Saudi Aramco puts on a show


April 10, 2019

Today, a large market for teeth, and TurboTax doesn’t want taxes to be cheap, but first…
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All according to plan: Investors bust out their wallets for Saudi Aramco

Last week it was widely reported that Saudi Aramco’s well-oiled ties to the Saudi Arabian government had investors trepidatious on the prospects of the oil giant preparing for a $15B bond sale. 

Yeah… about that.

Investors proved the sunny-side consensus wrong after Saudi Aramco hauled in a record $100B in orders.

Greasin’ the wheels

For decades, Saudi Aramco kept its oil spoils quiet. But, since Prince Mohammed’s connection to Jamal Khashoggi’s murder became public, the state-run oil giant decided it owed potential investors some good-guy reassurance.

In a push to prove transparency, Saudi Aramco opened its books and, spoiler alert: They’re not just crude rich — they’re crudely rich. 

In 2018, Saudi Aramco produced almost 1 in 8 barrels of the world’s crude oil supply and mined $111.1B in net incomehold for paralysis… yeah. That’s more than Apple, Amazon, and Alphabet combined.

And what do you know, investors came running

“I mean, it’s just a murder — put me down for $50m!”

Aramco’s open books caught oily investors hook, line, and sinker; Saudi Aramco (and its puppet masters) knew showing the goods would convince paper chasers to let Prince Mohammed’s bygones be bygones.

An oilman with a plan…

The bond sale will help finance Aramco’s $69B acquisition of another Saudi state-controlled company, petrochemical manufacturer, Saudi Basic Industries Corporation.

After Aramco’s announcement to go public was received poorly by investors in the fall, Prince Mohammed constructed the Sabic (Saudi Basic’s nickname) deal as an alternate way to raise money sans stock market.

Now, much of the cash from the deal will end up going toward the country’s sovereign wealth fund (a majority owner in Sabic), which plans to invest in Western technology to help rid the Saudi economy of its oil dependence.

And the cherry on top…

While it was assumed Aramco’s move to go public was canceled after it was left high and dry in the fall, Aramco officials have now indicated the public offering was only “postponed,” not canceled — meaning there still could be some public oil left in the drum.

As The New York Times put it, “the recent meetings with investors may prove a kind of dress rehearsal. An intense, yearslong preparation for the IPO helped make the bond possible.” 

Well-oiled cha-ching!
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Smile: Orthodontic startup Candid raises $63.4m 

Teeth-straightening startup Candid has raised $63.4m in a Series B round, bringing its total funding to $90m.

With the funding, Candid plans to adjust its head count from 275 to 550 and open additional Candid Studios — it currently has 13 locations and plans to open more for a total of 60+ across the US by the end of the year.

The market has arrived

Although orthodontics brought in $11B in revenue last year, the hazards of costly pay still keep many snaggletooths away (traditional braces range from $4k to over $8k). 

Studies show that 65% of the US population could benefit from a little T(ooth)LC — which, to investors, is the perfect indicator that there are tons of teeth just waiting to be touched by pairs of rubber gloves. 

SmileDirectClub, which is reportedly preparing for an IPO after hitting a $3.2B valuation, and other startups like Uniform Teeth and Orthly have all hit the market with missions to make people smile without having to take out 2nd mortgages on their houses.

But Candid keeps you away from the tooth torture chamber

Since last September, Candid, which 3D prints its aligners, has attracted new customers with its quick and easy process — growing its revenues 4x.

It starts with an at-home impression process. Once that’s done, customers get their teeth scanned at a Candid physical location, and have their aligners in about 30 minutes — a strong selling point, considering most people would rather dip their teeth in acid than go to an orthodontic office. 

» Right in the kisser

Expanse, which is built on military money and venture capital, raises $70m

Expanse, a cybersecurity startup that indexes IP addresses, raised $70m from private investors to help governments and large corporations monitor devices across the internet and buffer their businesses from bad guys.

Cybersecurity is so hot right now (the industry is expected to hit $300B by 2024), with many firms branching out from large tech companies. But Expanse traces back to a less common origin.

From the CIA to CVS

Expanse founder Tim Junio worked for the CIA and the secretary of defense before meeting co-founder Matt Kraning at DARPA, the US defense agency that incubates technology projects (like the friggin internet, for example). 

When the company (which was originally called Qadium) initially launched, it was basically an independent cybersecurity research lab funded by millions of dollars worth of DARPA grants.

But by 2017 the military R&D lab was attracting interest from dozens of private, Fortune 100 giants like CVS. You know what that means — time for a rebrand. Enter: Expanse. 

The ol’ Expanse dance

Like Palantir, Peter Thiel’s big data analytics company, Expanse is one of a growing number of private startups that power America’s most important government agencies and its biggest businesses (Thiel’s Founder’s Fund is a major investor in Expanse).

Expanse’s private clients include Thiel-founded PayPal, pharma behemoth Allergan, and legal giant Orrick. Expanse also has contracts with the Department of Defense, the Army, and the Navy. 

Just last year, Expanse won a $37m contract from the Department of Defense to build out technology for the US Navy’s Space and Naval Warfare Systems Command. 

» Expanse wears the pants

A TurboTax-backed bill is on track to ensure your tax headache doesn’t go away

Tax-induced migraines are as American as apple pie. But the tax-filing tango is a different dance across the rest of the world: In most developed countries, tax agencies like the IRS do people’s taxes for them

For years, the chronically underfunded IRS has wanted to build a similar system to make taxes easier and cheaper for millions of Americans. 

But yesterday, the House passed a bill preventing the plan — and you can thank TurboTax.

The fight for free filing

The “Taxpayer First Act” passed the lower chamber with bipartisan support; now, it’s headed to the Senate, where it’s likely to pass.

The bill, which is the first legislation passed to update the IRS in 20 years, aims to “modernize and improve” the IRS. But the fine print makes it illegal for the IRS to make a free online filing system.

That fine print is the result of years of lobbying: Last year, H&R Block and Intuit (TurboTax’s parent) spent $6.6m lobbying for tax legislation.

Your tax pain is H&R Block’s tax gain

By keeping things complex, H&R Block and Intuit continue to make fat stacks of tax cash (over the past several years, H&R Block has helped push through several pieces of legislation that have made it harder to file for tax credits).

Surprisingly, 70% of Americans are already eligible to file their taxes for free. But since the Free File Program is run by 12 for-profit partners who intentionally fail to promote the free program, only 3% of eligible taxpayers actually file. 

As for the rest? They pay TurboTax and H&R Block billions to do it for them.

» Make filing frustrating again
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