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Anglo American extends deadline for BHP takeover after rejecting improved bid

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Anglo American has extended talks with BHP over a takeover bid, keeping the prospect alive of the largest-ever deal in the mining sector, even after the UK-listed group rejected a third £38.6bn approach.

BHP now has until 5pm UK time on May 29 to make a formal bid for its smaller rival after increasing the number of shares on offer to Anglo investors in its third and “final” deal proposal.

Anglo will continue to engage with BHP for a further week, despite saying that it continues to hold “serious concerns” about the complex deal structure that requires it to spin off two South African units.

The extension keeps alive BHP’s hopes that it can still secure a deal that would transform the global mining industry and give the Australian company access to more copper, a metal vital for decarbonisation.

BHP said in a separate statement on Wednesday that its third all-share offer valued Anglo at £31.11 a share based on the May 22 closing price.

It said the preliminary proposal was its “final offer ratio” but added that it could be increased under certain conditions such as Anglo’s board agreeing to recommend a higher bid or a bid from a rival company for Anglo.

Anglo’s board unanimously rejected the third proposal. Chair Stuart Chambers said the bid “does not meet expectations of value delivered to Anglo American’s shareholders” but that the board was “willing to continue to engage with BHP and its advisers on this topic”.

Ben Davis, a mining analyst at Liberum, said the late twist meant a deal was still possible but that Anglo’s opposition to first spinning off its South African businesses remained a problem. “Final offers are never final and the door has been left open, but it’s difficult to see how to ‘make safe’ BHP’s proposed structure,” he said.

Anglo said the latest proposal valued its shares at £29.34 based on the closing price of its shares on April 23, before news of the merger talks became public. BHP’s previous offer valued Anglo at £27.53 per share, or £34bn. It had initially offered £25 a share, or £31bn.

The deal would hand Anglo shareholders 17.8 per cent of BHP’s shares and is a 47 per cent premium to Anglo’s share price before news of the merger talks became public, according to BHP.

BHP’s chief executive Mike Henry

The Start of De-Dollarization: China’s Gradual Move Away from the USD

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May 22, 2024 The Start of De-Dollarization: China’s Move Away from the USD

Since 2010, the majority of China’s cross-border payments, like those of many countries, have been settled in U.S. dollars (USD). As of the first quarter of 2023, that’s no longer the case.

This graphic from the Hinrich Foundation, the second in a three-part series covering the future of trade, provides visual context to the growing use of the Chinese renminbi (RMB) in payments both domestically and globally.  

The De-Dollarization of China’s Cross-Border Transactions

This analysis uses Bloomberg data on the share of China’s payments and receipts in RMB, USD, and other currencies from 2010 to 2024. 

In the first few months of 2010, settlements in local currency accounted for less than 1.0% of China’s cross-border payments, compared to approximately 83.0% in USD. 

China has since closed that gap. In March 2023, the share of the RMB in China’s settlements surpassed the USD for the first time.

DateRenminbiU.S. DollarOther March 20100.3%84.3%15.4% March 20114.8%81.3%13.9% March 201211.5%77.1%11.5% March 201318.1%72.7%9.2% March 201426.6%64.8%8.6% March 201529.0%61.9%9.0% March 201623.6%66.7%9.7% March 201717.6%72.5%9.9% March 201823.2%67.4%9.4% March 201926.2%65.1%8.7% March 202039.3%54.4%6.3% March 202141.7%52.6%5.6% March 202242.1%53.3%4.7% March 202348.4%46.7%4.9% March 202452.9%42.8%4.3%

Since then, the de-dollarization in Chinese international settlements has continued.  

As of March 2024, over half (52.9%) of Chinese payments were settled in RMB while 42.8% were settled in USD. This is double the share from five years previous. According to Goldman Sachs, foreigners’ increased willingness to trade assets denominated in RMB significantly contributed to de-dollarization in favor of China’s currency. Also, early last year, Brazil and Argentina announced that they would begin allowing trade settlements in RMB. 

Most Popular Currencies in Foreign Exchange (FX) Transactions

Globally, analysis from the Bank for International Settlements reveals that, in 2022, the USD remained the most-used currency for FX settlements. The euro and the Japanese yen came in second and third, respectively.

Currency20132022Change (pp) U.S. Dollar87.0%88.5%+1.5 Euro33.4%30.5%-2.9 Yen23.0%16.7%-6.3 Pound Sterling11.8%12.9%+1.1 Renminbi2.2%7.0%+4.8 Other42.6%44.4%+1.8 Total200.0%200.0%

The

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HPS Investment Partners limits fund inflows due to increased private credit demand

New York-based HPS Investment Partners is limiting inflows for its $10bn HPS Corporate Lending Fund in response to a surge in demand for private credit, according to a report by Bloomberg. 

This unusual move is expected to reduce contributions from its main distributor, JPMorgan Chase & Co, according to Bloomberg’s sources. 

Investors who are unable to contribute due to the cap — primarily wealthy individuals — will reportedly be placed on a waitlist. 

Despite the potential loss of fees associated with new capital, HPS is betting that this cap will provide it with the flexibility to reject unattractive deals, thereby enhancing returns in the long run. 

From March onwards, JPMorgan has reduced its monthly contributions to the HPS Corporate Lending Fund to approximately $150m-$200m, a significant decrease from the previous monthly total of about $200m-$500m, Bloomberg’s sources said. 

HPS focuses on debt and equity investments including loan, mezzanine, credit opportunities, private equity and real assets, according to Preqin. 

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Eby joined Goldman Sachs as a managing director in 2021 from Credit Suisse. He assumed his most recent job title alongside Kyle Van Fleet earlier this year.  

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Banks and private credit firms compete for PowerSchool buyout

Private credit lenders and banks are vying to offer debt financing for a potential acquisition of US education software provider PowerSchool Holdings, according to a report by Bloomberg citing people with knowledge of the matter. 

Ares Management, HPS Investment Partners, Blackstone and Blue Owl Capital are among the direct lenders aiming to provide an approximately $3bn debt package for the transaction. The financing could include a $2.4bn funded term loan, a $500m delayed-draw term loan and a $300m revolver. Banks are also said to be offering competing packages that include a smaller amount of debt and preferred equity. 

PowerSchool is based in Folsom, California and has reportedly also attracted interest from private equity firms Warburg Pincus and Bain Capital. Private equity firms Onex and Vista Equity Partners currently own about 63% of PowerSchool’s outstanding shares. 

The proposed amount of funded debt from private lenders would be significantly higher than seven times PowerSchool’s earnings, according to Bloomberg’s sources, which banks may struggle to match due to regulatory constraints. 

Bloomberg reported that PowerSchool has formed a special committee of its board of directors to work with an unnamed investment bank. 

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