Soho House goes public, with questions about its activities

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The parent company of Soho House, the upscale member club chain for celebrities and affluent young professionals, is due to start trading on the New York Stock Exchange today. But after pricing his IPO low, the question he faces is whether he can meet ambitious growth targets while keeping his cool, writes DealBook’s Michael J. de la Merced. for The Times.

Membership Collective Group, the brand’s parent company, has proven it can survive the pandemic. He now has 119,000 members in 30 clubs in the world, with 59,000 people on the waiting list. The company retained 92 percent of members last year even with most of its clubs closed, and now many of its locations have returned to 2019 capacity levels, Andrew Carnie, chairman of MCG, told DealBook. “We’re pretty bulletproof,” he boasted.

(Nick Jones, founder and CEO of the company, admitted that one thing has changed because of the pandemic. “I guess we’ll go to bed a little earlier,” he said. “I think so. that, in Covid, we are a bit out of practice, staying awake late. ”)

The company is betting that its business model has become even more attractive to public market investors. It introduced several types of membership, including co-working, a 100 pounds per year ($ 138) subscription with more limited access, and later this year a digital app for customers in areas without clubs. Jones compared MCG to Peloton, another luxury item that he says “has helped recurring revenue storytelling.”

A big test will be whether MCG can diversify from high-end hotels. It recently acquired the Line boutique hotel chain to provide somewhat lower-end accommodation around the world.

The list will serve several purposes:

  • MCG plans to repay heavy financial obligations – the company had $ 2.1 billion in debt starting in April – and renegotiating its high interest rates.

  • Equally important, the company wants to be able to tap the stock markets to fund an expansion effort that includes open more than five clubs per year. (It has openings in Paris, Tel Aviv, and Rome this year, with seven more through its Soho House, Ned, and Scorpios brands next year.)

  • Moreover, added Jones, it was time to open a new chapter in its history: “We are 26 years old. And so we grow. We are approaching thirties.

Yet the company valued its IPO at $ 14 per share yesterday, the bottom of its expected range, valuing it at $ 2.8 billion. We’ll see later today if investors want to buy into Soho House’s vision.

Jay Powell recognizes the jump in inflation. The Fed chairman told House lawmakers that inflation had risen “noticeably” and would likely stay high for at least six months. But he said that would moderate later, suggesting that the central bank would not change its approach.

Chinese growth is stabilizing. The country’s economy grew nearly 8% in the second quarter from a year ago, below estimates. There is growing evidence that China’s post-pandemic resurgence could be unsustainable – which would spill over into the rest of the world.

Saudi Arabia and United Arab Emirates reach agreement on oil production. The interim compromise would end a deadlock that has hampered OPEC’s efforts to get more oil into the markets. But the Wall Street Journal notes that it could prompt other OPEC members to demand further increases; oil prices fell 2 percent on the news.

Facebook joins the fight against Lina Khan. The tech giant demanded that the FTC chairwoman recuse herself from the agency’s lawsuit against the company, echoing a similar move from Amazon. This is the latest effort to turn Khan’s outspoken opposition to Big Tech’s power against her, although these motions usually fail.

Netflix is ​​getting into gaming. The streaming giant has hired former Facebook executive Mike Verdu to oversee the rollout of video games on its platform by next year, Bloomberg reports. The effort will pit Netflix against rivals with deep pockets determined to dominate the nascent game streaming market.

The nation’s largest banks released second-quarter earnings this week. Although profits rose, the reports were mostly dismissed by investors.

Citigroup, JPMorgan Chase and Wells Fargo all posted better-than-expected second quarter earnings. Bank of America missed expectations yesterday, but its bottom line still more than doubled from a year ago. Nonetheless, its shares have plummeted, as have those of Citi and JPMorgan since the publication of their latest results.

A better economy means banks set aside less to cover future losses. They can also get back the money they set aside to cover loans that have never failed. Due to the government’s aggressive stimulus efforts, the economic strains of the pandemic have forced relatively few borrowers to default. It is one of the factors determining the profits of banks, even if their core business, credit, remains lackluster.

Loans increased for the first time since the start of the pandemic, but only 1%. At the start of 2020, the bank’s group loans recorded a quarterly growth rate of 4%. Their loan balances remain $ 245 billion lower than before the pandemic. If things don’t speed up, it will take another year and a half to get back to where they were.

Loans are the lifeblood of an economy, and increased lending is generally a sign of optimism among borrowers and lenders. Heading into this year, some economists believed that the combination of the lifting of lockdowns and the stimulus flow would make the economy take off like a rocket. But as the loan data shows, the recovery has so far been more like a hot air balloon – one that recently appeared to be able to use a little more heat.

– Jackson Palmer, the inventor of Dogecoin, the cryptocurrency that started as a joke in 2013 but was widely adopted by traders last year, on why he is not tempted to return to the crypto industry.

For the first time on Ladders, a job search site for positions that make at least $ 100,000 a year, most of the ads are not in New York or San Francisco. There are now more remote jobs on offer than there are in any city in North America, the company said.

About 15% of well-paying jobs are available for remote workers, up from 5% a year ago. Many companies are bringing workers back to the office, with hybrid setups that are much more common than before the pandemic. But even though employees only come a few days a week, their work is still based where their business is located.

Extent of remote hiring suggests things won’t go back to how they used to be, much to the chagrin of business owners in urban centers. Employees who have gone remotely during shutdowns may be called back, but new hires who expect to work virtually are different. At the same time, as companies begin to adjust compensation for remote workers to meet local standards, six-figure jobs in New York City may soon become less lucrative if taken by a worker in New Mexico.

Offers

  • Blackstone will buy a 10 percent stake in AIG’s life insurance and pension business for $ 2.2 billion and manage at least 25 percent of the division’s investment portfolio. (Reuters)

  • European fintech firm Revolut is now valued at $ 33 billion after raising $ 800 million from investors like SoftBank and Tiger Global. (CNBC)

  • A short seller accused the oat milk brand Oatly of overestimating its revenues and selling margins; the company has denied the allegations. (CNBC)

  • Independent film studio A24 has reportedly considered selling for up to $ 3 billion as media giants rush to buy content. (Variety)

Politics

  • Majority Leader Senator Chuck Schumer has proposed decriminalizing marijuana at the federal level. (NYT)

  • Ireland reportedly intends to increase its corporate tax rate to avoid becoming an “outcast”. (Irish Examiner)

  • India’s central bank accused Mastercard of breaking data storage rules and ordered it to stop accepting new debit and credit card customers. (Reuters)

  • The European Central Bank is starting to work on a digital euro, a kind of move that Fed Chairman Jay Powell says could reduce the need for cryptocurrencies. (CNBC, Reuters)

Technology

  • Twitter’s disappear tweets feature is being phased out. (NYT)

  • Facebook unveils billion dollar program to recruit content creators and influencers. (NYT)

  • How a former plastic surgeon became one of the most influential players in the crypto industry. (FT)

  • Not only is there a shortage of computer chips, there is a growing supply of fake chips. (WSJ)

The best of the rest

  • Britney Spears can hire her own lawyer to end her guardianship, a judge has said. (NYT)

  • Jeff Bezos will donate $ 200 million to the National Air and Space Museum, the largest donation to the Smithsonian. (NYT)

  • Coca-Cola changes the taste of Coke Zero. He swears it won’t be New New Coke. (NOW)

  • Need data to pitch your boss on telecommuting? Goldman Sachs can help. (Initiated)

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