06/07/2026

BIZ & FINANCE MONDAY | JULY 6, 2026

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FRANKFURT: German auto supplier Continental announced on Saturday a €4 billion (RM18.7 billion) deal to sell a division to an American investment group, the latest move in a major restructuring. Continental, which has been struggling amid a crisis in the wider European auto sector, has been slimming down its operations to focus on its traditional tyre business. The group has signed an agreement to sell its ContiTech division, which makes plastic and rubber products for industrial clients, to private equity firm Lone Star Funds, according to a statement. As well as the €4 billion sale price, Continental could receive up to €250 million more in coming years, depending on the business’s performance. “With the planned sale of ContiTech, Continental is completing its strategic realignment,“ it said. The deal should be finalised by the end of 2026. Some of the funds from the sale will be used to pay down debt, while around €2.5 billion will be distributed WASHINGTON: An admired symbol of financial innovation in recent years, private credit has become a source of unease in US financial markets, and a subject of intensifying scrutiny. Leading firms have seen an acceleration of withdrawals from clients who had poured funds into non-banking financial firms as conventional banks pulled back on some vehicles after the 2008 financial crisis. In the most recent example, asset manager Blue Owl, a big player in private credit, reported redemption requests of US$4.7 billion in the second quarter, only slightly less than the US$5.4 billion lodged in the first quarter. In total, these requests amount to more than half the the total in one of Blue Owl’s funds dedicated to private credit. But like other firms faced with heavy withdrawal requests, Blue Owl limited withdrawals to five percent of the funds. In the first quarter of 2026, withdrawals from private credit funds overtook deposits in such funds, according to the Federal Reserve’s most recent report on financial stability. The dynamic poses risk for enterprises that have come to rely on private credit as a financing lifeline.

Creaky private credit sector continues to worry investors

These defaults translate into hardship for businesses and investors. But Fed officials have said they do not view the vulnerabilities in private credit as posing broad systemic risk – a view shared by other experts. “My assessment will be that this sector is in some trouble, but the risks to spill over are much lower than they were from, from subprime,” Slater said. “There are spillovers to banks, to insurers,” he said. These negative spillovers are “not nothing, but they are much more modest in scale, as far as we can understand.” Financial insiders expect declines in private credit to continue, with other financing vehicles emerging. In a few years, the push into this market will look like a “fad”, said one insider, its rise and fall part of the “natural process of the of the market”. – AFP

o Disproportionate exposure to software firms a source of unease in US

fraction of their funds each quarter. Such firms have represented a growth area for the industry but today are also a source of its fragility. One source of unease has been private credit’s disproportionate exposure to the software sector, which is considered especially vulnerable to emerging artificial intelligence technologies. “There’s a lot of fear about how nobody knows who they lent to,” Ellias said. “There’s even more fear ... that they’ve lent to a lot of software companies.” The default rate among borrowers has risen above 5% and continues to rise, according to the Fed.

“The private credit market grew very rapidly, it expanded from ... quite a small specialised thing to something larger,” said Adam Slater, economist at Oxford Economics. This growing population investing in private credit – including retail investors – was drawn into a space that offered less liquidity than other options, but which seemed to promise greater returns. “Because this is all bespoke lending between borrowers and lenders, our credit quality ought to be higher,” Slater said. But the situation has evolved in the last few years with the arrival of semi-liquid private credit funds, which allow investors to withdraw a

to shareholders, Continental added. The IGBCE union, which represents the division’s workers, said it had opposed the sale but was not ultimately able to stop it. Francesco Grioli, a union representative and member of Continental’s supervisory board, urged dialogue with the new owner and voiced opposition to any new potential job cuts. “This will meet with our determined resistance,“ he said. ContiTech has around 20,000 employees at some 60 sites globally, and last year generated sales of around six billion euros. Continental last year spun off a division focused on car components including braking systems and sensors as a separate entity, called Aumovio. The group has also announced thousands of job cuts in recent years, along with other auto suppliers and manufacturers in Germany. The sector is facing fierce Chinese competition, weak demand in key markets and a troubled shift to electric vehicles. – AFP “Traditionally, only really large companies could have” turned to private credit for capital, said professor Jared Ellias, an expert on corporate debt restructuring at Harvard Law School. “But today somebody who owns a couple of restaurants might be able to go do that,” he said. The sector grew quickly after Covid-19, from around US$500 billion in 2019 to almost US$1.5 trillion last year, according to the Fed. Even with that growth, the sector constitutes a relatively small share of total business debt in the massive US economy, where total corporate debt is estimated at US$20 trillion, not counting the financial sector.

Continental to sell unit to Lone Star Funds

People look at an Uber helicopter at The Great American State Fair on the National Mall in Washington. – REUTERSPIC

Uber pauses Europe food delivery expansion NEW YORK: Uber has paused the majority of its planned food delivery expansion in Europe just months after announcing the plans as the ride-sharing company continues to pursue a takeover of Delivery Hero, the Financial Times reported yesterday. planned to expand its food delivery business into seven new European markets – Austria, Denmark, Finland, Norway, the Czech Republic, Greece and Romania. The company expected the move to generate an additional US$1 billion in gross bookings over the next three years.

that the US company had raised its stake in the German food delivery company to nearly 37% from 25% after buying a stake from fellow shareholder Aspex Management. Reuters could not verify the FT report. Uber and Delivery Hero did not immediately respond to requests for comment. Uber told the FT it had decided to halt its expansion after the “huge success” of launches in Finland and Denmark, with plans to “focus on continuing the momentum” in existing markets. – Reuters

Uber no longer plans to launch food delivery in five of the seven countries it had targeted for expansion this year, including Austria, Norway and Greece, the report said. It did not identify the other two countries. Earlier in the year, Uber said it

The San Francisco-based company, however, is still seeking to acquire Delivery Hero, according to the FT report. Delivery Hero said in May it had received a €33-per-share (RM153.64) offer from Uber, and Reuters reported

Flags with the logo of Continental flutter in Korbach, Germany. – REUTERSPIC