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Business

Robinhood, gateway to ‘meme’ stocks, raises $2.1 billion in IPO

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Robinhood logo is seen on a smartphone in front of a displayed same logo in this illustration taken, July 2, 2021. REUTERS/Dado Ruvic/Illustration

July 28 (Reuters) – Robinhood Markets Inc, the owner of the trading app which emerged as the go-to destination for retail investors speculating on this year’s “meme’ stock trading frenzy, raised $2.1 billion in its initial public offering on Wednesday.

The company was seeking to capitalize on individual investors’ fascination with cryptocurrencies and stocks such as GameStop Corp (GME.N), which have seen wild swings after becoming the subject of trading speculation on social media sites such as Reddit. Robinhood’s monthly active users surged from 11.7 million at the end of December to 21.3 million as of the end of June.

The IPO valued Robinhood at $31.8 billion, making it greater as a function of its revenue than many of its traditional rivals such as Charles Schwab Corp (SCHW.N), but the offering priced at the bottom of the company’s indicated range.

Some investors stayed on the sidelines, citing concerns over the frothy valuation, the risk of regulators cracking down on Robinhood’s business, and even lingering anger with the company’s imposition of trading curbs when the meme stock trading frenzy flared up at the end of January. read more

Robinhood said it sold 55 million shares in the IPO at $38 apiece, the low end of its $38 to $42 price range. This makes it one of the most valuable U.S. companies to have gone public year-to-date, amid a red-hot market for new listings.

In an unusual move, Robinhood had said it would reserve between 20% and 35% of its shares for its users.

Robinhood’s platform allows users to make unlimited commission-free trades in stocks, exchange-traded funds, options and cryptocurrencies. Its simple interface made it popular with young investors trading from home during the COVID-19 pandemic.

Robinhood enraged some investors and U.S. lawmakers earlier this year when it restricted trading in some popular stocks following a 10-fold rise in deposit requirements at its clearinghouse. It has been at the center of many regulatory probes.

The company disclosed this week that it has received inquiries from U.S. regulators looking into whether its employees traded shares of GameStop and AMC Entertainment Holdings, Inc (AMC.N) before the trading curbs were placed at the end of January.

In June, Robinhood agreed to pay nearly $70 million to settle an investigation by Wall Street’s own regulator, the Financial Industry Regulatory Authority, for “systemic” failures, including systems outages, providing “false or misleading” information, and weak options trading controls.

The brokerage has also been criticized for relying on “payment for order flow” for most of its revenue, under which it receives fees from market makers for routing trades to them and does not charge users for individual trades.

Critics argue the practice, which is used by many other brokers, creates a conflict of interest, on the grounds that it incentivizes brokers to send orders to whoever pays the higher fees. Robinhood contends that it routes trades based on what is cheapest for its users, and that charging a commission would be more expensive. The U.S. Securities and Exchange Commission is examining the practice.

Robinhood was founded in 2013 by Stanford University roommates Vlad Tenev and Baiju Bhatt. They will hold a majority of the voting power after the offering, these filings showed, with Bhatt having around 39% of the voting power of outstanding stock while Tenev will hold about 26.2%.

The company’s shares are scheduled to start trading on Nasdaq on Thursday under the ticker “HOOD”

Goldman Sachs and J.P. Morgan were the lead underwriters in Robinhood’s IPO.

Reporting by Echo Wang and David French in New York; Editing by Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

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Business

Tencent snaps up British video game developer Sumo in $1.3 bln deal

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  • Shares surge in early trading to all-time high
  • Tencent offers 513p per Sumo share
  • Sumo boss says he is keen work with Tencent

July 19 (Reuters) – China’s Tencent (0700.HK) will buy British videogame developer Sumo (SUMO.L) in a $1.27 billion deal, it said on Monday, adding new titles to its growing portfolio of chart-topping videogames.

The purchase, which will boost the Chinese internet giant’s presence globally, brings together Sumo’s racing and snooker games with Tencent’s more high-profile range of games that includes Call of Duty’s mobile version.

Shareholders in Sheffield-based Sumo will get 513 pence in cash per share, a 43% premium to the last price and valuing the company at 919 million pounds, Tencent said, sending Sumo’s shares surging 42% to a record high.

The deal comes days after China’s market regulator decided to block Tencent’s plans to merge videogame streaming sites, Huya (HUYA.N) and DouYu, on antitrust grounds.

It is the second major deal involving a British video game company over the past year, following U.S. video game maker Electronic Arts’ (EA.O) deal to buy Britain-based Codemasters. read more

Tencent, with stakes in companies that make Fortnite and League of Legends, is the world’s second-largest videogame group by revenue after Sony.

“Chinese deals may imply a higher regulatory risk, but we see no likely resistance or counterbid,” Jefferies analysts said.

EXPERTISE AND RESOURCES

Sumo, which counts Microsoft’s Xbox, Amazon Game Studios, Apple, Google and BBC as its clients and partners, has seen its value soar since a 2017 listing on LSE’s junior market AIM at 100 pence.

“The Board of Sumo firmly believes the business will benefit from Tencent’s broad videogaming eco-system, proven industry expertise and its strategic resources,” non-executive chairman Ian Livingstone said.

Tencent owns 8.75% and is the second-biggest shareholder in Sumo, which has 14 studios in five countries and released the video games including Hotshot Racing, Sackboy: A Big Adventure and WST Snooker last year.

Sumo’s boss Carl Cavers said he and co-founders Paul Porter and Darren Mills would reprise their roles.

“The opportunity to work with Tencent is one we just couldn’t miss,” said Cavers, who founded the company 18 years ago.

($1 = 0.7261 pounds)

Reporting by Muvija M in Bengaluru; Editing by Arun Koyyur and Edmund Blair

Our Standards: The Thomson Reuters Trust Principles.

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Business

U.S. seeks to speed rooftop solar growth with instant permits

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Solar panels are seen on rooftops amid the coronavirus disease (COVID-19) outbreak, in Santa Clarita, near Los Angeles, California, U.S., June 18, 2020. REUTERS/Lucy Nicholson/File Photo

July 15 (Reuters) – The Biden administration on Thursday will roll out a tool that enables instant local permitting of rooftop solar installations, addressing a major source of industry delays and possibly lowering costs for homeowners, the Energy Department said.

The Solar Automated Permit Processing (SolarAPP+) platform, developed by DOE’s National Renewable Energy Laboratory, will be an optional portal for local governments to process permit applications automatically.

Approvals typically take a week or more currently, and permit-related costs can account for about a third of installers’ overall costs, DOE said. The software speeds the process up by standardizing requirements, streamlining the application and automating some approvals.

Administration officials said the software will help speed adoption of rooftop solar and achieve President Joe Biden’s goal of decarbonizing the U.S. electricity grid by 2035, a key pillar of his plan to address climate change. DOE has said that solar energy will need to be installed at a pace as much as five times faster than it is today to realize that goal.

“Having streamlined processes and an automated permitting platform that can make it faster, easier and cheaper for homeowners to go solar promises to really help expand the residential solar sector,” Becca Jones-Albertus, director of DOE’s solar energy technologies office, said in an interview.

Obtaining permits through local building departments has often proved to be a “pain point” for solar companies, according to Jones-Albertus. About a third of rooftop solar installations take more than two weeks for the permit process, DOE said.

SolarAPP+ was tested in four communities in Arizona and California starting last year. In Tucson, the portal reduced permitting review times from an average of 20 days to zero, the agency said.

An official from Stockton, California, a city that recently decided to adopt the SolarAPP tool, said it will free up staffers who have managed a 26% rise in solar applications over the last five years. It also allows homeowners to conduct the permitting process online rather than in person.

“It’s rare that you can find something that works this well for all of the parties involved,” John Alita, Stockton’s deputy city manager, said during a DOE webinar to unveil the tool.

The portal performs an automatic review of permit applications, approving eligible systems instantly. Complex or ineligible systems are re-routed for additional review.

Local governments will not have to pay for the portal, DOE said. DOE is challenging 125 mayors and local officials to sign up for the SolarAPP tool before the end of the summer.

Reporting by Nichola Groom; Editing by Dan Grebler and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

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Business

U.S. judge ends Amazon challenge to $10 bln cloud contract after Pentagon cancellation

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WASHINGTON, July 9 (Reuters) – A U.S. judge on Friday dismissed Amazon.com’s legal challenge to the Defense Department’s2019 decision to award a $10 billion JEDI cloud-computing project to rival Microsoft Corp (MSFT.O) after the Pentagon canceled the contract.

Amazon.com had accused then-President Donald Trump, alleging that the former president exerted improper pressure on military officials to steer the contract away from Amazon. The Pentagon said on Tuesday it expected the new multi-billion dollar contract would be split between Amazon and Microsoft.

Amazon did not object to dismissing its 2019 lawsuit.

Judge Patricia E. Campbell-Smith of the U.S. Court of Federal Claims agreed to dismiss the lawsuit at the government’s request, saying the case was now moot.

Trump publicly derided then-Amazon CEO Jeff Bezos and repeatedly criticized the company. Amazon had sought to question Trump about his role in the contract decision.

The Pentagon hopes to have the first awards by April 2022 for its new Joint Warfighter Cloud Capability (JWCC).

John Sherman, acting chief information officer for the Defense Department, said on Tuesday he expects both Microsoft and Amazon will get cloud contracts.

Microsoft said in a statement that the company was confident it will “continue to be successful as the DoD selects partners for new work.”

Amazon’s Amazon Web Services cloud unit said it agreed with the Pentagon’s decision to cancel the contract. It said the initial award was “not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement.”

In April, Campbell-Smith refused to dismiss Amazon’s claims alleging the Trump administration interfered in the Pentagon’s award to Microsoft after putting it on hold indefinitely in February 2020.

The now-canceled Joint Enterprise Defense Infrastructure Cloud (JEDI) contract was budgeted for as much as $10 billion and was part of a broader digital modernization of the Pentagon aimed at making it more technologically agile.

Reporting by David Shepardson; Editing by Dan Grebler

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Technology

Apple, Intel become first to adopt TSMC’s latest chip tech – Nikkei

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A 12-inch wafer is seen at Taiwan Semiconductor Manufacturing Co. (TSMC) in Hsinchu June 15, 2010. REUTERS/Pichi Chuang

July 2 (Reuters) – Apple Inc (AAPL.O) and Intel Corp (INTC.O) will be the first adopters of Taiwan Semiconductor Manufacturing Co’s (2330.TW) next-generation chip production technology ahead of its deployment, possibly next year, Nikkei Asia reported on Friday.

Apple and Intel are testing their chip designs with TSMC’s 3-nanometer production technology, the report added, citing several sources briefed on the matter. Commercial output of such chips is expected to start in the second half of next year, Nikkei Asia said.

Reporting by Kanishka Singh in Bengaluru; Editing by Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

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Business

China’s Didi raises $4.4 bln in upsized U.S. IPO -sources

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  • Didi sold 317 mln ADS, more than planned 288 mln -sources
  • Sells ADS at $14 a piece – sources
  • Would give Didi $73 bln valuation on fully diluted basis

June 29 (Reuters) – Chinese ride hailing company Didi Global Inc (DIDI.N) raised $4.4 billion in its U.S IPO on Tuesday, pricing it at the top of its indicated range and increasing the number of shares sold, according to two sources familiar with the matter.

Didi sold 317 million American Depository Shares (ADS), versus the planned 288 million, at $14 apiece, the people said on condition of anonymity ahead of an official announcement.

This would give Didi a valuation of about $73 billion on a fully diluted basis. On a non-diluted basis, it will be worth $67.5 billion. The company is expected to debut on the New York Stock Exchange on June 30.

The increase in deal size came after the Didi investor order book was oversubscribed multiple times, one of the sources said.

Investors have been told to expect their orders to be scaled back once allocations are completed on Wednesday, according to a separate source with direct knowledge of the matter.

Didi did not respond to a request for comment.

The listing, which will be the biggest U.S. share sale by a Chinese company since Alibaba raised $25 billion in 2014, comes amid record IPO activity this year as companies rush to capture the lucrative valuations seen in the U.S. stock market.

Didi’s IPO is more conservative than its initial aim for a valuation of up to $100 billion, Reuters has previously reported. The size of the deal was cut during briefings with investors ahead of the IPO’s launch. read more

This suggests increasing investor worries about China’s potential anti-trust related crackdown and a more volatile IPO environment globally in 2021, said Douglas Kim, a London-based independent analyst, who writes on Smartkarma.

A Didi logo is seen at the headquarters of Didi Chuxing in Beijing, China November 20, 2020. REUTERS/Florence Lo/File Photo

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“But it seems like many investors like this deal, the volatile IPO environment helped to lower IPO price and valuation looks attractive,” Kim told Reuters.

Didi’s IPO was covered early on the first day of the book-build last week and the investor books were closed on Monday, a day ahead of schedule. read more .

An over-allotment option, or greenshoe, exists where another 43.2 million shares can be sold to increase the deal size.

DIDI HISTORY

Didi was co-founded in 2012 by former Alibaba employee Will Wei Cheng, who currently serves as the chief executive officer. Cheng was joined by Jean Qing Liu, a former Goldman Sachs banker and the current president of the ride-sharing company.

The company counts SoftBank (9984.T), Uber Technologies Inc (UBER.N) and Tencent (0700.HK) as its main backers.

Didi is also known for successfully pushing Uber out of the Chinese market after the U.S. company lost a price war and ended up selling its China operations to Didi for a stake. Liu Zhen, the head of Uber China at the time, is Didi’s Liu’s cousin.

Like most ride-hailing companies, Didi had historically been unprofitable, until it reported a profit of $30 million in the first quarter of this year.

The company reported a loss of $1.6 billion last year and an 8% drop in revenue to $21.63 billion, according to a regulatory filing, as business slid during the pandemic.

Its shares are due to start trading under the “DIDI” symbol.

Reporting by Echo Wang in New York and Anirban Sen in Bengaluru and Scott Murdoch in Hong Kong; Editing by Greg Roumeliotis, Bill Berkrot and Himani Sarkar

Our Standards: The Thomson Reuters Trust Principles.

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