THERE ARE MORE THAN 2,000 JVs with significant profitability, strong management, and over $500 million in assets. Many of these could comfortably exceed the initial minimum listing requirements of various stock exchanges. For instance, the NASDAQ Global Market has initial minimum listing requirements of $11 million in pre-tax income in the last fiscal year or two of last three fiscal years, $55 million in stockholders’ equity and $45 million in market value of publicly held shares. As balance sheets get squeezed, and as JVs mature, more corporate parents are beginning to think about the IPO option for their joint ventures.
CYBERSECURITY PARTNERSHIPS are surging as companies, governments, and individuals demand more advanced solutions to address the growing threat of cybercrime and other technology vulnerabilities. Recent trends such as cloud computing, bring your own device (BYOD), and the Internet of Things are only serving to accelerate these concerns – and with it, the rapid proliferation of cybersecurity partnerships. Between 2014 and 2016, cybersecurity partnership deal volume jumped by 250% – and involved a wide variety of deal structures, economic and operating models, and partner goals and combinations. There were nearly 70 material partnership transactions in 2016, compared to 60 the previous year and less than 30 in 2014. In surveying the industry, we are seeing a few partnership hotspots on the landscape.
NOT SINCE THE interlocking corporate directorates of post-war Japan has there been such a concentration of intermingled corporate relationships as found today among oil and gas industry supermajors. When we plot producing assets by operatorship and non-operatorship, we see a pattern of extraordinary – albeit intriguingly lumpy – interconnections between the six supermajors (Exhibit 1).
AUGUST HAS BEEN quiet, almost too quiet. Financial markets are in a relative standstill as investors wait for policy cues from the Fed and as Europe seeks answers to the Brexit vote. Meanwhile, China continues to register tepid growth. Despite the economic lethargy, joint venture activity is red hot. The month of August has seen a string of new ventures consummated – both in new emerging technologies and old-line industries. The purpose of this note is to highlight five joint ventures that caught our eye.
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EARLIER THIS MONTH, Samarco Mineracao S.A., the iron-ore mining joint venture of BHP Billiton Ltd. (the world’s largest miner) and Vale S.A. (Brazil's largest miner), suffered a catastrophic "tailings dam" rupture which, according to The Wall Street Journal, spilled roughly 60 million cubic meters of water and iron ore waste across rural areas of Minas Gerais state. Tragically, at least 17 people are known to have been killed. Obviously, the liability of the involved parties will be determined by Brazil’s legal courts. The company and its parents will also undoubtedly be tried in the court of public opinion.
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GERMAN SPECIALTY CHEMICAL company Lanxess recently announced a JV with Saudi Aramco to help its challenged synthetic rubber business bounce back from high costs and industry oversupply. In return for fully contributing two underperforming divisions to a newly-formed 50:50 JV, Lanxess is receiving a cash payment of $1.3 billion from Aramco and a promise that Aramco will provide cost-advantaged access to feedstock, additional investment in technology, and access to capital to pursue industry consolidation (see Exhibit below).
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