One exclusive to start: private equity group CVC Capital Partners has bought stakes in two UK-based companies whose software underpins the NHS’s coronavirus vaccine rollout, as it seeks to capitalise on Britain’s inoculation success to sell the technology to other countries. More here.
One big thing happening on Wednesday: the FT Business of Football Summit kicks off, with two days of programming from the biggest names in the sport. All sessions will be recorded and available on-demand. Full details here.
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We’ve all had bad days at work, but few of us (we hope) have accidentally wired $900m to a group of hedge funds.
That’s what happened at Citigroup this past August, in a move US district judge Jesse Furman called “one of the biggest blunders in banking history”.
For those new to the story, we break it down here.
The bitter legal battle culminated on Tuesday when Furman ruled in favour of the asset managers — among them Brigade Capital, Symphony Asset Management and HPS Investment Partners — on the receiving end of the erroneously transferred funds.
You can tell the lucky winners over at HPS felt for Citi from the start, per this August 12 Bloomberg chat included in the court filing:
Quick recap: the funds had lent money to embattled cosmetics company Revlon back in 2016 to help pay for its acquisition of beauty brand Elizabeth Arden, a loan that Citi helped underwrite.
Come 2020, Revlon dragged its lenders into a contentious debt restructuring plan as the pandemic pummelled its value (which Brigade refused, to no avail), a deal that depressed the value of the original 2016 loan. The funds sued Revlon and Citi in retaliation.
It wouldn’t have even been such a huge story if Citi hadn’t accidentally sent them the $900m just days later.
Citi managed to recover $400m of the misplaced cash from certain funds, but $500m still remains with Revlon’s lenders.
Despite finding that the money Citi sent was “indisputably transferred by mistake”, Furman wrote that he was bound by precedent to rule in favour of the funds. New York law was just too cut and dry.
It’s not the first time this has happened — Deutsche Bank mistakenly wired $6bn to a US hedge fund client in 2015, a mistake blamed on a junior employee who processed a trade with “too many zeroes” while his boss was on holiday. Then there was JPMorgan’s $1.5bn loan snafu and subsequent decade-long legal battle.
For those that didn’t see Judge Furman’s ruling coming, they need only have looked at his decision on Windstream in 2019.
To the surprise of many Wall Street observers, he sided with hedge fund Aurelius Capital Management that a 2015 decision to spin off Windstream’s telecom infrastructure business had constituted a default. DD’s Sujeet Indap and Robert Smith followed the case closely.
After a rough start to the year, hedge funds might secretly be hoping that history continues to repeat itself. That is, except for the ones that gave their money back to Citigroup.
America is teeming with European exports — French wine, German engineering, Italian leather — but one Wall Street delicacy is catching fire across the Atlantic, and bankers are racing to get in on the demand.
Frequent DD readers will by now know we’re talking about Spacs.
A Spac frenzy is “unquestionably” making its way towards Europe, according to Nick Koemtzopoulos, head of Emea equity capital markets at Credit Suisse. “The level of dialogue and interest has gone up substantially. We’re having daily conversations with both issuers and private companies.”
JPMorgan Chase this week placed two of its M&A bankers, Guillermo Baygual, and Lukasz Dziarnowski on a new Spac specialist team focusing on the Emea region.
And in the race to become Europe's Spac capital, Amsterdam is widely expected to take the crown, reports the FT’s Nikou Asgari. Its listing rules closely mirror those of the US, which is the standard everyone is trying to replicate, and its reputation as an international venue is drawing in new money faster than its European rivals.
Amsterdam this week got a hefty vote of confidence from a powerful pairing. Jean Pierre Mustier, the former UniCredit chief, and LVMH founder/wolf-in-cashmere Bernard Arnault, have teamed up to launch a Spac that will target European financial companies.
“Amsterdam stock exchange has developed an expertise in Spacs ahead of all other cities in Europe at this point,” Mustier told the FT’s Stephen Morris. “Amsterdam is becoming the international stock exchange for Europe.”
Bankers and lawyers say that conversations about launching a Spac in Europe are almost all centred around the Netherlands, with several deals already in the works.
The widespread preference for Amsterdam over London, which is tied to unfriendly listing rules for Spacs on the London Stock Exchange, is yet another blow for the UK after the FT reported it had already lost its place as Europe’s top share trading hub. Amsterdam has snapped up a portion of London’s euro-derivatives and carbon trading too.
Although only one Spac has listed on the continent so far this year, compared to more than 140 in the US, sponsors are hoping that the advantages of listing in Europe will draw companies away from the flood of Spac cash swirling around across the pond.
Mid-short squeeze madness, when Robinhood chief executive and co-founder Vlad Tenev was in a desperate pinch for capital, he phoned a friend.
Enter Micky Malka, the Venezuelan venture capitalist behind Ribbit Capital.
The group agreed to lead a new round of convertible debt financing, wiring its investment that same day. Other investors piled in, giving Robinhood more than $1bn in funding commitments by the next morning.
Ribbit ended up investing more than $500m of the total $3.4bn in financing that Robinhood secured, in exchange for the opportunity to convert the debt into equity at a discount to the company’s future initial public offering price, insiders told DD’s Miles Kruppa.
It was a deal of astounding size and speed — but also risk.
For the gamble to pay off, Robinhood needs to pull off a successful IPO, a milestone the commission-free trading platform must navigate while facing significant political dangers.
Tenev is expected to testify to a room full of angry US lawmakers on both sides of the aisle on Thursday. Separately, regulators are prodding the platform’s controversial “payment order flow” business model, in which it sells client orders to large market-makers.
It’s not exactly a straightforward bet. But with a record for 30 per cent returns on his venture funds, before fees and expenses, Malka ought to be feeling lucky.
The art of war In derailing Ant Group’s colossal IPO, Chinese president Xi Jinping’s motives seemed clear — Jack Ma and his fintech empire were glaring enemies of his campaign for increased financial oversight. But he had a few other motivations up his sleeve. (Wall Street Journal)
Rupert Murdoch’s London calling Joe Biden’s US victory, a multibillion-dollar defamation suit and high turnover spell bad news for Fox News. And so, the channel’s billionaire overlord is packing his bags, and his rightwing playbook, for the UK. (New York Times)
Top Deutsche banker wooed clients for Wirecard months before collapse (FT)
Marriott chief Arne Sorenson dies aged 62 (FT)
Ex-Goldman Sachs analyst and brother charged with insider trading (FT)
UK regulator threatens eBay’s $9.2bn classified ads deal with Adevinta (FT + Lex)
Hacker claims to have stolen files belonging to prominent law firm Jones Day (WSJ)
Neil Woodford’s relaunch plan prompts calls for independent inquiry (FT)
Glencore reinstates dividend as Glasenberg prepares to exit (FT)
US comedy group Second City set to be bought by private equity (FT)
European telecoms: mixed signals (Lex)