One scoop to start: US private capital giant Global Infrastructure Partners and Canada’s largest pension fund are nearing a deal to buy Allete, a regulated utility with sizeable clean energy operations, for about $5bn, said people familiar with the matter. Read more here.
And: Hong Kong’s financial regulator has launched criminal proceedings in an insider dealing case against hedge fund Segantii Capital Management and its founder and director, Blackpool Football Club owner Simon Sadler. Read more here.
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In today’s newsletter:
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Spanish group in Europe’s biggest IPO of 2024
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SocGen trading “incident”
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Berkshire’s insurance business after Ajit Jain
Puig calls time after three generations
For 110 years, the Spanish beauty group Puig has remained a family affair.
On Friday, that is all set to change in Europe’s biggest initial public offering of the year.
With brands such as Jean Paul Gaultier and Nina Ricci, Puig has quietly become one of the most important companies in the fast-growing beauty sector. It has also made its owners, the Puig family (a Catalan name pronounced “poodge”), a fortune.
Led by Marc Puig — the group’s chair, CEO and a third-generation member of the family — the company is transitioning its ownership structure. It’s a process the Spaniard has called one of “self-disempowerment”, the FT reports in a profile of the executive.
The company’s IPO in Spain on Friday — which is expected to value its perfume, skin cream and fashion brands at about €14bn after pricing at the top of its range — will have a total offer size of roughly €3bn worth of shares.
While the family will still own nearly 72 per cent of the business and 92.5 per cent of the voting rights, it marks a moment of transition.
Puig has said that the fourth generation — his children included — will have no role running the Barcelona-based company. “Difficulties can arise, especially in the transition between generations — the search for leadership, a lack of understanding, a loss of passion,” he told the FT last year.
The scrutiny of outside investors would help the company avoid the “traps” family businesses can fall into, he said.
The shift at Puig comes when Europe’s biggest family-backed beauty groups are navigating succession planning. At LVMH, two more of French billionaire Bernard Arnault’s children recently joined the board.
Puig has been an active acquirer over the past couple decades, buying the likes of Belgian designer Dries Van Noten, British make-up maven Charlotte Tilbury and German skincare brand Dr Barbara Sturm.
The IPO will probably boost the company’s profile, after it has flown below the radar despite owning brands including Rabanne and Carolina Herrera.
For the family it will also bring a greater level of publicity. Puig and his relatives will see a live share price on roughly €10bn of shared equity wealth.
A sailing buff born in Barcelona, Puig will now get his chance to tack around a much bigger ocean.
SocGen trader ‘open to work’ after hidden derivative trades
Just over 16 years ago, a young banker on the Delta One trading desk at Société Générale plunged the French lender into crisis after hidden trades he put on were revealed. The bank ended up losing nearly €5bn.
Earlier this week, SocGen confirmed that two executives on the same derivatives trading desk had been let go. The bank said the duo were involved in “a one-off trading incident in 2023”, which again involved a series of unauthorised derivatives trades that went undetected and could have lost the bank money in a severe market downturn.
The bank didn’t disclose the identities of either person, beyond the fact that the trades were made in Hong Kong and involved bets on options contracts linked to Indian stock market indices.
Yesterday morning, one of the two employees involved decided to put their own account of events in the public domain, with a lengthy post on LinkedIn.
Kavish Kataria, whose LinkedIn profile says he was a vice-president at SocGen, wrote: “It is very easy for an organisation to put the entire blame on traders and make them the scapegoat in the entire incident.”
Kataria added that he did trade “options on Indian Indices” but said it was in his mandate. He concluded with a call to arms to fellow traders.
“Trading industry is so big but there are no rules or regulations which fight for trader justice,” Kataria wrote.
Kataria told DD that he is looking for a job. If any readers can help, here’s his LinkedIn.
Berkshire Hathaway’s insurance business after Ajit Jain
If insurance is the secret sauce in Berkshire Hathaway’s decades-long growth, Ajit Jain is the cook.
An industry veteran who heads Berkshire’s wide array of insurance operations, Jain has also been at the heart of some of the group’s biggest single reinsurance deals — where it takes billions of dollars of long-term liabilities such as asbestos claims off the books of other insurers.
In the second part of a series diving into what Berkshire Hathaway will look like when Warren Buffett is no longer leading the group, DD’s Eric Platt and the FT’s Ian Smith ask what is for some an equally important question: how will Berkshire’s insurance operations fare when Jain one day departs, and will one of the men (it’s almost always men in Berkshire’s top ranks) in the running to replace him one day have the talents needed to make what can be fiendishly complex bets?
Sources tell Eric and Ian there are three leading candidates, including Peter Eastwood, who runs the fast-growing Berkshire Hathaway Specialty Insurance unit, and Charlie Shamieh, chair of Gen Re. Todd Combs, one of Buffett’s two investment deputies and who became chief executive of Geico in 2019, is also in the running.
The chief executive of a rival who knows the trio well said they were “very good at what they do, they’re good at their verticals”, but running the entire operations would be a significant step up.
Then there’s the other part of Berkshire’s insurance operations that’s often overlooked: the intercompany dealmaking that allows it to take big risks and invest in the stocks of its choosing (compared to most rivals, which are stuck buying Treasuries, corporate bonds and asset-backed securities).
Read up on those transactions in the piece, as well as one relatively opaque deal that hasn’t gotten any media attention at all: an $82bn dividend Berkshire’s biggest insurance unit paid the parent company last year.
Job moves
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Peloton chief executive Barry McCarthy is stepping down from his role as the company launches a restructuring plan that will cut 15 per cent of its workforce. He was previously an executive at Netflix and Spotify and succeeded former Peloton chief and founder John Foley in 2022.
Smart reads
Private funding Blacklisted Chinese tech giant Huawei is secretly funding cutting-edge research at American universities, including Harvard, Bloomberg reports.
Digital dominance Google’s monopoly trial could change the way it does business and is likely to set a precedent for challenging the power of the industry’s giants, The New York Times reports.
Corporate overdose Healthcare giant CVS’s big bet on Medicare is backfiring, with higher medical costs pushing earnings well below Wall Street estimates, The Wall Street Journal reports.
News round-up
BHP says Anglo American deal structure is not a negative reflection of South Africa (FT)
Blue Owl targets infrastructure investors in hunt for acquisitions (FT)
Due Diligence is written by Arash Massoudi, Ivan Levingston, William Louch and Robert Smith in London, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde, Antoine Gara and Amelia Pollard in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco, and Javier Espinoza in Brussels. Please send feedback to [email protected]
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