

Coinbase’s direct listing – which means it has not sold any shares ahead of its market debut – is likely to accelerate that process, those interviewed by Reuters said, by boosting awareness of digital assets among investors.

“This is a very positive thing for bitcoin in itself, as it proves the bridge that has been built from an esoteric, left-of-field arena, full of cowboys, to mainstream finance,” said Charles Hayter of data firm CryptoCompare.

Still, some institutional investors voiced caution over long-term prospects for Coinbase and the crypto sector.

Swiss asset manager Unigestion said it was wary of the hype around cryptocurrencies, and as a result would not be buying Coinbase stock.

“We think there is a lot of frenzy and exuberance in everything that looks like crypto,” said Olivier Marciot, a portfolio manager at Unigestion, which oversees assets worth $22.6 billion.

“Hedge funds and retail will probably be the early birds in these new stocks – probably buying into them pretty heavily – which shouldn’t be a clear indication of how they will be in the longer term.”

BEHOLDEN TO BITCOIN?

Others experts said risks included Coinbase’s exposure to a highly volatile asset that is still subject to patchy regulation.

Founded in 2012, Coinbase boasts 56 million users globally and an estimated $223 billion assets on its platform, accounting for 11.3% crypto asset market share, according to regulatory filings.

The company’s most recent financial results underscore how revenues have surged in lock-step with the rally in bitcoin trading volumes and price.

In the first quarter of the year, as bitcoin more than doubled in price, Coinbase estimated revenue of over $1.8 billion and net income between $730 million to $800 million, versus revenue of $1.3 billion for the entire 2020.

“The correlation to bitcoin will be very high after the stock stabilizes after listing,” said Larry Cermak, director of research at crypto website The Block.

“When price of bitcoin goes down, it’s inevitable that Coinbase’s revenue and inherently price of the stock will decline as well.”

Regulatory risks also loom, others said, as Coinbase increases the number of digital assets users can trade on its platform.

Coinbase last year suspended trading in major digital currency XRP after U.S. regulators charged associated blockchain firm Ripple with an $1.3 billion unregistered securities offering. Ripple has denied the charges.

“Given the expansion of assets covered by Coinbase it’s almost inevitable that other listings will come into question,” said Colin Platt, chief operating officer of crypto platform Unifty.

Coinbase declined to comment.

Reporting by Tom Wilson and Anna Irrera; Editing by Nick Zieminski

Bitcoin hits record high of $62,575

LONDON (Reuters) – Bitcoin hit a record of $62,575 on Tuesday, extending its 2021 rally to new heights.

The world’s biggest cryptocurrency has more than doubled in price this year amid growing mainstream acceptance as an investment and a means of payment, and as investors seek high-yielding assets amid low interest rates.

Major firms including BNY Mellon, Mastercard Inc and Tesla Inc are among those to have embraced or invested in cryptocurrencies.

Reporting by Thyagaraju Adinarayan and Tom Wilson, Editing by Iain Withers

Exclusive: GameStop initiates search for new CEO-Sources

(Reuters) – GameStop Corp is looking for a new chief executive to replace George Sherman as it pivots from being a brick-and-mortar video game retailer to an e-commerce firm, three people familiar with the matter said on Monday.

It would be the biggest shakeup at GameStop since Ryan Cohen, the co-founder and former chief executive of online pet food company Chewy Inc, joined its board in January.

GameStop’s board is working with an executive headhunter on the CEO search, the sources said, requesting anonymity because the matter is confidential.

A GameStop spokesman declined to comment.

Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler

More money poured into stocks in past five months than over last 12 years: BofA

LONDON (Reuters) – Investors have pumped more money into equities over the past five months than in the last 12 years, BofA’s weekly flow figures showed on Friday, as ultra-easy monetary policies and unprecedented stimulus has sparked a secular shift into stocks.

BofA said $576 billion had gone into equity funds in the past five months, beating the combined $452 billion inflows seen in the last 12 years,

Based on clients’ asset allocations, Bofa said a record 63.6% of the money was invested in stocks, 18.5% in debt and 11.6% in cash.

The exuberance has however slowed in recent weeks, with investors pouring $22.7 billion into cash during the week to Wednesday, on top of the nearly $100 billion committed in the last two weeks.

Reporting by Thyagaraju Adinarayan; editing by Sujata Rao

Naspers investors want big deals, share buyback after Tencent windfall

JOHANNESBURG (Reuters) – Investors in Naspers Ltd – Africa’s biggest company – said on Thursday they want proceeds from a $14.7 billion stake sale in its Tencent Holdings investment to go towards blockbuster acquisitions or a share buyback.

Naspers’ Dutch-listed subsidiary Prosus NV sold a 2% stake in the Chinese gaming and social media giant on Thursday in the world’s largest-ever block trade, reducing its stake to 28.9%.

Prosus’ portfolio is dominated by Tencent, which owns China’s biggest messaging app, WeChat.

Bob van Dijk, chief executive of both Naspers and Prosus, said on Thursday the stake sale created the financial flexibility to go for mergers and acquisitions, continue its on-going share buyback programme and explore other ways to create shareholder value.

A major acquisition could give one of Prosus’ other business segments – classifieds, food delivery, fintech, payments or online education – a welcome boost, analysts said.

“We might see some deal announcements again in the next six months or the rest of this year,” said Jean Pierre Verster, CEO of the South African hedge fund management firm Protea Capital Management, which holds shares in Naspers and Prosus.

Aside from acquisitions, Verster, who said Prosus had shown discipline in capital deployment after an earlier Tencent stake sale in 2018, said it could put Thursday’s windfall towards another share buyback.

“That in my mind is very efficient capital allocation and that should decrease the discount because shareholders would gain a lot of comfort that management is allocating capital efficiently,” he said.

Naspers spun off its international assets into Prosus and listed it in Amsterdam in 2019 to try to reduce a yawning discount its shares traded on the Johannesburg Stock Exchange (JSE) to the value of its stake in Tencent.

And in October, Prosus announced it planned to buy back $1.37 billion worth of Prosus shares and $3.63 billion worth of Naspers shares.

That has yet to reduce the discount.

At current share prices, Naspers is trading at a discount of 26% to the value of its roughly 73% stake in Prosus. Prosus in turn trades at a 22% discount to its stake in Tencent.

Peter Takaendesa, head of equities at Mergence Investment Managers, which also holds Naspers and Prosus shares, said he favoured another buyback over acquisitions, given that, aside from Tencent and its online classifieds, Prosus’ other businesses are loss-making.

“Some of the proceeds should go to buy back shares, which may be a better way to deploy those proceeds instead of assets that we don’t know how they’re going to play out,” he said.

Reporting by Promit Mukherjee; Editing by Joe Bavier and Barbara Lewis

Europe should invest in chip design, not a mega-fab: Think tank

BERLIN (Reuters) – Europe’s ambition to make the most powerful computer chips risks wasting billions of euros, a German think tank said in a report on Thursday, urging policy makers to focus instead on rebuilding the region’s chip design industry.

The EU executive’s new goal of doubling its global semiconductor share by 2030 is doomed to fail because the bloc lacks a meaningful market that any super-advanced chip foundry could sell into, author Jan-Peter Kleinhans said.

“For an EU foundry there is simply no business case at the moment in Europe, mainly for the lack of customers,” said Kleinhans, an analyst at the Stiftung Neue Verantwortung (SNV) think tank in Berlin.

The European Commission last month launched a 10-year plan, the Digital Compass, setting its sights on a 20% global semiconductor market share and building a fabrication plant, or fab, that can make superfast 2 nanometer chips.

The push has gained urgency due to supply-chain dislocations caused by a sharp recovery in demand for products ranging from smartphones to electric vehicles following a slump at the onset of the coronavirus pandemic a year ago.

The problem with the EU’s strategy is that, unlike the United States and Asia, Europe lacks a meaningful chip design industry that could justify the cost of a mega-fab, Kleinhans told Reuters in an interview.

“In terms of volume it’s simply not enough to fill a fab,” he said. “That would mean an EU foundry would need to attract foreign customers – this is extremely unlikely.”

Industry leaders TSMC and Samsung already plan investments in the United States to serve chip design leaders like Qualcomm or Nvidia that rely on contract manufacturers to produce their chips.

Plans by Intel to launch its own foundry service, or contract manufacturing operation, starting in the United States, would add to capacity and raise questions about the economics of expanding production in Europe, said Kleinhans.

Europe should instead focus on reviving its vestigial chip design industry, he said. Of its last two publicly listed “fabless” chipmakers one, Dialog, has just agreed to be bought for $6 billion by Japan’s Renesas.

Apple’s announcement that it will invest 1 billion euros ($1.2 billion) in a new chip design facility in Munich, Germany, shows where the EU should be focusing its efforts.

“Apple has single-handedly done more for European-based chip design than the Commission in the past 10 years,” said Kleinhans.

($1 = 0.8430 euros)

Reporting by Douglas Busvine; editing by David Evans

Citi adds ESG scores to data platform for climate-conscious investors

(Reuters) – Citigroup has added environmental, social and governance (ESG) scores to its securities services data platform for clients to track the sustainability exposure of their portfolio holdings, the U.S.-based banking group said on Thursday.

For the Citi Velocity Clarity platform, the lender said it analyzes “multiple sustainability measures” provided on a daily basis by the ESG insight company Arabesque S-Ray, and will work with clients to include more data from other providers.

“The ability to understand ESG exposure has become imperative across the entire industry as investors, advisors and regulators are increasingly asking for transparency from asset managers and asset owners,” said Fiona Horsewill, global head of data for Citi securities services.

Along with growing investor concerns over climate change, Citi has introduced several measures in its green push, including plans last month to merge three of its investment banking groups into one.

Prosus nets $14.6 billion from sale of Tencent stake

AMSTERDAM (Reuters) – Amsterdam-based technology investor Prosus NV has netted $14.6 billion from the sale of a 2% stake in Tencent Holdings Ltd, the Chinese gaming and social media giant said, in one of the world’s largest ever block trades.

“Our belief in Tencent and its management team is steadfast, but we also need to fund continued growth in our core business lines and emerging sectors,” Prosus Chairman Koos Bekker said in a statement after the completion of the deal on Thursday.

In a Hong Kong Stock Exchange filing, Tencent said Prosus sold 191.89 million shares for HK$114.1 billion, reducing its stake to 28.9%.

That works out at HK$595 ($76.44) per share, at the top of an indicative range of HK$575 to $HK595 set out when Prosus announced its intention to sell the stake in an accelerated offering on Wednesday afternoon.

The price was a 5.5% discount to Tencent’s Wednesday close of $HK629.50. Tencent stock, which is up 10% so far this year, opened down 2.5% in Hong Kong on Thursday following the news.

The block trade – a trade of a large number of securities – was the largest of Tencent stock since 2018 when Naspers sold 2% of the group for $9.8 billion, Refinitiv data showed.

Prosus also invests in online food delivery platforms, classified marketplaces and digital payments businesses.

For the half-year ended Sept. 30, it reported a 29% increase in core earnings to $2.2 billion, as proceeds from its Tencent stake offset losses at other online interests.

Citigroup Inc, Morgan Stanley and Goldman Sachs Group Inc were joint global coordinators for the sale.

($1 = 0.8425 euros)

($1 = 7.7849 Hong Kong dollars)