One thing to start: the hedge fund Elliott Management has built a “significant” stake in the Japanese conglomerate Toshiba, adding to what people close to the company described as a “wolf pack” of shareholder activists. Read the take from the FT’s Lex column here.
‘Succession’ and real-life family feuds
In the trailer for the third season of HBO’s drama series Succession, which debuts later this month, the fictional media tycoon Logan Roy promises to go “full fucking beast”, presumably against the hostile takeover backed by his own son.
The Roys are based primarily on the Murdochs: Succession’s creator, Jesse Armstrong, once wrote a script about Rupert Murdoch’s 78th birthday party. But the real-life influences go much wider, writes the FT’s Henry Mance.
In this new feature, he details how traces of Robert Maxwell, Sumner Redstone, Gina Rinehart and James Packer are in evidence, and how many of the show’s other outrageous twists have parallels in actual family feuds. (Spoilers follow.)
In series one, the billionaire Roy patriarch tries to force his children to weaken their control over the family trust — a tactic that Australia’s richest woman Gina Rinehart used against her children until they launched legal action.
Succession’s Logan then suffers a stroke and almost dies without having chosen his heir — as was the case for the Indian magnates Anil and Mukesh Ambani after their father Dhirubhai actually died in 2002 following a stroke, without leaving a will.
As Logan lies in a coma, his son Kendall becomes aware that the family empire has huge undeclared debts. Something similar occurred in the hours after Maxwell’s death.
Unlike the real-life tycoons, Roy survives and clings to his crown despite being so unwell that he confuses his son’s office carpet for a urinal.
That recalls Redstone’s attempts to chair CBS and Viacom even as he was reduced to communicating with an iPad with audio clips such as “yes”, “no” and “fuck you”.
The ageing tycoon goes on to survive an attempted boardroom coup, backed by one of his bitter enemies who has covertly built a stake in his business. The latter echoes how John Malone, the cable billionaire, built a stake in his longtime rival Murdoch’s News Corp, a move that led the latter to sell DirectTV and adopt a poison pill.
And then there’s the UK’s Barclay family (where Sir Frederick Barclay was bugged by his nephews as he smoked cigars in the Ritz Hotel) or Maxwell’s daughter Ghislaine (who goes on trial next month on sex-trafficking charges, which she denies).
Yet for all the raging drama in the Roy family, former investment banker Jonathan Knee tells the FT that the feuds in family businesses are no worse than those in non-family businesses.
One of the two, though, certainly makes for better television.
Goldman walks a tightrope in the quest for Chinese riches
Todd Leland and Kevin Sneader seem like an unlikely duo to run the Asia division of Goldman Sachs.
Leland, a straight-talking Midwesterner who speaks no Mandarin, was parachuted into Hong Kong to run the unit in 2018 after spending almost the entirety of his 30-year career at the investment bank in the US and Europe.
Sneader, who was ousted from the top job at the global consulting firm McKinsey earlier this year, recently became the first non-banker appointed to Goldman’s Asia helm.
Until recently, however, Leland has been responsible for cleaning up the unit’s risk controls in the wake of the 1MDB scandal, while Sneader has spent his entire career helping big businesses boost their profits.
Their unique talents could prove useful as they’re tasked with walking a geopolitical tightrope for the US bank to profit from dealmaking in China.
A tidal wave of regulation from Beijing has de facto paralysed overseas deals, cutting off some of its most lucrative fees and unsettling foreign investors who have spent years ramping up their exposure to China.
It wasn’t always this way. For decades, Wall Street made a mint providing China access to international markets and vice versa.
No one has trodden that path as well as Goldman’s former chief executive Hank Paulson, whose knack for rubbing elbows with China’s most powerful politicians helped land the bank more lucrative deals than any of its rivals back home.
In 2004 he manoeuvred a groundbreaking joint venture with local brokerage Gao Hua Securities, giving Goldman an unmatched foothold in the country’s markets. Paulson’s savvy political dealings paid off last year when Goldman agreed to buy out its joint venture partner and double its Asian workforce.
But as Beijing’s regulatory fist tightens by the day, it’ll take more than calculated diplomacy to prolong the decades-long windfall Goldman has enjoyed in China.
The overflowing pipeline of Chinese companies debuting on international exchanges has slowed to a trickle, along with Goldman’s cut. The disastrous initial public offering of Chinese ride-hailing company Didi, for which the bank scored the once-coveted lead underwriting spot, has discouraged further listings.
Nevertheless, Goldman has ploughed deeper into Asia, launching a wealth management business with one of China’s largest banks and transforming its China investment banking team. Wei Cai, who was poached from the private equity firm FountainVest to jointly run the unit, is the first Goldman outsider to hold the position.
“This is totally un-Goldman, a massive culture shock,” said a former Goldman banker.
Read the full story from the FT’s Tabby Kinder here.
Can things get any better for dealmakers?
It may have seemed unfathomable in the early days of the pandemic, but 2021 is set to go down as a historic year for dealmaking.
Global mergers and acquisitions have topped $4.3tn during the first three quarters of the year, already exceeding the full-year record set six years ago. And we still have three months to go.
This is good and bad news for investment bankers, depending on how you look at it.
Sure, they’re probably exhausted. It’s the busiest year for dealmaking across the board, including for private equity firms and special purpose acquisition companies.
But annual bonuses are fast approaching, and they’re bound to be good. Investment banks have raked in record sums, with fees surging past $100bn in the first nine months of the year.
It’s probably little surprise that Goldman Sachs and JPMorgan Chase have once again dominated the rankings and have hauled in $18bn in fees.
The US has led in terms of deal value with $1.95tn worth of transactions agreed so far this year, marking the country’s strongest opening period since records began four decades ago.
In Europe, private equity has seized on a slower recovery in the stock market.
Bidding wars for Britain’s fourth largest supermarket chain, Wm Morrison, and the German online pet supplies retailer Zooplus underscore private equity’s insatiable appetite for European assets.
Just under 40 per cent of M&A volumes in the region are from buyout groups, an unprecedented market share according to Dirk Albersmeier, global co-head of M&A at JPMorgan.
Pair DD’s M&A analysis with our colleagues’ deep-dive into capital markets, which have seen more than $1tn worth of share sales and almost $4tn of bond issuance from companies such as Apple, Walmart, Baidu and Volkswagen.
As Duncan Smith, head of European equity capital markets at RBC put it:
“People are flat out right now, whether that be equity capital markets bankers, M&A bankers, lawyers — the City is definitely full with transactions”.
- Marc Lasry, the billionaire investor, has stepped down as chair of Ozy Media after only three weeks in the role, deepening the crisis at the digital media company.
- The Japanese insurer Tokio Marine has parachuted in a top executive from its US operation, Shilpa Strong, to run the unit that was at the heart of its fraught relationship with Greensill Capital.
- Clifford Chance partners Simon Gleeson and Simon Tinkler have been appointed as deputy high court judges in England and Wales.
- L.E.K. Consulting, the global management consulting firm, has elected its European head Clay Heskett as its next global managing partner, succeeding Stuart Jackson, who served three terms in the role beginning in 2013.
Spread the wealth University endowments have generated their largest returns in decades thanks to stellar equities and venture capital performance, reigniting debate as to whether such gains should be taxed. (Wall Street Journal)
Against the odds Female entrepreneurs have a far more difficult time securing funding than their male counterparts. A new assembly of women-led start-ups is seeking to challenge venture capital norms. (FT)
China’s #MeToo moment A case of alleged sexual harassment at Alibaba and Beijing’s drive for “common prosperity” have sparked a reckoning within Chinese corporate culture, where boozy dinners and late nights spent with clients are commonplace. (Bloomberg)
Merck to buy Acceleron Pharma for $11.5bn (FT)
Ex-Goldman Sachs compliance analyst accused of insider trading (FT)
Eutelsat rejects unsolicited bid from French telecoms billionaire Patrick Drahi (FT)
Private equity trio close in on $15bn of debt for massive buyout (FT)
UK investors threaten Loeb’s London group with court action (FT)
German court orders insider trader to repay almost 6 times his profits (FT)
Oxford Nanopore shares surge more than 40 per cent in London IPO (FT)
Virgin Money to close almost a fifth of its branches (FT)
Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to [email protected]