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In today’s edition, the sale of Forbes gets tripped up by U.S. national security concerns. ͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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February 9, 2023


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Liz Hoffman
Liz Hoffman

Hi and welcome back to Semafor Business, a twice-weekly look at the world of big money from Bradley Saacks and me.

Dealmaking is officially in a slump, and while a lot of that has to do with the markets, a noticeably icier regulatory mood is contributing to the slowdown. Antitrust cops are challenging deals they might once have let through. And with America-first economics seemingly one of the few bipartisan issues, national-security concerns are taking center stage.

Today, Ben Smith and I zero in on one deal walking that gauntlet: The proposed sale of Forbes magazine to an Indian billionaire who amassed much of his fortune in dealings with Russian state-owned enterprises. Bankers are now scrambling to line up U.S. investors to lead the buyout, hoping that will get it past hawkish regulators in Washington.

Plus Bard blinks under the stage lights, Credit Suisse continues its tumble, and South Korea is angling for a seat at the adults’ currency table.

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BUY: Interest. The average savings account rate has quintupled since last January to 0.33%, according to data from the U.S. Federal Deposit Insurance Corporation, thanks to the Federal Reserve’s battle with inflation (though banks are still notoriously slow to pass on higher interest rates to their depositors, something British politicians grilled U.K. bank bosses over this week).

SELL: Pinterest. The company laid off another 150 people after previous cuts in December, and its last quarter revenues underwhelmed investors. CEO Bill Ready, who has the backing of activist investor Elliott Management, told Yahoo Finance his focus is on making the platform more “shoppable” in the face of falling ad sales.

Semafor Stat

The stock-market value lost by Alphabet on Wednesday, when it pitched its new chatbot, Bard, which had already given an inaccurate answer in a promotional video. (The first image of an exoplanet was not, in fact, taken by the James Webb telescope). The Google parent is in an arms race with Microsoft, which just unveiled its own AI tool, powered by ChatGPT, to boost its Bing search engine.

Liz Hoffman and Ben Smith

Forbes, Russia hawks, and an $800 million deal in peril


Fear of U.S. government scrutiny is holding up a deal to sell Forbes to a foreign buyer, leaving the company scrambling to find U.S. investors willing to lend their money and name to the iconic American magazine.

Shiv Khemka, an Indian billionaire whose fortune was amassed over decades living in Russia, has been leading the purchase of the iconic, if shopworn, American finance brand. But Forbes’ bankers have told U.S. investors that they are looking for help to smooth the deal’s approval by American national-security regulators, people familiar with the matter said.

Forbes’ owners, a group of Asian investors that bought it in 2014, have been in talks since the fall to sell it to a firm controlled by Khemka and GSV, a Silicon Valley venture firm, Axios reported in December and Semafor confirms, with a deal price of slightly less than $800 million.

Citigroup bankers have been canvassing private-equity shops and family offices for names that might win approval from Washington, the people said. The goal, some of the people said, is to raise enough additional American money to make Khemka a minority investor.

Any deal would need approval from the Committee on Foreign Investment in the United States, the national-security panel that reviews foreign investments into companies with major American operations — even those, like Forbes, that are already foreign-owned. CFIUS has long held power over control investments, targeting key U.S. industries like technology and utilities.

Its definition of “critical infrastructure” has widened over the years, and in 2018, Congress gave it authority over minority investments in companies in certain fields, like those that hold sensitive, personal data.

Khemka has just one remaining investment in Russia, representing less than 5% of his holdings, a person familiar with the matter said. He had been on the board of a Russian defense contractor, but stepped off after the country’s invasion of Crimea in 2014.


Reuters/Liu Jianhua

Is Forbes a strategic asset? The company, whose cover could once announce a bigwig’s arrival on Wall Street’s stage, is just recovering its status as a valuable business publication, having spent years running its brand into the ground as a low-quality farm for sponsored-content. Its saving grace is its widely-read lists of rich people.

But the fact that its new buyers are worried the U.S. government could block the deal reflects the changing times. In 2014 nobody raised an eyebrow at Chinese government cash: When Forbes was sold to Integrated Whale Media, a consortium of Asian investors including China’s sovereign wealth fund, the deal breezed through CFIUS, which required no significant protective measures.

Since then, economic and military competition between the U.S. and China has increased, raising scrutiny over deals that have not drawn CFIUS concerns in the past. An analyst writing in the Washington Post, Isaac Stone Fish, uncovered several examples of apparent editorial meddling under Forbes’ Chinese owners, including cutting ties with an outspoken critic of the Communist party.

The current deal is happening in the shadow of a failed acquisition in 2021, when a blank-check company whose investors included China’s sovereign wealth fund agreed to acquire Forbes. The deal collapsed under public scrutiny, including from four U.S. senators, who raised concerns that it would be turned into a propaganda arm of the Chinese Communist Party.

“Forbes is a recognizable American brand with immense propaganda value to the CCP,”  they wrote in a letter urging the U.S. Treasury, which leads CFIUS, to block the deal. “Direction of Forbes’ editorial content and business operations, or its access to Forbes’ financial and personal research, could present a serious national security threat to the United States.”


The scramble to fill a cap-table hole with dyed-in-the-wool American investors illustrates a challenge in today’s dealmaking landscape: In a tough fundraising environment, a lot of the money in the world comes from problematic places.

Middle Eastern governments have been aggressively shopping for Western assets, bringing loads of cash but also ties to brutal regimes and complicated geopolitics. Goldman Sachs and China’s government fund partnered in 2017 to raise $5 billion from international investors; little came of it.

Deals are already facing a tougher road in Washington, where antitrust regulators have been more aggressive. CFIUS is a different gauntlet, and one that is far less transparent, shrouded in the concerns of a Washington that is uniquely united in its America-first agenda.


Stephen Heifetz, a partner at Wilson Sonsini Goodrich & Rosati focused on national security issues, wrote last month that the U.S. government’s “unquenchable thirst for new rules … has been great for CFIUS lawyers and government officials, but probably not so much for the rest of the country.”


Underlying both Chinese and Indian investments in Forbes is the fact that the brand, as the New York Times wrote in 2014, “has retained a gloss in Asia that it has lost in the United States.” For instance, a “Forbes Media Tower” opened in Manila in 2019.


Just how big has sports betting gotten? People are expected to spend nearly as much money gambling on Sunday’s big game ($16 billion) as they are on the wings, beer, and Patrick Mahomes’ jerseys that go along with it ($16.5 billion, per the National Retail Federation).


Down but not out: The crypto ecosystem is licking its wounds after the FTX implosion, but there’s still plenty of industry optimism. Bitcoin is up almost 40% this year, and crypto hedge fund ProChain Capital, which was down 65% last year, has ridden the bounce-back to a 24% gain in January. The firm told investors that “boring” developments, like California’s Department of Motor Vehicles putting car registrations on the blockchain, is a sign of “the beginning of digitization of all property.”


What We’re Tracking

Credit Suisse’s woes are worsening. The bank reported its fifth straight quarterly loss — and biggest annual loss since the 2008 crisis — and warned of more to come as restructuring costs mount and wealthy clients pull their money. The firm is cutting 9,000 jobs and exiting from businesses, moves that are weighing on its profits and diminishing its status as a Wall Street player.

Reuters/Arnd Wiegman
One Good Text

Pierre Haren is the co-founder of AI-powered research firm Causality Link who sold his first company to IBM, then worked on the original supercomputer, Watson.


South Korea is the world’s 10th-biggest economy, but the won has long been treated like an emerging-market currency. The government is trying to change that — and join currencies like the U.S. dollar, euro, and yen — by loosening trading restrictions. The new measures will double the hours of open trading and let international investors deal directly with local brokerages that might offer better rates.

Nicolas Economou/NurPhoto via Getty Images

Big planes are back. Years after ditching wide-bodies for more fuel-efficient and tightly packed models — a shift hastened by the pandemic — airlines are now scouring for jumbo jets again. Double-decker Airbus A380s are once again under the British Airways banner, Lufthansa pressed four-engine Airbus A340s back into service, and other carriers are paying up for wide-body leases, The Wall Street Journal reports.

That demand is running into supply constraints. Boeing stopped making its iconic 747 jumbo and its next-generation model is running five years behind schedule.

Some industries can respond nimbly to changes in customer demand, but airlines aren’t one of them. They can add and trim new routes quickly enough and tweak prices on a dime, but they’re in the business of buying and operating big, expensive hunks of metal. It makes forecasting especially important, and the scramble now suggests they’ve misjudged.


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— Liz and Bradley