Eindhoven Business Briefing: The ‘don’t worry, be happy’ edition of the EBB

(Editor’s noteWe started the Eindhoven Business Briefing in 2017, because we had more news in our headquarters city – which has a huge expat population – than we could possibly post. The future really is being invented here. Send your news to: [email protected])

Everyone is concerned about what the future holds for Eindhoven’s economy. In this edition of the Eindhoven Business Briefing, we say, “Don’t worry, be happy.” Amid the pandemic, semiconductor giant ASML is getting more publicity than ever with buy recommendations on many of the financial websites.

For example, Yahoo Finance writer Abigail Fisher, who’s part of the Insider Monkey group providing free trading data to ordinary investors, has a recent post looking at where ASML fits into the investment schemes of hedge funds, which typically make billions in investments along a spectrum from conventional stocks to alternative asset groups such as derivatives as “hedges,” or counterweights, to market swings.

Such “smart money” funds can go long (hold the stock for gains) or can “short” companies, betting their shares will lose value.

Fisher’s theory is that if hedge fund managers are long in a stock, that’s a pretty good indication the company is on a profitable path. She found that at the end of the first quarter of this year, a total of 30 of the hedge funds tracked by Insider Monkey were long on ASML, a change of 36 percent from Q4 2019. By comparison, one year ago, 15 hedge funds held shares or bullish call options in ASML. So, clearly, some of the smartest investors see a bright future for ASML, which has incredible market shares in the deep-tech photolithography biz, the foundation of chip making and the digital world.

Why does this matter? Easy. ASML employs about 25,000 people in some of the best jobs in Europe, most of them here in Eindhoven. More importantly, the company is the reason a lot of Eindhoven’s high-tech suppliers exists, suppliers with thousands of jobs themselves. So, this is the key piece of the economic-development puzzle for one of Europe’s Cities of the Future.

HighTechXL’s Info Day on 7 July

Speaking of deep tech, HighTechXL’s next online Info Session Q&A event is coming up 7 July. This event is the first step toward becoming a co-founder of a HighTechXL deep-tech startup … a startup that could be the next ASML.

You can read all the details on the Info Session landing page here.

HighTechXL is in the process of selecting co-founders – CEOs, CTOs and CBOs – for deep-tech ventures who’ll start the program this fall. These are preliminary steps toward the next FasTrackathon on 16 September.

From the landing page, you can request a link to see the the Info Session video, which has a lot of details about the venture building program and the HighTechXL assessment process. If you still have questions after you’ve watched the video, you can sign up for the Q&A online sessions.

After completing an extensive questionnaire and the interview process, you’ll go on to FasTrackathon, a reverse-hackathon where teams come together around advanced technologies and come up with business cases to take the tech to market.

Since 2018, HighTechXL has built teams around advanced technologies from CERN, the European Space Agency, TNO/Holst Centre and Philips. Alums have gone on to form partnerships with high tech global giants such as GIGABYTE and Intel.

In aggregate, HighTechXL startups have raised more than 100 million euros, with a far higher survival rate than other accelerators.

So this is your big opportunity to get in early with the next big thing.

HEMA’s long and winding road

The opposite of deep tech is, well, HEMA. Any expat who’s lived in Eindhoven knows HEMA, that ubiquitous Dutch chain of funky working class department stores with a distinctive, whistleable nine-note musical signature theme song.

For reasons connecting back to the Great Recession, it looked like the chain was done for after HEMA ended up in the hands of creditors essentially acting as a vulture fund – a syndicate that includes Washington, DC-based alternative asset private equity firm Carlyle Group, Credit Suisse and Invesco, the Atlanta-based investment-management firm that has more than $1.1 trillion under management. Bondholders include U.S. hedge funds Bardin Hill Investment Partners and CarVal Investors, and of course, there are equity groups involved that specialize in snapping up non-performing assets.

While we consumers like HEMA because of its affordable prices, relatively high design and, of course, those cafeterias with the two euro coffee and cakes, vulture funds like the new opportunity to make money from other peoples’ misfortune. They can go one of several ways with a distressed asset: restructuring the debt, repackaging the brand and reselling HEMA; selling the component pieces for a profit; or terminating operations altogether and taking the tax loss.

How some of the world’s largest private equity players ended up controlling a modest Dutch retail operation with 750 stores in seven countries (by comparison, Walmart has 11,500) is a long and baffling story. It’s also a revealing look at how the financial world works behind the curtain. Earlier this month, a group of creditors took over HEMA from Dutch entrepreneur Marcel Boekhoorn. Boekhoorn’s Ramphastos Investments acquired the company and its debt from London-based private equity firm Lion Capital back in 2018 at a time when no one – including a wildly successful investor such as Boekhoorn – could have anticipated the pandemic locking down consumer spending.

That deal included an annual multi-million euro balloon payment on the debt that came along with buying HEMA – essentially, half of the company’s total annual net income. A payment HEMA opted out of making this year, which got us to where we are today.

In a debt-swap earlier this month, Ramphastos is out, and minority investors have seen their positions go to zero, according to media reports, while senior debt holders ended up with the company. The end result was reducing HEMA’s securitized debt to 300 million euros from 750 million, a 60-percent write-down on paper. But HEMA has cut that annual debt payment to 28 million euros from 50 million euros.

Now, the big question is who will rescue HEMA from the sharks, with Blokker owner Michiel Witteveen expressing interest, according to NRC. And Bloomberg and other outlets are reporting that it’s not impossible that Boekhoorn could end up getting HEMA back ….

High Tech Campus getting new ‘smart’ building

Okay, HEMA is one part of the Marcel Boekhoorn story. The other part is his investment in High Tech Campus Eindhoven, which likely figured into his walking away from HEMA. And we know which we’d keep if forced to make that choice.

We knew about this quite a while ago …. HTC is building a new “smart” building. Construction has started on a sustainable, “smart office villa,” according to the campus website. The building is scheduled to open in 2021. Every environmental element will include the latest technology including the heating and cooling of the building by means of Thermal Energy Storage that stores excess energy that can be used days or even weeks later.

If you’re looking for office space in a cool building, you can download a brochure (in Dutch) here.

NXP’s revolutionary tech lets Apple turn iPhones into digital car keys

NXP, another Eindhoven-based deep-tech company that’s a global player, is making the tech that lets Apple turn iPhones and Apple watches into keyless devices owners can use to unlock and start cars.

Apple just announced on 23 June that digital keys will debut next month with the 2021 BMW 5-series cars. The feature will be part of Apple’s upcoming iOS 14 software and the current version, iOS 13. But it’s NXP’s near-field communications and ultra wide-band technology driving (so to speak) Apple CarKey. BMW runs on 100 percent near-field communications and ultra-wide band fine-ranging technology from NXP, according to our expat source.

NXP announced the revolutionary near-field communication technology last year. So now, we can use our iPhones to buy stuff (Apple Wallet) and start our cars (CarKey). And from what we understand, we can even use them as telephones.

You can get more details here on a CNBC post via an Apple news release.

Beer Buzz

We like to wrap up with good news, and this is it. Innovation Origins has a great post about how some clever students at Technical University of Eindhoven conceived, then built, a machine that can tap kegs of beer, then fill trays full of cups simultaneously and autonomously so you never have to stand in line again at football matches.

Freaking brilliant.

The name of this Brainport startup is, of course, Bierport. Since there are no PSV games this year, the prototype hasn’t been tested in the field, but if it’s durable enough to cope, the students will create a version for the Netherlands’ famous EDM festivals next year.

All startup teams set out to make the world a better place, but these guys have done it.

For more Eindhoven business news, see our full EBB archive here.

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