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Imagination ’s Designs On A London Listing Face Hurdles

Imagination

Imagination’s designs on a London listing face hurdles

Imagination Technologies was in a fight for its life. The microchip designer had shocked the London Stock Exchange when it revealed that Apple would stop using its technology in the iPhone.

Shares in the Hertfordshire microchip company fell by more than 60pc in a single day, forcing a bruising strategic review and ultimately, a delisting.

The company was scooped up by Canyon Bridge Partners, a Chinese-funded private equity outfit that claimed it could turn Imagination around. Critics of the 2017 deal feared that Beijing had gained control of hi-tech know-how on the cheap.

Nevertheless in the years since, the company appeared to get back on track.

After intervention from MPs, it saw off an attempted boardroom coup that would have appointed four Chinese directors. Then last year it signed a new deal with Apple said to be worth as much as $50m per year (Imagination disputes this figure).

The company has launched a new strategy to challenge its old rival, Arm Holdings. Now Imagination is seeking to return to the London stock market with bankers at Lazard advising.

The turnaround has not gone unnoticed. Imagination has also received approaches from private equity, including the US fund Francisco Partners, The Telegraph can reveal.

Yet while the outside world sees a brighter future for Imagination, its troubles are not entirely behind it. Questions over its ownership and concerns over deals the company has signed with Chinese chip makers persist, and it has also endured an exodus of engineering talent to rivals.

As many as 30 staff have left the company. Five members of its top engineering leadership have quit so far in 2021, going to rivals AMD and Intel, as well as its chief of staff.

“Once you lose the core of a company, it is almost impossible to come back,” says a former executive.

An Imagination spokesman said suggestions that staff have been unsettled were incorrect.

“We have made significant changes to strengthen our governance with the appointment of independent non-executive directors,” adding the claims were “not in any way representative of the company we are today.”

Founded 36 years ago, Imagination, which employs 900 people, develops and licences designs for graphics chips, most notably ending up in Apple’s iPhones and iPads.

Listed for close to two decades, crisis hit after it spurned an acquisition attempt by Apple, which cancelled its critical contract. In the ensuing crisis, Canyon Bridge, led by US semiconductor veteran Ray Bingham, snapped it up for £550m.

Its stewardship has proved controversial. The fund which owns Imagination is 99pc controlled by China Reform, which is in turn funded by the Chinese state. The Trump administration forced Imagination to sell its US business when Canyon Bridge took control.

Bingham insists Canyon Bridge is independent and is owned by a three-man partnership. China Reform “have no say in the company’s governance”, he told MPs.

Yet in April 2020, as the pandemic struck Britain, China Reform was agitating for more control. Imagination held an emergency board meeting over the appointment of four representatives from the Chinese fund. Ron Black, its chief executive, blew the whistle to MPs and ministers.

Within days he was out. Black says he was sacked; Imagination says he resigned. He is suing the company over his exit. However, an intervention by Oliver Dowden meant Canyon Bridge put a hold on the boardroom coup.

But while the public spat ended there, Imagination has since endured a flurry of leadership departures. Its technology chief left last September. In February, its chief of staff departed.

Over the summer, five top engineers departed, including a team to AMD in Australia. Imagination has since closed the office. The company admitted to “churn” in the industry, but said it had secured hires from key rivals.

Since its takeover, the company has made no secret of its plans to boost its growth prospects by mining China’s fast-growing chip sector for deals for its graphics technology. Some of these deals have seen it licencing its technology to state-backed Chinese technology companies.

In one instance, it is understood to have signed a substantial deal, worth in the region of $20m, with Birentech, a newly founded Chinese graphics chip maker. The company’s main backers include Chinese-state backed funds, such as the Russian China Investment Fund, CDB Equipment Manufacturing, and Guosheng Capital.

Some executives have grown disillusioned at these China tie-ups. One executive allegedly left the business citing “dodgy China deals for dimes”, according to a text message.

An Imagination Technologies spokesman dismissed this characterisation as “wholly inaccurate”.

“Like all other intellectual property vendors we licence our technology and work with our customers to ensure that they become successful. All deals we do in China are done at fair market value and comparable with deals we do elsewhere.”

 The spokesman added its deals allowed it to protect its intellectual property.

With a potential float on the horizon, analysts say the public troubles of Imagination could be outweighed by its improving business performance. “I think that Imagination has made progress in turning around its business since 2018,” says Anshel Sag, of Moor Insights and Strategy.

Among its new plans is launching a technology known as RISC-V, a cheaper rival to Arm’s microprocessor tools. It is increasingly sought after by Chinese clients as its “open source” licensing puts it beyond the reach of US export controls.

Sag adds: “RISC-V does appear to be a real challenger to Arm.” He notes Arm’s acquisition for $40bn by Nvidia could prompt customers to look for alternatives, such as Imagination.

Before it can dream that big however, Imagination must calculate a path through yet more instability as it goes up for sale again.

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Business

British pound plunges to new low as tax cuts spark concern

British pound plunges to new low as tax cuts spark concern

The British pound fell to all-time low against the U.S. dollar early Monday after Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts, fueling concerns about the government’s economic policy as the United Kingdom creeps toward recession.

The pound fell as low as $1.0373, before rallying to $1.0672 in early London trading. It was its lowest level since the decimalization of the currency in 1971.

The British currency has lost more than 5% of its value against the dollar since Friday, when Kwarteng announced the biggest tax cuts in 50 years. It comes as the government plans to spend billions of pounds to help consumers and businesses struggling with high energy bills that are driving a cost-of-living crisis. The combination sparked investor concern about spiraling government debt.

Kwarteng and Prime Minister Liz Truss, who took office three weeks ago, are betting that lower taxes and reduced bureaucracy will spur economic growth and generate enough additional tax revenue to cover government spending. Economists suggest it is unlikely the gamble will pay off.

Opposition Labour Party economy spokeswoman Rachel Reeves said Kwarteng had “fanned the flames” of instability by talking up more tax cuts and said the government’s policies were “reckless.”

When grilled about his economic policy Sunday, Kwarteng said he believed the government was acting responsibly.

“There’s more to come,” he said in an interview with the BBC. “We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it is the British people that are going to drive this economy.”

As it is cutting taxes, the government plans to cap electricity and natural gas prices for homes and businesses to help cushion price rises that have been triggered by Russia’s war in Ukraine and have sent inflation to near a 40-year high of 9.9%.

This program will cost 60 billion pounds, and the government will borrow to finance it, Kwarteng said Friday.

He said Sunday that it was the right policy because the government needed to help consumers squeezed by the unprecedented pressures caused by the war in Ukraine and the COVID-19 pandemic.

Britain can afford the cost because its debt as a percentage of gross domestic product is the second lowest among the Group of Seven large industrial economies, Kwarteng said. In the coming months, the government will announce plans for reducing the nation’s debt, he said.

When grilled about his economic policy Sunday, Kwarteng said he believed the government was acting responsibly.

“There’s more to come,” he said in an interview with the BBC. “We’ve only been here 19 days. I want to see, over the next year, people retain more of their income because I believe that it is the British people that are going to drive this economy.”

As it is cutting taxes, the government plans to cap electricity and natural gas prices for homes and businesses to help cushion price rises that have been triggered by Russia’s war in Ukraine and have sent inflation to near a 40-year high of 9.9%.

This program will cost 60 billion pounds, and the government will borrow to finance it, Kwarteng said Friday.

He said Sunday that it was the right policy because the government needed to help consumers squeezed by the unprecedented pressures caused by the war in Ukraine and the COVID-19 pandemic.

Britain can afford the cost because its debt as a percentage of gross domestic product is the second lowest among the Group of Seven large industrial economies, Kwarteng said. In the coming months, the government will announce plans for reducing the nation’s debt, he said.

“Obviously, I will be setting out plans for the medium-term fiscal plan, as we’re calling it, that will show that we’re committed to net debt-to-GDP to be falling over time,” Kwarteng said.

The pound’s decline against the dollar also has been fueled by the Bank of England not keeping pace with the U.S. Federal Reserve’s efforts to rein in inflation. Britain’s central bank on Thursday raised interest rates by half a percentage point, compared with large three-quarter-point increase by the Fed last week. But U.K. inflation is the highest among major economies, and the bank has predicted a recession later in the year.

While the pound’s slide has accelerated in recent days, the currency has fallen steadily against the dollar for more than a year as investors sought the security of U.S. assets amid the economic shocks from the pandemic and the war in Ukraine.

The British currency has dropped more than 24% against the dollar since its recent peak of $1.4181 on May 27, 2021.

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Business

37 firms get licences to produce 762.3MW

37 firms get licences to produce 762.3MW

Fresh licenses and permits have been issued to 37 companies to produce a total of 762.3 megawatts of electricity in order to boost power supply across the country, data obtained from the Nigerian Electricity Regulatory Commission showed.

An analysis of the commission’s latest Fourth Quarter 2021 Report on Sunday also indicated that the metering of power users dropped by 71.86 per cent when compared to the number of those who were metered by power distribution companies in the preceding quarter.

In the new report, the NERC said, “The commission approved the issuance of four new generation licenses with a total nameplate capacity of 508.5MW and the renewal of two existing licences in 2021/Q4.

“The commission also granted an aggregate capacity of 253.75MW captive power generation permit to eight companies and approved 25 mini-grid permits.”

It stated that 46 metering service providers consisting of 17 installers, 15 manufactures, two vendors and 12 importers were also approved by the commission in 2021/Q4

“The commission granted a total of 85 licenses and permits in 2021/Q4,” the report stated.

On metering, it stated that the huge metering gap for end-use customers was still a key challenge in the industry.

“A total of 81,084 meters were installed in 2021/Q4, as compared to the 288,154 meters installed in 2021/Q3,” the NERC stated.

Providing an explanation for this, it said, “The reduction in the number of meter installations in 2021/Q4 was largely driven by the winding down of the NMMP (National Mass Metering Programme) phase zero.

“The commission’s records indicate that, of the 10,514,582 registered energy customers as at December 2021, only 4,773,217 (45.40 per cent) have been metered compared to 42.93 per cent metering as at September 2021.”

It, however, stated that as a safeguard against overbilling of unmetered customers via estimation, the commission had set maximum limits to the amount of energy (energy caps in kWh) that might be billed to unmetered customers.

“The cap for each customer is set based on the customer category, consumption of metered customers on the same feeder and the customer’s tariff band.” the NERC stated.

It added, “The caps are computed based on three-month data of actual consumption records of metered customers on the same feeder.”

On customer complaints, the regulator stated that in 2021/Q4, cumulatively, the Discos received 222,639 complaints from consumers, as this was 24,479 (-9.91 per cent) less complaints than those received in 2021/Q3.

“In total, the Discos resolved 212,382 complaints corresponding to a 95.39 per cent resolution rate. Metering, billing, and service interruption were the prevalent sources of customer complaints, accounting for 58.83 per cent of the total complaints during the quarter,” it stated.

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Business

Ethiopian Airlines Wins Bid For Nigeria Air

The Federal Government has selected the Ethiopian Airlines (ET) Consortium as preferred bidder for Nigeria Air.

Minister of Aviation, Sen. Hadi Sirika disclosed this in a media briefing on Friday in Abuja.

He said ET scored 89 percent out of 100 as regards the technical bid and 15 out 20 as regards financial bid.

Mr Sirika said the Request for Proposal (RFP) under the Public-Private Partnership (PPP) Act, governed by Infrastructure Concession Regulatory Commission(ICRC) regarding the Nigeria Air was now completed.

He said, “After a careful, detailed and ICRC governed selection process, Ethiopian Airlines (ET) Consortium has been selected as preferred bidder, offering an owner consortium of 3 Nigerian investors.

“The Nigerian investors are MRS, SAHCO and the Nigerian Sovereign Fund (46%), FGN owning 5% and ET 49%. The consortium has been subject to a due diligence process.

“The contract will be negotiated between consortium and FGN leading to a Full Business Case (FBC) which will be expected to be approved by the Federal Executive Council (FEC). We expect this process to take 6-8 weeks.”

The minister said the national carrier would be launched with three Boeing 737-800 in a configuration very suitable for the Nigerian market.

Mr Sirika said Nigeria Air will be launched with a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between the two major Nigerian Airports.

“The first aircraft is ready to arrive in Abuja for the further work and NCAA inspection, demo flights and audit as part of the AOC requirements.

“In time, two others will arrive to complete the required three aircraft for a new AOC holder. The interim executive team has prepared, with the support of FAAN.

“The team has arranged for Terminal C at the Abuja Airport and finalised a contract with MMA 2 terminal in Lagos, for the operation of an initial shuttle between Lagos and Abuja,” he said.

The Operations Control Centre (OCC) at the Abuja Airport would act as Headquarters of the airline.

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