Barclays’ non-public credit score woes | USAEMALL.com

One scoop to start: Medical device maker Becton Dickinson has kicked off talks with rivals including Thermo Fisher Scientific and Danaher to discuss the divestment of its $21bn life sciences unit, said people familiar with the matter.

A massive fundraise: OpenAI has raised $40bn in new funding from SoftBank and other investors, valuing the ChatGPT maker at $300bn as it becomes one of the best-funded private start-ups in the world.

And a final thing: None of the top 20 law firms in the US have offered their “unconditional support” to Perkins Coie’s efforts to fight sanctions imposed by Donald Trump’s administration.

In today’s newsletter:

• A tough private credit fundraise

• Fortnox gets a white knight bid

• Europe’s latest creditor fight

Barclays’ slow-going private credit partnership

Banking titans are attempting to get their hands around the $1.6tn private credit industry. For UK-based Barclays — it’s slow going.

The group’s private credit partner, AGL Credit Management, has struggled to attract fresh investment almost a year after it announced a tie-up with the bank, DD’s Ortenca Aliaj and Eric Platt report.

The dearth of cash and deals is hitting hopes that the venture will provide Barclays with firepower to compete in the private credit market.

AGL and Barclays struck the partnership last April, which was touted as a way for the British lender to offer its clients private loans, versus the traditional bank loan market.

It was launched with a $1bn investment from the Abu Dhabi Investment Authority and a five-year co-operation agreement between AGL and Barclays.

For AGL, a manager of collateralised loan funds founded by leveraged loan market veteran Peter Gleysteen in 2019, the venture was its beachhead push into private loans. But beyond Adia’s $1bn commitment, AGL has struggled to draw in other large investors. Its fund had attracted less than $70mn of capital from others through the first quarter.

One of the people said it was “hard to fundraise” because AGL “[doesn’t] have a track record in private credit”.

In just a handful of years AGL has become a key player in leveraged loan markets — managing nearly $20bn, mostly through CLOs. But private loans are new terrain. Still, lenders such as AGL are a hot commodity on Wall Street.

Almost every major bank has stood up a partnership with a non-bank lender. Many deals in effect give banks the ability to offer credit to customers even when the loan market is shut, as it was in 2022 and 2023.

Two people briefed on the partnership rejected the suggestion that fundraising was slow, with one noting Barclays and AGL hadn’t set any hard targets for the efforts. (You can read AGL’s and Barclays’ comments here in the full story).

Market volatility could again rock leveraged finance markets, testing whether ventures between banks and private lenders will kick into action.

The last time that happened in 2022, private credit groups including Apollo Global, Blackstone and Ares Management picked up market share. They continue to raise cash ferociously and collectively manage more than $1.3tn in credit assets.

It’s why banks are so keen to ensure they have private credit options on tap. We’ll let you judge if $1.07bn* is enough.

*before any of that back-leverage the industry loves

EQT swoops in to buy Fortnox

Short sellers of Swedish software shops got a surprise on Monday with the announcement that the country’s private equity group EQT will buy Fortnox, a popular and highly valued provider of accounting programs there.

Key to the deal which values Fortnox at $5.5bn — a 38 per cent premium to Friday’s share price close — is chair and top shareholder Olof Hallrup, who has teamed up with EQT to take the company private.

What caught our eye, naturally, is EQT’s due diligence, which the announcement said didn’t involve any disclosure of non-public information.

Fortnox has attracted hedge fund scrutiny over the past year for a metronomic rise in customer numbers that was uninterrupted by the pandemic or any swings in the local economy, the only one in which Fortnox operates.

(The company has said rounding those numbers to the nearest thousand overemphasised their stability.)

Former chief executive Tommy Eklund left last summer after the FT took a look at questions about its disclosures and accounting practices.

Fortnox reorganised its reporting lines in every one of Ekland’s four years in charge, and did so again in the most recent annual report produced under chief financial officer and acting CEO Roger Hartelius.

Two investors who have shorted Fortnox in the past said that with shares trading close to the SKr90 offer price there would be an asymmetric pay-off if any issues emerged.

A person close to the transaction told the FT’s Dan McCrum and Costas Mourselas that the full and final bid was legally binding and they don’t see any risk right now that it won’t close.

Hallrup’s personal vehicle will keep its 19 per cent stake, becoming a minority partner to the flagship €22bn EQT X fund.

Creditor-on-creditor brawls eke their way into Europe

Historically, hedge funds and investors in Europe were rarely comfortable pulling off any sort of sharp-elbowed tactic that might land them in court.

That’s the American way, they would say. Not how it’s done in Europe.

Fights between creditors — sometimes called “creditor-on-creditor violence” — have been a feature of US distressed debt markets for at least the past decade. Certain tactics such as drop-downs or up-tiers are used to shift assets away from other lenders.

In fact, such manoeuvres have become so ubiquitous that what used to end up in years-long legal brawls are now part of the mainstream.

Like so much else on Wall Street, some of those more aggressive tactics are now making their way across the Atlantic. The recent dispute over Dutch lingerie brand Hunkemöller is the latest display of how creditor fights have arrived, reports the FT.

The New York-based distressed debt investor Redwood Capital last month seized control of the Dutch company, just the latest move in a string of tactics that allowed the hedge fund to leapfrog other lenders.

Rival creditors led by Cheyne Strategic Value Credit are weighing their legal options to undo the takeover.

The group — which includes Man Group, Contrarian Capital and St James’s Place — sued Redwood in November over an earlier deal that they alleged violated terms of their bonds.

The steps that led to the legal fight will sound very familiar to anyone who deals with troubled companies in the US.

Last year, Hunkemöller borrowed €50mn from Redwood, which was its largest existing bondholder, in the form of super senior debt as it tried to shore up its balance sheet.

Other lenders also tried to provide financing, but they were rebuffed. The company later announced this new tranche of debt would push down other lenders in the pecking order. This is commonly called an “up-tiering” deal.

DD will be watching closely to see how far European funds will go in playing hardball.

Job moves

• CD&R has hired Walt Bettinger as a senior adviser to consult on potential investments in the financial services and technology sectors. He was previously the chief executive of Charles Schwab.

• BerlinRosen’s parent company Orchestra has hired Heather Perlberg as the executive vice-president for financial communications. She was previously a reporter at Bloomberg News for more than a decade.

• Warner Bros Discovery has added Anton Levy, the former co-president of General Atlantic, to its board following talks with an activist shareholder, the Wall Street Journal reports.

• Paul Marchant, the chief executive of fashion chain Primark, has resigned with immediate effect following an investigation into alleged inappropriate behaviour towards a woman.

Smart reads

X’s shuffle Elon Musk is merging two of his companies xAI and X, formerly known as Twitter, in an all-stock deal, Lex writes. What’s most interesting might be the respective valuations.

Market test The “hyper-rational” chief executive behind CoreWeave secured important deals with Blackstone and Microsoft ahead of its public listing, the FT reports. The IPO will test the market’s faith in all the excitement around AI.

Sotheby’s sit-down Charles Stewart, the chief executive of Sotheby’s, tells the FT’s Matthew Garrahan how Brexit impacted the New York art market, and what it’s like steering the legendary auction house through choppy economic waters.

News round-up

Elon Musk’s artificial intelligence group buys X for $45bn (FT) 

Deloitte hit hardest by Trump’s clampdown on consultancy spending (FT)

Larry Fink warns ‘protectionism has returned with force’ as Trump tariffs loom (FT)

Rocket to buy Mr Cooper in $9.4bn deal to create US mortgage giant (FT)

Google DeepMind’s drug discovery spin-off Isomorphic Labs raises $600mn (FT)

British Steel’s auditors warn of ‘material uncertainty’ as it battles to survive (FT)

NYSE’s Texas platform debuts with Donald Trump’s social media stock (FT)

Plans to break up Eurostar monopoly given boost by rail regulator (FT)

Nippon Steel accused by activist of harming minority investors in subsidiary (FT)