Investment

Uber: Two Stock Prices but Not One Deal

The potential billion-dollar transaction between Uber and the Japanese investment company, SoftBank, was announced several months ago, though the deal has yet to close.

SoftBank’s Chief Executive Officer, Masayoshi Son, plans to invest $10 billion in the ride-sharing giant to become a significant shareholder in the company. The investment is comprised of a $1 to $1.25 billion investment, and the purchase of 14 to 17 percent of Uber’s shares.

There are two different sets of shares under this deal. Uber will issue new shares to sell to SoftBank for the first set, and SoftBank will acquire the second set from current investors through a tender offer.  However, not all current investors will be authorized to accept SoftBank’s tender. Eligible shareholders include (but are not solely limited to) current Uber employees and board members with at least 10,000 shares, who may sell no more than half of their total shares.

Although Son intends to buy the newly issued shares based on Uber’s most recent $68 billion company valuation, he is only willing to make an offer for the second set of shares based on a $50 billion company valuation. Because Uber is a private company, investors like SoftBank can in fact determine the company’s valuation on its own. This of course may have harmful effects on those Uber shareholders who desperately want to exit the scandal-labeled company and may be forced to sell their shares at this lower valuation in order do so.

The SoftBank deal, coupled with Uber’s recent change in its governance structure, may offer hope to those dissatisfied shareholders and investors unable to sell their stocks. In addition to SoftBank appointing two directors to Uber’s new 17-member board if the deal is completed, Uber’s board hopes to carry out an initial public offering by 2019. Investors in public markets have greater freedom to transfer their shares and valuations are much more transparent than in private companies.

Despite the delay and obvious drawbacks, Uber board member Arianna Huffington said she remains “optimistic” that SoftBank and Uber’s massive deal will soon close.

Uber Two Stock Prices but Not One Deal (PDF)

Chinese Conglomerates Diversify by Buying U.S. Investment Firms

As the number of consumers in China continues to grow, some Chinese conglomerates are raking in cash and looking for ways to diversify their businesses. What are they doing with this money? Recently, they have been looking to buy U.S. investment firms. Specifically, Chinese businesses are attracted to firms that practice more passive investment strategies, like investing in “funds of funds.”

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DiCaprio to Cooperate in Probe into Malaysia’s 1MDB

1Malaysia Development Berhad (“1MDB”), Malaysia’s state-owned investment fund, was set up by Malaysian Prime Minister Najib Razak in 2009. 1MDB was meant to boost the Malaysian economy through strategic investments, and turn its capital city, Kuala Lumpur, into a financial hub. In early 2015, however, 1MDB began to attract negative attention after missing its payments on its $11 billion debt, owed to banks and bondholders. Specifically, 1MDB missed the repayment of a $563 million short-term loan that was due in December of 2014.

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Controversial EB-5 Investment Program Extended until December

After almost expiring last month, Congress renewed the EB-5 Immigrant Investment Program – which provides U.S. visas in exchange for large investments in U.S. businesses – until December 9. Although touted to create jobs where they are needed the most, allegations of fraud have marred the program’s effectiveness and caused some to question whether it should exist at all.

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Recap: “Innovating for Social Impact”

On October 3, the Berkeley Center for Law, Business and the Economy (BCLBE) held a speaker series entitled “Innovating for Social Impact.” The center welcomed three leading attorneys in social entrepreneurship and nonprofit legal strategy: Joel Beck-Coon, Nancy McGlamery and Will Fitzpatrick.

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Rise of Institutional Investors Raises Questions of Collusion

In recent years, institutional investors like BlackRock have grown to own 70% of the public stock market. This growth is particularly noticed in horizontal shareholdings in concentrated product market, like airlines, causing them to compete less vigorously with each other. For instance, 7 institutional shareholders who controlled 60% of United Airlines also controlled major rivals such as Delta Airlines (27.5%) and Southwest Airlines (22.3%).

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University of Phoenix to Be Taken Private Amid Mounting Investigations and Losses

Apollo Education Group, the owner of for-profit education giant University of Phoenix, agreed on February 8 to a $1.1 billion sale to a group of private investors. The for-profit education industry has been quite controversial in recent years, especially as educational institutions have historically been almost entirely non-profit, including private institutions. For-profit education exploded after Congress implemented the “90-10 rule” which, albeit barring for-profit colleges from receiving more than ninety percent of their revenues from the Department of Education, assisted for-profit institutions in receiving more federal aid. From 1990 to 2009, the number of undergraduate students enrolled at for-profit institutions grew from approximately 2 percent to 11.8 percent of the nation’s total number of students.

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Event Recap: Berkeley Sustainable Business & Investment Forum (Part I)

On November 10 & 11, 2015 the University of California, Berkeley School of Law and Berkeley Haas School of Business jointly hosted the inaugural Berkeley Sustainable Business & Investment Forum at the University Club on campus. Key players from across all industries and academia attended the two-day event to share perspectives and insight on evolving topics of risk management, capital investment, and sustainable business practices with a focus on long term growth and value creation for all stakeholders.

The event was co-sponsored by PepsiCo, Visa, and PriceWaterhouseCoopers (“PwC”). The forum focused on the advancement of risk management, capital allocation, and sustainable business practices, with an emphasis on long-term value-creation

This is part one of a three-part series dedicated to coverage of the event.

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Event Recap: Berkeley Sustainable Business & Investment Forum (Part II)

On November 10 & 11, 2015 the University of California, Berkeley School of Law and Berkeley Haas School of Business jointly hosted the inaugural Berkeley Sustainable Business & Investment Forum at the University Club on campus. Key players from across all industries and academia attended the two-day event to share perspectives and insight on evolving topics of risk management, capital investment, and sustainable business practices with a focus on long term growth and value creation for all stakeholders.

The event was co-sponsored by PepsiCo, Visa, and PriceWaterhouseCoopers (“PwC”). The forum focused on the advancement of risk management, capital allocation, and sustainable business practices, with an emphasis on long-term value-creation

This is part two of a three-part series dedicated to coverage of the event.

(more…)

Event Recap: Berkeley Sustainable Business & Investment Forum (Part III)

On November 10 & 11, 2015 the University of California, Berkeley School of Law and Berkeley Haas School of Business jointly hosted the inaugural Berkeley Sustainable Business & Investment Forum at the University Club on campus. Key players from across all industries and academia attended the two-day event to share perspectives and insight on evolving topics of risk management, capital investment, and sustainable business practices with a focus on long term growth and value creation for all stakeholders.

The event was co-sponsored by PepsiCo, Visa, and PriceWaterhouseCoopers (“PwC”). The forum focused on the advancement of risk management, capital allocation, and sustainable business practices, with an emphasis on long-term value-creation

This is part three of a three-part series dedicated to coverage of the event.

(more…)