Woodside to Buy Ammonia Plant From OCI Global for $2.35bn (WSJ)
Private capital groups deploy $160bn as they prepare for deal revival (Financial Times)
Tech Stock Bet Backfires: Leveraged ETFs See Massive Losses
Investors funneled billions into leveraged ETFs last month, banking on a tech stock rebound. However, with the Nasdaq 100's significant July decline, these leveraged bets are now suffering substantial losses amid the broader market downturn. Funds like Direxion Daily Semiconductors Bull 3x Shares (SOXL) and ProShares UltraPro QQQ (TQQQ), which amplify daily market moves, saw record inflows only to face steep declines of up to 60% since mid-July. The swift sentiment shift, driven by disappointing employment data and earnings reports, has raised recession fears and triggered a flight to safer assets. The Federal Reserve's decision to hold rates steady further compounded market uncertainty. With tech giants like Intel and Amazon posting grim forecasts, investors in leveraged ETFs are at risk of margin calls, potentially sparking forced sales and deeper losses. As volatility continues, experts caution that leverage requires precise risk management, especially in turbulent markets.
"Many people are long growth/tech stocks, which is the brunt of the selloff. People who invest in leverage should understand the risks."
Mohit Bajaj (WallachBeth Capital)
Private Funding Pulse Check
Intelmatix, a leading deep-tech AI company in Saudi Arabia, announced that it successfully raised $20M in funding, concluding the region's largest AI Series A round backed by Zain Ventures.
Backed by S2G Ventures, Applied Carbon, a company designing automated biochar production machines that convert in-field agricultural crop waste into biochar, announced it has raised $21.5M in a Series A round.
Cambridge, UK-based CorrosionRADAR, a provider of predictive Corrosion Under Insulation (CUI) monitoring solutions, announced that it has secured a £5M investment in a new funding round backed by Yusuf bin Ahmed Kanoo Group.
Backed by Temerity Capital Partners, Climatize has closed a $1.75M pre-seed round to expand its global network of climate-focused investors and accelerate renewable energy adoption.
Focus Financial Partners is consolidating its operations by merging HoyleCohen, a San Diego-based firm with $3.6 billion in assets under management, into The Colony Group, with the deal expected to close in the third quarter of 2024
HoyleCohen, formed in 2001 and a Focus partner since 2006, has grown significantly under the leadership of CEO and Senior Managing Partner Mark Delfino, now boasting over 60 team members and 1,700 client households
This merger is part of Focus Financial's broader strategy, under private equity firm Clayton, Dubilier and Rice, to consolidate its 90 subsidiary practices into a few large firms
Recent similar moves include the merging of Gratus Capital into The Colony Group, along with earlier mergers involving GW & Wade, InterOcean Capital Group, and five business lines from Connectus (WealthManagement.com)
Mark Delfino
CEO and Senior Managing Partner
Cooling Labor Market Poses Risks to Economic Gains
Recent data indicates that the labor market, which has provided significant economic benefits over the past two years, is starting to cool. Economists caution it is too early to declare a recession, but signs of a slowdown are evident. New unemployment insurance claims have increased, hiring has decelerated, and wage gains have moderated. The influx of job seekers has nudged the unemployment rate to 4.3%, its highest level in nearly three years. While the tight labor market of 2022-23 reduced wage inequality and boosted employment among disadvantaged groups, there is concern these gains could be at risk if the labor market continues to soften. The Federal Reserve's interest rate hikes aimed at curbing inflation have contributed to this rebalancing, but maintaining economic benefits without tipping into a recession is now a challenge. Additionally, high-propensity business applications—those likely to hire employees—were running 26% higher in the second quarter than in late 2019, indicating a surge in entrepreneurial activity that may face new challenges.
"We are seeing the fruits of that high-pressure economy."
Michael Pearce (Oxford Economics)
AI Boom Fuels Thrive Capital's Record $5 Billion Fundraising
Thrive Capital has raised an unprecedented $5 billion for its largest-ever pair of venture-capital funds, underscoring the renewed enthusiasm in AI-driven investments. This significant milestone, reported to investors on Sunday, includes commitments for the full amount, marking Thrive's largest fundraising to date and one of the biggest by any venture firm this year. Thrive, established by Josh Kushner 15 years ago, has grown in prominence largely due to its strategic investments in AI, notably its substantial backing of OpenAI. The AI boom has rejuvenated investor interest after a tech downturn prompted by rising interest rates. Thrive's recent fundraising effort highlights its focus on AI, positioning it for future technological breakthroughs despite the high costs and uncertain revenue associated with AI ventures. With this new capital, Thrive plans to split the funds between early-stage and later-stage investments, maintaining its broad investment strategy that has previously shielded it from volatile market trends such as the crypto bust.
“The technological breakthroughs that will occur over the next years will be unlike anything we have ever experienced before.”
Biofuels Disappoint, LNG Emerges as Energy Transition Hope for Shell and BP
Biofuels, once heralded as a key player in the green energy transition, have fallen short of expectations, pushing Europe's oil and gas giants, Shell and BP, to refocus on liquefied natural gas (LNG). Despite significant investments in biofuels, including Shell's $780 million impairment on a Dutch plant and BP's scaled-back refinery plans, the market is struggling with oversupply and profit margin squeezes from cheap imports and relaxed renewable fuel mandates in Finland and Sweden. While biofuels remain essential for reducing transport sector emissions, the current market conditions suggest profitability will be elusive until at least 2027. In contrast, Shell and BP are doubling down on LNG, seen as a more immediate solution for energy security and decarbonization. Shell plans a 30% increase in LNG volumes this decade through acquisitions and investments like the Ruwais LNG project in Abu Dhabi, while BP aims for a 30 million ton LNG portfolio by 2030. However, the long-term viability of LNG as a lower-carbon energy source is contentious due to methane emissions and potential future oversupply.
Written by:
Sharah Roy | Research Associate
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