Paytm and Zomato IPOs Point to Coming Wave of Indian Tech | Sidnaz Blog


NEW DELHI—India is gearing up for tech IPOs, including two worth more than $1 billion, as startups look to tap a stock market that has proved resilient despite Covid-19.

The initial public offerings reflect the maturing of a generation of e-commerce and digital-economy companies, bankers say, many of which have grown rapidly during the pandemic as well-off city-dwellers turn to them when purchasing products from milk to medicines.

On July 16, the operator of the Paytm digital-finance app, One97 Communications Ltd., filed a prospectus for what would be India’s largest IPO in local-currency terms. The group offers services such as a mobile wallet, loans and stock-trading, and is backed by

Jack Ma’s

Chinese financial-technology giant Ant Group Co. One97 aims to issue new and existing shares worth a total of up to 166 billion rupees, the equivalent of $2.23 billion.

Other companies considering IPOs include digital-payments platform One MobiKwik Systems Ltd., which filed its prospectus earlier this month, and logistics and supply-chain-services provider Delhivery Pvt., according to a company spokeswoman. Online cosmetics seller Nykaa E-Retail Pvt., API Holdings Pvt., the parent company of online pharmacy PharmEasy, and PB Fintech Pvt., the parent of insurance aggregator Policybazaar.com, are also considering listings, according to people familiar with their plans.

“This is the first set of these companies coming to the public market” in India, said

Kaustubh Kulkarni,

the head of investment banking for India at the local unit of

JPMorgan Chase

& Co.

Demand for the shares is likely to be strong, given the companies’ brand recognition, said Mr. Kulkarni, who is also the bank’s co-head of investment banking for South and Southeast Asia. “Most of these companies are offering products, services or capabilities which millions, if not hundreds of millions, of customers are utilizing on a day-to-day basis,” he said.

Last week investors placed orders worth 38 times the shares being offered by Zomato Ltd., India’s answer to

DoorDash Inc.

The food-delivery group raised around 94 billion rupees, the equivalent of $1.26 billion, and its shares are due to start trading on July 27.

Some market-watchers say Indian tech has plenty of room to grow, as more consumption shifts online. Earlier-stage investors have poured about $16 billion into Indian startups this year, creating 16 new unicorns—young private companies valued at $1 billion or more—according to data firm Venture Intelligence.

India’s unicorn population will rise to 150 by 2025 from 60 now, predicted

Gaurav Singhal,

the head of India consumer technology at

Bank of America Corp.

’s investment-banking arm. Many will eventually look to float, he said, translating into a big increase in market capitalization.

“India will see $300 billion to $400 billion of market-cap creation in the internet ecosystem in the next five years,” said Mr. Singhal.

The deals already under way show how India’s financial sector has been swept up in an international boom, even as the country records more than 30,000 new Covid-19 cases a day, among the highest daily counts in the world.

Already this year, India has hosted a rush of IPOs—joining a global surge fueled in part by tech companies from elsewhere in Asia, such as China’s

Kuaishou Technology

and South Korea’s

Coupang Inc.

The operator of the Paytm digital-finance app filed a prospectus for what would be India’s largest IPO in local-currency terms.



Photo:

Dhiraj Singh/Bloomberg News

India’s 22 IPOs in the first six months of 2021 brought in $3.7 billion, a record half-year haul, according to Prime Database Group, a research firm in New Delhi. Shares in some recently listed companies are trading at twice their IPO price.

At the same time, Indian stock indexes have soared as investors bet on big listed companies. The S&P BSE Sensex has hit a series of record highs, most recently on July 15, and international investors have poured about $7.7 billion into Indian shares this year, official data shows.

Millions of individual Indian investors are trading stocks for the first time, again mirroring trends seen in the U.S. and some other markets.

Harpreet Singh,

a 23-year-old from the northern city of Pathankot, started dabbling in the market last year while waiting for the chance to study abroad.

Relying on advice from videos on YouTube and Telegram, Mr. Singh said, he has lost money at times—but still finds trading stocks more appealing than getting a job in his hometown, where he said private-sector work pays barely 10,000 rupees a month, equivalent to about $134.

“If you have knowledge of stocks,” he said, “then in three to four months you can earn hundreds of thousands of rupees, sitting at home.”

Write to Shefali Anand at [email protected]

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Stock Futures Extend Recovery From Selloff | Sidnaz Blog


U.S. stock futures ticked higher after a dramatic start to the week that saw a selloff on fears around the Delta variant of Covid-19 largely reverse itself as investors rushed back into equities.

Futures on the S&P 500 strengthened 0.3% and futures on the Dow Jones Industrial Average were up 0.4%. The contracts don’t necessarily predict market moves after the markets open.

In Europe, the Stoxx Europe 600 climbed 1.1% in morning trade with the energy and utilities sectors leading gains.

The U.K.’s FTSE 100 rose 1.2%. Other regional indexes in Europe mostly climbed as France’s CAC 40 gained 1.1% and the U.K.’s FTSE 250 added 0.6%, whereas Germany’s DAX added 0.5%.

The Swiss franc, the euro and the British pound fell 0.1%, 0.2% and 0.2% respectively against the U.S. dollar.

In commodities, Brent crude declined 0.4% to $69.08 a barrel. Gold remained flat, at $1,811.60 a troy ounce.

The yield on German 10-year bunds slipped to minus 0.415% and the 10-year U.K. government debt known as gilts yield was down to 0.551%. 10-year U.S. Treasury yields edged up to 1.211% from 1.208%. Bond prices and yields move in opposite directions.

Indexes in Asia were mixed as Japan’s Nikkei 225 index climbed 0.6% and China’s benchmark Shanghai Composite gained 0.7%, whereas Hong Kong’s Hang Seng was lower 0.6%.

Traders worked on the floor of the New York Stock Exchange on Tuesday.



Photo:

Richard Drew/Associated Press

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Netflix May Find No Business Like Show Business | Sidnaz Blog


Anya Taylor-Joy and Thomas Brodie-Sangster in a scene from ’The Queen’s Gambit.’



Photo:

/Associated Press

It is as good a time as any for

Netflix

to test a new story line. Even a lucky turn in videogames won’t free the streaming giant from the need to keep playing Hollywood’s game, though.

Netflix used its second-quarter report Tuesday afternoon to confirm previously reported plans to enter the videogame business. No timing was given, though the company said the offerings would be included in its current subscription plans at no additional cost. The company isn’t backing away from its work on movies and TV shows, but said in its letter to shareholders “since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games.”

That news comes as Netflix remains mired in somewhat of a post-pandemic slump. It added 1.5 million net new paying subscribers in the second quarter, which was a bit better than it had forecast but still its lowest level of growth in nearly a decade. It also projected 3.5 million net adds for the third quarter—about 29% less than what Wall Street was hoping for. That would bring the total number of new subscribers to about nine million for the first nine months of 2021. Netflix added more than 28 million paying subscribers in the same period last year.

A foray into games might make sense for a company with an intimate knowledge of the viewing habits of a user base that now numbers over 209 million. It is also a tough business to crack—even the mobile gaming market that Netflix says it expects to target initially. There are many participants, but most of the money is still made by long-established properties. Games like “Candy Crush” and “Clash of Clans” remain in the top-five grossing charts even after nearly a decade on the market.

Netflix will need to keep battling it out for video streaming eyeballs. The company expects its pace of new releases to pick up in the second half of this year; analysts from Wedbush count 42 original shows and movies expected for the third quarter alone. But the company still has its own track record to compete with: Last fall included popular shows such as “The Queen’s Gambit,” “The Crown” and “Bridgerton.” Netflix shares are down nearly 2% this year, lagging behind many internet and entertainment peers. Streaming investors hyper-focused on subscriber growth aren’t playing games.

Write to Dan Gallagher at [email protected]

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Appeared in the July 21, 2021, print edition.



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Baby-Food Maker Little Spoon Raises $44 Million | Sidnaz Blog


Little Spoon Inc., a direct-to-consumer baby-food company targeting millennial parents, raised $44 million in a venture-capital funding round.

The so-called Series-B financing round values the company at roughly $200 million, people familiar with the matter said. It was led by Valor Equity Partners.

Little Spoon ships organic purées, toddler meals and vitamins to customers, bypassing grocery stores and other distribution outlets. Last year, Little Spoon launched Plates, its meals for toddlers and bigger children. The company also offers a virtual community that provides caregivers with a platform to connect and interact.

“Packaged baby food hasn’t evolved in line with the modern parent,” Chief Executive

Ben Lewis

said in an interview. “It was this glaring void that we couldn’t ignore,” added Mr. Lewis, who co-founded Little Spoon in 2017 with

Lisa Barnett,

Michelle Muller

and

Angela Vranich.

Little Spoon is one of several upstart baby-food companies to jump aboard the organic trend, aiming to attract the growing demographic of millennial parents. Recent reports of high levels of toxic metals in several top baby-food brands opened the door for new competitors focused on safety.

Co-founders Lisa Barnett, Angela Vranich, Michelle Muller and Ben Lewis.



Photo:

Little Spoon Inc.

Little Spoon also emphasizes that it is a mission-driven company. During the Covid-19 pandemic, it has donated more than $100,000 of its products to food pantries and introduced a program to supply the products at cost to first responders and anyone who experienced pandemic-related financial hardship, according to the co-founders.

“It’s exactly the kind of company we like to invest in,” said

Jon Shulkin,

a board member and partner at Valor Equity Partners, which also invested in Little Spoon during its Series A financing round. “They’re solving a problem and doing good work.” He said he is optimistic about the company’s growth prospects because there are “always ways to scale” for makers of baby and children’s food.

Little Spoon said it is growing quickly, delivering seven million meals since the onset of the pandemic out of the 15 million delivered since the company’s founding. Large baby-food makers have had to adapt as some parents make their own and others embrace baby-led-weaning, in which infants are served pieces of real food rather than purées.

While overall food sales surged during pandemic-related shutdowns around the U.S., the baby-food segment didn’t receive the same boost, according to market-research firm IRI. Sales of baby food dropped in the spring of 2020, and though they have climbed since, growth has continued to lag behind the broader food segment.

Write to Corrie Driebusch at [email protected]

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Space Race, Nasdaq, IBM, Nvidia: What to Watch When the Stock | Sidnaz Blog


To the moon! Well, not quite, but into space at least today for

Jeff Bezos,

the billionaire baron of ecommerce. Also not going to the moon is

Amazon


AMZN -0.67%

stock, though it is 0.4% up premarket on Tuesday morning.

  • One reason for Mr. Bezos’s rocket ride is the more earthly goal of winning government contracts for the kind of less thrilling scientific projects the provide reliable revenue. His Blue Origin company is playing catch-up with Elon Musk’s SpaceX.
  • Mr. Musk’s electric vehicle maker

    Tesla,


    TSLA 0.31%

    is getting a bit of a boost Tuesday morning ahead of the open, rising 1% premarket. It is also gaining more attention on the message boards among day traders, according to Topstonks.com. The company reports earnings next Monday and tends to see its stock rise in the days ahead as investors start hoping for exciting announcements.

  • In the wider markets, U.S. stock futures are trending higher ahead of the open following Monday’s broad selloff. S&P 500 futures are up 0.5%, while Dow futures are up 0.6%. Nasdaq-100 futures are up 0.4%
  • Nasdaq the company, not the index, is itself rising premarket, up 1%, after The Wall Street Journal’s exclusive that it will spin out its Private Market for shares in start-ups that trade among some investors before an initial public offering. The business will go into a standalone joint venture company and get investment from three Wall Street banks and SVB Financial Group, a tech specialist bank.
  • Nvidia


    NVDA 15.18%

    is up 0.8% on large volumes following a 15% rise Monday. The shares are up nearly 80% over the past year, putting the chip maker into the top 10 list of U.S. public companies. It also executed its four-for-one stock split overnight, which has given some investors more ways to trade the stock-performance.

  • International Business Machines


    IBM -0.71%

    is up 3.4% ahead of the open on Tuesday after turning in decent second-quarter numbers Monday after the close. The computing group’s efforts to refocus on cloud-based computing and spin off its old-fashioned IT services business is winning fans among investors. At the same time, it has benefitted from companies beginning to invest again as the economy reopens.

IBM reported earnings on Monday..



Photo:

sergio perez/Reuters

Chart of the Day
  • Stocks, commodities and other financial markets took a stumble Monday on growing concerns about the strength of the post-Covid-19 global recovery.

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U.S. Stock Futures Tick Higher | Sidnaz Blog


U.S. stock futures ticked up, suggesting Wall Street could stage a partial recovery after worries about the Delta variant of the coronavirus dragged major indexes lower.

S&P 500 futures gained 0.6% and Dow Jones Industrial Average futures strengthened 0.8%. Changes in equity futures don’t necessarily predict market moves after the opening bell.

European stocks climbed Tuesday after a four-session losing streak. The Stoxx Europe 600 added 1% in morning trade, led by gains in energy and utilities sectors.

BP jumped 2.1% snapping a losing streak of more than a week and SSE rose 2%.

The U.K.’s FTSE 100, which is dominated by large international businesses, climbed 1.1%. Other stock indexes in Europe also mostly climbed as France’s CAC 40 gained 1.2%, the U.K.’s FTSE 250 rose 0.7% and Germany’s DAX added 1%.

The euro and the British pound dropped 0.2% against the U.S. dollar whereas the Swiss franc was flat against the U.S. dollar, with 1 franc buying $1.09.

In commodities, international benchmark Brent crude was up 1.2% to $69.43 a barrel. Gold also gained 0.4% to $1,816.60 a troy ounce.

The German 10-year bund yield declined to minus 0.396% and the yield on 10-year U.K. government debt known as gilts was down to 0.553%. The yield on 10-year U.S. Treasury rose to 1.214% from 1.181%. Yields move in the opposite direction from prices.

Indexes in Asia mostly fell as Hong Kong’s Hang Seng lost 1.2%, Japan’s Nikkei 225 index was down 1%, and China’s benchmark Shanghai Composite shed 0.1% after falling by as much as 0.8% during the session.

A trader worked on the floor of the New York Stock Exchange on Monday.



Photo:

Richard Drew/Associated Press

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UBS Profit Jumps on Wealth Management Boom | Sidnaz Blog


A pedestrian passes a UBS branch in Zurich earlier this month.



Photo:

Stefan Wermuth/Bloomberg News

UBS Group AG


UBS -2.22%

posted better-than-expected second-quarter earnings from strong client activity in the world’s buoyant markets.

On Tuesday, Switzerland’s biggest bank said net profit jumped to $2 billion from $1.23 billion a year earlier, outpacing analyst expectations of $1.34 billion. It said wealth clients traded more, pushing transaction revenues 16% higher from a year earlier, and added that recurring fees were 30% higher on their existing trades and products.

At UBS’s investment bank, deal advice for mergers and acquisitions and other corporate transactions pushed global banking revenue 68% higher, helping to offset a 14% decline in market-trading income.

UBS said markets revenue would have been flat but it took an additional $87 million hit the quarter from the late March default by family office Archegos Capital Management. UBS was one of about a half-dozen banks that lent to Archegos to take large, concentrated positions in stocks. The Swiss bank said in April that it had lost $861 million when exiting the trades, most of it booked in the first quarter.

UBS helps the world’s rich manage their wealth and competes with Wall Street banks in investment banking.

On Tuesday, Chief Executive

Ralph Hamers

said wealth clients are investing more with the bank in private markets and in separately managed accounts, adding that they are also freeing up liquidity as a buffer against unforeseen events by refinancing assets and borrowing from the bank.

He said momentum is on UBS’s side and that its strategic choices are paying off. The bank refocused around wealth management a decade ago and pared back its investment bank. It has been less in the limelight than its smaller domestic rival,

Credit Suisse

Group AG, which lost more than $5 billion from the Archegos affair this year.

Write to Margot Patrick at [email protected]

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How Jitters About the Global Economy Are Rippling Through Markets | Sidnaz Blog


Stocks, bond yields and oil prices declined Monday in the most acute sign yet that investors are second-guessing the strength of the global economic recovery that sent markets soaring this year.

Markets rallied in the first half of 2021, thanks to investors’ bets that economies would bounce back, as countries rolled out Covid-19 vaccinations and lifted restrictions on businesses. Reports on everything from retail sales and housing prices to employment have shown swaths of the U.S. economy healing, helping send the S&P 500 to 39 record closes this year and almost double from its March 2020 trough.

Monday’s pullback put a dent in that narrative. The Dow Jones Industrial Average fell 725.81 points, or 2.1%, to 33962.04, logging its steepest decline since October. Meanwhile, the yield on the 10-year U.S. Treasury note, which falls as bond prices rise, sank to its lowest level since February. And U.S. crude oil prices slid 7.5%—marking their worst session since September.

Behind the rout, investors say, is a growing list of concerns about the recovery. The Delta coronavirus variant has spread rapidly, reigniting the debate in several countries about whether governments should resume lockdowns and curb activity. Meanwhile, inflation has accelerated faster than many anticipated, and strained U.S.-China relations have put pressure on trillions of dollars’ worth of U.S.-listed Chinese companies.

Many money managers believe the global economy will be able to keep growing. They just don’t know how quickly—and whether the gains will be enough to keep increasingly pricey-looking markets rising after a banner first half.

“The market is saying the economy is going to slow down fairly significantly in the next weeks or months,” said Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management.

Peak Growth?

Investors say much of what drove markets’ reversals on Monday is concern that the best of the economic recovery may be in the rearview mirror.

The 2020 recession in the U.S. lasted just two months—the shortest on record, according to the National Bureau of Economic Research. The economy powered higher in the year that followed.

Gross domestic product grew at a 6.4% seasonally adjusted annual rate in January through March, leaving the U.S. within 1% of its peak reached in late 2019.

Economists surveyed by the Journal estimate that the economy expanded at a 9.1% seasonally adjusted annual rate in the April-to-June period, the second-fastest pace since 1983. Corporate earnings are also poised to soar. Analysts are projecting profits for S&P 500 companies to rise almost 70% in the second quarter from a year earlier, a growth rate that would be the highest in more than a decade.

Now, some investors are asking: Is this as good as it gets?

Economists believe the pace of U.S. growth this year likely peaked in the spring and will moderate to 6.9% for 2021 as a whole before cooling to 3.2% next year and 2.3% in 2023. These dwindling expectations have stoked big moves among stocks and sectors within the S&P 500 as well as across the bond market.

“That’s what the market has been doing…starting to digest peak growth rates and realizing these growth rates are unsustainable,” said

John Porter,

chief investment officer of equities at Mellon Investments Corp.

Elsewhere around the world, growth also looks poised to slow—potentially pointing to further challenges for investors. The S&P 500 has continued to outperform the Stoxx Europe 600 and Shanghai Composite for the year. However, some investors wonder if the gap between U.S. and overseas indexes will narrow, if the recovery in the U.S. begins to stall more.

Oil Prices Tumble

One area of the markets where fear about growth quickly reared its head: the oil market.

For months, investors had piled into bullish bets on oil, assuming that demand would boom and the economy would stage a robust recovery. Many of those wagers have been unwound in recent sessions. Monday’s declines were driven by fears about the Delta variant halting travel and crimping demand for fuel.

Shares of energy producers, which tend to be sensitive to changes in the economic outlook, also pulled back. The S&P 500’s energy sector is now down 13% this month, the worst-performing group within the index.

Investors say much of what drove markets’ reversals on Monday is concern that the best of the economic recovery may be in the rearview mirror.



Photo:

Richard Drew/Associated Press

Sentiment Stalls

For months, people around the U.S. opened their wallets and spent on everything from cars to travel. Investors grew more optimistic about the economy, as Americans got vaccinated, businesses reopened and many people found themselves flush with cash, helped in part by stimulus checks. One survey by Gallup showed that the percentage of Americans who considered themselves to be “thriving” in life reached 59.2% in June, the highest in more than 13 years.

Recently, signs have emerged that this optimism is starting to fade. Fresh data last week showed that consumers stepped up spending in June. However, new figures also showed that consumer sentiment in the U.S. declined in early July, missing expectations from economists polled by The Wall Street Journal. Meanwhile, the unemployment rate has stagnated, and some investors are now concerned about a labor shortage snarling the economy.

One of the biggest factors weighing on sentiment? Inflation. Consumer complaints about rising prices on homes, vehicles and household durables reached a record, particularly hitting lower and middle-income households. The Labor Department said its consumer-price index rose 5.4% in June from a year ago, the fastest 12-month pace since August 2008.

Because consumer spending drives much of U.S. economic growth, investors tend to heed signs that households are beginning to become more wary about major purchases. Inflation can also eat into corporate profits, making stocks look less attractive.

According to a recent Charles Schwab survey, 15% of all U.S. stock market investors said they first began investing in 2020. Picking a stock, however, may not be as easy as it sounds. WSJ’s Aaron Back explains the factors at work when stock-picking. Photo illustration: Rafael Garcia

“Last week we had high inflation readings. Now we have concerns that the rise in Covid cases is dimming the economic outlook. High inflation and lower economic growth is not a good combination,” said

Dave Donabedian,

chief investment officer of CIBC Private Wealth Management, U.S., in emailed comments.

The Bond Market’s Warning

Even before Monday, bets that economic growth will cool rippled across the bond market. Investors have been gobbling up government bonds for weeks.

One effect of the slide in bond yields? The real yield on the 10-year Treasury note has been negative, and on Monday it slipped to 1.05%, the lowest since February. Real yields are what investors get on U.S. government bonds after adjusting for inflation. When those bond yields are negative, as they have been lately, investors are effectively locking in losses when parking their money in government bonds.

“People are worried about inflation but also a growth scare,” said

Giorgio Caputo,

a portfolio manager at J O Hambro Capital Management. “You’ve never had a modern economy that’s reopened after a pandemic.”

These fears have driven investors into government bonds and helped push those real yields lower and lower, he said.

While a souring outlook for growth is generally negative for stocks as a whole, one area of the market has actually benefited from negative real yields. Lower yields weigh on the discount rate in formulas used to estimate what stock prices should be, making future corporate earnings more valuable. The recent drop in yields has boosted shares of technology companies and other fast-growing firms and helped drive a mammoth shift in the stock market in recent weeks. Tech behemoths like

Apple Inc.,

Amazon.com Inc.

and

Microsoft Corp.

have risen to fresh highs, even as many other parts of the market have floundered.

And on Monday, the tech-heavy Nasdaq Composite outperformed its peers. Many investors returned to the bets that had flourished when people around the country were stuck at home during the Covid-19 pandemic.

Peloton Interactive Inc.

shares jumped 7.1%, while

Slack Technologies Inc.

added 1%.

Wayfair Inc.

shares advanced 3.3%.

In contrast, shares of cyclical companies that benefit from a speedier economic recovery—like banks, energy companies and airlines—were among the worst-performers in the stock market.

“It seems like the market overextrapolated the good times…and now we’re seeing a little bit of the air being let out,” said

Jason Pride,

chief investment officer of private wealth at Glenmede.

Covid-19 Weighs on Investors

More WSJ coverage of markets, selected by the editors

Write to Gunjan Banerji at [email protected] and Akane Otani at [email protected]

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William Ackman Needs a Soothing Pitch After Universal Music Drama | Sidnaz Blog


Pershing Square Tontine Holdings had planned a $4 billion purchase of a 10% stake in Universal Music Group.



Photo:

Bing Guan/Bloomberg News

William Ackman’s

blank-check company picked a good target but a poor deal structure. To keep investors happy, both need to be right on a second attempt.

On Monday,

Pershing Square Tontine Holdings


PSTH -1.45%

$4 billion purchase of a 10% stake in Universal Music Group was called off. The world’s biggest record label will be spun off from its French owner

Vivendi

and listed on the Amsterdam stock exchange in September. The SPAC’s investors were offered early exposure to an attractive business at a low valuation.

The deal’s complexity has been part of its undoing. After spending 72% of the SPAC’s cash on the Universal stake, $1.6 billion would be left over for another acquisition. Investors also would get warrants to buy into an additional blank-check deal. The Securities and Exchange Commission, which is scrutinizing SPAC deals more closely these days, said that as more than 40% of its assets would be in a minority stake, Pershing Square Tontine risked becoming an unregistered investment company.

The SPAC’s workaround caused a headache for investors. The Universal shares were to be locked up in a trust for four months, which would trigger a fall in Pershing Square Tontine’s share price—bad news for a sizable chunk of the SPAC’s shareholders who bought the stock on margin. The final nail in the coffin was the SEC’s opinion that the Universal stock purchase wouldn’t meet the New York Stock Exchange’s SPAC rules.

Mr. Ackman still gets his hands on the record label because the

Pershing Square Holdings


PSH -4.85%

hedge fund will buy the stake instead. This way, though, he will tie up a lot more capital in Universal than initially planned. Under the original deal, his fund would have owned a 3% stake but that number could now be closer to 10%.

More pressing is the need to pacify institutional investors and family offices that liked the idea of a stake in Universal and missed out. The deal also was supposed to showcase what the hedge-fund billionaire could accomplish with future blank-check vehicles. It hasn’t been a good start.

Pershing Square Tontine Holdings’ shares are down almost one-fifth since the Universal deal was announced and now trade just in line with their net asset value. Its founder has learned the lesson to keep things simple; the SPAC will do a conventional deal next, according to an investor letter Monday. Investors will be harder to impress the second time around.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ

Write to Carol Ryan at [email protected]

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Oil Prices Slide on Fears Delta Variant Will Crunch Demand | Sidnaz Blog


U.S. crude futures are more than 10% below last week’s multiyear peak, a drop that marks correction territory.



Photo:

Kyle Grillot/Bloomberg News

Oil prices slid Monday morning, heading for their biggest one-day drop in four months as investors worried that the spread of the Delta variant of coronavirus will halt travel and dent demand for fuel.

U.S. crude futures were recently down 6.4% at $66.98 a barrel, on track for their worst day since mid-March. Prices are now more than 10% below last week’s multiyear peak, a drop that marks correction territory. They are still up sharply for the year.

Traders in recent days have unwound some wagers that oil demand will continue to climb as more consumers get vaccinated and resume normal travel patterns. Hopes for a demand surge have buoyed oil throughout the year, but rapidly climbing coronavirus cases in some parts of the world are forcing investors to pare back their expectations for the economy. Some traders also remain wary of more travel shutdowns, which would have an outsize impact on oil prices.

“If we stagnate or retrace some of the demand increase we’ve seen thus far, the market will move from being undersupplied to oversupplied into the back half of the year,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth, U.S.

Brent crude, the global gauge of oil prices, was recently down 5.7% at $69.41 a barrel.

Oil’s tumble came as stocks also fell on concerns about the economy. Investors on Monday sought shelter in ultrasafe government bonds, pushing down the yield on the benchmark 10-year U.S. Treasury note to around 1.2%. Yields fall as bond prices climb.

Energy traders also were weighing the news that large global suppliers are set to gradually raise output in the months ahead. The Organization of the Petroleum Exporting Countries and allies including Russia agreed to ease production curtailments in response to a recent demand recovery, though the Delta variant’s course could change the group’s plans.

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