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| Hello Insiders, Thursday's Inside Business newsletter looks into GM's Q2 report and deep dives into China's IPO analysis between the first half of 2022 and 2023, along with American Equity Investment Life Holding Company's deal with Brookfield Reinsurance. ALSO: we want to hear from you! Tell us what you think are the most important factors to consider when starting a new business, and vote here! Shriram
p/Shriram | |
| 1 | | GM's Q2 U.S. vehicle sales totaled 691,978, up 18.8% on the year, confirming the strong demand for new vehicles despite supply chain issues. Forecasters predict a 16%-18% annual growth in U.S. vehicle sales for Q2. More: - GM's retail sales rose 15% in the first half of the year, while its fleet business soared 30%.
- With sales climbing 18.3% in the year's first half, GM remained the U.S.'s top automaker.
- During the first portion of the year, GM sold over 36,300 electric vehicles, making up 2.8% of all sales.
- Although GM has received criticism for its EV production ramp-up process, the company still intends to introduce several significant EV models in the year's second half.
Zoom Out: - In October 2022, GM announced the introduction of a new electric delivery van and the Celestiq, an ultra-luxury class Cadillac EV that will cost over $300,000.
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What the numbers say: Mainland China raised $35B in IPO proceeds during the first six months of the year, representing half of global IPO proceeds. However, this amount was 14% lower than the previous year, and the average size of IPOs in mainland China in 2023 is $183M less than in the first half of 2022. Relevance: Chinese IPO activity has been impacted by the country's slowing economic growth, which has prompted some businesses to take a wait-and-see attitude. Although IPO activity may be separated between security-sensitive and non-sensitive technology, spin-offs from tech giants and listings from AI or automotive startups may be crucial to Hong Kong's market recovery. Where it leads: The Chinese economic outlook need to become more favorable to drive IPO activity. There are opportunities to attract Asian-based investors, such as Japan, South Korea, Southeast Asia, and India, which can be found elsewhere. With the anticipated Syngenta Group offering, China's position as the top IPO destination in 2023 might be upheld. | | | |
| A message from our sponsor, RYSE. |  | | The Window to Invest is Closing The smart home industry is entering a phase of consolidation, with a wave of acquisitions that have led to massive returns for smart-home investors: - Smart vacuum iRobot acquired by e-commerce giant Amazon for $1.7B.
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And let’s not forget RING and Nest — acquired by Amazon and Google for $1B and $3.2B respectively. The trend behind these acquisitions? Innovative, patented products that have secured precious shelf space in retail stores. There is another up-and-coming company that's checking all the boxes for building a successful smart home product. RYSE is disrupting the automated shades industry — recently signing a deal with Best Buy to stock their patented product in 100+ stores. The opportunity to invest in RYSE is closing soon - don’t miss it. Learn More | |
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| 3 | | Brookfield Reinsurance, a Canadian investment firm, is set to acquire American Equity Investment Life Holding in a $4.3B deal, representing a 35% premium to its June 23 closing price. This widely accepted acquisition boosts the company's assets under management to approximately $100B, expanding its presence in the private equity annuity provider market. More: - American Equity shares surged 1.8% after the takeover announcement, reflecting the increasing trend of private equity firms investing in annuity providers for capital growth.
- This strategic transaction comes after recent purchases by Brookfield of Network International Holdings and Origin Energy.
- There has been interest in buying American Equity, and Brookfield is already the company's largest stakeholder with a roughly 20% holding.
- The offer consists of cash and shares, and a sizable portion of American Equity's portfolio is under the management of Brookfield Asset Management.
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| 4 | | In response to reports of a prospective merger between the business and Borealis, with the combined organization valued at over $30B, Borouge's share prices soared 9.4% in the Abu Dhabi market, the most significant intraday gain since June 2022. The merger would allow the business to grow throughout Asia while streamlining ownership arrangements and promoting expansion. More: - Borealis, headquartered in Vienna, is a 75% owned subsidiary of OMV, with the remaining ownership stake being held by Adnoc, while Borouge is the joint venture between Adnoc and Borealis.
- According to Citigroup Inc., by joining forces, Borouge would have access to Borealis' European markets and be able to provide a broader range of products.
- The pricing, ownership structure, and prospective headquarters location of a planned combination to produce a more potent rival to chemical rivals like Sabic are all being discussed.
- The potential for equal control of the combined company is being discussed by OMV AG and Abu Dhabi National Oil Co. (Adnoc).
Zoom Out: - Borouge, which manufactures specialty plastics for manufacturing and consumer goods, went public last year in an IPO valued at $2B and reported $13.3B in revenues in 2022.
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| A message from our sponsor, Klue. |  | | Competitors are killing your efficiency We spoke with over 300 revenue leaders to understand how they’re navigating difficult market conditions. One of the most interesting pieces of data: 91% said that their deals were more competitive than last year. Deals and renewals are heating up. There are more people chasing less pie. That’s a major obstacle to what leaders also said were their top three priorities: - Hitting revenue targets
- Retaining customers
- Improving sales performance
If your business isn’t preparing to compete effectively today, your revenue numbers are going to look grim at your next board meeting. Read and listen to how these leaders are navigating a tough, competitive market to hit their targets in our latest report When the Pie Shrinks. Read the Report | |
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| 5 | | Fidelity National Information Services (FIS) sells a majority stake in its merchant payment arm, Worldpay, to private equity firm GTCR for up to $18.5B. FIS will receive $11.7B in cash and retain a 45% stake in the new entity. More: - Based on the profits GTCR receives from the transaction, the purchase price can exceed $18.5B.
- About half of the purchase will be financed by debt and the other half by equity from GTCR's funds.
- Large banks, including JPMorgan, Goldman Sachs, and Citigroup, have arranged a debt financing package for the transaction.
- One of the biggest corporate carve-outs in history, the transaction signifies Worldpay's return to private equity control.
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| 6 | | According to the Mortgage Bankers Association, mortgage demand decreased by 4.4% last week, falling to its lowest level in a month, attributed to the increase in the average fixed rate for 30-year mortgages to 6.85%. Additionally, the demand for mortgages to buy homes fell by 5%, or 22%, less than in the same period in 2022. More: - Purchase loan sizes have hit their lowest level of $423,500 since January 2023, likely due to decreased buying in the higher-price markets and more activity in lower-priced tiers.
- Applications for refinancing decreased by 4% for the week and were 30% lower than during the same week last year.
- Mortgage rates went over 7% last Thursday and stayed over it, rising to 7.08% the following week's Tuesday.
- The Federal Reserve's upcoming rate hikes and employment data may impact mortgage rates in the forthcoming weeks.
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- The Federal Reserve recently expressed an intent to raise interest rates after a June pause, inferring that more economic tightening is needed due to a tight labor market and potential inflationary pressures.
- A U.S. Judge has prohibited federal authorities, including the Department of Justice and the FBI, from collaborating with social media companies on the elimination of "protected free speech" from their platforms.
- Bank of America announced on Wednesday that it would raise its quarterly dividend from $0.22 per share to $0.24 per share (9% increase) starting in Q3 of 2023, following the Fed's stress test findings.
- Meta's launch of Threads, a direct challenge to Twitter, has resulted in the acquisition of millions of users in a short time frame due to Twitter's weakened state caused by a series of chaotic decisions from owner Elon Musk.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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