‘Alexa, get me a doctor’: Amazon’s push into healthcare

One scoop to start: The head of the Kuwait Investment Authority’s London office has been fired with immediate effect following a period of turbulence at one of the world’s largest sovereign wealth funds. Details here.

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One Medical shareholders swallow bitter pill

A One Medical lobby can feel more like a Swiss private bank with its sleek modern furniture and dispenser of infused water. The primary care provider may soon be a part of the Everything Store.

On Thursday, Amazon announced it would acquire 1Life Healthcare, One Medical’s parent, for cash in a transaction value of $3.9bn, its biggest dive yet into healthcare. The purchase implied a juicy premium of more than 75 per cent to its previous closing price.

But it probably still felt painful for One Medical backers. The company went public in early 2021 at a price of $14 per share, just $4 less than its 2022 takeout price. One Medical at one point in 2021 hit nearly $60 per share on the hype that swept emerging consumer tech upstarts.

The company, whose backers include Tiger Global and the Carlyle Group, offers a “concierge” primary care service where for a $200 annual fee, subscribers get user-friendly access to physicians and labs, with treatment covered by traditional health insurance.

At the end of 2021, the company had more than 700,000 members and 182 facilities across America.

“We think healthcare is high on the list of experiences that need reinvention,” Neil Lindsay, senior vice-president of Amazon Health Services, said in a statement.

Amazon has been a player in online pharmacies, a natural fit for its logistics expertise. The company had been part of a shuttered effort to reimagine healthcare that it undertook with JPMorgan Chase and Berkshire Hathaway.

Healthcare in America is a notoriously expensive and inefficient industry where innovation is desperately sought. But with Washington already suspicious of Amazon and the growing power of Big Tech, it is no cinch that regulators will wave through Jeff Bezos’s latest foray.

One Medical, and many of the hyped companies that went public between 2019 and 2021, are desperate to be resuscitated by a blue-chip, including the likes of Peloton, SmileDirectClub, Beyond Meat and Bumble.

Bargains abound, and expect others like Amazon to attempt to buy low and bet that the Department of Justice and Federal Trade Commission will give the tie-ups a clean bill of health.

Wall Street’s China dilemma 

Inside China-based companies, a “Chinese Communist party committee” serves a dual purpose. It is a workers’ union, and a means by which a representative of the party is installed within the top ranks of the business.

China’s companies act states that “Communist party organisations shall . . . be set up to carry out activities of the party” within businesses, which “shall provide the necessary conditions for the party organisations to carry out their activities”. 

But a requirement to have a CCP committee is not widely enforced among foreign finance groups with investment banking operations in mainland China. Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank don’t have one.

That’s why HSBC’s installation of a CCP committee on its HSBC Qianhai Securities bank on the mainland — as revealed in this scoop by the FT’s Stephen Morris and Tabby Kinder — is so significant.

Several other foreign banks have been assessing whether they need to have the committees after taking full ownership of operations on the mainland in recent years. And HSBC’s move will put them under pressure to follow suit.

Viewed through a western lens, that’s difficult. Executives of US banks are worried about the optics of potentially exposing strategic decisions and client data to the CCP, several told the FT. 

You only have to read Republican senator Marco Rubio’s letter to the Wall Street Journal last week, in which he wrote about the “risk of Communist infiltration” and the CCP “operating inside many of America’s most well-known and respected financial firms” to understand the tenor of the debate on the issue.

HSBC’s move illustrates the seemingly impossible dilemma that global banks face when trying to toe the line between getting access to China’s huge markets while handling western fears about political interference and navigating major geopolitical tensions.

“It is significant in the sense of where [HSBC] is allocating its future,” a senior figure at another bank said. “It is increasing its ties with an autocracy that clearly has views on how far it wants to reach into private companies. It is another brick in that wall.”

Shell’s next M&A play 

Many bankers are wondering whether, flush with cash from soaring prices, the world’s biggest oil and gas companies could decide to turbocharge their energy transition strategies by buying a major renewables business.

Shell chief executive Ben van Beurden’s interview with the FT’s Tom Wilson this week provided some juicy insights on that front.

The long-serving Dutch executive said he needed more time to understand the renewables industry before jumping into something big. “I have purposely held back from doing large things in that space to make sure that we first of all know how their business works.”

Shell’s preference has been to acquire medium-sized power companies at around the billion-dollar mark, van Beurden explained. In April, it bought the Indian renewable power group Sprng Energy from Actis for $1.55bn.

But, if and when Shell does do something bigger, acquiring renewables customers will be more important than renewables assets.

Bankers like to suggest that Shell could buy Danish power company Orsted or Germany’s renewables-focused RWE. Although van Beurden said neither deal was likely, he added that Orsted in particular would not fit with Shell’s plans.

“I’d be more inclined to think of an RWE with a customer base than an Orsted with a collection of wind farms,” he said.

Further oil divestments are also on the cards, he said, possibly as a way to finance a big renewables play.

The problem is that oil market uncertainty makes it near-impossible to time when to divest to get the best value. At this point in time, he said, “it’s a bit like trying to catch a falling knife”. 

Job moves

• Severin Schwan will step down next March as chief executive of Swiss pharma group Roche. He will be nominated as chair of the board. Schwan will be succeeded as chief executive by Thomas Schinecker, head of the diagnostics unit.

• Citigroup’s top energy banker Stephen Trauber is set to retire from the company, according to Bloomberg.

• Alison Brittain, who is leaving her role as chief executive of Whitbread, is set to become chair designate of UK home furnishings group Dunelm.

Smart reads

France’s Murdoch Bloomberg investigates billionaire media baron Vincent Bolloré and his conservative ideological agenda, as the 70-year-old beefs up his media empire.

LBO woes With debt markets in turmoil, private equity groups have turned increasingly to private credit to finance buyouts. But even those lenders are now trying to cut risk — which threatens to make big-ticket deals even harder, Bloomberg writes.

‘I suck’ Employees react emotionally to feedback. The FT digs deep into the science of criticism.

News round-up

Shares in Martin Sorrell’s S4 Capital halve after profit warning (FT + Alphaville)

Tata threatens to close Port Talbot steelworks without £1.5bn of aid (FT)

US charges former Coinbase employee with insider trading (FT)

Blackstone reports surging inflows but warns of economic slowdown (FT)

Altice USA considers selling cable, internet service Suddenlink for up to $20bn (Bloomberg)