|Bid||156.25 x 39700|
|Ask||156.28 x 38900|
|Day's range||155.19 - 157.38|
|52-week range||93.62 - 158.20|
|Beta (5Y monthly)||1.10|
|PE ratio (TTM)||25.17|
|Earnings date||07 May 2021|
|Forward dividend & yield||2.70 (1.73%)|
|Ex-dividend date||16 Nov 2020|
|1y target est||129.79|
(Bloomberg) -- British industrialist Sanjeev Gupta’s companies seemed to be prospering until his main lender, Greensill Capital, imploded last month. But long before Greensill collapsed, several banks had cut off the commodity trading business of Gupta’s Liberty House Group.Four banks stopped working with Gupta’s commodity trading business, starting in 2016, after they became concerned about what they perceived to be problems in bills of lading – shipping receipts that give the holder the right to take possession of a cargo – or other paperwork provided by Liberty, according to interviews with 18 people directly involved in the trades, as well as internal communications seen by Bloomberg News. The banks include Sberbank PJSC, Macquarie Group Ltd., Commonwealth Bank of Australia and ICBC Standard Bank. Goldman Sachs Group Inc. also stopped working with Gupta’s companies around that time.In 2018, Sberbank sent a team to scour the brightly colored containers stacked in the port of Rotterdam, looking for the ones full of nickel that the bank had financed on behalf of Liberty. Yet each time investigators located one of the containers, they found it had already been emptied, according to two people involved in the matter. After checking about 10 of them, they gave up, the people said. Sberbank confronted Gupta at a meeting weeks later. He promised that his company would pay back the roughly $100 million it owed, the people said.“At some point certain discrepancies were spotted within documentation and logistical data, which made Sberbank discontinue all operations with the company,” the bank said in an emailed statement. “The issue was settled in pre-trial format. Thanks to the existing control systems, we incurred no financial losses through these operations and managed to unwind all transactions in the spring of 2019.”GFG Alliance, which is made up of the companies controlled by Gupta and his family, including Liberty, said in an emailed statement sent by a spokesman that it refutes any suggestion of wrongdoing.“An internal investigation was conducted in 2019 by Liberty Commodities Limited (LCL)’s external legal advisors following enquiries regarding alleged rumours of double pledging,” GFG Alliance said in the statement. “The investigation found no evidence to substantiate the rumours, nor was LCL ever subject to further complaints or proceedings.”Double pledging is the practice of improperly raising funds more than once using the same collateral. As several banks dropped Gupta’s commodity trading unit, GFG Alliance came to rely more on Greensill Capital for loans – ultimately racking up debts of nearly $5 billion to Lex Greensill’s trade finance company by March 2021, according to a presentation seen by Bloomberg News. Gupta’s commodity trading business alone has $1.04 billion of debt, of which $846 million is owed to Greensill, according to the presentation. “LCL has ongoing banking relationships with separate financial institutions,” GFG Alliance said in the statement. “Its reliance on Greensill was a natural consequence of the competitive nature of the trade finance market, which has been hugely challenging for all but the very largest commodities traders in recent years.”Now, with Greensill in insolvency and its German subsidiary under a criminal complaint after the regulator said it found irregularities in how the banking unit booked assets tied to GFG Alliance, Gupta is trying to find new financing. But it’s been tough. After Gupta searched for would-be financial backers for weeks, Credit Suisse Group AG – which became a major lender to Gupta’s companies by buying debt packaged by Greensill – moved last month to push Liberty Commodities Ltd. into insolvency. Gupta said in interviews on BBC Radio 4 and Sky News on April 1 that the action made no sense and that he’d litigate it if needed.Lending RisksTraders in the world of commodities have long relied on banks to help finance the flow of goods on their journey from origin to destination. From the banks’ point of view, this type of financing is generally considered low risk. Should the trader run into financial difficulties, the bank can seize its collateral – the cargo – and easily recoup its money. That holds true so long as the shipping paperwork used, such as a bill of lading, is accurate.ICBC Standard Bank stopped financing Liberty’s commodity trading unit by early 2016, after discovering it had presented the bank with what seemed to be duplicate bills of lading, according to two people with direct knowledge of the matter. Commonwealth Bank of Australia pulled the plug on lending to Gupta’s trading business the same year after the bank financed a cargo of metal for Liberty, only to be presented with what appeared to be the same bill of lading a short time later by another trader seeking a loan, according to three people directly involved.Then, in late 2016, Goldman Sachs, which had extended a credit line of about $20 million to Liberty to finance its nickel trade, stopped dealing with Gupta’s trading company after being warned of alleged paperwork problems by a contact in the warehousing industry, according to three people familiar with the matter.Spokespeople for Goldman Sachs, Commonwealth Bank of Australia and ICBC Standard Bank all declined to comment.“No financial institution has been left out of pocket as a result of lending money to LCL,” GFG Alliance said in the statement, referring to Liberty Commodities Ltd. “On the contrary, they have received substantial commercial returns.”By 2016, Liberty had already become one of the world’s largest traders of nickel, according to an interview with Gupta in Metal Bulletin. Still, Liberty’s containers of nickel would sometimes take an unusually long time to travel between Europe and Asia – instead of the normal sailing time of about one month, the voyage would take several months, stopping off at ports along the way for weeks at a time, six people said.Metals trader Red Kite Capital Management, which also cut ties with Liberty, did so because it had become “uncomfortable” with some of the trades, said Michael Farmer, the company’s founder who is also a member of the U.K’s House of Lords. “It was difficult to work out the commercial sense of some of the shipments, which resulted in our decision to err on the side of caution and discontinue such trades,” said Farmer, who is one of the world’s best-known metal traders. “We had no proof of any misdoings.”Savior of SteelGupta was born in Punjab, India, the son of a bicycle manufacturer. He moved to the U.K. as a teenager to attend boarding school and set up Liberty House, his commodities trading business, in 1992 while he was still an undergraduate student at Trinity College, Cambridge. He first hit the headlines in Britain in 2013 when he bought a troubled steel mill in Newport, South Wales, and restarted production at a time when many other steel plants were being closed down. He went on to buy a string of other struggling steelworks, earning him the nickname “the savior of steel.”Gupta’s GFG Alliance isn’t a consolidated group, but a loose conglomerate of more than 200 different entities. The common thread running through both sides of his business, according to six former employees, was a chronic shortage of cash and intense pressure to find new ways to generate financing.On the industrial side of the business, that meant buying one asset after another in rapid succession, including unloved aluminum and steel plants in Yorkshire, England, northern France and South Australia, then borrowing against the business’s own inventory, equipment and customer invoices, often from Greensill.On the trading side of the business, that often meant nickel. Used as an alloying element in the production of stainless steel, nickel is among metals deliverable on the London Metal Exchange, which means that its price can easily be hedged and that banks are usually willing to lend against it; and nickel is expensive, meaning a relatively small amount of space in a ship can hold a valuable cache of metal.The commodity trading business grew rapidly. Revenue rose to $8.41 billion in the 15 months to March 2019, from $1.67 billion in 2012, according to the accounts of Liberty Commodities Group Pte, a Singapore holding company for the trading operations.Delayed DeliveryMacquarie became concerned about the paperwork underpinning some of Liberty’s trades some four years ago, according to four people with direct knowledge of the events as well as written communications seen by Bloomberg News.In one instance, the bank realized that nickel that it was supposed to have received in Antwerp, according to the shipping documentation, wasn’t at the port, according to two people. Liberty eventually delivered the nickel to Macquarie, but at a different port and about two weeks later than was listed in the paperwork.It wasn’t the only time Macquarie’s team had discovered discrepancies in Liberty’s paperwork, the people said.At a meeting in Macquarie’s London offices, executives from the bank grilled Gupta and his top lieutenants about the inner workings of the commodity trading business, three of the people said. Macquarie remained unsatisfied with the explanations, and by mid-2017, the bank had made the decision to stop all financing for Liberty, the people said.A spokesman for Macquarie declined to comment on the matter.After that banking relationship ended in acrimony, Gupta’s companies turned to Sberbank. When that link, too, soured, they became even more reliant on Greensill.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The surprise takeover bid for Toshiba Corp. is a palpable demonstration of the growing influence in corporate Japan of activist investors, who have gone from largely impotent onlookers to kingmakers in the space of just a few years.The offer from CVC Capital Partners, while still in the early stages, comes just weeks after Toshiba Chief Executive Officer Nobuaki Kurumatani lost a landmark shareholder vote, forcing an independent investigation into alleged issues with voting at its annual general meeting last year.That loss has piled pressure on Kurumatani, who barely won re-election at last year’s meeting and is seen as unlikely to survive another. The vote was triggered by Toshiba’s largest shareholder, the secretive Singapore-based hedge fund Effissimo Capital Management.Any deal for Toshiba faces legal hurdles, and analysts say that investors such as Effissimo would likely insist on a substantial premium from Tuesday’s closing price. But the episode shows that the influence of activism in Japan is becoming hard to deny.“There have been false dawns before,” said Justin Tang, head of Asian research at United First Partners in Singapore. “But activism is taking hold now.”Flexing MusclesCVC offered about 5,000 yen per share in its buyout proposal, according to a Toshiba executive. A bid at that level would value Toshiba at about 2.28 trillion yen ($20.7 billion) and represent a 31% premium to its last close before news of the bid emerged, data compiled by Bloomberg show.That would make it the largest private equity-led buyout since 2013, and CVC’s biggest acquisition on record. Toshiba’s board plans to form a special committee to consider the proposal, said the executive, who asked not to be identified discussing confidential information.While there are many hurdles to a deal taking place, Toshiba shares rose by their daily limit of 18% to 4,530 yen per share at the close Wednesday in Tokyo. The stock gained as much as 5.7% more on Thursday.“Considerable value would be created simply by simplifying ownership and clarifying governance by taking the company private,” said Nicholas Benes, an expert on Japanese corporate governance. “Precisely because of that, one would very much hope that this is a case where Toshiba will be open to other bids, by both other PE firms as well as strategic acquirers.”Activist investors have increasingly been flexing their muscle in Japan in recent years, as corporate governance reforms promoting shareholder value have meant management can no longer dismiss such pressure. Tokyo Dome Corp. will be delisted this month after acquisition by a white knight last year to fend off pressure from activist investor Oasis Management Co.Once a storied name in Japan, Toshiba has faded dramatically since its glory days after years of management missteps and scandal. The conglomerate invented flash memory three decades ago, but it was forced to sell most of its prized chip business in 2018 because of losses in its nuclear-power operation. That deal led to an infusion of cash -- but also a large contingent of more vocal shareholders. Last week, Singapore fund 3D Investment Partners became the latest investor to say it may make make proposals to management, boosting its stake to more than 7%.“Any successes of this nature will probably snowball and lead to more activity,” said Damian Thong, an analyst at Macquarie Group Ltd. “There is a sense that a large part of Japan’s industrial base is being run inefficiently, resulting in apparent undervaluation of Japanese conglomerates.”Kioxia OptionsOne open question for Toshiba is the future of Kioxia Holdings Corp., its former memory-chip division in which its still holds the biggest stake. Kioxia is focused on going public as soon as this summer in an IPO that could value the business at more than $36 billion, Bloomberg News reported last week. Alternatively, Micron Technology Inc. and Western Digital Corp. are each to be interested in acquiring the firm, the Wall Street Journal reported.If Toshiba secures a reasonable market valuation for Kioxia, and its core businesses attract multiples similar to those of its Japan peers, Thong said he sees scope for over 1 trillion yen of shareholder value creation. That would imply a Toshiba share price of over 6,500 yen per share, compared with the CVC offer at 5,000 yen apiece.Mio Kato of LightStream Research sees a low possibility of the deal going through under current terms, and expects volatile trading for Toshiba’s shares in the near term depending on how things develop. Toshiba’s shareholders, especially activists, will want a rather “steep price,” he wrote in a note published on SmartKarma.Given the sensitivity around several of Toshiba’s bushinesses, including its deep involvement in decommissioning the wrecked Fukushima Dai-Ichi nuclear power plant, government approval would be required for the deal, Chief Cabinet Secretary Katsunobu Kato said Wednesday.It’s unclear if a foreign firm such as CVC would be allowed to take control of Toshiba. The relationship between CVC and Toshiba executives -- with Kurumatani a former Japan president and external director Yoshiaki Fujimori still employed by the firm -- has also raised eyebrows.“This could simply be an attempt to buy time for Kurumatani,” Kato said.(Updates with share move in eighth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- David Dorfman, a former Macquarie Group Ltd. senior banker, has founded a growth-focused private equity firm, according to people with knowledge of the matter.BroadLight Capital, a venture between Dorfman, talent manager Rick Yorn and entertainment lawyer Kevin Yorn, is seeking to raise $300 million or more for its debut fund, said one of the people, who requested anonymity because the information isn’t yet public. The vehicle will seek to make bets on fast-growing companies in sectors including consumer, entertainment and technology, the person said.Athletes and artists such as singers, actors and social media stars are expected to back the fund and co-invest in specific deals, the person added.A representative for BroadLight Capital declined to comment.Read more: VMG Raises $850 Million for Food and Beverage, Wellness BetsDorfman spent over a decade at Macquarie Capital, the advisory and merchant banking arm of Australia’s Macquarie, and was most recently global head of technology media and telecommunications, his LinkedIn profile shows.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.