⚡️ Can Europe come out of the energy crisis? Plus Kim Kardashian launches PE fund and more in today’s Finbrief
Hello. Welcome to the Sep 8th edition of finbrief daily business brief!
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⚡️ Can Europe come out of the energy crisis?
If you weren’t aware yet, Europe is in the midst of its biggest energy crisis in decades. Electricity prices have surged almost 300% in 2022 (and on an average, energy prices are 10 times higher than the 5-year average)! The result: households and businesses are struggling with the soaring energy bills, threatening to slide the region into a recession.
That sounds bad, but why is this happening? Let’s see:
- The recovery from the pandemic resulted in soaring demand for energy, but the supply of natural gas (a key source of heating and electricity generation) hasn’t kept up. The result: Soaring gas prices and in turn electricity prices
- To top it off, Putin has practically cut off gas supply to Europe in response to European sanctions over the Ukraine war. And guess who is the largest supplier of gas to Europe? You got it: Russia
- Making matters worse, Europe is suffering from historic heatwaves and droughts this summer, further intensifying the demand for energy.
So how is Europe responding? Policy makers are lining up a bunch of measures including:
- Giving households and businesses subsidies to keep them afloat + power cuts during peak hours to reduce consumption
- Setting price caps on oil and gas purchased from Russia
- ..and further price caps on electricity prices (to decouple them for soaring gas prices)
Are price caps a strategy? They certainly provide relief if it works, but it isn’t without risks. Price caps on Russia can backfire: Putin has already threatened to cut off all gas, oil, coal and heating oil supplies if the European Union imposes price caps. And price caps on electricity can encourage further consumption which is the exact opposite of what the governments want.
▶︎ WHAT’S THE TAKEAWAY?
While these measures may provide temporary relief, it comes at a massive price (to date, the support measures will cost the five largest economies of Europe a whopping $201 billion) and will be difficult to sustain. In the long run, Europe will need to wean itself off unreliable Russian gas supplies. This will also likely accelerate Europe’s shift to renewable energy sources like Solar and Wind. In the short term though, winter is coming for Europe and it doesn’t look pretty.
💸 Kim Kardashian launches a…private equity firm!
Guess what Kim Kardashian is upto? Well, she’s now entering the world of high finance and setting up a private equity firm.
Kim is teaming up with Jay Sammons — a former partner at Carlyle Group who invested in hot brands like Beats by Dr. Dre — to launch their firm SKYY Partners. The firm will focus on investing in and building consumer and media businesses. Kim’s mother — and marketing genius — Kris Jenner will join the firm as a partner.
▶︎ WHAT’S THE TAKEAWAY?
Is this crazy? Nope, not at all. Kim (and the entire Kardashian family) have built multi-billion dollar brands around themselves. And now they want to use their brand power and global reach to grow other companies (while making a nice buck out of it). We’re excited to see the companies they invest in and what they do with it.
🗞 Other quick hit stories
- Will Adani beat Jeff Bezos to become the 2nd richest person in the world? Gautam Adani’s wealth has nearly doubled in the last year to $143 billion — and with that, he’s just $6 billion shy of the second richest person in the world: Amazon founder Jeff Bezos who has an estimated net worth of $149 billion. At the pace that Adani’s wealth is growing, it probably is only a matter of time before he takes over. There’s still some catching up to do with the richest man in the world: Tesla chief Elon Musk who’s worth an estimated $244 billion.
- Flipkart launches Flipkart Hotels: Flipkart is doubling down on the travel sector. After the launch of Flipkart Flights, the company is now entering the hotel booking space — allowing customers to book domestic and international hotels on its app. The platform will be powered Cleartrip’s API.
- Online pharmacy 1mg crosses billion dollar valuation: The company raised $41 million in a funding round led by Tata Digital at a valuation of $1.25 billion. Tata Digital had previously purchased a 63% stake in the company in June 2021. With this fund raise, 1mg becomes the 21st startup in India to cross the billion dollar valuation mark (i.e., become a unicorn) in 2022.
💡 Fin fact of the day
Kim Kardashian’s undergarment and apparel business Skims is valued at $3.2 billion. All within 3 years of its launch in 2019.
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