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The social media app everyone is talking about
The hottest new social media network in Silicon Valley is invite only, hasn’t decided how it plans to make money and has still managed to secure a $1bn valuation.
That would be Clubhouse, the app whose popularity has exploded since it played host to a discussion between Elon Musk and Robinhood chief executive Vlad Tenev following the discount brokerage’s controversial decision to halt trading in popular (meme) stocks.
For the uninitiated, think of Clubhouse as a live, interactive podcast. Users, who must be personally invited to the app, host “rooms” where they invite speakers on “stage” to talk about a topic of choice to an audience of up to 5,000 people.
Clubhouse may be relatively small for now, with some 3.4m downloads as of early February, but it’s already drawing equal amounts of buzz and backlash.
It also represents a large and risky bet on the future of audio for its principal backer, the venture capital group Andreessen Horowitz, whose partners seem to spend a significant amount of time on the app.
From DD’s experience on Clubhouse, the most popular rooms trend towards predictable topics for a VC-heavy social app — entrepreneurship, tech trends, and the like.
But the app’s rapid rise in China, where it briefly played host to contentious political debates before being blocked by censors, showed how it could have a broader appeal as it expands outside the US.
So how about that valuation? It’s a truism that a company’s value is set by the price the last marginal buyer is willing to pay for its shares.
In the case of Clubhouse, Andreessen was willing to vault it into the billion-dollar club in January, just months after it led a round of funding pegging the app’s worth at one-tenth that amount.
DD readers might question the logic of bestowing that kind of price tag on such a young company without a clear revenue model. They wouldn’t be totally off base.
However, by the cynical logic of VC, Andreessen is in pole position if Clubhouse becomes the next TikTok, and if it doesn’t, the only thing the group has to lose is a fraction of a $750m pool of capital.
Andreessen, which is already known in VC circles for paying top prices for hot deals, might just have something bigger to lose if Clubhouse fails: its carefully maintained reputation as a Silicon Valley soothsayer.
Go deeper with this look at Clubhouse’s rise from DD’s Miles Kruppa and the FT’s Hannah Murphy.
Silver Lake gets into vets and pets
Private equity group EQT was just days away from kicking off what would have been one of London’s largest recent listings.
Its UK-based portfolio company IVC Evidensia, which has spent years rolling up individual vet practices to become Europe’s biggest vets group, was ready to hit the public markets and hoping for a valuation of about €12bn — a huge jump from a €3bn figure as of February 2019.
Analyst presentations had already begun and would-be public market investors had been given deep-dive sessions on the workings of the company.
Then Silver Lake, a California-based private equity group that had been quietly following IVC’s growth, entered the fray, and everything changed.
On Tuesday IVC called off the IPO and said it would instead sell stakes to Silver Lake and Nestle, which already owned a minority stake. Alongside that, EQT would sell a chunk of the company effectively to itself, transferring it from an older fund to its new one.
Catch up on all the details with DD’s Kaye Wiggins and the FT’s Judith Evans here. It’s the latest example of a buyout group selling a company between different funds under its control (if you missed it, catch up on this deep-dive about the trend).
No doubt some across the City, who had been lined up for a bumper IPO, are feeling bruised while others like bankers at JPMorgan Chase, which was not on the listing but did advise Silver Lake, must be pleased.
The new deal values the company at €12.3bn, slightly higher than was expected from the IPO.
One lesson from the episode: IPO markets might be booming at the moment, but the wall of money in private equity means it can rival them on price.
A French banking deal
What would you do with an investment bank that has had its risk management severely questioned by investors and is trading well below its book value?
If you’re a large French mutual bank that already owns 70 per cent of said asset, you could just take it private. It would give that investment bank somewhere to lick its wounds and take advantage of the value you implicitly think the market is missing.
And that is why France’s BPCE pulled the trigger to buy out the rest of Natixis, its struggling investment bank, with a cash offer of €3.7bn, writes the FT’s David Keohane from Paris.
This wasn’t the first attempt by BPCE’s chief executive Laurent Mignon to take Natixis in-house. Talks had collapsed last year after the FT broke that they were happening.
Mignon, who is reversing the strategy of his predecessor, argues it’s time to simplify the group. He told the FT on Tuesday evening that he doesn’t consider being listed as “a necessity”.
The big question now is about how the group will actually function. Natixis may have cut ties with its under-fire asset manager H2O but there are still questions about its multi-boutique investment banking model.
And just as important will be the future of the investment bank business, which has seen its share of equity derivative blow-ups in recent years. There are concerns it might not get the kind of support it needs inside a slower moving, traditional mutual group structure.
The operator of the Hong Kong stock exchange has picked Nicolas Aguzin, chief executive of JPMorgan’s international private bank, as its new head.
Naotoshi Okada will become the new chair and chief executive of the Nikkei Group, the Japanese media company, which owns the FT. He replaces Tsuneo Kita who is stepping down at the age of 74. Kita was instrumental in defeating Axel Springer in the $1.3bn bidding war to buy the FT in 2015.
Ho Ching, the head of Singapore’s state-backed investment company Temasek, is retiring as executive director and chief executive in October. Ho, who is the wife of Singapore’s prime minister Lee Hsien Loong, has headed Temasek since 2004. She will be replaced by Dilhan Pillay, chief executive of Temasek International, the group’s investment arm. More here.
Josh Smiley, Eli Lilly’s chief financial officer, has been forced to step down after an internal investigation revealed “consensual though inappropriate personal communications” with some employees. Read more here.
Michael Ronen, a former managing partner at SoftBank’s Vision Fund, has co-founded a company called Branded, which has acquired 20 sellers on the Amazon marketplace and raised $150m in funding.
Global MBA Rankings This will be a year of reckoning for many business schools. MBA applications rebounded, driven by people choosing full-time study to escape a difficult jobs market, but admissions departments face the sobering reality of meeting new student needs in an age of uncertainty. Discover 2021’s top schools (FT)
Tesla’s cryptic bet Elon Musk is a maverick entrepreneur venerated by an army of retail investors when it comes to buying the stock of his pioneering electric car company. But the decision by Tesla’s founder to buy $1.5bn worth of bitcoin with the company’s spare cash is unlikely to be copied by other corporate treasury departments (FT)
KPMG UK chairman told staff to ‘stop moaning’ about work conditions (FT)
German finance ministry lambasts regulator over Wirecard (FT)
Reddit boosts valuation with $250m fundraising (FT)
Lonza/vaccines: Alpine ambitions (Lex)
Match Group buys South Korean social-media company for $1.7bn (Wall Street Journal)