May 4, 2020 9:52 AM EDT
NEW YORK, NY – SEPTEMBER 19: Philanthropist Warren Buffett is joined onstage by 24 other philanthropist and influential business people featured on the Forbes list of 100 Greatest Business Minds during the Forbes Media Centennial Celebration at Pier 60 on September 19, 2017 in New York City. (Photo by Daniel Zuchnik/WireImage)
Some of Warren Buffett’s best bets came out of investing in the darkest hours of the financial crisis.
But amid a global pandemic expected to spark a recession, the Oracle of Omaha isn’t taking a leaf from his “be greedy while others while fearful” playbook—at least, for now.
“We want to do big things if the prices are attractive… but we haven’t seen anything that’s attractive,” said Buffett, chairman and CEO of Berkshire Hathaway during the insurance conglomerate’s 2020 annual shareholder’s meeting over the weekend. Instead of buying, Buffett offloaded his massive position in airline companies, including in United, American, Southwest, and Delta Airlines—companies that contributed to Berkshire Hathaway’s record $49.8 billion first-quarter net loss. The storied investor said that he would not invest in companies that he believed would need additional funding during the pandemic’s uncertain timeline, and when he thinks flying could be altered for years to come.
Which…is an interesting juxtaposition to many of the travel deals we’ve heard of in recent weeks. The likes of Silver Lake Partners, Apollo Global Management, Fidelity, Oaktree, and Sixth Street Partners have poured billions into Expedia Group and Airbnb in the form of debt for some and equity for others.
Certainly companies like Expedia and Airbnb have lighter costs on physical property, and debt-holders appear to have eked out favorable terms—but the ultimate question remains: How long will they be able to endure social distancing?
What’s also made for fewer attractive deals for Buffett (for now): Companies quickly found funding in public markets as the Federal Reserve acted more speedily than in the 2008 crisis. It slashed rates to 0% in mid-March while Congress rapidly enacted a $2 trillion—and perhaps growing—stimulus package to balance the economy.
“Now that could change very quickly or it may not change,” Buffett added. “You could come to me on Monday morning with something that involved $30 or $40 billion or $50 billion, and if we really liked what we were seeing, we would do it, and that will happen someday.”
Vegetarianism gets a boost: A meat shortage is looming as the pandemic has shuttered major meat processors and pushed some into hunting for the first time in their lives. Naturally, investors are betting another part of the food economy to get a boost: plant-based proteins.
Impossible Foods, a maker of soy-based burgers now valued at about $4 billion, is in talks to raise more funding from investors including some in China, per Bloomberg citing sources. It doesn’t appear to be in dire need of capital, having last raised $500 million in Series F funding in March led by South Korea’s Mirae Asset Global Investments—but it received “excess demand” from investors seeking to participate in that round. Raise while you can was the adage.
The company is hoping to bulwark itself in an uncertain economy. It’s a checkered situation for the likes of Impossible Foods. Shares of rival Beyond Meat, for instance, may be up 21% this year, but analysts worry that plant-based proteins are a more costly product than meats and have pushed into restaurants at a time when restaurants are suffering.
Read more below, for a day of few but big and interesting deals.
– Byju’s, a Bangalore, India-based education learning startup, is in talks to raise $400 million as part of an ongoing round that includes Tiger Global and General Atlantic, per TechCrunch citing sources. The deal values the company at about $10 billion. Read more.
– Medable, a Palo Alto, Calif.-based platform for decentralized clinical trials, raised $25 million in funding. GSR Ventures led the round and was joined by investors including PPD.
– ZAF Energy Systems Inc., a Joplin, Mo.–based developer of battery tech, raised $22 million in Series A funding. Investors include Élevage Capital Management, Catalus Capital, Holt Ventures, and Coventry Asset Management.
– KlearNow, a Santa Clara, Calif.-based AI-driven customs clearance platform, raised $16 million in Series A funding. GreatPoint Ventures led the round, and was joined by investors including Autotech Ventures, Argean Capital, and Monta Vista Capital.
– Knowde, a San Jose-based online chemical marketplace, raised $14 million in Series A funding. Sequoia Capital led the round, and was joined by investors including Refactor Capital, Bee Partners, and Cantos Ventures.
– Classplus, an Indian platform for educators, raised $9 million in Series A funding. RTP Global led the round, and was joined by investors including Blume Ventures, Sequoia Capital India’s Surge, Spiral Ventures, and Strive.
– Oxwash, a UK-based laundry startup raised £1.4 million ($1.7 million) in seed funding. Investors include TrueSightVentures, Biz Stone (co-founder of Twitter), Paul Forster (founder of Indeed.com), and Founders Factory. Read more.
– Softomotive, a London-based startup making software robotics to automate tasks, is in talks to be acquired by Microsoft, per Bloomberg citing sources.to buy that makes software robots to automate tasks, according to people familiar with the matter. Read more.
– HealthpointCapital acquired IlluminOss Medical, an East Providence, RI-based provider of technologies for fracture repairs.
– Blackstone acquired a near 7% stake in Energy Transfer, a transporter of natural gases and crude oils, including shares held by Harvest Fund Advisors, per Bloomberg citing sources. Financial terms weren’t disclosed. Read more.
– Cinven and Advent, the private equity firms behind the planned Europe’s largest deal in a decade, are seeking other investors to help them pay for the €17.2 billion acquisition for Thyssenkrupp’s elevator business, per the Financial Times citing sources. Read more.
– Afterpay (ASX: ATP), a Melbourne-based point-of-sale lending platform, raised an undisclosed sum after Tencent acquired a 5% stake in the company. Financial terms weren’t disclosed.
– IHS Markit (NYSE: INFO) acquired Catena Technologies, a Singapore-based regulatory trade reporting firm. Financial terms weren’t disclosed.
– Menarini Group agreed to acquire Stemline Therapeutics, a U.S. biopharmaceutical focused on oncology therapeutics, in a deal valued at up to $677 million. Stemline shareholders would get $12.50 per share, involving an upfront payment of $11.50 in cash, the companies said.
– Telefonica and Liberty Global, two telecom companies based in Madrid and London respectively, are weighing a merger of their U.K. operations, per sources cited by Bloomberg. The deal would bring together Telefonica’s O2 mobile network and Liberty Global’s Virgin Media business. Read more.
– Kingsoft Cloud, a Beijing, China-based cloud services provider spinning out of Kingsoft Group, plans to raise $425 million. It posted revenue of $568.3 million in 2019 and losses of $166.8 million. Kingsoft (53.8% pre-offering) and Xiaomi (15.8%) back the firm. It plans to list on the Nasdaq as “KC.” Read more.
– Pexip, a Norweigian video-conferencing competitor to Zoom, plans to raise NOK 2.142 billion ($206 million) in an offering of 17 million shares at NOK 63 ($6.06) apiece. Existing shareholders plan to sell another 17 million share. Read more.
– Sixth Street Partners completed its separation from TPG. Financial terms weren’t disclosed.