Tesco sells South Korean chain Homeplus for £4.2bn
British supermarket giant Tesco (LON:TSCO) has agreed to sell Homeplus, its South Korean unit, to private equity firm MBK Partners for £4.2 billion.
Tesco Chief Executive Dave Lewis commented: “This sale realises material value for shareholders and allows us to make significant progress on our strategic priority of protecting and strengthening our balance sheet.”
This sale is the first major move since the chain delivered a record pre-tax loss of £6.4bn for the year to February, compared with a profit of £2.26 billion the year before; one of the largest in the country’s corporate history.
Tesco is currently trading down 0.99 percent at 184.10 pence per share (0843GMT)
August non farm payroll figures lower than expected
Non farm payroll figures show that the US added 173,000 jobs in August, lower than the 220,000 expected by analysts.
The figures released by the Department of Labor on Friday are the last before September’s interest rate decision by the Federal Reserve and are the lowest since 2013. The disappointing numbers, alongside recent volatility in China, could indicate that a rate rise will be pushed back.
However, unemployment dropped to 5.1 percent, the lowest figure in seven and a half years. The price of gold steadied this morning ahead of the data, with spot gold at $1,123.26 an ounce at 1144 GMT. U.S. gold futures for December delivery were down $1.70 at $1,122.80.Crowdfunding Q&A: Stuart Black, BrainTrain UK and Nikolay Piriankov, Rare Pink
If you are a small business looking for investment, navigating the wild waters of start-up financing can be tricky. Last week we spoke to Simply Wall St, who chose angel funding as their option, as well as several small businesses who thought pension-led funding was the best route for them. With so many different forms of alternative finance, it can be hard to figure out which one to choose for your business.
This week, we’re focussing on the benefits of crowdfunding. Crowdfunding has expanded exponentially over the past three years, going from something relatively unknown and used by individuals to a very viable form of business financing. We have spoken to two very different businesses who have completed rounds on online platforms to raise the money needed; both had extremely successful campaigns, and used different platforms to do so.
Stuart Black is the Director of Cromwell Hospital in Kensington, and CEO of Brain Train UK. Brain Train UK uses applied neuroscience to resolve mental health disorders and, in the long term, essentially aims to ‘train’ the brain to work better.
Nikolay Piriankov is the founder and CEO of Rare Pink, an online retailer of bespoke engagement rings and fine diamond jewellery. Rare Pink is unique in that it offers a bespoke design service, offering over 100,000 ethically sourced diamonds and the ability for customers to design their own ring.
Why did you choose crowdfunding over other financing options?
Stuart: At the time I didn’t know much about crowdfunding, but banks wanted security or would be willing to finance capital investment secured against the investment, but I wanted to use this as working capital to make ‘softer’ investments such as marketing and further practitioners. The idea of democratising finance also appealed to me.
Nikolay: We chose crowd-funding for several reasons. Of course we first considered raising investment through the traditional routes taught at university – approach your bank, speak to angel investors, but in reality, these methods either don’t work anymore (with regards to banks for start-ups) and finding angel investors without previous investor contacts is not as easy when this is your first business.
Nikolay cites several benefits that crowdfunding has over other forms of finance, including the ability to reach out to customers and validate your business idea; if the crowd likes what you do and invests, then it is a good sign to continue and grow the business. He also noted the PR potential of crowdfunding:
“It is quite topical at the moment it is also a great source of PR, as we saw through features in the Guardian and other online publications.”
What made you pick the crowdfunding platform you used, rather than any of the others?
Stuart: Funding Circle attracted me because it was a loan model and not an equity sale; I didn’t want to dilute my equity at that stage. I preferred the arms-length relationship with lenders rather than the more intimate relationship with shareholders. Funding Circle also seemed straight forward to deal with that others.
Nikolay: We chose Seedrs over its biggest rival Crowdcube for a few reasons. They have a nominee structure which means that while we have 150 investors, Seedrs ensures we treat them as a single investor, which makes any future investment rounds or important decisions easy to make. We don’t have to consult with each and every single one – instead we just speak to Seedrs.
Interestingly, both Nikolay and Stuart had different methods of promoting the campaign once it went live. Whilst Stuart took a more laissez-faire approach, Nikolay’s was more targeted.
Why do you think your campaign was so successful? Do you have any ‘crowdfunding secrets’?
Stuart: My marketing strategy for the campaign was really no more than the way we described the business Funding Circle. I think that perhaps what we do – offering a drug-free approach to mental health issues and peak performance – interested people and ‘brain’ technologies seem to be in vogue at the moment. After the campaign went live, I nipped out for 20 minutes and when I returned 20 minutes later we had raised 33% of the request!
I also saw that you could load up an audio file to “sell” your proposition. I did a couple of takes on the audio file and by the time I was happy with it and uploaded it we were at 80%.
Nikolay: To be successful at crowd-funding, 80% of the work is done before the launch of the campaign. You need to create an inspiring video that sells the business and the team.
Also, and perhaps most importantly, any investment round needs a leader. A good investment leader commits between 25-50% of the investment round. This gives your valuation and proposition credibility and helps bring the smaller investors on board. This means, to have a successful crowd-funding round first it is important to first identify a few larger potential investors and only launch your campaign once they have committed to your round.
Curiously, whilst crowdfunding is seen a great way to promote the business and interest more customers, Stuart noted that whilst they had 626 people investing with them no new clients have yet mentioned a Funding Circle connection. However, Nikolay had a different experience: “50 investors is also 150 brand ambassadors. In our case we know our investors, large and small, proudly tell their friends they are shareholders in a diamond business and many have since purchased from us.”
Either way, both businesses are extremely pleased with the results from crowdfunding. Traditional routes such as bank loans are now seen as outdated – not to mention far more difficult to obtain – and using crowdfunding is a great way to use the internet and technology to reach out to a greater pool of potential investors.
Miranda Wadham on 03/09/2015
Retail sales fall in August, according to BDO
Retail sales fell 4.3 percent August, making it the worst month for high street shops since the global financial crisis of 2008.
According to a survey published this morning by accountancy firm BDO, sales have fallen every month since May for the first time since 2009, countering signs that Britain’s economy is improving.
The figures were compiled from data released by 85 medium-sized retailers, including Gap, French Connection and Hobbs, with around 10,000 outlets, and shows that all retail sectors including lifestyle, fashion and homewares recorded lower sales than last year.
This data echoes Thursday’s survey by Markit, showing that businesses in Britain’s services sector recorded their slowest growth in more than two years last month.
GVC beats rival 888 to Bwin bid
GVC Holdings (LON:GVC) have trumped rival 888 after winning the bidding to buyout Bwin.party Digital Entertainment (LON:BPTY) for about £1.06 billion.
Both companies have been vying for the offer for several months, after Bwin originally agreed to an offer from 888 for £900 million.
The directors of Bwin said GVC’s offer was “fair and reasonable”.
However, Bwin Chairman Philip Yea admits shareholders were split about choosing GVC over 888.
“There was a pretty even split of those that expressed views one way or the other. But we also had a significant block of shares that was happy to support the board on its deliberations,” Reuters quoted him as saying.
This is the latest in a series of mergers from online gambling firms, who are trying to band together in response to higher tax bills and tighter regulation in Britain and continental Europe.
Bwin are currently trading up 0.35 percent, with GVC trading down nearly 4 percent on the news.
ECB cuts 2015 inflation and growth forecasts
The European Central Bank have said that they will be delaying a rate rise, as it announced cuts it its inflation and growth forecasts for 2015 yesterday.
The ECB will be keeping its main interest rate on hold at 0.05% for the foreseeable future, citing problems with China as the reason for Europe’s economic recovery continuing “at a somewhat weaker pace than expected”.
The euro fell sharply as ECB President Mario Draghi revised growth expectations, dropping a cent against the dollar to $1.1127. The figures were moved down to 1.4% in 2015 and 1.5%, and 1.7% in 2016, compared with its previous projection of 1.9%.
He also admitted that inflation could turn negative in the coming months.
“Lower commodity prices, a stronger euro, somewhat lower growth, have increased the risk to a sustainable path of inflation towards 2%,” he told a news conference in Frankfurt.
Draghi also hinted that the bank could expand its stimulus programme if necessary, continuing its already massive bond-buying program which underscoring an increasing divergence in the monetary policies of the world’s largest central banks.
Nissan to invest £100 million into UK car plant
Japanese automaker Nissan has announced it will invest £100 million in its UK plant in Sunderland, in order to build the new Juke model.
It is believed that the investment will secure 6,700 jobs at the plant and more than 27,000 in the supply chain. The plant in Sunderland is one of the most productive plants in Europe, producing 500,000 cars last year. The Japanese company, which employs 6,700 at the factory directly, said the decision demonstrated it was the “undisputed leader” in the so-called crossover vehicle market. The design of the new Juke will be completed by engineers in London and Bedfordshire. The Sunderland plant currently makes the Qashqai, Note and electric Leaf models. The new Juke model first entered production in 2010 following more than 22,000 pre-orders. Chancellor George Osborne hailed the announcement as “fantastic”, and said that it was “an important sign of Britain being chosen as a global leader in car production”.Toshiba set to disclose 10 billion yen loss
Japanese electronics firm Toshiba (TYO:6502) may disclose a net loss of about 10 billion yen (54.24 million pounds) later this week when it reports its financial earnings for the year, according to the Yomiuri daily.
Toshiba has been at the centre of an accounting scandal for a number of months, after an independent probe discovered it had overstated profits for $1.2 billion over the course of several years.
On Monday Toshiba postponed its annual results for a second time, but the company is due to announce earnings by September 7 or face being delisted. Shares in Toshiba were up 2.5 percent on Thursday morning.
Elesewhere in Japan, activity in the country’s services sector expanded at the fastest pace in almost two years in August, a survey showed on Thursday.
The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to 53.7 from 51.2 in July to reach the highest since October 2013, meaning that the index has remained above the 50 threshold that separates expansion from contraction for the fifth consecutive month.
Easyjet up 7 percent on strong August figures
Budget airline EasyJet (LON:EZJ) raised their full year profit forecast to between £675m and £700m, after seeing a record number of passengers in August. In comparison, their full-year profit for 2014 was £581 million.
The airline said that it carried 7.06 million passengers in August – the second consecutive month above the seven million mark.
The load factor was a record 94.4% – up 0.2 percentage points from August last year. Ryanair (LON:RYA) yesterday disclosed a load factor of 95 percent.
Shares in Easyjet have risen 25% over the past 12 months and closed at £16.72 on Wednesday. This morning they are trading up nearly 7 percent on the news.
Carolyn McCall, easyJet Chief Executive, commented:
“These figures demonstrate the strength of easyJet – with its strong customer focus and its unique and winning combination of the best route network connecting Europe’s primary airports, with great value fares, friendly service and industry leading digital innovations.
“This platform meant that easyJet was best placed to maximise the strong late summer demand from UK passengers to get away to beach and city destinations across Europe and will enable the airline to set new records for full year revenue and profit.”
Simply Wall St: making stocks simple
For the co-founders of Sydney-based start up Simply Wall St, investing in the stock market was a little too complicated. Undoubtedly, there are plenty of people who would say the same; however Simply Wall St’s goal is to change that, and the company have created software that can provide everybody with the knowledge and information to be a successful investor. Its founders, Al Bentley and Nick van den Berg, firmly believe that investing in the stock market can, and should, be simple and enjoyable for everyone.
Simply Wall St turns complicated financial data into easy to understand visuals. On a daily basis, the company produce over 9,000 detailed infographics and visual analyses on all the companies listed on primary US, UK and Australian stock exchanges, with financial data provided by Standard & Poor’s Capital IQ. Investors can log in online and create a personalised portfolio of stocks they are following, and their brilliantly designed site enables you to easily see the stocks previous and present performance, potential and value. Their free service uses a unique method to analyse stocks, creating a ‘snowflake’ for each company, generated from 30 financial checks in 5 different core areas of a company: Value, Past Performance, Future Performance, Health and Income. The larger and greener the snowflake becomes, the more checks the company has passed and the healthier investment it is.
The company have just raised $600k in one of the biggest Australian seed rounds this year, with Michael Quinn from Innovation Capital leading the oversubscribed opportunity and involvement from Sydney Angels and the Sidecar Fund. The amount they have managed to raise from investors is impressive; Bentley and van den Berg have clearly got fundraising down to a fine art. But what exactly is their secret?
When looking for seed funding, Bentley believes that finding the right lead investor is key.
“You really need to focus on finding the right one as the rest will follow after this. When we were looking to raise Simply Wall St’s seed round of $600,000 we selected Mike Quinn and reached out with a cold email – yes those do work!
“After getting to know him we decided we wanted him as he really understood what we were doing and most importantly liked working with us.”
It’s also important to select the right type of investment. Whilst many start ups are now going down the crowdfunding route, it may be worth considering other options before ‘leaping on the bandwagon’.
“We chose the angel route rather than crowdfunding mainly because of the non-monetary benefits, such as advice and connections. Our investors provide insight and mentoring that we just wouldn’t get with crowdfunding. They will be there to support us in further rounds and assist with those big company level decisions about the direction of growth.”
The funds will be used to take the startup out of Beta, start monetization and expand in the UK and US markets, which currently account for more than 75% of users.
“This funding will further our mission to empower casual investors to make profitable long term investment and actually understand the stock market,” Bentley said.
As shown by the response to their request for investment, Simply Wall St has a unique and clever business idea; one that will hopefully drive their business to greater success. However, perhaps the most important piece of advice Bentley has to give is that starting a company is anything but easy; he spent three months living underground in his van in order to get started.
“I had to move to Sydney and I was bootstrapping, so I spent 3 months living in my van parked in an underground lot at the co-working space. It was tough, but it was worth it.”
For more information and to sign up to Simply Wall St’s free service, visit simplywallst.st.
Miranda Wadham on 02/09/2015