(The authors are Reuters Breakingviews columnists. The
opinions expressed are their own.)
By Breakingviews columnists
MILAN/LONDON/HONG KONG, Dec 18 (Reuters Breakingviews) -
C orona Capital is a column updated throughout the day by
Breakingviews columnists around the world with short, sharp
pandemic-related insights.
LATEST
- Italian broadband
- Paris offices
- IQiyi fundraising
FIBRE FEVER. Enel’s ENEI.MI early bet on fibre is paying
off in the pandemic. Defying sceptics, Chief Executive Francesco
Starace has secured https://www.enel.com/media/explore/search-press-releases/press/2020/12/enel-board-of-directors-resolves-to-sell-40---50-of-open-fiber-to-macquarie
an equity valuation of 2.65 billion euros from infrastructure
specialist fund Macquarie MQG.AX for the 50% stake it holds in
broadband startup Open Fiber. That gives it an enterprise value
of around 7.1 billion euros, once about 1.8 billion euros of
debt is added. An earn-out clause suggests the valuation could
rise to above 8 billion euros if Open Fiber merges its network
with that of rival Telecom Italia TLIT.MI , against an
estimated book value of less than 500 million euros for the Enel
stake.
That looks chunky: a recent KKR KKR.N deal valued Telecom
Italia’s last-mile network company at 7.7 billion euros,
including debt urn:newsml:reuters.com:*:nL8N2FY27X. But while Telecom Italia’s FiberCop
is predicted to report 900 million euros of EBITDA next year,
Open Fiber is barely at break-even. JPMorgan predicts that the
network challenger could approach 700 million euros of EBITDA
only in 2030. If the deal is indeed completed, Starace looks
like the real winner. (By Lisa Jucca)
NEARING THE BOTTOM. Sickly Paris offices could be headed for
a revival. That’s according to U.S. property investor Tishman
Speyer https://www.prnewswire.com/news-releases/tishman-speyer-acquires-the-carre-saint-germain-in-the-heart-of-paris-301195780.html,
which has splurged 750 million euros on three offices in the
French capital in recent weeks https://www.ft.com/content/4f130016-f99d-43f1-9b35-c462f5243554,
according to the Financial Times. The $97 billion fund, which
owns New York’s Rockefeller Center, negotiated a 25% discount on
the former headquarters of media group Canal+.
Bargain-basement prices may not last long. Low-rise
buildings in Paris are much better equipped for pandemic living
as staff can use the stairs, unlike in London and New York where
long waits for lifts are a stumbling block to a full return to
office life. This has not been reflected in prices. London
office prices have held up much better: Great Portland Estates
GPOR.L said the value of its property portfolio only fell 6.6%
from March to the end of September. Tishman Speyer is betting
that this divergence may not last much longer. (By Aimee
Donnellan)
AGAINST THE STREAM. Online video service iQiyi IQ.O has
become the latest U.S.-listed Chinese company to tap markets for
capital. It rounded up $1.6 billion by selling shares and
convertible bonds https://ir.iqiyi.com/news-releases/news-release-details/iqiyi-announces-pricing-its-offering-us800-million-400.
Despite the pandemic boost for streamers broadly, this
fundraising was less about growth and more about fortification.
Net debt stands at $1.7 billion for unprofitable iQiyi.
The $13 billion company controlled by Chinese web search
outfit Baidu BIDU.O has lost 30% of its market value over the
last six months. A U.S. regulatory probe into its accounting
hurt, as did disappointing third-quarter results https://ir.iqiyi.com/news-releases/news-release-details/iqiyi-announces-third-quarter-2020-financial-results.
Sales and subscribers dipped. Takeover talks with Alibaba
9988.HK , BABA.N and Tencent 0700.HK were also put on hold
because of tighter oversight from Beijing, Reuters reported last
month urn:newsml:reuters.com:*:nL1N2ID0JU. That has left the shares trading below the
$18 where they debuted in 2018. If iQiyi couldn’t capitalise on
a big captive audience, things might get even harder for
investors to watch. (By Jennifer Hughes)
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(Editing by Lisa Jucca, Jeffrey Goldfarb and Oliver Taslic)