Canva closes blockbuster US$1.5b secondary share sale

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

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1.

Share sale success: Canva has completed a USD1.5 billion ($2.27 billion) secondary share sale, one of the largest in global startup history. The secondary sale marks a significant liquidity event for the Australian ecosystem, easily outweighing Atlassian’s IPO nine years ago. In addition to the design software company closing the share sale, unnamed sources cited by Capital Brief reveal that Canva is also in the final stages of hiring a new CFO, following the controversial departure of Damian Singh earlier this year. The new CFO is likely to be based in the US, which would follow Canva’s recent US hire of an enterprise-focused chief customer officer, Rob Giglio. The new CFO will be charged with leading the company as it prepares for a Wall Street IPO as early as 2025. (Capital Brief)

2.

Ripple effect: Cryptocurrency group Ripple Labs will launch a stablecoin in efforts to lure asset managers and banks to trade securities on blockchain, on the back of Bitcoin’s recent surge. Stablecoins are a specific type of digital asset which, unlike Bitcoin, are typically pegged to a sovereign currency. Ripple plans to launch its stablecoin token which will be pegged 1:1 to the US dollar, and fully-backed by dollar deposits and short-term Treasuries, later this year. When it launches, Ripple’s token will be available on the XRP Ledger and Ethereum blockchains, with plans to expand to other blockchains and DeFi protocols over time. Ripple has been battling a lawsuit brought by the US SEC for a number of years, which claims that the company had been selling unregistered securities.(Ripple press release)

3.

Pandemic probe: Authorities in Italy, Austria, Romania and Slovakia arrested 22 people across the bloc following an investigation into a criminal network defrauding the EU of millions in Covid-19 recovery funds. The individuals are suspected of defrauding €600 million from Italy’s National Recovery and Resilience Facility (NRRF). In 2021 the suspected criminals applied to receive grants that were designed to support digitalisation, innovation and competitiveness for small businesses, by creating and depositing false corporate balance sheets to show that the companies were active and profitable, when they were in fact entirely fictitious. A network of accountants, service providers and public notaries allegedly supported the suspects to successfully obtain the funds, which were promptly transferred to bank accounts abroad. The suspects used VPNs, international cloud servers, crypto-assets and AI software in efforts to conceal and protect their activities. (Capital Brief)

4.

Default shareholders: Two state-owned Chinese banks are part of a group of lenders involved in a stand-off over debt at Thames Water’s parent company, Kemble Water Finance. Shareholders in Kemble Water Finance last week announced that they would be unable to repay a £190 million loan when it matures at the end of April. If Thames Water defaults on the loan, the two Beijing-owned banks could become shareholders. The UK’s biggest water utility is facing a debt crisis, currently shouldering approximately £15 billion in debt which amounts to around 80% of the business’ value. Last week, Thames Water shareholders (Including Chinese sovereign wealth fund CIC) refused to pay £500 million to stabilise the utility’s finances, leading the provider to admit that it would need to secure more funding by late next year or risk nationalisation. The two Chinese lenders, Bank of China and Industrial and Commercial Bank of China (ICBC), are part of the group which has refused to extend the £190 million loan without new equity. (Financial Times)(Bloomberg)

5.

HubSpot soft-spot: Google parent Alphabet is weighing the possibility of making an offer on online marketing software company, HubSpot, according to unnamed sources cited by Reuters. Shares in the NYSE-listed HubSpot climbed on the back of the news, gaining over 5% in early trading. The company has a market value of USD32 billion. Alphabet has reportedly met with Morgan Stanley investment bankers to discuss the potential offer, to assess both the size of the offer and the likelihood of a potential deal being approved by competition regulators. Antitrust regulators across the globe are cracking down on big tech companies’ market control, heightening their focus on potential M&A activity by tech giants within the sector. Reuters' sources say that while Alphabet has not yet submitted an offer to HubSpot, the acquisition could mean that the cash-heavy Alphabet is able to put a portion of its USD110.9 billion money pile to work. (Reuters)

6.

US data: Wall Street stocks opened higher on Thursday, after unemployment claims data added to traders’ confidence that the Federal Reserve will begin rate cuts this year. The US Bureau of Labor Statistics showed that new applications for unemployment aid jumped to their highest level in 14 months. Technology and government sector job layoffs outpaced other sectors during Q1, with 42,442 cuts announced since the beginning of the year. While the figures showed increased unemployment, the US job market remains strong. Other economic news out of the US saw the country’s trade deficit widen for a second consecutive month in February, rising 1.9% to USD68.9 billion, as an increase in exports was offset by surging imports. (Financial Times)(Reuters)

7.

Military overhaul: Germany has revealed sweeping military reforms which could include plans to reintroduce national service, as the country’s defence minister pledged to restructure the military to better defend Nato territory. Boris Pistorius told an audience marking the military alliance’s 75th anniversary that he has signed an order to reorganise the German military in a “landmark reform” such that “nobody should have the idea of attacking Nato territory – this is what we [want to] convey.” The reforms will be the most significant changes made to the country’s military since the cold war, and indicate a meaningful shift in attitude towards German armed forces. A proposal on a model of national service for young adults will be put before German politicians in the coming weeks, Pistorius said. (Financial Times)

8.

Space sale: Private equity firm Carlyle is mulling the USD10 billion sale (including debt) of US aircraft maintenance services provider, StandardAero. Unnamed sources cited by Reuters state that discussions for the sale are in early stages, and Carlyle is currently selecting advisors to lead the review process. Carlyle is also considering a potential IPO of StandardAero. The aircraft maintenance provider generated USD4.6 billion in revenue during 2023 and is expected to post high single-digit sales growth for 2024. StandardAero was acquired by Carlyle in 2019 for around USD5 billion, and its sale could mark a major win for Carlyle’s PE business which reported a sizeable drop in realised proceeds in 2023 to USD13.5 billion from USD22.5 billion the year prior. (Reuters)