“Business as usual” says PAL following Chapter 11 filing

BY Fraser Tennant

A victim of prolonged travel restrictions and a decline in tourism, Philippine Airlines Inc. (PAL) has filed for Chapter 11 bankruptcy in order to restructure and reorganise its finances to navigate the COVID-19 crisis and emerge as a leaner and better-capitalised airline.

As part of the Chapter 11 process, PAL has filed a restructuring plan, which is subject to court approval, which provides over $2bn in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25 percent.

Also included in the plan is $505m in long-term equity and debt financing from PAL’s majority shareholder and $150m of additional debt financing from new investors. PAL will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.

The flag carrier of the Philippines and the country’s only full-service network airline, PAL was the first commercial airline in Asia and marked its 80th anniversary in March 2021. It was also ranked the 30th best airline in the world in 2019.

PAL has stated that business operations will continue as usual during restructuring. PAL Holdings Inc., the holding company of PAL, and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 filing.

“We welcome this major breakthrough,” said Dr Lucio C. Tan, chairman and chief executive of PAL. “This is an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world.”

The company expects to emerge from the Chapter 11 bankruptcy process before the end of 2021.

Mr Tan concluded: “We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term.”

News: Philippine Airlines files for Chapter 11 in U.S. after COVID-19 crisis

Global CEO confidence returns to pre-pandemic levels, claims new report

BY Fraser Tennant

Confidence among global chief executives is returning to pre-pandemic levels, with eight out of 10 stating a willingness to launch aggressive M&A plans in the next three years, according to a new KPMG report.

In its ‘KPMG 2021 CEO Outlook’, which asked more than 1300 global chief executives about their strategies and outlook over a three-year period, KPMG found that 60 percent of leaders are confident about the global economy's growth prospects – up from 42 percent in January/February 2021.

Moreover, the prospect of a stronger global economy is leading chief executives to invest in expansion and business transformation, with 69 percent of senior executives identifying inorganic methods, such as  joint ventures, M&A and strategic alliances, as their organisation’s main strategy for growth.

In terms of M&A, KPMG reveals that a majority (87 percent) of global leaders stated that they are looking to make acquisitions in the next three years to help grow and transform their businesses.

“Despite the continued uncertainty around the pandemic, chief executives are increasingly confident that the global economy is coming back strong,” said Bill Thomas, global chairman and chief executive of KPMG. “This confidence has put leadership in an aggressive growth stance. While inorganic growth strategies are a priority, chief executives are also looking to expand organically and continue to assess the future of work to ensure they can attract top talent.”

Another positive noted by the KPMG report is a greater focus on environmental, social and governance (ESG) among leaders. “If there is a positive to come out of the past 18 months, it is that chief executives are increasingly putting ESG at the heart of their recovery and long-term growth strategies. The unfolding climate and societal crises have made it clear that we need to change our ways and work together.”

To this end, the report highlights that 30 percent of chief executives plan to invest more than 10 percent of their revenues into sustainability measures and programmes over the next three years.

Mr Thomas concluded: “I am encouraged about what the future holds because business leaders are acknowledging that they need to be the drivers of positive change, supporting measures to tackle environmental dangers, as well as societal challenges – from gender and race to equity and social mobility.”

News: CEOs back to pre-pandemic levels of confidence, KPMG survey shows

Prosus increases Indian investments

BY Richard Summerfield

Prosus N.V. has agreed to acquire BillDesk in a deal worth $4.7bn, subject to approval from the Competition Commission of India.

The deal will increase Prosus’ total investment in Indian start-ups to more than $10bn, the company said in a statement. Prosus’ Indian portfolio includes food delivery company Swiggy, EdTech giant BYJU’S, FinTech company LazyPay, and Urban Company.

Upon completion, the deal is expected to create a financial ecosystem that could handle 4 billion transactions annually, which is nearly four times what PayU, another Prosus FinTech, does in India currently, as well as meet the changing payments needs for multiple stakeholders in the country.

“We have a long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005,” said Bob van Dijk, group chief executive of Prosus. “We’ve invested close to US$6 billion in Indian tech to date, and this deal will see that increase to more than US$10 billion. BillDesk exemplifies the ambition and expertise of Indian entrepreneurs, who are among the best in the world, with exceptional abilities to build products and services and understand scale and value. This is critical in a country as vast as India.”

“We believe this transaction will stimulate both innovation and competition within India’s digital payments industry,” said Laurent Le Moal, chief executive of PayU. “This will not only help to strengthen India’s digital economy, but also bring financial services to those who may have historically been excluded. This ambition is fully aligned with the Government of India’s vision of ‘Digital India’ and is a key objective for PayU across all the communities we serve globally. This deal is an example of how our purpose and our business objectives work together, accelerating growth and increasing access to financial services.”

“BillDesk has been a pioneer in driving digital payments in India for well over a decade,” said M N Srinivasu, co-founder of BillDesk. “This investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India, India’s central bank. BillDesk has always been committed to making payments faster, easier and more secure. We are excited about what the two great teams at BillDesk and PayU can deliver together as a driving force within the evolving digital payments landscape in India.”

BillDesk was founded in 2000 and counts Visa, General Atlantic and Temasek Holdings, among others, as its investors.

News: Prosus doubles down on India with $4.7 bln deal for BillDesk

Goldman Sachs to acquire NNIP

BY Richard Summerfield

The Goldman Sachs group has agreed to acquire NN Investment Partners from NN Group N.V. for around $1.98bn. The transaction is expected to close by the end of the first quarter of 2022, subject to regulatory and other approvals and conditions.

The deal will essentially double Goldman Sach’s European assets under supervision to about $600bn and will bring “great cross-selling opportunities” for Goldman Sachs Asset Management, according to Julian Salisbury, head of Goldman Sachs Asset Management.

“This acquisition allows us to accelerate our growth strategy and broaden our asset management platform,” said Mr Salisbury. “NN Investment Partners offers a leading European client franchise and an extension of our strength in insurance asset management. Across NN Investment Partners’ offerings they have been successful in integrating sustainability which mirrors our own level of ambition to put responsible investing and stewardship at the heart of our business.”

The deal also enhances Goldman Sachs’ global position as it boosts the firm’s fund management and distribution with $355bn in assets under management and about $70bn in assets under advisement. The acquisition of NNIP is the biggest deal by Goldman Sachs since David M. Solomon became chief executive in 2018.

Under the terms of the deal, NNIP’s 900 employees will join Goldman Sachs and the Netherlands will become “a significant location” in the firm’s European operations. Furthermore, the two companies will enter a 10-year strategic partnership under which Goldman will provide asset management services to NN Group on an investment portfolio of $190bn, the companies said in a statement.

“NN Group and NN Investment Partners have a longstanding and successful shared history,” said David Knibbe, chief executive of NN Group. “We value this strong and constructive relationship that we have and we look forward to further building on it in a new form. This transaction brings together two international asset managers, each with many decades of investment experience. We have found a strong and professional partner in Goldman Sachs, providing an environment in which our NN Investment Partners colleagues can continue to thrive, while the combined investment expertise and scale will enhance the service offering to NN Investment Partners’ clients, including NN Group.

“This transaction will also give NN Group greater optionality to develop a broader range of asset management propositions for our customers.,” he continued. “Our approach and ambitions around ESG will remain unchanged and Goldman Sachs shares our commitment to responsible investing.”

News: Goldman Sachs to buy Dutch asset manager NNIP for around $2 billion

Out of this world: Virgin Orbit goes public in $3.2bn SPAC deal

BY Fraser Tennant

In a $3.2bn deal that will make it a publicly-traded company, satellite-launch services provider Virgin Orbit is to merge with special purpose acquisition company (SPAC) NextGen Acquisition Corp. II.

Under the terms of the definitive agreement, the transaction is expected to provide the combined company up to $483m in cash proceeds, including up to $383m of cash held in the trust account of NextGen and a $100m fully committed private investment in public equity (PIPE). Additionally, the combined company will retain the Virgin Orbit name and is expected to be listed on Nasdaq under the ticker symbol ‘VORB’. 

Operating one of the most flexible and responsive satellite launchers ever invented, in just a span of four years Virgin Orbit has developed a proprietary air-launch technology, coupled with world-class manufacturing infrastructure and a proven team to transform space access for a diverse and global customer base.

“We have built Virgin Orbit in order to change the business of satellite launch and to open space for everyone, globally,” said Dan Hart, chief executive of Virgin Orbit. “Our success in launch has driven the business forward, and we are driving innovation with world-class design and advanced manufacturing capabilities, our unrivalled mobility of launch, and our exciting space solutions services.”

The boards of directors of both Virgin Orbit and NextGen have unanimously approved the proposed merger.

“We are delighted that our search for a great company, with strong organic growth in a large and growing market, disruptive technology and a world class management team has led to our partnership with Virgin Orbit,” said George Mattson and Greg Summe, co-founders of NextGen. “The space economy is developing rapidly, and Virgin Orbit is well positioned to benefit through its ability to competitively launch at any time, from any place on Earth, to any orbit and inclination.”

The merger is expected to be completed in Q4 2021 subject to, among other things, the approval by NextGen’s shareholders and the satisfaction or waiver of other customary closing conditions.

Sir Richard Branson, founder of Virgin Orbit, concluded: “I am very excited we are taking Virgin Orbit public, with the support of NextGen. It is another milestone for empowering all of those working today to build space technology that will positively change the world.”

News: Branson's Virgin Orbit to go public through $3.2 bln SPAC merger