CEOs reject Saudi Arabia’s conference, but will they reject its money?
Faced with public backlash, CEOs of Uber, JPMorgan, Blackrock, and Blackstone have withdrawn from a conference in Saudi Arabia next week as the Kingdom addresses allegations it killed journalist Jamal Khashoggi.
But, while it’s easy to ditch a conference, it’s much harder to ditch Saudi Arabia’s checkbook -- which bankrolls many of the world’s most powerful companies, funds, and projects.
The downfall of ‘Davos in the desert’
Saudi Crown Prince Mohammed bin Salman (MBS) organized the “Future Investment Initiative” conference to highlight his reformist economic agenda and recruit global partners.
Unfortunately, after the Saudi royal family was accused of Khashoggi’s murder, many of the business partners that MBS hoped to schmooze are now worried he’s a murderer.
Ugh, hate it when that happens…
However, since Saudi Arabian oil money is invested so widely across the global economy, it would be nearly impossible for foreign partners to disentangle their businesses from Saudi Arabian cash if they wanted to.
Saudi petro dollars grease the wheels of the global economy
Saudi Arabia’s Public Investment Fund (PIF) began investing in foreign companies in 2015, pumping $3.5B into Uber and $40B to American infrastructure projects with partners General Electric and Lockheed Martin.
Saudi then contributed $45B to SoftBank’s Vision Fund, which invested in WeWork, Slack, Wag, GM Cruise and dozens of others (MBS has already committed $45B to SoftBank’s next Vision Fund).
Just last week, MBS recruited some of America’s biggest tech executives to the advisory board of his $500B future-city project, NEOM.
Now, investors need to decide if blood is thicker than oil
American business leaders are now under pressure from shareholders to distance themselves from MBS -- who currently sits on Uber’s board. Meanwhile, shares of SoftBank, whose $93B Vision Fund is made up of more than $45B of Saudi funds, fell 8% yesterday after the fallout.
But, if the stakes are high for Saudi’s partners, they’re higher for the Kingdom itself. MBS plans to take Saudi Aramco public for $2T, but according to Bloomberg, the company’s value is just $1.3T -- and will likely drop lower as global partners disappear.
More BS from MBS?
Twilio acquired SendGrid for $2B to expand its automated communications platform
Yesterday evening Twilio, a software company that makes tools to send programmatic phone calls and text messages, acquired email platform SendGrid for $2B.
The deal (Twilio’s largest to date) will position the company to offer end-to-end communication tools for developers -- and both companies are getting a hefty stock boost.
First phone calls, then text messages…
And now emails. By purchasing SendGrid’s email service (and its 74k paying customers who send 45B emails a month), Twilio wants to position itself as a one-stop shop to help companies for automated communications.
Once the deal is closed in the first half of 2019, the combined company is expected to have more than 100k customers and bring in $700m in annual revenue.
SendGrid sent both stocks through the roof
After the announcement of the acquisition (which offered a significant premium over the company’s $1.4B market value), SendGrid’s stock surged almost 14% in after-hours trading to more than $35 a share, more than 2x the $16 share price at which it went public just last year.
But if SendGrid had a good year, Twilio has had a great one: Although shares at the company dipped slightly yesterday afternoon, they are up 220% so far this year.
Carl Icahn thinks there could be potential in bonds of bankrupt Sears
Sears filed for bankruptcy protection, and now, activist investor Carl Icahn believes there could be potential in the beleaguered appliance giant’s bonds, telling CNBC, “We’re taking a look at them.”
The 125-year-old Sears has been in “survival mode” for the last decade, filed for bankruptcy on Monday, and plans to close 142 stores toward the end of this year (Sears once had 3.5k locations -- there are now just 700 left).
Icahn lives for this sh*t
While it’s not unusual for big investors like Icahn to look for opportunities in bankrupt companies to profit from asset sales, Icahn has made a career out of it.
Over the years he’s made bets on the debt of past companies like auto parts maker Federal Mogul, Metro Goldwyn Mayer, Tropicana Entertainment, and Blockbuster.
When asked to comment on where Sears went wrong, he said, “I’m not going to second-guess what they did… we all have our problems.”
Lampert is getting the brunt of the blame
Many blame ex-CEO Eddie Lampert for slashing the company’s flagship brands and assets over the years as it fell in sales to Walmart, Home Depot, and Amazon.
If you ask the former Sears Canada CEO, he would say Sears was “toast” the moment it closed its merger with Kmart back in 2005 -- Lampert reportedly saw value in the retailers’ real estate and believed two fading giants was better than one.
Good news and bad news: Flutterwave raises $20m, but loses its founder
Quartz reports that a year after raising a $10m Series A round, the leading Nigerian fintech company Flutterwave announced an extension of its Series A which brings its total funding beyond the $20m target.
Unfortunately, the celebration will be bittersweet: its high-profile CEO, Iyinoluwa Aboyeji, unexpectedly announced his resignation from the company -- his second exit from a company he co-founded in less than 5 years.
Oh boy, Aboyeji
Aboyeji, undoubtedly one of the biggest names in Nigeria’s tech-iverse, will exit the role a little over 2 years after he co-founded the payment solutions startup.
His unexpected departure mirrors his 2016 exit from Andela -- a company that trains software developers in Africa and pairs them with tech companies -- 2 months after the company’s $24m series B led by the Chan Zuckerberg Initiative.
Flutterwave, one of the most well-regarded startups of Africa’s fintech space, has quickly become a leading player in online payments, processing 60m transactions worth over $2B from global companies like Uber, Booking.com, and more.
So, what’s next?
Aboyeji has been a serial entrepreneur since he was at university, so it’s fair to assume this won’t be the last of him.
In a farewell message via Twitter, the 27-year-old says he will now spend his time to “pursue family goals” and plans to consult local startups.
Olugbenga Agboola (also a co-founder of Flutterwave) will replace Aboyeji as CEO.