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US Fed intends to slow rate hikes as inflation begins to decline – Industry roundup: 14 December

US Fed intends to slow rate hikes as inflation begins to decline

The US Federal Reserve is holding its final policy meeting of the year today, with a policy statement expected to release at 2:00pm EST. Following a slight dip in inflation, a slower pace of interest rate hikes and a pause in tightening monetary policy are anticipated.

With the expected half-point increase today, the target federal funds rate would fall in the 4.25%-4.50% range. Investors in federal funds rate contracts now expect the Fed to scale back to quarter-point hikes in February and March 2023. At 2:30pm EST, Fed Chair Jerome Powell plans to hold a news conference to provide details on the policy decision as well as relevant information pertaining to future conferences. The Fed expects to employ a different indicator to target 2% inflation, which would reportedly be equivalent to 2.5% consumer price inflation.

The Consumer Price Index reportedly remains on the rise, increasing 7.1% year on year in November. However, this is a decrease from June's rate of 9%, the highest in forty years.

Thoma Bravo to purchase and privatize Coupa Software for US $8 billion

Thoma Bravo, a US-based private equity firm, has agreed to acquire Coupa Software Inc., a cloud-based business software company, with plans to privatize the company. The deal is valued at US $8 billion. Coupa Software, which has been public since 2016, offers business-spend management software that assists businesses in managing their purchases of goods and services. In 2020, Coupa acquired treasury management system (TMS) provider BELLIN Group, which was subsequently rebranded as Coupa Treasury.

Coupa reported a 17% increase in total revenue for the quarter ended Oct. 31 and an $84.1 million net loss. Its stock reportedly rose 27% once the Thoma Bravo deal was revealed, following a drop of more than 60% this year. Under the agreement, Coupa shareholders can expect to receive $81 per share, which is 30.5% more than the stock's closing price on Friday and 77.2% more than the price on Nov. 22, said reports. Additionally, the all-cash transaction has an enterprise value of $8 billion, including debt, as well as a minority investment from an affiliate of the Abu Dhabi Investment Authority, a sovereign wealth fund.

The technology sector has reportedly been among the hardest hit during these economic uncertainties. Although the lack of bank debt financing has reportedly hampered deal-making activity, some software companies have become acquisition targets for private equity firms.

Thoma Bravo's acquisition of Coupa Software is expected to be partially funded by a $2.6 billion loan package from a group of 19 direct lenders, including Sixth Street. Other direct lenders on the transaction reportedly include HPS Investment Partners, Oaktree Capital Management, Apollo Global Management Inc. and Blackstone Inc. Following similar transactions this year involving software companies like Anaplan, Ping Identity, ForgeRock and Sailpoint Technologies, the privatization of Coupa Software is Thoma Bravo's most recent transaction.

CyberData Pros partners with Mastercard's RiskRecon, providing global cybersecurity safeguards to companies worldwide

CyberData Pros (CDP), a company that specializes in cybersecurity, has partnered with RiskRecon, a Mastercard Company, to offer threat prevention services for clients globally. CDP, which mainly focuses on data security, compliance, consulting and due diligence processes, reportedly also offers clients solution-oriented awareness and implementation mechanisms to help reduce security risks.

RiskRecon, a SaaS platform, aims to evaluate the cyber risks associated with a company's digital assets. Furthermore, a company can reportedly take action-based steps on the risks observed in their own IT infrastructure and vendor portfolio using RiskRecon's cybersecurity ratings and insights. CDP offers automated risk assessments that are reportedly created in accordance with the company's risk aversion, enabling businesses to mitigate risks while focusing on corporate goals.

Businesses around the world, once evaluated by RiskRecon, will be able to collaborate with CDP to develop an action plan to eliminate identified cybersecurity risks. Both CDP and RiskRecon aim to create a client-centred team that helps minimize cybersecurity threats and raise risk awareness for organizations all over the world, establishing a more secure financial ecosystem.

BNP Paribas establishes a €30 billion private assets division to commence January 2023

BNP Paribas Group has established a new private assets division within its Investment and Protection Services (IPS) division, generating over €30 billion in assets under management and advisory. David Bouchoucha, who previously supervised the BNP Paribas Asset Management's private debt and real assets investments, is expected to lead the new business unit as head of private assets, reporting directly to Sandro Pierri, CEO, BNP Paribas Group.

The new division is expected to begin operating in January 2023 and to seek to raise funds from institutional and individual investors and third-party clients. The new unit’s primary areas of concentration are the direct management of corporate financing, real asset financing, and personal financing as well as indirect management via private asset funds. Additionally, the division plans to integrate the group's current functionalities, including Principal Investments' private asset management operations and its affiliate, BNP Paribas Agility Capital.

The development of the new unit is reportedly a component of the company’s growth, technology and sustainability (GTS) 2025 strategic plans for the organization, stated reports. One of the growth drivers outlined in the firm’s GTS 2025 strategic plan is private asset management, a market that has reportedly tripled in size over the past ten years, stated Renaud Dumora, Deputy Chief Operating Officer and Head of IPS, BNP Paribas. Furthermore, Pierri commented that “in an environment of volatility and cyclical uncertainty, being able to offer quality assets, selected according to financial and extra financial criteria, offering a stable return provides a major diversification lever.”

The move would make BNP Paribas the most recent company to establish a separate division for private assets, with ten out of the top 25 traditional asset managers having started some sort of restructuring of their private markets divisions in the previous five years, according to recent studies. These include the establishment of JP Morgan Private Capital and Schroders Capital, both created in 2021.

BigCommerce and Sage collaborate to enhance e-commerce within the B2B and B2C ecosystems

BigCommerce, an open SaaS e-commerce platform for businesses of all sizes, has joined forces with Sage, a technology provider specializing in accounting, finance, HR and payroll, to offer businesses an end-to-end solution that connects their online storefronts to their back-office operations.

BigCommerce's integration with Sage 100's ERP software reportedly enables companies to update their digital business, rollout integrated B2C and B2B storefronts, attract new clients, boost productivity and provide real-time updates and visibility for orders, client data and invoices. For Sage 100 customers who seek to sell online, BigCommerce is reportedly among the first enterprise e-commerce platforms to launch in the Sage Business Cloud Marketplace.

The collaboration, which also includes Sage Technology partner, ROI Inc., enables clients to use advanced payment options and capabilities; define custom account structures; segment customers for pricing, product access and promotions without having to maintain a second website; and manage invoices online with the ability to easily split or consolidate.

Microsoft to purchase 4% of the London Stock Exchange in a cloud-related transaction

Microsoft Corp. has reportedly agreed to purchase a 4% stake in London Stock Exchange Group Plc (LSEG), valued at US $2.8 billion, with LSEG stating it will spend at least that amount on Microsoft cloud services over the next decade. The new collaboration is expected to help accelerate the migration of its markets to the cloud, enabling the exchange to develop innovative products and services.

With recent trends of exchanges and tech companies teaming up, such as alliances between Nasdaq Inc. and Inc. and Google and CME Group, investors are reportedly seeking data that provides them a competitive edge in the rapidly advancing digital ecosystem. In 2021, global spending on financial market data and news reportedly increased by 7.4% to a record $35.6 billion, according to a Burton-Taylor International Consulting report. Microsoft will reportedly acquire its share in the company from a group comprised of Blackstone, Thomson Reuters Corp., affiliates of the Canada Pension Plan Investment Board and Singapore's GIC.

The agreement highlights LSEG's increased emphasis on data and analytics, particularly with the recent $27 billion acquisition of Refinitiv in 2021, which reportedly accounts for the majority of its earnings. The Microsoft contract is anticipated to cost LSEG between £250 million and £300 million during 2023 and 2025, including approximately £100 million in capital expenditures. Moreover, Microsoft forecasts that the alliance could generate revenues in excess of $5 billion for the business over the next ten years.

Paytm, an Indian e-commerce firm, to purchase back shares after a 75% stock decline

Paytm, one of India’s largest mobile payments companies, will reportedly begin buying back shares, with investors gaining slightly more than a third of what they had paid in the nation's largest IPO just over a year prior.

Reports indicate that Paytm's shares have plummeted 75% since its US $2.5 billion IPO in November 2021. Due to concerns about losses, the shares reportedly dropped 27% on their first day of trading, plunging further in the following months before trying to settle at a quarter of their IPO value. Paytm stated that the company will buy back shares for 810 rupees ($9.80), a 62% discount from the IPO price of 2,150 rupees, but a 50% premium over yesterday's closing price.

The largest shareholders of Paytm, including Softbank, Alibaba, Berkshire Hathaway and Canada Pension Plan Investment Board, which are also having to contend with the global tech stock meltdown, are reportedly concerned about the company’s stock collapse. Vijay Shekhar Sharma, Founder, Paytm, commented that the $103 million buyback is expected to generate long-term shareholder value and become beneficial to stakeholders.

Despite a 76% increase in revenues, the company still reported a net loss of 5.7 billion rupees for the quarter that ended on 30 September. However, the company claimed it would achieve cash flow profitability in a disclosure to stock exchanges.

Reports state that the Paytm platform, which was introduced in 2010, was quickly associated with digital payments in a nation where cash transactions have historically been predominant. Accordingly, the firm has reportedly leveraged the government's initiatives to reduce the use of cash, such as the demonetisation of banknotes five years ago. In addition, Paytm's prevalent blue-and-white QR code stickers are widely used by Indian shop owners, taxi drivers and other vendors to accept payments as low as 10 rupees ($0.13). In the months of October and November, merchant payments increased 37% to $28 billion, stated reports. The company further claimed that more than 84 million Paytm subscribers used the service in October and November, up from 80 million users during the three months ended September 30.

Visa Europe establishes a team for sustainability solutions

Visa's European division has formed a sustainability solutions team in efforts to render payments more environmentally friendly and collaborate with clients and partners across Visa’s network to create and build sustainable technology for the larger payments landscape.

Reports indicate that the network is functioning with the current Visa Eco-Benefits program, which includes a carbon footprint tracker made available through a partnership with ecolytiq, as well as frictionless payments for the recharging of electric vehicles. Additionally, Visa has also established a Consulting & Analytics Sustainability Advisory Practice in order to assist clients in navigating their current sustainability initiatives, developing their framework and creating a business plan for "embedding a planet-centric approach”, said reports.

A recent study conducted by Visa in twelve European countries found that 75% of consumers expect businesses to drive change in sustainability, and 46% have refrained from buying from particular brands or businesses due to their adverse effects on the environment.

The newly formed team aims to not only help shape Visa's sustainability goals and transition towards net zero, but also help clients in their processes for making sustainable decisions, commented Charlotte Hogg, CEO, Visa Europe.

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