☕️ Canva’s AI-rival

Good morning.

Australia's tech titan Canva made waves on Tuesday with its acquisition of Leonardo.Ai, the burgeoning generative AI sensation. While the financial details remain under wraps, the move is set to turbocharge Canva’s AI capabilities just in time for its anticipated IPO in 2025.

After launching in December 2022, Leonardo – which according to Bronwen Clune and Dan Van Boom’s reporting for Capital Brief, is valued at north of $300m - has quickly grown to 19 million users and had been eyeing a Series B funding round before Canva swooped in.

The deal merges Canva’s vast user base and resources with Leonardo’s own foundation AI model, Phoenix, promising a new chapter in local AI innovation.  

🏆 LOI Subscriber #TBD

Market movers

Credit Corp's shares soared on Tuesday to $17.32, the highest since early May, in a major relief rally.

Despite a 44% drop in NPAT and a 46% dividend cut, the company’s upbeat FY25 forecast was enough to lift spirits. E&P Capital analyst Olivier Coulon thinks the low expectations were the secret sauce. A classic case of ‘low bar, high jump’.

The quick sync

• Rex Airlines has entered voluntary administration, grounding its domestic Boeing 737 fleet and cancelling major airport flights, making it the second domestic airline to fail this year after startup Bonza. (Capital Brief)

• The predicted cost benefits from artificial learning are overstated, Macquarie analysts say. (Capital Brief)

• Mike Sneesby dodged a dozen striking journalists from Nine Entertainment gathered at Sydney international airport ahead of crucial pay talks on Wednesday. (Capital Brief)

• Fortescue shares tanked on Tuesday after media reports claimed that JPMorgan was looking to sell $1.9b of discounted stock on behalf of an unnamed institutional investor. (Capital Brief)

• BHP and Canada’s Lundin Mining agree to buy Toronto-listed explorer Filo Corp, gaining access to two South American copper projects. (Capital Brief)

Trading floor

M&A

• Colonial First State has signed a five-year deal with Microsoft to enhance its cloud and AI capabilities. (Capital Brief)

• Jon Adgemis finalizes $400m refinancing for Public Hospitality Group with Deutsche Bank, with an announcement expected soon. (AFR)

• Whitehaven Coal is finalizing a deal to sell a stake in its Blackwater mine to two Japanese groups at a premium. (The Australian)

• Canva will acquire Leonardo.Ai, an Australian AI platform with 19 million users, ahead of its IPO planned within 18 months. (Capital Brief)

• Bank of America is set to sell Singapore Post's Australian assets, which earn around $100m annually. (AFR)

• Pacific Equity Partners and Friesland Campina made an unsolicited offer for Fonterra’s $3bn brand and ingredients business. (The Australian)

• Bombora won a victory with the Takeovers Panel, leading to the cancellation of an improper bonus share issue by the Salerno Family’s RW Trust in Ringers Western. (The Australian)

• Pacific Smiles is assessing Genesis Capital's revised bid but still recommends NDC BidCo's earlier proposal. (Capital Brief)

• Melbourne start-up IntelligenceBank has acquired AI compliance software firm Red Marker with funds from its US private equity backer Five Elms Capital, marking its first buyout. (AFR)

• IFM, Pacific Equity Partners, and TPG Capital are set to advance to the next round for Healius's Lumus Imaging unit sale. (The Australian)

• Boss Energy withdrew its takeover bid for Energy Resources of Australia after the NT government rejected the Jabiluka mining lease renewal. (Capital Brief)

• Pacific Equity Partners has submitted a bid for the $1bn-plus Guardian Childcare and Education sale, managed by Morgan Stanley, attracting mostly financial sponsors. (AFR)

• AD1 Holdings will acquire Melbourne agency Oliver Grace for $2m, with its founders joining AD1's executive team. (BNA)

• Fletcher Building’s Tradelink sale, aimed at countering a share price drop, has attracted two final bidders, including secretive US billionaires. (AFR)

Capital Markets

• Telix Pharmaceuticals' shares fell after completing a $650m convertible notes raise to fund strategic priorities and future opportunities. (Capital Brief)

• Community Capital, backed by Barrenjoey Capital, raises $674m for its credit fund, donating management fees to non-profits. (AFR)

• Regional Express Holdings is set to appoint Ernst & Young as administrators after entering a trading halt and previous reports of Deloitte's involvement. (Capital Brief)

• BHP will invest $3.2bn to expand its South American copper assets by partnering with Lundin Mining in a joint venture and acquiring Filo Corp. (AFR)

• Perseus Mining met its 2024 targets, aided by rising gold prices and acquiring the Nyanzaga gold project, with development set to start in 2025 and production by early 2027. (Capital Brief)

• Team Global Express reported a $190m loss for the year ending March 31, up from $163m the previous year. (The Australian)

VC

• None

People moves

• Ramsay Healthcare CEO Craig McNally will retire next year, with Woolworths' Natalie Davis named his successor. (Capital Brief)

• Peter Graf and Robert Meyers join Adara's advisory panel, providing expertise for deals without a fee. (AFR)

• Peter Rutter is leaving Royal London to head Lifecycle Investment Partners under Pinnacle Investment Management, with the new firm set to launch by year-end. (AFR)

Together with Shares in Value

Special Report - Artificial Intelligence Stocks

It’s the buzzword for 2024 and with good reason. 2023 saw big breakthroughs from the likes of ChatGPT and a host of other AI language models. Suddenly we're all asking ChatGPT to code our new software and write our AI sector reports. We’re truly living through a massive computing breakthrough. Technology and buzzwords seem to be changing ever more quickly.

Get our Special 24-page report on Artificial Intelligence & Quantum Computing.

What's Inside this Report

• 8 Stocks to gain exposure to AI & Quantum Computing.

• Comprehensive analysis.

• 4 NASDAQ Listed and 4 ASX Listed Companies to watch.

The watercooler