— Fed Maintains Hawkish Tone at Annual Meeting; Blackstone Sells Stake in Bellagio; Zillow Launches 1% Down Payment Mortgage Program; Market Data Firm Klaviyo Plans IPO; Blue Torch Acquires Bankrupt Pillow Maker; Grocery Delivery Giant Instacart Prepares for IPO; Boeing 737 Max Deliveries to China Resume
1. Fed Maintains Hawkish Tone at Annual Meeting
Today, the Federal Reserve held its annual meeting in Jackson Hole.
At the meeting, Federal Reserve Chair Jerome Powell stated that although inflation has clearly retreated from its peak, it remains at a high level. If necessary, the Fed will continue to raise interest rates and keep the benchmark rate elevated until there is clear evidence that inflation is sustainably easing.
Powell hinted that the Fed might hold off on raising rates at its September meeting, aligning with market expectations.
______
2. Blackstone Sells Stake in Bellagio
Blackstone will sell a 21.9% stake in the Bellagio Hotel in Las Vegas while retaining a 73.1% stake.
The buyer is real estate investment firm Realty Income Corporation, and the deal values Bellagio’s assets at approximately $5.1 billion.
Blackstone’s BREIT fund, which targets high-net-worth investors, has been managing assets and distributing cash to investors over the past year to enhance returns and liquidity.
As of early August, the BREIT fund still held $10 billion in liquid assets, and investor redemption requests had dropped to their lowest level this year.
Four years ago, Blackstone acquired Bellagio for $4.25 billion.
______
3. Zillow Launches 1% Down Payment Mortgage Program
This Thursday, Zillow Group launched a mortgage program with a 1% down payment, even lower than Freddie Mac’s 3% option.
The 30-year mortgage rate has reached 7.23%, the highest since 2001, and U.S. housing affordability is at its worst level in over 40 years.
To attract more customers and increase competitiveness, Zillow announced it would provide an additional 2% down payment assistance at the time of home purchase.
Bloomberg analysts believe this approach may carry high long-term costs and impact profitability.
______
4. Market Data Firm Klaviyo Plans IPO
Boston-based marketing data automation firm Klaviyo Inc. filed for an IPO with the SEC this week.
Filings show the company earned $321 million in revenue and $15 million in net profit during the first half of this year, a significant improvement from a $25 million loss in the same period last year.
Goldman Sachs, Morgan Stanley, and Citigroup will underwrite the IPO, and the company will trade under the ticker symbol KVYO.
Klaviyo will disclose offering details and pricing in upcoming filings.
U.S. capital markets have remained sluggish over the past 18 months, but recent large IPOs have revived some optimism.
______
5. Blue Torch Acquires Bankrupt Pillow Maker
Blue Torch Capital plans to acquire bankrupt pillow maker Pegasus Home Fashions, pending approval from Pegasus’s bankruptcy court judge.
Pegasus filed for bankruptcy this Thursday, citing financial strain and management confusion following the founder’s sudden departure.
Founded in 1990, Pegasus sells its products through retail channels like Costco and Walmart.
Former parent company H.I.G. declined to provide additional funding, prompting Blue Torch to step in with a rescue plan.
In 2021, the company generated $100 million in revenue but carried $80 million in debt.
______
6. Grocery Delivery Giant Instacart Prepares for IPO
Instacart, the largest grocery delivery company in the U.S., plans to follow Arm Holdings and launch its IPO this year.
Filings show Instacart posted $242 million in net profit in the first six months of the year.
Founded in 2012, Instacart has been preparing for an IPO for several years. According to PitchBook data, the company has raised $2.74 billion in total funding and reached a valuation of $39 billion in 2021.
However, due to a normalization of delivery demand post-pandemic, the company’s internal valuation dropped to $13 billion in October last year.
PepsiCo has expressed interest in purchasing $175 million worth of preferred shares.
______
7. Boeing 737 Max Deliveries to China Resume
According to sources, Boeing Co. will resume deliveries of its 737 Max jets to China after a four-year hiatus.
The first batch of deliveries could take place within weeks, and China Southern Airlines is expected to receive the first 737 Max jet.
The 737 Max is not only one of the largest U.S. export products but also a key revenue driver for Boeing. Some believe the aircraft could be used as leverage in the U.S.-China trade conflict.
Boeing currently has 85 undelivered 737 Max jets intended for Chinese airlines in storage.
______
This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.