the times | Saturday May 28 2022 2GM 53
Business
days if needed.” Even when the largest
tech companies have navigated today’s
issues — from sustained supply chain
problems to the normalisation of con-
sumer habits after two years of corona-
virus restrictions — those bearish
about their prospects note that myriad
more challenges await.
Businesses that once prided them-
selves on an ability to “move fast and
break things” face mounting regulatory
scrutiny in Washington and beyond, as
well as mobilisation campaigns within
their ranks. Workers at Amazon, en-
couraged by President Biden, voted last
month to establish the company’s first
union in the United States, at a ware-
house in Staten Island, New York. Staff
at several Apple Stores are attempting
to follow suit. Microsoft, striving to
push through its $68.7 billion takeover
of Activision Blizzard, has signalled its
support for a union recently formed
within the video games group.
Plenty of prominent bulls regard the
rout as an overreaction. “In the crash of
1999, 2000, 2001, you had internet com-
panies with no revenues and obviously
no earnings,” David Rubenstein, co-
founder of The Carlyle Group, the pri-
vate equity giant, said on a panel hosted
by CNBC at this week’s World Eco-
nomic Forum in Davos. “They had
nothing but a business plan in somecases, and those companies shouldn’t
have gone public, let alone maybe been
getting any capital.”
In contrast, Netflix has about 221 mil-
lion subscribers, Rubenstein observed.
“It may not be worth what it was worth
in the market a few months ago,” he
conceded, “but it’s certainly worth
more in my view than what it’s cur-
rently trading for.”
Some maintain that the worst is yet
to come. Scott Minerd, chief invest-
ment officer at Guggenheim Partners,
warned of a “summer of pain” in an in-
terview with the MarketWatch website.
He anticipates that the Nasdaq could
fall as much as 75 per cent. Last nightThe debate over the future of HSBC is
set to be reignited after the bank invited
analysts and investors to an event to de-
tail its strategy for its UK high street
banking business, which some in the
City believe could be spun off.
The event was organised before it
emerged that Ping An, a Chinese insur-
er and HSBC’s biggest shareholder, was
agitating for a break-up of the bank.
HSBC has rejected the proposal.
However, bosses are expected to face
fresh questions about the feasibility of a
split at a seminar on its UK ring-fenced
bank that The Times has learnt will take
place in Birmingham on June 16.
Although it is Britain’s biggest bank
levy will be phased out “if oil and gas
prices return to historically more
normal levels”, or by the end of 2025.
Neivan Boroujerdi, of Wood Macken-
zie, a consultancy, said: “It’s far from
certain what those levels are, and fiscal
uncertainty in the UK will remain a key
issue for investors.”
The Institute for Fiscal Studies has
suggested the tax relief for North Sea
investment may be too generous and
encourage “economically unviable pro-
jects”. Stuart Adam, senior economist,
said: “The new super-deduction means
that investing £100 in the North Sea
will cost companies only £8.75, with the
remaining cost paid by the govern-
ment. A massively loss-making invest-
ment could still be profitable after tax.”HSBC UK spin-off back in spotlight
and is based in London, HSBC is
heavily focused on Asia. Hong Kong,
where it was founded in 1865, is HSBC’s
biggest market, and Noel Quinn, its
chief executive, is focusing more of its
capital on the region.
Ping An owns 9.2 per cent of HSBC.
It is understood to have raised the idea
of a break-up with HSBC bosses several
months ago but its campaign only
became public at the end of April.
It is understood that Ping An believes
geopolitical tensions between China
and the West are dragging on the valua-
tion of HSBC’s Asian business. While
other investors have not come out in
support of a split, Ping An’s proposal has
drawn attention to HSBC’s structure.
There has long been speculation thatits UK retail operation, based in
Birmingham, could be spun off. It is
already legally separated under ring-
fencing reforms of the sector intro-
duced after the 2007-08 financial crisis.
“It would be one of the easier bits to
spin out,” a top shareholder said. “I
think everyone [at the seminar] will
surely have it in their minds: ‘What
does this look like as a standalone?’ ”
An analyst who is attending the
event, which is being hosted by Ian
Stuart, the bank’s UK chief executive,
said bosses would “undoubtedly” face
questions about a potential break-up.
HSBC said it “regularly engages with
analysts and investors” and that the
Birmingham seminar follows “a similar
event and format” to one held in 2019.Ben Martin Banking Editor
Energy firms suffer £4bn hit
Continued from page 51
“When making plans for the next
decade and beyond, we need certainty.”
Many in the oil and gas industry had
been resigned to a windfall tax but were
taken aback by the severity and
open-ended nature of the measures
announced on Thursday. One senior
oil executive described it as a “bloody
nightmare” and the worst they had
seen in decades. BP had said that its
plans would be unaffected by a windfall
tax. It will now review its North Sea
investment plans because the new
regime was not a “one-off tax — it is a
multi-year proposal”, it said.
Companies will not be allowed to use
prior year tax losses or decommission-
ing costs to reduce their tax bill, and theMarket capitalisation
2019 2020 2021 2022012$3trn2014 2016 2018 2020 2022(^) Source: Netflix, Statista
Source: CompaniesMarketCap.com
Source: Amazon
Slowing growth
20
0
40%
2017 2018 2019 2020 2021 2022
50
0
100
150
200m
Netflix announced a 200,000 loss of subscribers in the
first quarter of 2022, its first such loss for ten years
Nextflix subscriptions
Amazon’s quarter-on-quarter revenue only
grew by 7% in the first three months of 2022
Apple was the most valuable company at over
$3 trillion at the beginning of the year. It fell
behind but reclaimed top spot yesterday
Microsoft
Apple
Alphabet (Google) Amazon
Aramco
Market capitalisation
2019 2020 2021 2022
0
1
2
$3trn
2014 2016 2018 2020 2022
Source: Netflix,,Statista
Source: CompaniesMarketCap.com
Source: Amazon
Slowing growth
20
0
40%
2017 20182019202020212022
50
0
100
150
200 m
Netflix announced a 200,000 loss of subscribers in the
first quarter of 2022, its first such loss for ten years
Nextflix subscriptions
Amazon’s quarter-on-quarter revenue only
grew by 7% in the first three months of 202 2
Apple was the most valuable company at over
$3 trillion at the beginning of the year. It fell
behind but reclaimed top spot yesterday
Microsoft
Apple
Alphabet (Google) Amazon
Aramco
HarbourVest
has record
year as deals
make $835m
Simon Freeman
the index capped its first positive week
of trading in two months, however, fu-
elling tentative optimism in some cor-
ners that tech stocks may well have
found their floor.
The sell-off is likely to conclude “over
coming weeks”, Ives suggested, predict-
ing that some of the names hit hardest
in recent months will “rip higher” in the
second half of the year.
“Stocks are already factoring in a
mild recession,” he said. “Unless there’s
a hard landing [as the Federal Reserve
combats inflation] and just an Arma-
geddon-like recession, I believe these
stocks, especially in tech, are factoring
in very negative news.”
A wave of multibillion-dollar US tech-
nology company floats including Rob-
lox and Coinbase propelled Harbour-
Vest Global Private Equity to record
highs in 2021.
Last year was the most lucrative in
the 15-year history of the FTSE 250 in-
vestment fund, as high-profile listings
and activity in deal-making markets re-
alised a total of $835 million.
Exit payouts and value gains from an
“extraordinary” 555 transactions en-
compassing initial public offerings,
mergers and buyouts raised its net asset
value (NAV) per share, a key metric, by
a record 37 per cent to $49.11.
Chief among them were the block-
buster listings of Roblox, the DIY gam-
ing platform; Coinbase, the crypto-
currency exchange; and Monday.com,
a cloud-based business software firm.
All helped contribute to a $1 billion net
gain on investments.
The fund was spun out of Harbour-
Vest, the private equity giant headquar-
tered in Boston, in 2007. It offers Euro-
pean investors easy access to a range of
holdings in thousands of private com-
panies worldwide.
Technology and software companies
— such as the buy now, pay later
pioneer Klarna, data analytics start-up
Databricks and video meet-up
platform Discord — make up almost a
third of the fund’s total holdings. It also
has stakes in Shein, the Chinese fast-
fashion retailer; Revolut, the fintech
firm; and the Sidney Murray hydro-
electric power station project on the
banks of the Mississippi.
However, its portfolios remain tilted
towards riskier early-stage invest-
ments, a position that Ed Warner, the
chairman, concedes leaves it open to
“very severe economic and political
challenges” as investors rotate back
into traditional safe haven assets.
Warner — a sports enthusiast who
led the successful bid to stage the 2017
World Athletics Championships in
London as chairman of UK Athletics —
warned: “Private markets are likely to
feel some degree of impact from these
developments, so we might expect to
see downward pressure on valuations.”
Nevertheless, he remained optimis-
tic about the fund’s long-term
prospects. “At times of uncertainty, it is
vital to keep a level head, and we will re-
main measured and disciplined in our
approach,” Warner said.
“This should enable HVPE to pros-
per through more challenging times.”