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RBC kicking of early insight programs for class of 2027.. & follow @firststeptofinaloffer on insta (06/25/24)

Author

Brooks Gammill
June 25, 2024

Your weekly round-up of an M&A deal walkthrough, insightful market news summaries, technical quiz questions, and various internship, events, and diversity programs. A key resource to best prepare yourself for finance recruiting. If someone sent you the newsletter subscribe below!

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MARKET NEWS

Nvidia Suffers Biggest Loss in World History After $646 Billion Bloodbath 

Nvidia experienced a historic decline in its stock value, dropping 13% over three days, resulting in a loss of $646 billion. The fall followed Nvidia's recent achievement of becoming the world's most valuable company by market capitalization. Analysts suggest investor concerns about AI fatigue and index concentration contributed to the sell-off. Despite this, some experts believe Nvidia’s fundamentals remain strong and view the drop as a potential correction after significant gains. (Yahoo Finance) 

 

OpenAI CEO Says Company Could Become Benefit Corporation 

OpenAI's CEO, Sam Altman, mentioned to shareholders that the company is considering restructuring as a for-profit benefit corporation. This change would shift control away from its nonprofit board. This move follows similar paths taken by other AI firms like Anthropic and xAI. Discussions are ongoing, and the final decision has not been made. OpenAI emphasized its commitment to its mission of building AI for the benefit of all. (Reuters) 

 

U.S. Screens Record-Setting 2.99 Million Air Passengers in Single Day 

The United States Transportation Security Administration (TSA) screened a record 2.99 million air passengers on June 23, 2024. This unprecedented number reflects a surge in travel demand as the summer season begins. The TSA has increased staffing and operational efficiencies to manage the high volume of passengers. Despite the challenges, the agency reported smooth operations at most airports. This milestone underscores the robust recovery of the aviation sector post-pandemic. (Reuters) 

M&A Deal Overview

GIP and Snam Consider Exiting $21 Billion ADNOC Gas Pipeline Unit 

Global Infrastructure Partners (GIP) and Italy's Snam SpA are contemplating an exit from their $21 billion investment in Abu Dhabi National Oil Company’s (ADNOC) gas pipeline unit. The consortium, which includes Brookfield Asset Management and other major investors, initially acquired a 49% stake in ADNOC's gas pipelines in 2020. The potential divestment reflects ongoing strategic evaluations amidst a dynamic energy market. This move could reshape investment strategies within the global energy infrastructure sector. (Bloomberg, BNN Bloomberg) 

TECHNICAL QUESTION OF THE WEEK:

If a company has $200 in EBITDA at purchase and is purchased at a 10x multiple with 6x leverage, then sold later with $300 EBITDA, 10x multiple, and 4x leverage, what would be the MOIC for this deal?

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ADDITIONAL RESOURCES

LAST WEEK TECHNICAL QUESTION OF THE WEEK ANWSER:

Correct Answer - 50% and response from one of our readers ““This question relies on identifying that you need to find the net income and then the earnings before taxes, before working to find the tax expense and rate. Since we know the Eq. V is 200m and we have the P/E ratio of 20x, the net income is $200m/20= 10m. Next, we have to find the enterprise value by finding the value of the debt. Since we have the interest expense of $20m, and the rate of 5%, the total value of the debt is $20m/5%=400m. Thus our EV is $600m, and since EV/EBITDA is 10x, EBITDA= $600m/10=$60m. We can find our pretax income by subtracting the depreciation and interest expense, to leave us with a pretax income of $20m. Since the difference between pre- and post-tax income is $10m, the tax rate is then $10m/$20m, which is 50%.”