US Grounds All Boeing 737 MAX Models, China Industrial Output Drops to 17-Year Low, India Startup Fund to Get an INR3,000cr Boost et al.

 

US grounds all Boeing 737 MAX models. Boeing at risk of losing $600bn worth orders. China’s industrial output drops to 17-year low. Sony may buy 20% stake in Zee. India startup fund to get an INR3,000cr boost.

 

Moving on to the top Business stories of the week. 

 

AVIATION

US grounds all Boeing 737 MAX models. Boeing at risk of losing orders worth $600bn.

Last Man Down: President Trump has announced that the Federal Aviation Administration would ground Boeing’s fleet of 737 MAX airliners after new data indicated that last weekend’s deadly crash in Ethiopia resembled the Lion Air crash in October last year.

All Right: Boeing said it maintained full confidence in the MAX plane but decided to recommend a temporary grounding to reassure the flying public.

Since the crash on Sunday, regulators in dozens of countries have suspended flights by the single-aisle airliners, including the UK, Australia, and Canada. The US was the last significant aviation market still allowing the 737 MAX to operate.

Buyers Beware: Boeing’s more than $600bn worth orders for its 737 MAX models hang in balance as customers threaten to reconsider their purchases in light of the recent Ethiopian Airlines crash.

These Include:

  • VietJet Aviation, which doubled its order to about $25bn only last month
  • Kenya Airways, which is reviewing proposals to buy the Max and could switch to Airbus A320
  • Utair Aviation, which is seeking guarantees before taking delivery of the first of 30 planes
  • Lion Air, which decided to drop a $22bn order for the 737 in favor of the Airbus jet

 

CHINA

China’s industrial output drops to 17-year low. Unemployment rate also on the rise.

Long Time Coming: China’s industrial output growth fell to a 17-year low in the first two months of the year. The industrial output rose 5.3% in January-February vs 5.7% in December, lower than the expected 5.5% growth.

Silver Lining: Growth in fixed-asset investment, a major growth driver in the past, increased to 6.1% in the first two months of this year, up marginally from 5.9% in 2018.

Retail sales were also marginally better than expected, with the headline figure rising 8.2% in January-February from a year earlier.

More Help: In addition to a fiscal stimulus such as higher local government spending and tax cuts, more monetary policy support is also expected this year.

No Jobs: China’s unemployment rate jumped to 5.3% in February from 4.9% in December on the back of low industrial output and slow retail sales expansion.

Perfect Timing: The jump in joblessness comes just days after Premier Li Keqiang announced an employment first strategy as a key part of the economic policy for the coming year.

Side Effect: The increase of the unemployment rate shows rising pressure from the US-China trade war on China’s job stability. 

Fun Fact: China combines January and February activity data in an attempt to smooth distortions created by the long Lunar New Year holidays early each year, but some analysts say a clearer picture of the economy’s health may not emerge until first-quarter data is released in April.

 

FUNDING

 

Sony may buy 20% stake in Zee. Brookfield to buy $4.8bn stake in Oaktree. India startup fund to get an INR3,000cr boost.

Clearing Debt: Sony is in advanced talks to buy c. 20% stake in Zee Entertainment in a INR13,000cr deal. The entire amount raised through the stake sale is likely to be used to repay its debt.

Big Boost: A potential deal with Zee, which has as many as 66 television channels across 171 countries, will be a boost to Sony, the Indian subsidiary of which operates 29 television channels.

Buying Trees: Brookfield Asset Management is buying a majority stake in Oaktree Capital Management in a $4.8bn deal, creating an alternative-asset manager that will challenge the likes of Blackstone Group.

Brookfield will buy about 62% of the Oaktree business, acquiring all outstanding shares of its publicly traded common stock for $49 in cash, or 1.077 Brookfield shares.

Combined Power: The deal will bolster the credit business of Brookfield, which has more than $475bn in assets spread over real estate, infrastructure and private equity.

Speeding It Up: India’s startup fund is expected to get a boost of INR3,000cr, a move aimed at increasing liquidity to spur growth.

Additionally, financing commitments from long-term partners are being secured for a sum of INR16,680cr, which can help to speed up the startup deployment.

Read more on the matter here.

 

CORPORATE

Insurance startup Acko raises $65m. Uber might sell its self-driving unit. Azim Premji donates c. $21bn to charity.

Big Backers: Online insurance startup Acko has raised $65m in its Series C round from several investors including Binny Bansal, RPS Ventures, and Intact Ventures. Binny Bansal has reportedly invested $25m in this round.

Returning: The round also saw participation from existing investors including Amazon, Accel Partners, SAIF Partners, and TechPro Ventures.

Last May, Acko had raised $12m as a part of its Series A funding led by Amazon. Prior to that, it had raised one of the highest seed funding in the Indian startup ecosystem - $30m - in May 2017.

With this latest round of Series C funding, Acko’s total funds raised till date stands at $107m.

Softening Up: Uber in talks with Softbank and other investors to sell its self-driving technologies unit for an estimated $1bn. SoftBank is already a major investor in the ride-hailing firm after it acquired about 17.5% of Uber’s stock last year.

Under the terms of the proposed deal, investors would purchase from a pool of Uber stock specifically earmarked for the self-driving technologies unit. 

Still in Control: Uber would maintain majority control of the self-driving arm and would use the investment to fund its research and development. The deal would value the self-driving business at $5bn-$10bn.

The news comes months after Uber filed to go public in December.

Big Heart: Azim Premji has given away 34% of his shares in Wipro to charitable causes. The shares given away by Premji are valued at about $7.5bn.

With the latest contribution, the total value of funds committed by the billionaire towards Azim Premji Foundation’s philanthropic activities amounts to INR1.45tr.

 

DISPUTE

J&J to pay $29m in damages to cancer victim. Spotify files antitrust complaint against Apple. Singh brothers in trouble over Ranbaxy deal.

 

In Time: California Superior Court has awarded $29m to a woman who said that asbestos in Johnson & Johnson's talcum-powder-based products caused her cancer.

Jurors found that J&J's talc-based products used by plaintiff Terry Leavitt were defective and that the company had failed to warn consumers of the health risks, awarding $29.4m in damages to Leavitt.

In Denial: J&J, however, denies that its talc causes cancer, saying numerous studies and tests by regulators worldwide have shown that it's safe and asbestos-free.

Unfair: Spotify has filed an antitrust complaint in the EU against Apple

What’s the Case?: Spotify alleges that Apple in recent years has abused its control over which apps appear in its App Store with the aim of limiting competition with its streaming service Apple Music.

Spotify claims that Apple made it difficult for rival subscription services to market themselves to users without using Apple’s payment system, which generally takes a 30% cut of transactions.

Threats: The European company also said Apple at times rejected security updates of its app and threatened to kick it out of the App Store for allegedly anticompetitive reasons.

What's the Plan: The SC has asked former Ranbaxy promoters, Malvinder Singh and Shivinder Singh, to apprise it how they propose to comply with the INR3500cr arbitral award passed against them by a Singapore tribunal.

The bench asked the Singh brothers to appear before it on March 28 and submit the plan. 

Answer Time: The court was hearing the plea of Japanese firm Daiichi Sankyo which is seeking to recover INR3,500cr, awarded to it by a Singapore tribunal in its case against Malvinder and Shivinder Singh.

 

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