Who opened Pandora's Box?

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The Pandora Papers leak has outdone the Panama Papers and exposed how some of the most powerful people hide their wealth using secret offshore companies. In the US, Treasury Secretary Janet Yellen has warned Congress that the Treasury would be unable to pay its debt if the ceiling is not raised by October 18. We take a look at Roblox's $90mn acquisition of Guilded and speak to Kiril Dimov of L Catterton in our Industry Insight Podcast Series.

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🏦Anatomy of an Investment Bank with Katie Ramsey

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👨‍🏫Q&A with Citadel Associate Portfolio Manager

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🇬🇧United Kingdom

💰 Investors surge into VCTs ahead of dividend tax increase: Fundraising for UK Venture Capital Trusts has started the year at a blistering rate, raising £128m since the start of the tax year in April, and some in the industry predict cash will keep flowing as wealthy savers look to take advantage of the tax breaks on offer for backing relatively risky early-stage British companies.

⛈ UK businesses warn of ‘autumn storm’ of shortages, costs and taxes: According to The Institute of Directors’ economic confidence index, confidence has fallen to levels last seen at the height of the third lockdown in February 2021, after recording record highs in the summer.

💷 Sunak urges Tories to back him on reining in spending: Chancellor Rishi Sunak has urged Tory MPs to back his efforts to keep public spending under control in this month’s Budget, as Sunak continues to be placed under mounting pressure from Labour and some Tory MPs to increase support for households to avoid a cost of living crisis this autumn and help public services recover from the coronavirus crisis.

🇺🇸United States

💵 Congress has to reach a deal to raise the federal borrowing limit: Treasury Secretary Janet Yellen told Congress on Tuesday that the Treasury would be unable to pay all of the government’s bills if the ceiling isn’t raised by Oct. 18, stating that the Treasury would be left with very limited resources that would be depleted quickly.

🇨🇳 New trade talks with China: The Biden administration began defining its China trade policy, saying it aims to launch new talks with Beijing but will keep existing tariffs in place, while also restoring the ability of U.S. importers to seek exemptions from those levies.

📈 House prices are rising at a record pace but incomes are not keeping up: The median American household would need 32.1% of its income to cover mortgage payments on a median-priced home. That is the most since November 2008, when the same outlays would eat up 34.2% of income.

🇪🇺Europe

🔋 Inflation concerns intensify as cost of energy soars: According to recent news, UK and Europe’s natural gas crunch is poised to intensify, after Beijing ordered Chinese state-backed companies to secure their energy supplies at any cost.

⛽ France to block gas and electricity price rises until the spring: In a televised address on Thursday evening, Jean Castex, Prime Minister, announced that, after an already scheduled 12.6 percent rise in gas prices on Friday, the government would block any further price increases and lower taxes paid on power until April, as it seeks to relieve the pressure of a global gas crunch and soaring energy costs across Europe.

🛒 Eurozone consumer activity returns to pre-pandemic levels: According to Oxford Economics’ data on eurozone economic activity in September, European consumers feel emboldened by high Covid-19 vaccination rates, posting a strong gain in the first half of September and rising by a cumulative 2.3 points to a new pandemic high, despite a slew of worrying economic news including higher energy bills, supply-chain disruptions and worries about the impact of an economic slowdown in China.

🇸🇬Asia Pacific

📰 Pandora Papers leak: An unprecedented leak of financial records has revealed the offshore financial assets of dozens of current and former world leaders and hundreds of politicians from Asia and the Middle East to Latin America.

🎌 Fumio Kishida elected as Japan's 100th Prime Minister: At his first press conference Monday, he has expressed skepticism about China's qualification to join the CPTPP trade pact, noting the bloc's tough free trade requirements. He also stressed the need to improve missile defense for Japan.

🛑 Evergrande halts trading in HKEX: China Evergrande Group and its property-services arm were halted in Hong Kong stock trading amid a report that the developer agreed to sell a controlling stake in the unit to raise much-needed cash.

Roblox to Acquire Guilded for $90 Million

Acquirer: Roblox Corporation (NYSE:RBLX)

• Roblox, developed by the Roblox Corporation, is an online platform and storefront where users can develop and play games made by other users. Currently, users on the platform have published more than 20 million games
• The company boasted 32.6M daily active users in FY2020, with 400M+ website views in the past 6 months
• Roblox was the fifth highest-grossing game across the App Store and Google Play for July 2021

Target: Guilded Inc. (privately held company)

• Guilded is a VoIP (Voice over Internet Protocol), instant messaging, and digital distribution platform designed by Guilded Inc. Key features of the app are voice chat, video chat, an integrated calendar, tournaments, and scheduling tools
• Guilded can also be used on both PC and mobile, where it recorded 500k downloads in 2020 across the App Store and Google Play Store
• Developed specific functionality for a handful of titles, including League of Legends, Fortnite, and CS: GO

Rationale

• Video game stocks are continuing their slow recovery following the peak of the COVID-19 pandemic, and Roblox is no exception, vastly underperforming compared to analyst estimates for Q2 2021
• Acquiring Guilded would be an important acquisition for Roblox, adding a new vertical and income stream to their already-robust platform, especially after Guilded's $7 million Series A raise in 2020 to expand and take a bigger percentage of the market share from their competitors, such as Discord
• With over 40 million daily active users in May 2021, up 28% Y-o-Y, along with an increase in bookings growth from 24% to 26%, and an increase in revenue growth from 123% to 126%, this acquisition will integrate seamlessly with the Roblox infrastructure and can take advantage of this boosted Q3 growth
• With this acquisition, Roblox can continue forward with its vision of becoming a "metaverse" company - one where users can create and explore with other people who aren't in the same physical space as them. Guilded provides voice and chatting options for gamers, while also allowing users to organize communities around events and calendars
• With Facebook's recent acquisition of Guilded-competitor Creta, this acquisition has come in a timely manner, as it puts Roblox in a position to gain a competitive edge and reach the metaverse status quicker than Facebook

This week we are joined by Kiril Dimov, Associate at L Catterton.

This episode covers:

• The pursuit of driving meaningful change in companies
• The influence of mentors within the private equity industry and the general importance of them for professional development
• Misconceptions of the private equity industry and the skill set needed to be successful within the space