SoFi to acquire Galileo for $1.2bn

BY Richard Summerfield

Despite the scarcity of deals given the COVID-19 outbreak, some M&A activity is still occurring. On Tuesday, non-profit online student lender Social Finance Inc (SoFi) announced it had agreed to acquire payments and banking technology provider Galileo Financial Technologies for $1.2bn in cash and stock, subject to regulatory approval.

The deal will see Salt Lake City-based Galileo continue to operate as an independent subsidiary of SoFi Inc, with current chief executive, Clay Wilkes, remaining in charge of the company.

“SoFi has established itself as a leader in the fintech sector, providing our more than one million members a full array of financial products to help them get their money right,” said Anthony Noto, chief executive of SoFi. “The response by our members to our innovation across borrowing, saving, spending, and investing has motivated us to think bigger, bolder and more expansively given the insatiable consumer appetite for financial services innovation.

He added: “Together with Galileo, we will partner to build on our companies’ strengths to drive even greater financial technology innovation, making those products and services available to both current and future partners. While we march forward on our mission to help people achieve financial independence through our own direct efforts, with Galileo, we can enable a broader ecosystem of companies to join us in helping the world achieve financial independence.”

“SoFi has built a very strong diversified financial services company focusing on a full suite of financial services,” said Mr Wilkes. “These are products that many of our leading fintech clients are asking for. Distributing products through our enterprise class API is the vision behind this combination. I think it’s very powerful.

He continued: “We’re excited to work with SoFi to build on the services that have made Galileo the leading supplier of infrastructure services to leading financial, technology, and fintech companies. With the help of SoFi, we intend to continue to grow with and support all of our existing clients and the product roadmaps that they have defined.”

News: SoFi To Acquire Galileo Financial Technologies

PE giant Lone Star acquires hotel operator Unizo for $1.9bn

BY Fraser Tennant

Following months of negotiations and counter bids, global private equity (PE) firm Lone Star Funds has won the race to acquire Japan-based company Unizo Holdings Co Ltd for $1.9bn.

The transaction will see Lone Star, in tandem with a number of Unizo employees, acquire all 29,618,824 shares tendered in the offer at ¥6000 apiece in cash. The tendered shares – including those of Unizo shareholders Elliott International and Liverpool Limited Partnership – represent 86.55 percent of Unizo’s outstanding shares.

Furthermore, Lone Star plans to acquire the hotel operator’s remaining shares that were not tendered in the offer. Throughout the long open-bidding process, Unizo had expressed a preference for its employees to be involved in the deal, a scheme which allows a group of Unizo employees to own 73 percent of common shares, while Lone Star would hold the remainder.

Principally engaged in the real estate sector, Unizo has two core business divisions: a real estate business and a hotel business. The company owns and leases office buildings located in central areas of Japan and prime locations in large cities in the US, as well as operating several hotels located in prime locations of major cities in Japan.

In a statement, Unizo said that it had rejected a number of bids due to concerns over securing employment. The hotel operator also stated that it had made a rare request to bidders for Unizo employees to be able to control the new owner’s power to sell assets – a request with which Lone Star concurred and which helped seal the deal.

Based in Dallas, Texas, Lone Star invests globally in real estate, equity, credit and other financial assets. Since the establishment of its first fund in 1995, the firm has organised 17 PE funds with aggregate capital commitments totalling over $70bn.

To acquire Unizo, Lone Star had to outpace a number of fellow bidders, including Fortress Investment Group and Blackstone, which made a sweetened bid for Unizo in January 2020 after its initial October 2019 offer was rejected.

News: Lone Star succeeds in $1.9-billion buyout of Japan hotel chain Unizo

Game over? – USA Rugby files for Chapter 11

BY Fraser Tennant

As a result of “insurmountable financial constraints” in the wake of the COVID-19 crisis, the board of directors of USA Rugby – the national governing body for the sport of rugby union in the US – has voted to file for Chapter 11 bankruptcy.

The board, along with the USA Rugby Congress, stated that the current suspension of sanctioned rugby activities caused by the ongoing COVID-19 pandemic had accelerated existing financial challenges facing the organisation, including a 2019 budgetary overspend.

In the main, the suspension of competition resulted in a significant loss of revenue from spring and summer membership dues, sponsorship drawbacks and additional revenue sources. To mitigate the impact of lost revenue, USA Rugby worked on potential solutions, including bankruptcy and restructuring.

The Chapter 11 filing is reinforced by a financial support package approved by the World Rugby Executive Committee (EXCO) which will enable USA Rugby to restructure on an expedited timeline. Both the USA Rugby Board and Congress agree that the filing supported by a robust action plan is the optimal strategy to swiftly and efficiently address challenges and deliver a foundation for future stability.

Additionally, USA Rugby has confirmed that these measures are intended to protect and support the men’s and women’s sevens and fifteens programmes as they continue to compete on the world stage.

“This is the most challenging period this organisation has faced, and all resolves were never taken lightly in coming to this determination,” said Barbara O’Brien, chair of USA Rugby. “While the current climate is of course much larger than rugby, we remain focused with stakeholders and supporters in the continued effort toward a balanced rugby community where the game can truly grow.”

Although the Chapter 11 filing has required significant staff and budget reductions, USA Rugby’s headquarters will continue to operate on a condensed staffing model through the remainder of the restructuring process.

Going forward, World Rugby and other creditors will review and endorse final court-approved restructuring plans, allowing USA Rugby to emerge from Chapter 11.

News: USA Rugby to file for bankruptcy

OneWeb files for Chapter 11 bankruptcy protection

BY Richard Summerfield

Satellite operator OneWeb has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York. The firm, backed by SoftBank Group Corp, aims to build a global network to deliver broadband internet.

OneWeb had already raised £2.6bn to fund its expansion but had been attempting to raise additional funding. In a statement released on Saturday the company noted that it had been close to obtaining financing but that “the process did not progress because of the financial impact and market turbulence related to the spread of COVID-19”.

“OneWeb has been building a truly global communications network to provide high-speed low latency broadband everywhere,” said Adrian Steckel, chief executive of OneWeb. “Our current situation is a consequence of the economic impact of the COVID-19 crisis. We remain convinced of the social and economic value of our mission to connect everyone everywhere.”

He continued: “Today is a difficult day for us at OneWeb. So many people have dedicated so much energy, effort, and passion to this company and our mission. Our hope is that this process will allow us to carve a path forward that leads to the completion of our mission, building on the years of effort and the billions of invested capital. It is with a very heavy heart that we have been forced to reduce our workforce and enter the Chapter 11 process while the Company’s remaining employees are focused on responsibly managing our nascent constellation and working with the Court and investors.”

OneWeb’s network was intended to compete with SpaceX’s ‘Starlink’ project and had launched 74 satellites to date. The company planned a constellation of 648 spacecraft. If no buyer for OneWeb or its assets can be found, the UK government is ultimately responsible for the 74 spacecraft currently in orbit.

News: OneWeb files for bankruptcy protection

Carlyle’s Japan-focused fund

BY Richard Summerfield

Private equity giant Carlyle Group has raised $2.3bn (¥258bn) for its fourth Japanese buyout fund, Carlyle Japan Partners IV ( CJP IV).

The fund will focus on targets shed by conglomerates as well as succession deals. Specifically, it will focus on upper mid-market investment opportunities in Japan across consumer, retail and healthcare, general industries and technology, media and telecoms. It will also pursue large-cap investments on an opportunistic basis.

The fund received strong backing from domestic and global investors and is more than double the size of its predecessor fund, CJP III, which raised ¥120bn.

“Our investments over the past 20 years have earned us the trust and support of our investors, who we would like to thank for their continued confidence in our ability to create value and drive performance,” said Kazuhiro Yamada, head of Carlyle Japan in a statement. “We are seeing growing opportunities in Japan across succession and carve-out deals, and with this larger fund and strengthened leadership, we believe we are well-positioned to capture these.”

“We have been a driving force in the development of the Japanese private equity market for two decades, combining our deep local knowledge with our global platform to create significant long-term value for our investors and for Japanese companies,” said Kewsong Lee, co-CEO of The Carlyle Group. “We are excited about how the market is evolving and will strive to further build out our Japan business by partnering with strong management teams and high potential companies to drive growth and value over the long-term.”

Corporate asset acquisitions are likely to range between ¥20bn and ¥40bn, though for larger deals the firm will also use money from other funds in Asia, Europe and the US.

News: Carlyle raises $2.3 billion for its biggest Japan fund to date