Air France-KLM prices capital hike at 4.84 euros per share

PARIS (Reuters) – Air France-KLM on Tuesday launched a capital hike at 4.84 euros ($5.76) per share as part of a 4 billion-euro recapitalisation to shore up its finances amid the COVID-19 crisis.

The airline said in a statement it could raise up to 1.036 billion euros if demand was sufficient to exercise an option to increase the size of the rights issue.

It added that the subscription pricing amounted to an 8.85% discount to Monday’s closing price.

Shares of the Franco-Dutch company were down 4.33% at 5.08 euros at 0810 GMT, the worst performer on France’s French SBF 120 index.

Air France-KLM said on Monday it will expand its partnership with China Eastern Airlines, as the Chinese carrier committed to subscribe to the issue. It will hold less than 10% of the firm’s capital.

The French state will cover as much as two-thirds of capital increase.

($1 = 0.8404 euros)

Reporting by Matthieu Protard; Editing by Kirsten Donovan

HSBC bans customers from buying bitcoin-backer MicroStrategy shares

LONDON (Reuters) – HSBC has banned customers of its online share-trading platform from buying or moving into their accounts MicroStrategy Inc stock, a message seen by Reuters showed, calling it a “virtual currency product”.

The bank will not facilitate the buying or exchange of products related to or referencing the performance of virtual currencies, the message to an HSBC InvestDirect client said. Bitcoin is the largest and best-known virtual currency.

MicroStrategy declined to comment. The U.S. business software firm is led by bitcoin proponent Michael Saylor and owns bitcoin worth billions of dollars.

While HSBC will allow the holding, sale and outgoing transfer of MicroStrategy shares, it will forbid new purchases or incoming transfers, said the message dated March 29.

“HSBC has no appetite for direct exposure to virtual currencies and limited appetite to facilitate products or securities that derive their value from VCs (virtual currencies),” HSBC said in a statement.

HSBC InvestDirect is available to customers in countries including Canada and Britain.

The bank said its policy towards cryptocurrencies had been in place since 2018 and is kept under review. It could not immediately say which countries the ban applied to.

The move comes amid a growing embrace of cryptocurrencies by large financial firms, companies and investors seeking yield in a world of ultra-low interest rates.

Goldman Sachs Group Inc said last month it would offer investments in bitcoin and other digital assets to its wealth management clients. Morgan Stanley has also started offering clients investments to the emerging asset class.

MicroStrategy has along with Tesla Inc and payments firm Square Inc become one of several publicly listed U.S. companies to buy large amounts of bitcoin for its treasury.

MicroStrategy said last week it owns around 91,579 bitcoins. Its holdings, worth around $5.5 billion according to a Reuters calculation, are equal to around 80% of its $6.8 billion market capitalisation.

Reporting by Tom Wilson; Editing by David Holmes

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

Korean video game firm Krafton applies for IPO, seen worth billions of dollars

SEOUL (Reuters) – South Korea’s Krafton Inc, the video game holding company that publishes the blockbuster game PlayerUnknown’s Battlegrounds (PUBG), has applied for preliminary approval for an initial public offering (IPO), Korea Exchange said on Thursday.

The IPO is expected to be one of the biggest Korean listings this year, Seoul-based analysts said, with over-the-counter trades on Thursday valuing Krafton at around 20 trillion won ($17.92 billion).

Krafton founder Chang Byung-gyu is the largest shareholder with a 16.4% stake as of end-2020, followed by China’s Tencent holding a 15.5% stake through an investment company. Small shareholders with less than 1% stake individually held a combined 23.2% of Krafton, according to a company filing.

PUBG is one of the highest-grossing video games of all time, with up to 55 million daily users excluding China on weekends and 70 million copies of the game sold for PC and game consoles, Krafton said. Upcoming new mobile game “PUBG: New State” gained more than 5 million pre-registrations within a week, Krafton said in March.

Krafton reported revenue of 1.67 trillion won and operating profit of 774 billion won in 2020, Korea Exchange said in a statement.

The main adviser for the IPO is Mirae Asset Daewoo, while other advisers are Credit Suisse, Citigroup Global Markets, Korea Investment & Securities, JP Morgan and NH Investment & Securities.

Robust investor demand has fuelled a flurry of sizable listings in South Korea this year.

An IPO by vaccine developer SK Bioscience Co Ltd last month was the biggest in Seoul in nearly four years, while battery component developer SK IE Technology’s (SKIET) planned IPO is expected to be worth at least $1.5 billion.

($1 = 1,116.3800 won)

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)

U.S. private prison GEO suspends dividends as sector faces pressure on finances

(Reuters) – U.S. private prison company GEO Group said on Wednesday it would suspend quarterly dividend payment to repay debt and fund growth as it faces pressures under limits on the sector from President Joe Biden.

Earlier this year, Biden signed an executive order to roll back the U.S. government’s use of private prisons, a part of what he called an initiative to tackle systemic racism.

Another private prison, CoreCivic Inc, has said it would offer $400 million in bonds to reduce debt and for corporate purposes.

Shares of GEO were down about 6% before the bell and those of CoreCivic fell about 2%.

GEO said it intends to maintain its corporate tax structure as a Real Estate Investment Trust (REIT), but would evaluate the structure, considering potential changes to its financial operating performance among other factors.

It had $291 million in cash on hand and about $209 million in borrowing capacity available under a revolving credit facility and $450 million under its senior credit facility, as of March 31, the company said.

Deliveroo shares rise: Retail investors join trading

LONDON (Reuters) – Deliveroo shares opened slightly higher on Wednesday, the first day of unrestricted trading when retail investors were allowed to trade the shares bought during the food delivery group’s initial public offering (IPO).

At 0710 GMT, the stock was trading up 2.5% at 287 pence, about 25% lower than its IPO price, following a hefty first day tumble when it made its stock market debut in London last week.

Deliveroo was given an initial 7.6 billion pounds ($10.46 billion) valuation through a 390 pence price tag per share.

SK Group buys 16.3% stake in VinCommerce for $410m

SEOUL (Reuters) – South Korea’s third-largest conglomerate, SK Group, said on Tuesday it has agreed to acquire a 16.3% stake in Vietnam’s VinCommerce, a retail affiliate of Masan Group, for $410 million.

SK Inc, formerly SK Holdings Co Ltd, as well as battery maker SK Innovation, SK Telecom, world’s second-largest memory chip maker SK Hynix and power generation firm SK E&S are participating in the deal through an investment unit focused on Southeast Asia.

VinCommerce operates about 2,300 convenience stores and supermarkets in Vietnam, with a roughly 50% market share in the country’s consumer retail sector, SK said.

SK plans to accelerate other investments in major strategic interests such as online and offline distribution, logistics, and electronic payment in Vietnam by utilizing its strategic partnership with Masan Group, it said.

Asia shares set to rise after S&P 500, Dow hit records on strong economic data

(Reuters) – Asian equities are poised to rise on Tuesday after the S&P 500 and Dow indexes set records as a streak of strong U.S. economic data fueled optimism even as a smaller-than-expected climb in 10-year Treasury notes eased inflation concerns.

Investor sentiment was buoyed by a survey from the Institute for Supply Management (ISM) on Monday showing activity in the U.S. services industry reached its highest level on record in March. The data came after a jobs report on Friday beat forecasts with 916,000 added to the U.S. economy last month.

“The jobs report set the stage for what we’re seeing today,” said Thomas Hayes, chairman of Great Hill Capital LLC in New York. “It’s not only that the report crushed expectations but it showed that wage inflation was subdued as people compete for labor.”

Australian S&P/ASX 200 futures rose 0.34% in early trading, while Hong Kong’s Hang Seng index futures rose 0.40%.

The S&P 500 and the Dow – the benchmark Wall Street indexes – have rallied in recent sessions as widespread vaccinations and an unprecedented government stimulus boosted investor confidence in an economic rebound and spurred demand for sectors, including energy, financials and materials, which are primed to benefit from economic reopening.

On Monday, gains were led by sectors that have underperformed recently, including communication services, consumer discretionary and technology, as the 10-year U.S. Treasury yield remained below a 14-month high hit last week.

“The rate of change with the 10-year yield has slowed and that has created a runway for some of the left behind sectors in recent weeks like tech and other yield sensitive areas like utilities,” Hayes said.

On Wall Street, Dow Jones Industrial Average rose 1.13% to a record high of 33,527.19, the S&P 500 gained 1.44% to a record 4,077.91 and the Nasdaq Composite added 1.67%, to 13,705.59.

U.S. Treasury yields edged lower on Monday, as investors paused recent selling of government bonds and took profit from short positions, though the uptrend in rates remained intact following Friday’s blockbuster jobs report.

Benchmark 10-year notes last rose 3/32 in price to yield 1.7127%, from 1.72% late on Friday. The yield curve steepened on Monday after flattening the previous session as the spread between U.S. 2-year and 10-year yields rose to 154 basis points.

Gold prices edged lower as the safe-harbour metal’s luster was dimmed by rising global equity prices.

Spot gold declined 0.1% to $1,727.98 an ounce. U.S. gold futures settled little changed at $1,728.80.

Oil prices fell as increasing OPEC+ supply and rising Iranian output, along with the threat of a new wave of COVID-19 infections, offset hopes for a demand rebound driven by economic revival.

U.S. crude settled at $58.65 per barrel, down 4.6% on the day, while Brent shed 4.18% to end at $62.15 per barrel.

Tesla shares surge after electric carmaker posts record deliveries

(Reuters) – Shares of Tesla Inc were up about 7.5% in pre-market trading on Monday, after the world’s most valuable carmaker posted record deliveries as a solid demand for its electric cars offset the impact of a global shortage of auto parts.

Tesla delivered 184,800 vehicles globally during the first quarter, above estimates of 177,822 vehicles, according to Refinitiv data.