Blackstone’s Q3 exits stuck in slow lane

Good morning. Here's what happened overnight and what you need to know today.

1.

Exit lull: Blackstone flagged it is on track to post lower profits from selling investments in the third quarter, as deal exits remained muted, Bloomberg reported citing a statement. The world’s largest alternative asset manager disclosed realised performance revenue and realised principal investment income for the third quarter through Tuesday are well below last year’s Q3 totals, according to the report. Realised performance revenue of about USD225 million ($329.97 million) and realised principal investment income of around USD45 million from the period compared with the respective measures of USD337.9 million and USD55.5 million in 2023, it said. Blackstone’s shares fell over 3%. It is the first time Blackstone has reported such figures. The numbers highlight private equity firms are still struggling to exit assets bought when interest rates were much lower, even as the Federal Reserve begins its rate-cutting cycle. (Capital Brief)

2.

Lebanon invasion: Israel is preparing for a potential ground incursion into Lebanon, targeting Hezbollah positions, the Israeli Defence Forces said Wednesday. IDF Chief Lieutenant General Herzi Halevi said troops were reading to enter Hezbollah-controlled areas to secure northern Israeli residents, following days of intensive airstrikes targeting over 2,000 Hezbollah sites. On Wednesday alone, Israel struck 260 targets. Hezbollah fired a long-range ballistic missile at Tel Aviv, aiming for Mossad headquarters, which Israel intercepted. The attacks into Lebanon have resulted in 636 deaths, including 50 children, since Monday, the Lebanese Ministry of Health said. Over 90,000 people have been displaced in Lebanon. Meanwhile, the US and France are leading diplomatic efforts to broker a ceasefire other leaders including US President Joe Biden, Turkey’s President Erdogan and France’s President Emmanuel Macron called for an urgent de-escalation. (Reuters)(WSJ)(ABC)

3.

AI deception: The US Federal Trade Commission (FTC) announced enforcement operations against five companies for deceptive and unfair use of artificial intelligence. The FTC suspended three businesses that falsely claimed to help generate passive income through e-commerce storefronts, and settled with AI-lawyer company DoNotPay, over allegations it deceived customers about its automated legal services. It also settled allegations against Rytr, an AI writing tool used to generate fake product reviews. DoNotPay agreed to pay USD193,000 ($282,850) and to inform subscribers of its legal feature's limitations. Rytr will cease offering review generation services, but neither company admitted wrongdoing. While all five FTC commissioners supported action against AI falsehoods, the two Republican commissioners disagreed on Rytr’s case. FTC Chair Lina Khan said, "Using AI tools to trick, mislead, or defraud people is illegal."(FTC) (Reuters)

4.

Cloud clash: Google has lodged a formal complaint with the European Commission against Microsoft, alleging anti-competitive practices in the cloud computing space. Google's Cloud VP Amit Zavery accused Microsoft of using its dominant Windows Server OS to lock customers into its Azure platform, imposing a 400% mark-up for running Windows Server on rival cloud providers. Users of rival cloud systems would also get later and more limited security updates, Zavery said. Google cited a CISPE study showing EU businesses paying up to €1 billion annually due to Microsoft licensing penalties. Despite Microsoft settling a 20-million-euro licensing complaint with CISPE in July, Google contends the broader issue remains unresolved. Google said Microsoft had locked customers into using collaboration application Teams even when they preferred alternatives and was using the same playbook for Azure. "The time to act is now," Zavery said. "The cloud market will get more and more restrictive if things don't happen now." (Reuters)

5.

Italian courtship: Commerzbank AG's board member Stefan Wittmann warned that a hostile takeover by UniCredit could slash two-thirds of Commerzbank's jobs, while the Italian bank’s boss, Andrea Orcel vowed that any deal wouldn't happen without Commerzbank's consent and confirmed he won’t seek a board seat. “I usually do not believe in investors having board seats,” Orcel said at a BofA conference. “I think it’s inappropriate for us to have a board seat because we’re also a competitor." Union Investment, an investor holding 1.5% of the German lender, urged the bank to consider discussions with the Italians, while Bettina Orlopp's appointment as Commerzbank's new CEO set the stage for potential negotiations. Sources told Bloomberg UniCredit did inform German officials of its interest in Commerzbank before Berlin began selling its shares, though not at the top government level. (Bloomberg)(CNBC)

6.

Wonder drug: A study from Case Western Reserve University suggests Novo Nordisk's diabetes drug Ozempic, containing semaglutide, may reduce the risk of opioid overdose in people with type 2 diabetes who have a history of opioid use. The study, published in JAMA Network Open, reviewed medical records of over 33,000 patients and found that those using semaglutide, also the key ingredient of Novo’s weight loss drug Wegovy, were less than half as likely to overdose compared to those on other diabetes medications like insulin. The study relied on electronic health records of patients with an opioid disorder and tracked them for a year. While more research is needed, the findings add to evidence that semaglutide may help manage addiction-related behaviours, as it has already shown benefits for alcohol and smoking habits, Rong Xu, a professor of biomedical informatics who led the study told Bloomberg. (Capital Brief)

7.

Orion debut: Meta Platforms unveiled its first working prototype of augmented-reality glasses, Orion, at its annual Connect conference. CEO Mark Zuckerberg showcased the magnesium-alloy glasses, featuring hand-tracking, voice and wrist-based neural interaction. The tech giant plans to ship its first commercial AR glasses by 2027, a source told Reuters. Meta also unveiled enhancements to its AI assistant, Meta AI, including celebrity voice options and language translation features. It also released three new Llama 3 AI models. Despite losing USD8.3 billion ($12.16 billion) in the first half, Meta's Reality Labs division is continuing to invest heavily in metaverse and AI technologies, driving record forecast capital expenses of up to USD40 billion for 2024. Meta also announced an entry-level version of its Quest line of mixed-reality headsets, the Quest 3S, starting at USD299.99. (Reuters)

8.

REA rejected: Rightmove rejected a third bid from Rupert Murdoch’s REA Group, calling the £6.1 billion ($11.91 billion) cash-and-shares offer "unattractive" and undervaluing the UK property portal. The Rightmove board unanimously dismissed the proposal on Wednesday, the third attempt by REA this month after earlier bids of £5.6 billion and £5.9 billion. REA, majority-owned by Murdoch’s News Corp, said it was disappointed by Rightmove's refusal to engage substantively. Rightmove’s board warned shareholders to reject REA's “wholly opportunistic” bid. REA has until 30 September to make a revised offer. Despite REA's claim that the offer was worth 770 pence per share, Rightmove noted the implied value had dipped to 759 pence due to REA's share price fall. (Capital Brief)