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One scoop confirmed to start: Brazil’s Natura, owner of the Body Shop and Aesop, has said it’s adding another company to its beauty bag, confirming a story by DD’s James Fontanella-Khan that it will acquire Avon Products in an all-stock deal. Now, on to the show . . .

Game of Thrones, the HBO show, ended last week with the naming of an unexpected new king. Few on Wall Street or in Silicon Valley believe the battle between Morgan Stanley and Goldman Sachs will shake out the same way in one category.

The two have a vice-like grip on advising top technology companies on their initial public offerings. And alongside JPMorgan Chase, the three commanded more than half of the fees generated by said listings last year. The next three banks — Bank of America, Allen & Co and Citigroup — earned less than a third of their bounty, according to data provider Refinitiv.

It makes the case of Uber and Lyft’s weak IPOs all the more noteworthy. Rivals are salivating over the opportunity to claw some market share back from the three top underwriters. And as DD readers already know, advisers will use any shred of evidence to try to win business from a rival.

Our favourite titbit: Goldman used Facebook’s initial stumbles out of the gate (an IPO led by Morgan Stanley) in its pitch to woo Uber executives. It didn’t win Goldman lead left position on the Uber IPO, but they did come second.

“The quality of deal execution is being called into question more, by both corporates and VCs [venture capital firms],” said David Hermer, head of equity capital markets at Credit Suisse, noting that a “small number of banks have a disproportionate share of leadership roles in technology IPO”.

While rivals like Credit Suisse see the share price falls for Lyft and Uber as an opportunity to pitch unicorns like Airbnb and WeWork that are considering flotations, history suggests they face an uphill battle.

Credit Suisse, Bank of America, Citigroup, Barclays and Deutsche Bank are pitted against some of the most well-connected bankers in Silicon Valley. Howard Lerman, the chief executive of enterprise software company Yext, said the early drop in Uber, like Facebook before it, was unlikely to shake up the league tables.

“When you’re a tech entrepreneur and you’re taking your company public, introducing new risk into the equation is not something you’re jumping to do,” he said. “By going with a tried and true [adviser], you’re not going to do something crazy.”

Morgan Stanley, Goldman and JPMorgan benefited as some rivals retrenched after the financial crisis; they also capitalised on demand for additional services from tech companies who were staying private for longer. Private placements were particularly popular, such as the 2015 $1.6bn private placement that Goldman led for Uber. It was a deal that was backed by Goldman’s own private wealth clients.

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Dan Dees, co-head of Goldman’s investment banking division, told DD’s Eric Platt and the FT’s Laura Noonan, Shannon Bond and Nicole Bullock, that the bank has been a long-term player in the industry. “We’ve committed resource. We’ve kept our people here. We’ve maintained the commitment to the business through the lean times.”

Goldman’s bankers, like Morgan Stanley’s, were roaming Silicon Valley in the 1990s when the tech underwriting business was most associated with the “Four Horsemen” — boutique investment banks Alex Brown, Hambrecht & Quist, Robertson Stephens and Montgomery Securities — which have long since been taken over by bigger institutions. Morgan Stanley alumni from that time include the noted venture capitalist Mary Meeker.

The only bank to really muscle in to the duopoly is JPMorgan. Its push has been partly fuelled by its ability to lend, using the biggest bank balance sheet in the US, and the provision of other services such as cash management and private banking. JPMorgan led the Lyft IPO, but questions persist over whether even it can win lead left mandates when it goes to bake-offs against Morgan and Goldman.

DD will avoid spoilers for readers who haven’t caught up on the finale of Game of Thrones. But we would caution, as far as Silicon Valley IPOs are concerned, it doesn’t look like either Goldman or Morgan are under siege.

Things Fall Apart: Britain, British Steel and Greybull Capital

On Tuesday, it was Jamie Oliver’s restaurant empire. On Wednesday, it was British Steel. The carnage in British business keeps coming with each passing day.

On Wednesday, DD’s Javier Espinoza told you about a contrarian private equity investor who thinks he can snap up bargains once Brexit and other factors rip apart the already sluggish UK economy.

But there’s nothing contrarian about the investment philosophy of Greybull Capital, the private equity outfit that bailed out British Steel three years ago.

The distressed private equity fund scooped up the troubled company for a token £1 in 2016, allowing the UK’s Tory party, then led by David Cameron, the ability to escape an embarrassing business failure that would eliminate manufacturing jobs.

Now Greybull blames the company’s demise on a well-known Cameron faux pas — Brexit.

“There are a number of reasons why the turnaround has been very badly blown off course but the main one is Brexit,” Marc Meyohas, right, Greybull’s founder, told DD in his first interview since the company’s collapse.

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However, those who follow Greybull closely already knew their investment was no sign of a revival for British Steel and its 5,000 employees. It was just a delay to their ultimate demise, which was formalised on Wednesday.

The London-based private investment firm doesn’t exactly have a sterling reputation when it comes to saving damsels in distress.

Greybull was the owner of Monarch airlines when it went bust in 2017, landing the not-so coveted title of the UK’s biggest peacetime repatriation after taxpayers paid a cool £60m to arrange the return of thousands of holidaymakers.

Its foray into retail didn’t work out too well either, with both the electrical retailer Comet and convenience store chain My Local ultimately failing.

But it seems to be a game of heads I win, tails you lose with Greybull, which sets up structures to minimise its loses in the event of a collapse, giving it minimum exposure to downside risks but benefits from a potential upside.

Meyohas insisted he’d do it all over again, even risking failure. “Turnaround investing is an incredibly important part of the economy,” he said. “Companies get into trouble and it is right that there are people who are willing to support them.”

“We cannot let these companies die. It would be crazy for the economy.”

Read the full interview here.

A juicy rumour that Apple tried to buy Tesla re-emerges

It seems almost inevitable. As soon as Tesla’s stock price neared the $200 mark, rumours of a bid by Apple for the business started to resurface.

The culprit? Craig Irwin, an analyst at Roth Capital Partners, floated the idea that Apple might want to buy Tesla based on market speculation that it had bid $240 per share for the electric carmaker in 2013.

Whispers of takeovers aren’t unusual when a hot tech stock’s price falls. Snapchat’s share price collapse following its 2017 listing was peppered with murmings of a buyout. And a $240 per share price doesn’t seem too egregious for Apple, which has a comfortable cash stash and has dabbled in various car-related products. Does it?

Alphaville’s Jamie Powell takes a look at the numbers to see how Tesla’s shareholders would fare in such a deal. After all, the company’s balance sheet looks vastly different to how it did six years ago.

The full details are here, but put simply, due to Tesla’s share count increasing by almost half and it’s net debt going up, Apple’s hypothetical offer would convert to only $115 per share.

A 44 per cent discount doesn’t sound too good, at least until shareholders hear that Morgan Stanley analyst Adam Jonas, once firmly in the Tesla bull camp, says the shares could fall to a mere $10 in a worst-case scenario.

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According to Business Insider, Jonas told clients on Wednesday that Elon Musk’s company is no longer a growth story but “a distressed-credit story”. Ouch.

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Job moves

  • Tesla’s unconventional relationship with social media continues as the electric carmaker tapped a 28-year-old resident of Reading, south England, to be its social media manager. Adam Koszary, who works at the Museum of English Rural Life, caught Elon Musk’s attention after posting a photo of an Exmoor Horn ram last April, captioned: “Look at this absolute unit.” Full tale here.

  • Private equity firm Siris has hired Tracy Harris as a partner and head of investor relations and product strategy. Harris was previously a partner at StepStone Group, where she served as a senior member of the firm’s small buyout, growth equity and venture capital sector teams.

  • Sidley Austin has hired a team of lawyers from Cooley led by private equity partner Mehdi Khodadad in Century City and Washington DC. The team consists of Khodadad, partners Josh DuClos and Eric Kauffman, counsel Stacy Crosnicker and several associates.

Smart reads

A doomed hook-up How Grindr’s Chinese owner tried to keep a hold of the popular dating app after US officials got wind of a data mis-step that gave engineers in Beijing access to the personal information of millions of Americans. (Reuters)

Problematic platforms The land grab for assets across media and food delivery shows that technology platforms are facing a loss of control, writes the FT’s John Gapper. (FT)

Are you being watched? While tech companies talk about the importance of privacy as if their lives and revenue growth depend on it, a recent crop of stories about Airbnb guests finding recording equipment in their rentals serves as a stark reminder that in this day and age, privacy is a luxury. (FT)

News round-up

Saudi Aramco signs US LNG deal in bid to diversify beyond oil (FT)

Pret A Manger to buy rival Eat in Veggie push (FT)

Nascar revs up with $2bn acquisition of Daytona track owner (FT)

Vista Equity Partners lines up binding bid for Kantar (Reuters)

TransferWise co-founders sell part of stakes at $3.5bn valuation (FT)

Trainline aims for £1.5bn valuation with London float (FT)

Sirius Computer moves to block derivatives holders from speculation (Reuters)

Former currencies star fights to revive hedge fund after loss (FT)

Canada’s Barrick Gold makes buyout offer for Acacia Mining (FT)



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