Business News Roundup: January 31
January 31, 2025
World
SoftBank in Talks to Lead OpenAI Funding Round of Up to US$40 Billion
SoftBank Group is in talks to lead a funding round of up to US$40 billion in artificial intelligence developer OpenAI at a valuation of US$300 billion, including the new funds, sources said, in what could be a record single funding round for a private company. The funding comes as Chinese startup DeepSeek has launched an inexpensive AI model that has caught worldwide attention and challenged expectations of what it costs to develop and deploy AI. Still, SoftBank has valued OpenAI, the maker of ChatGPT, at US$260 billion going into the funding round, up from US$150 billion a few months ago, the sources, who requested anonymity to discuss private matters, told Reuters. The funding is expected to come in the form of convertible notes and, similar to OpenAI’s last funding round, is conditioned on OpenAI restructuring its business to remove control of the company by its non-profit arm. Leading the funding round in OpenAI would mean a bold bet for SoftBank, the global tech investor and its CEO Masayoshi Son, whose group has about US$30 billion in cash to deploy, according to filings. OpenAI and SoftBank declined to comment. The Wall Street Journal reported earlier that OpenAI was in talks with SoftBank for an investment round to raise nearly US$40 billion that would value the AI startup at up to US$340 billion.
SoftBank could invest US$15 billion to US$25 billion directly into Microsoft-backed OpenAI, some of which may be used to pay for OpenAI’s commitment to Stargate, one of the sources added. Stargate, a joint venture of Oracle, OpenAI and SoftBank, plans to invest up to US$500 billion to help the U.S. stay ahead of China and other rivals in the global AI race. SoftBank’s investment would be on top of the US$15 billion it has already committed to Stargate, the person said, adding the talks are at an early stage. In earnings calls this week, the CEOs of Microsoft and Meta Platforms defended their massive AI spending, saying it was crucial to staying competitive in the new field. Microsoft has earmarked US$80 billion for AI in its current fiscal year, while Meta has pledged as much as US$65 billion. DeepSeek has attracted attention in global AI circles after writing in a paper last month that the training of its model DeepSeek-V3 required less than US$6 million worth of computing power from Nvidia H800 chips. DeepSeek has used a common technique called model distillation to build on top of frontier AI models including those from OpenAI, and raised concerns among investors on whether labs such as OpenAI can maintain their edge to generate revenue while facing competition from lower-cost rivals.
Intel Fourth Quarter Revenue Fell 7% to US$14.26 Billion
Intel posted December-quarter results that beat analysts’ low expectations, while its forecast for current-quarter revenue missed estimates as the chipmaker grapples with tepid demand for its data center chips and as investors wait for a new CEO. Shares of the Santa Clara, California-based company climbed 3.8% in after-hours trading. Last year, Intel’s shares lost about 60%. The company’s quarterly results and forecast were overshadowed by questions about its long-term strategy and efforts to replace former CEO Pat Gelsinger, who was ousted last month. Two interim co-CEOs currently run the former No. 1 U.S. chipmaker which is struggling to catch up to its rivals, especially AI chip maker Nvidia. As Intel undergoes a historic transition and attempts to emerge from one of its bleakest periods, it has also struggled to cash in on a boom in investment in advanced AI chips. On a conference call with investors, Co-interim CEO Michelle Johnston Holthaus said Intel was shelving its forthcoming graphics processing unit (GPU) design called Falcon Shores, leaving it with no major new products for AI customers. The company said it planned to use Falcon Shores as an internal test chip and focus on future data center AI products.
Intel said it expects first-quarter revenue of US$11.7 billion to US$12.7 billion, compared with analysts’ average estimate of US$12.87 billion according to data compiled by LSEG. Companies looking to capitalize on generative AI technology have prioritized spending on specialized AI processors that can churn huge amounts of data, crimping demand for the traditional server processors that Intel sells. Interim co-CEO and Chief Financial Officer David Zinsner said the company’s goal was to ensure operating expenses were at roughly US$17.5 billion for 2025. Intel last year scrapped a 2024 forecast that it would sell over US$500 million worth of its new AI processors, named Gaudi, suggesting they struggled to compete against Nvidia’s chips. On an adjusted, per-share basis, Intel forecast it would break even for the current quarter. Analysts expect adjusted profit of 9 cents per share. Intel reported fourth-quarter revenue fell 7% from a year earlier to US$14.26 billion, beating estimates of US$13.81 billion. Grants Intel received related to federal CHIPS Act money were responsible for part of the company’s revenue and profit margins that beat expectations in the fourth quarter, Zinsner said. The PC market – Intel’s largest by revenue share – saw global shipments rise only modestly last year, underperforming analysts’ expectations of a strong rebound after months of declines. The company has also been losing share in the PC and server CPU market to rival AMD, a trend analysts expect to continue into 2025.
Nationwide to Acquire Allstate’s Stop-Loss Insurance Business in a US$1.25 Billion Deal
U.S. insurer Nationwide said that it would acquire property and casualty insurer Allstate Corp’s employer stop-loss segment in a US$1.25 billion deal, as it seeks to expand its stop-loss insurance offering. The transaction is expected to close in the second half of 2025, Nationwide said in a statement. Stop-loss insurance serves as a financial safeguard for companies against large medical expenses incurred by an employee in any given year. Ohio-based Nationwide is a diversified insurance and financial services firm that provides a range of products, including auto, business, farm and life insurance, among others. “Acquiring Allstate’s employer stop-loss segment will broaden Nationwide Financial’s portfolio, meeting the needs of small businesses, allowing us to serve more customers,” said Nationwide President John Carter. Allstate Corporation is an insurance firm that offers protection for autos, homes, electronic devices and identity theft. The sale is expected to help Allstate with a financial book gain of about US$450 million and increase deployable capital by US$900 million after the deal’s completion, which is expected in 2025, the firm said. J.P. Morgan and Ardea Partners are acting as financial advisers on the deal.
Visa First Quarter Adjusted Profit of US$2.75 Per Share Beat Estimates
Visa’s first-quarter profit beat Wall Street estimates, as easing concerns about an economic slowdown and discounts encouraged customers to splurge during the holiday shopping season. Retailers offered deep discounts on everything from apparel to toys and luxury products to lure cost-conscious consumers while online sales remained strong thanks to a boom in mobile shopping. Payments volume — a gauge of overall consumer and business spending on Visa’s network — jumped 9%, while revenue rose 10% to US$9.5 billion in the quarter. Shares of the world’s largest payments processor were up 1.8% after the bell. Visa also benefited from strong domestic and international travel demand, driven by improved pricing and the absence of severe weather-related disruptions. Cross-border volume excluding intra-Europe, a measure of international travel demand, jumped 16%. Processed transactions rose 11% in the quarter. The San Francisco, California-based company posted an adjusted profit of US$2.75 per share in the three months ended Dec. 31. Analysts, on average, had expected US$2.66 per share, according to data compiled by LSEG.
Although higher-for-longer interest rates were expected to be a dampener, consumer spending continues to be underpinned by a solid labor market and continued wage growth. “Consumer spending in the U.S. and around the globe is quite resilient and strong,” said Chief Financial Officer Chris Suh in an interview with Reuters. The trend bodes well for Visa and rival Mastercard as they pocket a small fee off each transaction on their networks. Mastercard earlier in the day reported a fourth-quarter profit that beat Wall Street estimates as consumers ramped up spending during the holiday season. Shares of both companies had underperformed the broader markets in 2024 on worries that a slowdown in major global economies could hurt the sector.
Baker Hughes Fourth Quarter Adjusted Profit of 70 Cents Per Share Beat Estimates
U.S. oilfield technology firm Baker Hughes beat Wall Street estimates for fourth-quarter profit, as robust demand for natural gas equipment and services helped offset weak sales of its drilling gear in North America. Oilfield service companies are grappling with lower demand as extraction technologies get more efficient and higher supplies deter more drilling by energy companies. Baker Hughes said revenue in its oilfield services segment fell 5% in North America, while it dropped 1% in its international markets unit. Larger rivals SLB and Halliburton earlier this month flagged a flattish revenue in 2025 as customers limited their activity and spending due to a glut. However, orders in Baker Hughes’ gas technology equipment business jumped 44%, lifting revenue in its industrial and energy technology (IET) segment to US$3.5 billion. IET booked US$3.8 billion of orders in the quarter, supported by strong LNG orders and another gas infrastructure award, CEO Lorenzo Simonelli said.
The Houston-based company provides compressors, turbines, valves and other modular systems to customers for gas processing. President Donald Trump earlier this month said the United States would guarantee supplies of liquefied natural gas to Europe, even amid worries that the booming export industry could boost prices of gas for U.S. consumers. Baker Hughes posted an adjusted profit of 70 cents per share for the three months ended Dec. 31, compared with analysts’ average expectation of 63 cents, according to estimates compiled by LSEG.
Arthur J Gallagher Posted Fourth Quarter Profit of US$258.2 Million
Arthur J Gallagher posted a profit for the fourth quarter, compared with a loss a year earlier, as heightened insurance activity boosted fees and commissions from its brokerage services. Insurance brokerages act as intermediaries between clients and insurers, guiding customers in selecting policies that best match their needs. Unlike insurers, they do not directly sell policies. Confidence in a soft-landing and economic resilience has spurred businesses to spend more on insurance, benefiting brokerages such as Arthur J Gallagher through higher fees. The company’s profit was US$258.2 million, or US$1.12 per share, for the three months ended Dec. 31, compared with a loss of US$39.6 million, or 15 cents per share, a year earlier. Its total revenue rose nearly 12% to US$2.72 billion, helped by a 13% jump in commissions.
Walmart Canada to Invest about C$6.5 Billion to Build New Stores and Expand its Supply Chain
Walmart Canada said it is investing about C$6.5 billion (US$4.51 billion) to build new stores and expand its supply chain, marking its biggest ever investment since opening its first store nearly 30 years ago. U.S. retail giant Walmart’s Canadian branch, which plans to expand its footprint, added it would be building dozens of new stores starting with five new supercenters in Ontario and Alberta by 2027. The retailer also plans to invest in modernizing its distribution centers. “Across the country, we’re making strategic investments in our online and in-store offerings to be more relevant to more customers than ever before,” said Joe Schrauder, Walmart Canada’s chief operations officer. Walmart Canada currently has over 400 stores and more than 100,000 workers in the country. The move follows Walmart’s decision to open 150 new stores in the United States. The company joins a list of other retailers, including Target, which have been making efforts to add new locations to gain more market share, following the increasing popularity of free and curbside delivery services. Walmart Canada also said it would be selling its fleet business to Canada Cartage, a provider of fleet services. The terms of this deal were not disclosed. The company also raised wages for its hourly retail and frontline associates in Canada last year.
Mastercard Fourth Quarter Adjusted Profit of US$3.82 Per Share Beat Estimates
Mastercard reported a fourth-quarter profit that beat Wall Street estimates as a resilient economy encouraged consumers to ramp up spending during the holiday season, sending the payments processor’s shares up 3.8%. Consumer spending continues to be underpinned by a solid labor market and continued wage growth, while retailers also offered discounts to attract budget-conscious shoppers during the holiday season. “Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market,” Mastercard CEO Michael Miebach said. The company’s cross-border volume, which tracks spending on cards outside of the country of their issue, jumped 20% in the quarter. Chief Financial Officer Sachin Mehra said cross-border volume benefited from a pull forward of travel spend and cryptocurrency purchases. “A step up in Q4 volumes was somewhat anticipated given robust holiday trends, but cross-border volume upside was a nice surprise,” according to Citi analyst Andrew Schmidt.Mastercard’s more balanced global exposure compared with its peers has resulted in continued stability in volume growth, analysts have said.
The company in recent years has also bolstered its value-added services such as fraud protection to diversify its business model. Mastercard finalized the US$2.65 billion acquisition of threat intelligence company Recorded Future during the fourth quarter. “Fraud attempts are increasing at high levels as commerce increasingly moves online and as AI becomes more prevalent,” Miebach said. Revenue from Mastercard’s value-added services and solutions business increased 17% in the quarter. Gross dollar volume, or the value of all transactions processed on the company’s platform, rose 12%. On an adjusted basis, Mastercard earned US$3.82 per share, beating the average analyst estimate of US$3.69, according to data compiled by LSEG. The company’s net revenue rose 16% to US$7.49 billion.
Blackstone in Talks to Buy Stake in New York City Office Building
Blackstone is in talks to buy a sizeable stake in a New York City 50-story office building from institutional investors of JPMorgan Asset Management, two sources familiar with the matter said. The planned move comes as Blackstone executives signaled on an earnings call earlier in the day that the troubled commercial real estate sector was stabilizing. The Manhattan building, 1345 Avenue of the Americas, is jointly owned by institutional investors advised by J.P. Morgan Global Alternatives and Fisher Brothers. JPMorgan Asset has no equity interest in the building, which is partly owned by its institutional investors, one of the sources said. Blackstone and JPMorgan Asset Management declined to comment. The sources declined to be named because the talks are not public. Risks in commercial real estate, particularly within the office sector, had been exacerbated by elevated interest rates and the widespread adoption of remote and hybrid work models in the post-pandemic era.
Monetary policy easing by the U.S. Federal Reserve has begun to show early signs of relief for the sector. In addition, several top corporate giants in the U.S., including JPMorgan Chase and Amazon, have mandated strict return-to-office policies for most employees, improving the demand outlook for office space. “We remain firm believers that a sustained commercial real estate recovery is underway,” Blackstone President Jonathan Gray said in a post-earnings call with analysts. In 2023 law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP signed a 20-year, 765,000 square-foot lease, initially occupying 18 floors of the Avenue of the Americas’ building, according to an announcement then. Blackstone’s Gray cited a “pretty healthy U.S. economy” and a decline in borrowing costs as key factors behind the firm’s forecast for a recovery in real estate in 2025. Blackstone’s real estate business, which manages US$315.4 billion in total assets, saw inflows of US$27.9 billion in 2024.
Singapore
Singtel Optus Signed A$1.95 Billion Credit Facility with 12 Banks
Singtel announced that its wholly-owned subsidiary, Optus Finance Pty Limited has signed a A$1.95 billion committed revolving credit facility with 12 banks, comprising Australia and New Zealand Banking Group Limited, Bank of China Limited, Sydney Branch, BNP Paribas, Sydney Branch, Citibank, N.A., Sydney Branch, Commonwealth Bank of Australia, DBS Bank Ltd., Australia Branch, Mizuho Bank Ltd., Oversea-Chinese Banking Corporation Limited, Sumitomo Mitsui Banking Corporation, Sydney Branch, The Hongkong and Shanghai Banking Corporation Limited, Sydney Branch, United Overseas Bank Limited, Sydney Branch, and Westpac Banking Corporation. This facility is guaranteed by Optus Finance Pty Limited’s parent company, Singtel Optus Pty Limited, and certain of its subsidiaries and will be used to refinance its existing credit facilities as well as for other general corporate purposes.
AIMS APAC REIT 9M FY2025 NPI Up 1.9% to $99.6 Million DPU Up 1.1% to 7.07 Cents
AIMS APAC REIT has reported a distribution per unit (DPU) of 7.07 cents for the 9MFY2025 ended Dec 31, 2024, 1.1% higher y-o-y. Gross revenue increased by 5.7% y-o-y to $139.1 million due mainly to sustained positive rental reversions across the portfolio’s segments. Net property income (NPI) grew by 1.9% y-o-y to $99.6 million for the same reasons. Distributable income increased by 4.3% y-o-y to $57.5 million. As at Dec 31, 2024, overall portfolio occupancy stood at 94.5%, down from 98.1% as at Dec 31, 2023. The portfolio’s weighted average lease expiry (WALE) stood at 4.7 years, up from 4.6 years last year. Rental reversion for the 9MFY2025 stood at a positive 21.2%, compared to 22.7% in 9MFY2024, while 9MFY2025’s tenant retention rate came in at 76.3%, down from 80.3% in the 9MFY2024. During the 9MFY2025, the manager executed 19 new and 41 renewal leases totalling 127,299 sqm, or 16.4% of the portfolio’s net lettable area (NLA). As at Dec 31, 2024, the REIT’s aggregate leverage stood at 33.7%, up from 32.2% as at Dec 31, 2023. Interest coverage ratio stood at 3.9 times as at the same period.
About 70% of debt were on fixed rates, compared to 76% as at Dec 31, 2023. The expected percentage of Australian dollars (AUD) hedged into Singapore dollars (SGD) was 72%, two percentage points lower y-o-y. Looking ahead, the REIT manager says it remains “optimistic” as it progresses on its portfolio rejuvenation, capital recycling and sustainability initiatives. The REIT’s Singapore portfolio remains robust thanks to the “sustained demand for its portfolio of high-quality, modern and well-located assets” by global and domestic companies across several industries. Its Australian portfolio, which has assets that are anchored by quality tenants on long lease terms and built-in annual rental escalations, are supported by long term infrastructure works and government investments, adds the REIT manager. Unitholders will receive their DPUs on March 26.
IPS Securex Holdings Issued Profit Warning for First Half
IPS Securex Holdings Limited announced that based on a preliminary review of the Group’s unaudited financial statements for the six months ended 31 December 2024 (“1H-2025”), the Group is expected to report a net loss after tax for 1H-2025 as compared to a net profit after tax of approximately S$0.18 million for the previous six months ended 31 December 2023 (“1H-2024”). The net loss after tax of the Group for 1H-2025 is mainly due to a decrease in revenue in 1H2025. This was mainly due to the expiry of a maintenance contract with a customer in the Rest of Southeast Asia and lower demand for maintenance support services by customers in Singapore. Furthermore, revenue from Security Solutions also decreased due to slower project delivery in accordance with the schedules of certain customers at their request. Notwithstanding the decline in revenue in 1H-2025, costs in general for the period had stayed high.
The Company is still in the process of finalising the Group’s unaudited financial results for 1H2025. The information contained in this announcement is only based on a preliminary assessment by the Board with reference to the information currently available to it. Further details of the Group’s financial performance for 1H-2025 will be disclosed when the Company announces the Group’s unaudited financial results for 1H-2025 by 14 February 2025.
ESR REIT to Divest 1 Third Lok Yang Road and 4 Fourth Lok Yang Road for Approximately $6.8 Million
ESR-REIT Management (S) Limited, the manager of ESR-REIT (the “Manager”), announced that Perpetual (Asia) Limited, in its capacity as trustee of ESR-REIT, has entered into a contract of sale to divest 1 Third Lok Yang Road, Singapore 627996 and 4 Fourth Lok Yang Road, Singapore 629701 (the “Property”) for approximately S$6.8 million (excluding divestment costs and applicable goods and services tax) (the “Sale Consideration”) subject to the terms and conditions of the contract (the “Divestment”). The Sale Consideration represents a 3.5% premium above its valuation of S$6.6 million. The Divestment is not expected to have a material impact on ESR-REIT’s net asset value and distribution per unit for the financial year ending 31 December 2025.
The net proceeds from the Divestment will be deployed to repay outstanding borrowings, finance potential acquisitions, asset enhancement initiatives and redevelopments and/or fund general working capital requirements. Upon completion of the Divestment, ESR-REIT’s diversified portfolio will consist of 70 properties (excluding 48 Pandan Road held through a joint venture) located across Singapore, Japan and Australia, as well as investments in three property funds in Australia. The Divestment is expected to be completed in 1Q2025. Located along 1 Third Lok Yang Road, the Property is a logistics building within the Jurong Industrial Estate. Based on Master Plan 2019, the site is a “Business 2” zoning with gross floor area of 10,601 sqm.
CapitaLand India Trust FY2024 NPI Up 14% to $205.6 Million DPU Up 6% to 6.84 Cents
CapitaLand India Trust’s distributions per unit (DPU) in FY2024 rose by 6% y-o-y to 6.84 cents and by 3% y-o-y in 2HFY2024 to 3.2 cents. This is despite a 2% growth in the number of units to 1,342 million units. CLINT’s FY2024 net property income (NPI) grew 16% y-o-y in INR terms INR12.9 billion and 14% in SGD terms to $205.6 million. In Indian Rupee terms, total property income for FY 2024 increased by 21% to INR17.4 billion. This was mainly due to income contribution from aVance II Hinjawadi, Pune, which was acquired in March 2024; Building Q2 in Aurum Q Parc, Navi Mumbai, which was acquired in July 2024 and contribution from three assets acquired in 2023 – Block A in International Tech Park Hyderabad (ITPH); International Tech Park Pune – Hinjawadi and Industrial Facilities 2 and 3 at Mahindra World City, Chennai. CLINT’s existing properties also achieved higher rental income compared to last year. CLINT achieved a committed portfolio occupancy of 95%. In Dec 2024, MTB 6 at International Tech Park in Bangalore received its Occupancy Certificate. Gauri Shankar Nagabhushanam, CEO of CLINT’s trustee manager says: “We pre-leased 100% of MTB 6 at International Tech Park Bangalore, a 0.8 million sq ft building, to a large semi-conductor tenant.
In February 2024, CLINT continued to diversify its portfolio by entering into a forward purchase agreement to acquire three industrial facilities at OneHub Chennai. In March 2024, CLINT increased its presence in Pune with the completion of its acquisition of aVance II, a multi-tenanted IT Special Economic Zone (SEZ) property in Hinjawadi. In May 2024, CLINT entered into a forward purchase agreement to acquire IT buildings with a total leasable area of 2.5 million square feet (sq ft) in HITEC City, an IT and office hub in Hyderabad. In July 2024, CLINT acquired Building Q2, a fully leased IT Non-SEZ office building at Aurum Q Parc business park in Navi Mumbai. CLINT’s owns four data centres under development. The construction works for the data centres in Navi Mumbai and ITPH (Hyderabad) are nearing completion. The superstructure works for the data centre in Chennai are progressing as planned. The development of the data centre in Bangalore is expected to commence by 2Q2025. As at Dec 31 2024, CLINT’s completed floor area stands at 21.9 million sq ft with a total development potential of 7.1 million sq ft. Construction activities for existing projects, including its committed forward purchase pipeline, are progressing as scheduled. As at Dec 31, 2024, its gearing ratio was 38.5%. After including cash and cash equivalents of $135 million, the gearing was 36.6%. For CLINT, 73% of its total borrowings is on fixed interest rates and 52% was hedged in Indian Rupee. The trailing 12-month interest service coverage (ICR) was 2.6 times. A 10% decrease in ebitda causes ICR to fall to 2.3x as would a 100 bps increase in interest rates.
