French research firm Qwant seeks € 8m bailout loan for Huawei – POLITICO

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PARIS – French search engine Qwant is seeking 8 million euros from Chinese telecommunications giant Huawei in order to stay afloat, according to documents viewed by POLITICO.

Qwant CEO Jean-Claude Ghinozzi on May 18 asked shareholders to agree to € 8 million in funding via convertible bonds from Hubble, the Hong Kong-based venture capital arm of Huawei, according to the reports. documents.

The move comes as Qwant, which is partly funded by French public money, aims to consolidate its finances. Launched in 2013 and soon supported by the French President Emmanuel Macron and vice-president of the European Commission Margrethe Vestager, Qwant was designed to become a rival to US search giant Google and bolster the EU’s tech sector as part of broader efforts to wean the continent from dependence on foreign companies.

Financial support could mean the Chinese actor has a say in the company’s operations, at a time when Huawei is accused by several governments of spying and has been kicked out of key markets.

Despite geopolitical tensions around Huawei, French state-owned bank Caisse des Dépôts – a shareholder in Qwant – voted in favor of the financial transaction, according to one of those present at the May 18 meeting.

Caisse des Dépôts declined to comment. A person involved in the case said the bank was reassured that Huawei did not have the power to convert its bonds as it wished.

This type of financial transaction, quite common in the startup world, aims to bail out Qwant after years of losses via a three-year loan at an interest rate of 4.5%. The company lost 13 million euros in 2020, €23 million in 2019 and € 11.2 million in 2018 for revenues amounting respectively to 7.5 million euros, 5.8 million euros and 3 million euros.

But the mechanism also allows investors like Huawei to turn its bonds into stocks under strict conditions. As a shareholder, the company could potentially gain visibility or influence over the company’s strategy.

Among other conditions, the company must obtain “administrative authorizations”, before requesting a conversion in two years and become a shareholder holding only “between 5 and 7.5%” of Qwant, the document indicates. Parties declined to comment on who would issue such authorization.

A Qwant spokesperson said the bond financing was a continuation of an existing partnership with Huawei, which did not mean the Chinese company would take a stake.

“It is an investment via a bond. It is not an entry into the capital of Qwant. It is a vehicle to finance our expansion, and above all it is with a crucial global player who recognizes the strength of our technology and the reality of our project. “

“Concretely, with its bond investment, Huawei is helping Qwant to develop and gain momentum at the European level for all the brand’s smartphones which will be marketed in France, Germany and Italy”, added the spokesperson. .

Huawei did not immediately respond to a request for comment. A spokesperson for Axel Springer, who is also a investor in Qwant via Axel Springer Digital Ventures, declined to comment. Axel Springer is co-owner of POLITICO Europe.

Huawei’s partnership with Qwant dates back to March 2020, when the two companies announced they would cooperate on mobile devices, with Qwant installed by default on Huawei’s P40 smartphones in some European countries. Huawei has been deprived of Google products due to a conflict with the US administration.

The Qwant-Huawei partnership had been in the works since November 2018, several insiders told POLITICO.

Financial details of the deal were not disclosed, but they included the sharing of advertising revenue that P40 users would generate on Qwant’s search engine.

This article is part of POLITICSThe premium Tech policy coverage of: Pro Technology. Our expert journalism and suite of political intelligence tools allow you to transparently research, track and understand the developments and stakeholders shaping EU technology policy and taking decisions. decisions impacting your industry. E-mail [email protected] with the code ‘TECH’ for a free trial.

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