Paul Hastings adds to restructuring and private credit team

Law firm Paul Hastings has added to its US team of restructuring, private credit and special situations lawyers, who will be based variously in New York, Chicago, Houston and Washington, DC.

The team joins from King & Spalding and includes Jennifer Daly, who was co-head of the global finance and restructuring practice and previously headed the private credit and special situations practice, Roger Schwartz, Matthew Warren, Christopher Boies, Zachary Cochran, Peter Montoni, Geoffrey King, Lindsey Henrikson and Robert Nussbaum. Daly, Schwartz, Boies, Montoni and Nussbaum will be based in New York; Warren will split time between Chicago — where he will be joined by King and Henrikson — and Houston; and Cochran will work out of the Washington, DC and New York offices.

Prior to King & Spalding, Schwartz and Warren were restructuring partners at Latham & Watkins.

According to a press statement, collectively, the team represents clients including private credit funds, business development companies, banks, financial institutions and CLOs. The team’s experience spans all market cycles.

Alphabet taps Eli Lilly’s Anat Ashkenazi as new CFO

Alphabet’s new chief financial officer is Anat Ashkenazi, who will join the company after more than two decades at pharmaceutical giant Eli Lilly. Ashkenazi will replace current CFO Ruth Porat, effective July, as the latter shifts to a new role as president and chief investment officer of Google. Google’s finance unit has undergone restructuring as the company devotes more resources to the AI race. A view of Google Headquarters in Mountain View, California, United States on April 16, 2024.  Tayfun Coskun | Anadolu | Getty Images

Eli Lilly Chief Financial Officer Anat Ashkenazi will become Alphabet’s new CFO effective July 31, Google’s parent company announced Tuesday, almost a year after Alphabet first announced that current CFO Ruth Porat would move into a new role as president and chief investment officer.

Ashkenazi had a 23-year career at Eli Lilly, which in a separate release confirmed her departure.

“We’re very pleased to have found such a strong CFO, with a track record of strategic focus on long-term investment to fuel innovation and growth,” Alphabet CEO Sundar Pichai said in a release.

Ashkenazi joined Eli Lilly in 2001 and has been CFO since 2021. She will continue to serve on the pharmaceutical company’s executive committee until her departure. She previously served as CFO for several of the company’s global business areas, helping manage the revenue windfall from Eli Lilly’s weight loss and diabetes drugs.

Porat had a nearly three-decade career as an investment banker at Morgan Stanley, culminating as its CFO, before joining Google in 2015. She helped Google grow into one of the most valuable companies in the world, including while the company has recently contended with threats ranging from the artificial intelligence race to antitrust investigations.

The leadership shuffle has long been in the works. Google first announced in 2023 that Porat would step down and has since been mounting a search process.

Google’s finance unit has been grappling with other changes in recent months as well. Porat announced earlier this year that Google was restructuring its finance unit as the company pushed to favor investments in AI, CNBC previously reported, with layoffs and relocations that would impact teams worldwide.

Other top executives at the firm include Chief Business Officer Philipp Schindler, Head of Google Search Prabhakar Raghavan and Google Cloud CEO Thomas Kurian.

Google’s “old guard” has experienced shifts beyond

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Hanesbrands to sell Champion brand to Authentic Brands in $1.2 billion deal

Hanesbrands said Wednesday that it signed a deal to sell its Champion brand to Authentic Brands Group. The deal could reach up to $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met. This comes after Hanesbrands announced it was considering selling the business in late September. A shopper walks past the American sportswear fashion brand Champion store in Hong Kong. Budrul Chukrut | Getty Images

Hanesbrands agreed to sell its global Champion business to Authentic Brands Group in a transaction valued at $1.2 billion, including a contingent cash consideration, the company announced on Wednesday.

The deal has the potential to reach $1.5 billion through an additional cash contingent consideration of up to $300 million if performance thresholds are met, according to a press release from Hanesbrands.

The company expects to receive net proceeds of $900 million from the deal, the release says. Hanesbrands said the company plans to use the net proceeds to accelerate debt reduction.

Hanesbrands shares surged around 12% during premarket trading Wednesday.

As of the end of the first quarter of 2024, Champion generated around $75 million of adjusted EBITDA.

“We believe this transaction will enable the company to accelerate its debt reduction while positioning Hanesbrands to deliver consistent growth and cash flow generation through a focused strategy on advancing its leading innerwear brands and optimizing its world-class supply chain,” said board chairman Bill Simon.

The agreement, which the Hanesbrands’ board of directors approved unanimously, comes months after the company said it was considering a sale of Champion.

CNBC reported in November 2023 that Authentic Brands Group and fellow brand management firm WHP Global were both interested in buying Champion.

Hanesbrands first announced it was considering offloading Champion in late September, which was just over one month after activist firm Barington Capital Group began pressuring Hanesbrands to cut costs and generate cash amid declining sales.

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BB Capital launches two ‘unique’ private markets funds

BB Capital Investments has launched two new funds within the firm’s private markets fund-of-funds strategy – the BB Capital Private Credit Fund and the BB Capital NextGen Fund – both of which it says are unique to the Dutch market.

BB Capital Private Credit Fund provides access to a diversified portfolio of private credit funds, while BB Capital NextGen Fund provides access to international impact funds focused on the crucial themes of climate change, the circular economy and social equality.

According to a press statement, their fund-of-funds structure makes both vehicles unique in the Dutch market for private credit and impact investments. With BB Capital Investments’ evergreen structure, which is already accessible through the firm’s private equity proposition, individual investors now have access to active fund-of-funds portfolios of private credit and impact investments.

Private payrolls growth slows to 152,000 in May, much less than expected, ADP says

ADP reported that companies added 152,000 jobs in May, fewer than the downwardly revised 188,000 in April and below the Dow Jones consensus estimate for 175,000. Nearly all the hiring came from the services sector, with goods producers contributing just a net 3,000 to the total. Trade, transportation and utilities led with 55,000 new jobs, while education and health services added 46,000, and construction contributed 32,000.

Private job creation slowed more than expected in May, according to a report Wednesday from ADP that signals further sluggishness in the labor market.

The payroll processing firm said that companies added 152,000 jobs on the month, fewer than the downwardly revised 188,000 in April and below the Dow Jones consensus estimate for 175,000. This was the lowest monthly level since January.

Along with the slowdown in job creation, annual pay growth gains held at a 5% rate, where they have been for three months running.

“Job gains and pay growth are slowing going into the second half of the year,” ADP’s chief economist, Nela Richardson, said. “The labor market is solid, but we’re monitoring notable pockets of weakness tied to both producers and consumers.”

A bartender prepares drinks in Le Central restaurant in San Francisco, California, US, on Tuesday, May 7, 2024.  David Paul Morris | Bloomberg | Getty Images

Nearly all the hiring came from the services sector, with goods producers contributing just a net 3,000 to the total.

Trade, transportation and utilities led with 55,000 new jobs, while education and health services added 46,000, and construction contributed 32,000. The other services category added 21,000, but leisure and hospitality, a leading contributor over the past several years, saw a gain of just 12,000.

A number of sectors saw job losses on the month.

Manufacturing, which has been in contraction for most of the past year and a half, lost 20,000 jobs. Others seeing decreases included natural resources and mining (-9,000), information (-7,000), and professional and business services (-6,000). Small business also saw a decline, with companies employing between 20 and 49 workers down 36,000.

The report comes two days ahead of the more closely watched nonfarm payrolls count from the Bureau of Labor Statistics. ADP sometimes can provide a preview of what’s ahead in the BLS

CNBC

Ron Baron, big Tesla shareholder, supports Elon Musk’s $56 billion pay package

Billionaire investor Ron Baron, longtime Tesla bull and shareholder, wrote an open letter in support of CEO Elon Musk’s controversial $56 billion pay package.

The Baron Capital chairman and CEO said Musk’s compensation contract in 2018 included “aggressive” performance metrics that few believed could be achieved. Musk would have earned nothing if these ambitious goals had not been met, he said.

“Elon is the ultimate ‘key man’ of key man risk,” Baron said in the letter. “Without his relentless drive and uncompromising standards, there would be no Tesla. Especially considering how he slept on the floor of Tesla’s Fremont factory when the company was going through what he called ‘production hell!'”

Ron Baron, founder of Baron Capital Anjali Sundaram | CNBC

The pay package, proposed by Tesla’s board of directors, has repeatedly come under fire for its close ties with Musk. The package has no salary or cash bonus and sets rewards based on Tesla’s market value rising to as much as $650 billion over the 10 years from 2018.

If passed, it would be the largest pay package for a CEO in corporate America. Tesla’s shareholder meeting is scheduled for June 13.

“I’m voting for the pay package,” Baron said on CNBC’s “Squawk Box” Wednesday.

In January, Judge Kathaleen McCormick of Delaware’s Court of Chancery voided the original pay package. Musk then sought to move Tesla’s state of incorporation to Texas from Delaware.

Baron previously revealed that his firm has made about 20 times its investment in Tesla since he first bought the stock in 2014. Tesla is the biggest holding in Baron’s oldest and biggest fund, Baron Partners Fund (BPTIX), accounting for nearly 30% of the portfolio.

“At Baron Capital, our answer is clear, loud, and unequivocal: Tesla is better with Elon. Tesla is Elon,” he said.

CNBC

YFM Equity Partners and Par Equity invest £8.7m in EV software provider Fuuse 

Private equity firms YFM Equity Partners and Par Equity, alongside an angel syndicate, have made an £8.7m growth capital investment into Fuuse, a UK provider of electric vehicle charging software.  

According to a press statement, the combined investment will help Fuuse to expand its customer base and increase density in the UK market.

Fuuse was launched in 2021 and is based in Lancaster. The company’s EV charge point management software platform is built to open standards and compatible with OCPP compliant hardware, serving customers in both the public and private sector.

Pannone Corporate, Gneiss Energy, NovAzure, KBS Ventures, Sales Blueprint, CM People Partner and The Startup Factory advised on the deal.

Stocks making the biggest moves premarket: Hewlett Packard Enterprise, Instacart, CrowdStrike and more

Is The Bond Market Rethinking The Outlook For Rate Cuts?

Here we go again. After yesterday’s news that US job openings fell to a three-year low in April, the data fueled the incentive for the bond market to reassess the view that the Federal Reserve will keep interest rates higher for longer.

The catalyst for what may be the start of a new phase in market sentiment: the number of new job openings listed in the US slumped to the lowest level since February 2021, the Labor Department reports. The update is widely seen as more evidence that the labor market is weakening.

A bit of context is needed, however. Job openings spiked in 2021 to an unusually high level as the rebound from the pandemic took root. The surge in openings, although welcome, was unsustainable. Even after the latest update, openings remain above pre-pandemic levels. Nonetheless, the downside directional bias is hard to miss – a trend that looks set to continue as the labor market continues to normalize.

The view that the recent deceleration in payrolls growth will persist — supported by the job openings numbers – suggests that the downshift will help take the edge off of the sticky-inflation bias that’s prevailed in recent months. In turn, that will give the Federal Reserve room to start cutting interest rates, or so this line of reasoning runs.

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The Treasury market is pivoting to that view, based on trading in recent days. Notably, the policy-sensitive 2-year yield fell sharply for a fifth straight trading session on Tuesday (June 4), cutting this key rate to below 4.80% for the first time since May 15. This yield is now sitting just above its 200-day average – a break below that mark will be seen as a sign that even lower yields are likely in the near term.

Meanwhile, the 2-year rate continues to trade well below the Fed funds target range (5.25%-to-5.50%). The gap reflects the market’s ongoing, but so far premature forecast that the central bank will soon begin cutting rates.

Fed funds futures have lifted the implied probability of a future cut in recent days, albeit only modestly. The September 18 FOMC meeting is still viewed as the earliest date for a lower rate. The market sees higher probabilities later in the year.

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