January 21, 2021

Target

  • Hindenburg Research is back with more allegations of fraud. 
  • The short-seller has accused Kandi motors of fake sales and deceptive accounting practices. 
  • In September, a Hindenburg report unraveled electric-truck startup Nikola’s $2 billion deal with General Motors, with the two companies eventually agreeing to a scaled-down deal instead.
  • Visit Business Insider’s homepage for more stories.

Hindenburg Research is looking for a victory lap.

After single-handedly unraveling Nikola’s potential $2 billion deal with General Motors over the summer, the short-selling research firm has a new target: Kandi Motors.

The China-based and Nasdaq-listed electric-car startup has used in-house corporate entities to fake sales and show illegitimate growth, Hindenburg alleged in its report released Monday.

“The company’s largest customer, representing ~55% of last twelve months (LTM) sales, shares a phone number with a Kandi subsidiary, and shared an executive with Kandi,” the report says. “We visited the ‘customer.’ It is based in a tiny building right next to Kandi’s factory with a sign indicating that it’s a Kandi company. The same building housed another entity used by Kandi as part of a separate fake sales scheme to collect illegitimate subsidies from the Chinese government, for which it was fined and sanctioned.”

Shares of Kandi have tumbled more than 33% since the report was published Monday.

The company told Business Insider it takes seriously any allegations of impropriety, and it would study Hindenburg’s report. “We intend to thoroughly research the accusations, investigate internally as needed, and offer a public response in the near future,” a spokesperson said.

Hindenburg alleged that a fake revenue scheme was used as a ploy to raise money on US capital markets, and said the company has raised $160 million from investors since November. It also pointed to past SEC investigations and EPA fines.

“The company will likely issue some sort of press release declaring everything we say false and misleading, as they always do, while ignoring all or the vast majority of the questions we’ve raised,” Hindenburg said, alluding to its fight with electric-truck startup Nikola over the summer.

In September, shortly after General Motors and Nikola announced a partnership potentially worth up to $2 billion, a Hindenburg report caused the startup’s stock to plunge, its founder to relinquish his role in the c-suite, and GM to scale back its partnership.

Hindenburg said it’s still short Nikola, too, and will “keep calling it out as we see it.”

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PARIS (Reuters) – French telecoms magnate Xavier Niel is teaming up with former Lazard banker Matthieu Pigasse and another entrepreneur to raise funds through a new listed vehicle to target acquisitions in the European consumer goods sector.

The businessmen said in a statement on Sunday that their special purpose acquisition company (SPAC), named 2MX Organic, would initially looked to raise 250 million euros ($299 million) from investors, but this could rise to 300 million euros.

SPACs, which are more common in the United States, are shell companies that use proceeds from going public to buy another firm that has not yet been identified at the time of the listing.

Niel, best known for founding mobile operator Iliad in France, has already used the format alongside Pigasse to create French media group Mediawan, born out of the country’s first ever SPAC.

This time the pair will work alongside Moez-Alexandre Zouari, who controls frozen foods company Picard Surgeles.

The businessmen said they would focus on environmentally-friendly consumer companies, such as those that source goods like food locally, a sector that is increasingly attracting shoppers across Europe.

A source close to the matter said the SPAC could target a first purchase as soon as 2021 and worth between 1.5 billion to 2 billion euros.

After listing on the Paris stock exchange, the SPAC can carry out further rounds of fundraising. The subscription period for the first offering will run between Nov. 30 and Dec. 7, and the SPAC founders said they would also invest in the vehicle, though will own no more than 29.6%.

The goal of a SPAC is to allow the target to obtain a stock market listing without going through an initial public offering.

Deutsche Bank and Societe Generale are advising on the deal.

($1 = 0.8365 euros)

Reporting by Gwenaelle Barzic, Writing by Sarah White and Alexander Smith

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Governments across Canada are facing severe economic uncertainty caused by COVID-19. It was clear from Ontario Finance Minister Phillip’s budget speech that much of that uncertainty remains for the foreseeable future. Trying to predict what next year will bring is anyone’s guess. However, several realities pre-existed the pandemic and it is important that we seize the predicament we find ourselves in to address them.

If dealing with this pandemic means that governments in Ontario and across Canada have no choice but to continue to produce high deficits, it should also mean that we choose to spend these deficits wisely. That means spending on programs and assets that offer long term benefits for current and future generations. To my mind, infrastructure spending focused on greener, safer and more efficient public transportation offers the best hope of long-term economic recovery and social benefits. That is why I was pleased to see Premier Doug Ford speak so positively about light rail transit in Hamilton recently despite the fact that some of the required financing is still uncertain.

The pandemic is playing havoc with public sector finances and the reality is that the governments’ focus has narrowed. They are spending to protect Canadians’ physical and mental health during this pandemic, to enhance the care we give our seniors, to make sure Canadian families can pay their monthly bills, small businesses survive, and kids are educated. This must remain their priority, for the short term at least. But for the long term we must restart our economy on a solid foundation, and we must do it now.

To be clear, none of this is to say that governments in Toronto and across Canada should be doing something differently. The COVID-19 pandemic has given them an entirely new set of all-consuming priorities which didn’t exist before March, and which in some cases carry huge and open-ended price tags. But as Minister Phillips and his peers across Canada spend to protect us from this virus, we can be ambitious at the same time. We can address the climate impact of single-passenger cars, create thousands of jobs through a better, more resilient public transportation infrastructure, make it easier to go to work, go to school and move larger numbers of people in our rapidly expanding Canadian cities.

To get it done, governments need to pursue more cost-efficient, climate-impactful and rapidly deployed partnerships between the public and private sectors. In this mega-deficit environment forced on us by the pandemic, governments can leverage their spending by inviting private sector partners to participate in financing major transportation infrastructure projects. By getting private partners to risk their own capital, governments can increase the odds of projects being delivered on time and on budget. And we cannot afford delays nor unduly complex commercial structures. These partnerships must be accessible to the largest number of industry players with a model that fairly associates project risks to financial rewards and socio-economic benefits. A report published in 2017 by BCG Consulting found that Canada already had

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