Over 1.4 billion to use facial recognition for payments by 2025, claims new report

BY Fraser Tennant

The number of users of software-based facial recognition to secure payments will exceed 1.4 billion globally by 2025, from just 671 million in 2020, according to a new study by Juniper Research.

The study, ‘Mobile Payment Authentication: Biometrics, Regulation & Market Forecasts 2021-2025’, states that this 120 percent growth demonstrates how widespread facial recognition has become – a rapid increase fuelled by its low barriers to entry, a front-facing camera and appropriate software.

Furthermore, the study identified the implementation of FaceID by Apple as accelerating the growth of the wider facial recognition market, despite the challenges to facial recognition during the coronavirus (COVID-19) pandemic with the use of face masks.

The study also recommends that facial recognition vendors implement robust and rapidly evolving artificial intelligence (AI)-based verification checks to ensure the validity of user identity, or risk losing user trust in the authentication method as spoofing attempts increase.

“Hardware-based facial recognition is growing, but the ability to carry out facial recognition via software is limiting its adoption rate,” said Susan Morrow, associate analyst at Juniper Research and co-author of the study. “As the need for a secure mobile authentication environment grows, smartphone vendors will need to increasingly turn to more robust hardware-based systems to keep pace with fraudsters’ evolving tactics.”

The Juniper study also found that the use of voice recognition for payments is increasing, from 111 million users in 2020, to over 704 million expected in 2025. The study identified that, at present, voice recognition is mostly used in banking, and will struggle to grow beyond this, due to concerns around robustness.

Juniper Research recommends that vendors adopt a multi-method biometric strategy, encompassing facial recognition, fingerprints, voice and behavioural indicators to ensure a secure payment environment.

Report: Mobile Payment Authentication: Biometrics, Regulation & Forecasts 2021-2025

Genworth pulls plug on $2.7bn acquisition by China Oceanwide

BY Fraser Tennant

Citing unreasonable time frames and a need for greater clarity as to its future, US insurance company Genworth Financial has terminated its long-delayed $2.7bn acquisition by privately owned investment company China Oceanwide. 

First announced in 2016 and originally expected to close in the following year, regulatory hurdles and financing issues repeatedly delayed the acquisition, which was further complicated over the past year by the global coronavirus (COVID-19) pandemic.

“Our board of directors has concluded that China Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity is needed now in order for Genworth to execute its plans to maximise shareholder value,” said James Riepe, non-executive chairman of the Genworth board of directors. “Thus, the board decided to terminate the merger agreement.”

Genworth has stated that the termination will allow it to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership, which it believes may impact its ability to successfully execute the plan.

Those plans include a potential partial initial public offering (IPO) of Genworth's US mortgage insurance business, subject to market conditions as well as the satisfaction of various conditions and approvals. Genworth has already sold its interest in its Australian mortgage insurance business.

“We are grateful for China Oceanwide’s commitment to our planned transaction over the years,” said Tom McInerney, president and chief executive of Genworth. “During that time, we together navigated significant market uncertainty and regulatory hurdles, a testament to both parties' good faith efforts to complete the transaction.”

Despite the termination of the acquisition, Beijing-based China Oceanwide and Genworth have stated that they will continue to explore potential opportunities to bring long-term care insurance and other similar products to the Chinese insurance market in the future.

Mr Riepe concluded: “Although disappointed after more than four years of efforts, I want to especially thank our shareholders, regulators, policyholders, customers and employees, for their patience and support as we all persevered through an especially long and arduous cross-border approval process.”

News: Insurer Genworth terminates $2.7 billion buyout deal with China Oceanwide

Hertz chooses Chapter 11 exit plan

BY Richard Summerfield

Hertz Global Holdings Inc has selected an ‘enhanced’ restructuring offer from a consortium of company bondholders and private equity (PE) investors that have agreed to supply the billions of dollars in equity capital the company requires to exit Chapter 11 bankruptcy protection.

A consortium made up of Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC has been chosen to sponsor Hertz’s exit from Chapter 11 along with bondholders that agreed to take control of the reorganised company. Hertz remains on track to exit bankruptcy protection in June.

The offer from the PE consortium was chosen ahead of a rival offer from Knighthead Capital Management LLC and Certares Management LLC, according to papers filed in the US Bankruptcy Court in Wilmington, Delaware.

Under the terms of the restructuring deal, the supporting noteholders have given approval for the exchange of their unsecured funded debt claims against the company for approximately 48.2 percent of the equity in the reorganised company, and the right to purchase an additional $1.6bn of equity in the future.

Hertz’s restructuring plan requires the approval of the bankruptcy court and will be subjected to a creditor vote. Hertz said Saturday that more than 85 percent of its unsecured bondholders, the biggest voting class in the bankruptcy, support the proposal backed by Centerbridge, Warburg and Dundon.

“We are pleased to be moving forward with an enhanced proposal supported by our largest creditor constituency and that delivers excellent value to all our stakeholders,” said Paul Stone, president and chief executive of Hertz. “This plan accomplishes all the goals we set out to achieve through our financial restructuring. Our new sponsors combined with our strong leadership team will bring significant operational experience across fleet financing and management, which will benefit all of our stakeholders. We look forward to emerging from Chapter 11 in the second quarter financially and operationally stronger, and well-positioned to achieve the opportunities in the rebounding travel market.”

Last week, Hertz Global Holdings completed the $850m sale of Donlen Corp, which it operated as a wholly-owned subsidiary for nearly a decade. Under the terms of that deal, Athene Holding Ltd paid $891m in cash for Donlen, a business which Hertz acquired for $250m in September 2011.

Hertz filed for bankruptcy protection in May 2020 amid the dramatic downturn in travel during the early stages of the COVID-19 pandemic, which had a significant impact on the car rental business. The company had planned to raise funds by selling stock, but the US Securities and Exchange Commission took issue with that plan.

News: Hertz selects Chapter 11 exit plan backed by Centerbridge, Warburg, Dundon

Hitachi goes GlobalLogic

BY Richard Summerfield

Hitachi Ltd has agreed to acquire US software company GlobalLogic Inc in a deal worth $9.6bn, including debt. The acquisition, which is being funded with cash and bank loans, is expected to close by the end of July 2021.

Hitachi, the Japanese electronics and construction giant, will acquire GlobalLogic, which was founded in 2000, from current owners Canada Pension Plan Investment Board (CPPIB) and Swiss investment firm Partners Group. CPPIB and Partners Group each hold 45 percent of the company and GlobalLogic’s management owns the remaining stake.

“The acquisition of GlobalLogic creates an exciting new opportunity for Hitachi to expand our offerings of Lumada solutions and services, provide value to customers in their digital transformation journey, and grow our Lumada business globally,” said Toshiaki Higashihara, president and chief executive of Hitachi. “The synergy of GlobalLogic’s leading experience design and innovation with Hitachi’s expertise in IT, operational technology, and products, will help us realize our goal to be the leading digital transformation innovator in social infrastructure worldwide.”

He added: “Together, we will create new social, environmental and economic value for our globally expanding client companies and elevate QoL (quality of life) for people through contributions to realize sustainable society.”

“Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life,” said Shashank Samant, president and chief executive of GlobalLogic. “We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses.”

The acquisition of GlobalLogic is part of Hitachi’s 2021 plan to invest one trillion yen to strengthen the digital capabilities of its businesses.

Partners Group acquired a joint lead ownership equity stake in GlobalLogic alongside equity partner Canada Pension Plan Investment Board in 2018 at an enterprise value of $2bn.

“GlobalLogic is serving clients on the front line of the digital transition, helping them reimagine their offering, adapt their business models and change how they engage with consumers,” said Dr Marcel Erni, co-founder and member of the board of directors of Partners Group. “Digitization is one of the three investment giga themes that Partners Group is focused on that is driving change across industries worldwide. GlobalLogic is an exciting success story demonstrating how Partners Group delivers sustainable returns to our clients through transformational investing.”

News: Hitachi to buy U.S. software developer GlobalLogic for $9.6 billion

WeWork goes public via $9bn SPAC merger with BowX

BY Fraser Tennant

In a transaction with an enterprise value of approximately $9bn, flexible space provider WeWork is to become a publicly listed company via a merger with special purpose acquisition company (SPAC) BowX Acquisition Corp.

Under the terms of the definitive merger agreement, WeWork will be provided with approximately $1.3bn of cash which will enable it to fund its growth plans into the future. The transaction will be funded with BowX’s $483m of cash in trust in addition to a fully committed $800m private placement investment at $10 per share.

Since 2019, WeWork has made significant progress on a strategic plan that included robust expense management efforts, exits of non-core businesses and material portfolio optimisation, which contributed to a dramatically improved cost structure.

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” said Sandeep Mathrani, chief executive of WeWork. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

Upon closing, it is expected that WeWork will have approximately $1.9bn of cash on the balance sheet and total liquidity of $2.4bn, even after exiting non-core businesses and despite significant headwinds from the coronavirus (COVID-19) pandemic.

“I am thrilled to partner with  WeWork team as they continue to transform this business and the real estate industry at large,” said Vivek Ranadivé, chairman and co-chief executive of BowX. “With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitalise an enormous industry.”

Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access and Platform offerings, enabling users to choose from their WeWork mobile app when, where, and how they work. Furthermore, demand from landlords and members remains strong, with a $4bn total sales pipeline and an estimated $1.5bn in committed 2021 revenue.

Marcelo Claure, executive chairman of WeWork, concluded: “WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter.”

News: WeWork takes SPAC route to go public in $9 billion deal