Billionaires race to seal a $23bn coup | USAEMALL.com

One scoop to start: Billionaire Izzy Englander is exploring opening up the ownership of his $76bn hedge fund Millennium Management to its top executives for the first time, in the latest step to prepare it for life beyond its founder.

And a big job move: David Cameron is advising a private equity firm founded and chaired by Jeb Bush, the brother of former US president George W Bush, his latest post since he left government last year.

In today’s newsletter:

The art of the $23bn deal in the Panama Canal

The second Trump presidency has been surprisingly depressing for many bankers, but the signature deal of the US president’s return to the White House was orchestrated at lightning speed by some of Wall Street’s biggest players.

BlackRock’s $23bn acquisition of a network of ports, including two major ones along the Panama Canal, from Hong Kong conglomerate CK Hutchison came to pass at blitz speed through just a handful of billionaires and powerful interlocutors, spanning from Wall Street to the White House to Hong Kong.

At the centre of the deal was Larry Fink, the public-facing chief executive of financial juggernaut BlackRock, who briefed Donald Trump and secretary of state Marco Rubio ahead of the announcement.

Fink’s expertise in dealmaking has been well-tested in recent years after spending about $25bn to buy private credit giant HPS and infrastructure investor Global Infrastructure Partners. He was primed to swiftly execute a deal at this scale.

The hordes of Wall Street advisers typical in the vast majority of transactions didn’t participate this time around, a painful blow for fee-starved bankers.

Hashing out the terms took place almost entirely on Zoom and over the phone. Goldman Sachs played a crucial role, as did former Citigroup chief executive Michael Corbat, who advised CK Hutchison from his base in the ski town Jackson Hole.

Also on hand was a short roster chock-full of billionaires including GIP chief executive Adebayo Ogunlesi and CK Hutchison billionaire owner Li Ka-shing, as well as his son Victor.

The ultra-wealthy Aponte family scion Diego Aponte played a critical role too. The family owns the world’s biggest container shipping line Mediterranean Shipping Company, which also joined the consortium. (It helped that MSC is one of CK Hutchison’s top customers.)

CK Hutchison “knew it was going to another billionaire family that they trusted”, one person briefed on the negotiations said, referring to the Aponte family.

For now, it seems all parties may have walked away as winners. Trump had the deal primed for his address to Congress on Tuesday night, while BlackRock was able to flex its new private capital muscles, outmanoeuvring rival suitors Blackstone and KKR.

Ka-shing’s CK Hutchison, meanwhile, has avoided a potential geopolitical nightmare and will walk away with $19bn in cash, some of which will probably be handed to shareholders through dividends or buybacks.

Microsoft walks away from some CoreWeave commitments

Data centre operator CoreWeave is preparing to list in a chunky $35bn-plus public offering next month.

The share offering is being closely watched on Wall Street because CoreWeave is in some ways a creation of red hot private credit funds who have ploughed billions into the prolific buyer of Nvidia graphics processing units.

But first a potential bump in the road.

Microsoft is walking away from some of its commitments with CoreWeave over delivery issues and missed deadlines, according to people with knowledge of the matter.

The move is a significant blow for a company that generated about 62 per cent of its revenue last year from the Seattle-based group.

People close to the relationship have told the FT that the delays have affected Microsoft’s confidence in CoreWeave. The company has more than $10bn worth of contracts with Microsoft.

They added that Microsoft retained a number of ongoing contracts with CoreWeave and it remained an important partner.

CoreWeave acknowledged in its IPO filings earlier this week that any negative change in Microsoft’s demand for services would “adversely affect our business, operating results, financial condition and future prospects”.

Microsoft declined to comment.

CoreWeave said: “CoreWeave has a consistent track record of delivering complex AI infrastructure at scale to some of the world’s leading AI labs and enterprises. Doing so has allowed us to earn and maintain the confidence of our customers.”

Microsoft has used CoreWeave’s service to help feed OpenAI and its founder Sam Altman’s hunger for data centre capacity to train artificial intelligence models that underpin services such as ChatGPT.

CoreWeave’s origins as a cryptocurrency mining operation turned hyperscaler stalwart is a sign of just how dramatically things have shifted for the data centre market in the past few years as AI-fuelled demand for computing power has skyrocketed.

Its equity backers include Magnetar Capital, Jane Street, Fidelity and Lykos Global Management — and it has borrowed billions from the credit funds of Blackstone, BlackRock and Carlyle.

For Magnetar, an IPO could mint a multibillion-dollar windfall, the FT has reported. Lenders, meanwhile, stand to see some of their debts paid down per its S-1.

Legacy planning at two rival hedge funds

In late 2019, billionaire hedge fund trader Chris Rokos convened his top portfolio managers at the firm’s Mayfair offices.

His four-year-old hedge fund Rokos Capital Management had endured a shaky period of performance and the firm’s mercurial founder had decided to take matters into his own hands.

Rokos told his assembled portfolio managers that all significant investment decisions would now go through him and that they would no longer be able to manage their own money. Several of those portfolio managers departed in the following months.

Around the same time, traders at rival macro hedge fund Brevan Howard, which Rokos had co-founded two decades earlier, were preparing for a new boss. The firm’s billionaire CEO and co-founder Alan Howard had just anointed a new chief.

The radically different paths taken by the former business partners turned rivals show how the thorny question of succession continues to dominate the $4.5tn hedge fund industry.

Both men are known as star traders in the business of global macro, making huge wagers on swings in interest rates, currencies and equities.

By doubling down on himself, Rokos has radically improved performance at his firm, while also — as things stand — complicating succession. People close to the firm say that it’s bigger than one man and point out that succession is not an immediate concern.

Howard has seemingly created a durable business powered by the efforts of many traders. But amid a recent run of poor performance, the billionaire founder has become increasingly involved with the master fund, raising questions as to whether he can ever truly distance himself.

People familiar with Howard’s thinking say he is “deeply involved” in the strategic direction of the firm but that the common goal is to create something that “outlives individuals”.

Ultimately, the decision on how well either firm will outlast their founders may come down not to the two men themselves, but to their backers.

“There are some funds where you stay with the key man and one day, when he retires, you retire with him,” said one rival to the two firms. “Not everything is repeatable.”

Job moves 

• Goldman Sachs has named David Dubner chief operating officer of global M&A. He was previously co-head of activism and shareholder advisory in the Americas.

• Ares Management partner Scott Graves has left to launch his own alternative asset management firm called Lane42 Investment Partners, with $2bn of capital commitments and a minority stake from Millennium Management. 

• White & Case has hired Rahul Rao as a partner for its competition practice in Washington. He was previously a deputy director of the Federal Trade Commission.

• ICR has hired Chuck Dohrenwend as a managing director to help the public relations group expand its work for private equity firms and their portfolio companies. He previously worked at Abernathy.

Smart reads

Space taskmaster Jeff Bezos is focused on his rocket maker Blue Origin, driving the company to adopt an Amazon-like ethos with job cuts and longer hours for workers, the FT reports. It’s all part of the rivalry with Elon Musk’s SpaceX.

Strategic shift For BlackRock, private asset ownership suddenly seems a lot more attractive than public company agitation, Lex writes. The Panama deal aligns with that shift.

Vape tycoon The world’s most popular vapes — Geekvape, Lost Mary and Elf Bar — all trace back to one mysterious billionaire in Shenzhen, Bloomberg writes.

News round-up

Gaming chat platform Discord in early talks with banks about public listing (FT)

Barclays ex-CEO Staley claimed he would never introduce family to a paedophile (FT)

Deloitte links office attendance to bonuses (FT)

BNP Paribas former top lawyer fined for slurs against colleagues (FT)

Judge denies Elon Musk’s attempt to block OpenAI’s conversion to for-profit entity (FT)

WPP invests in Stability AI in new technology tie-up (FT)

Pensions minister says schemes must invest more in UK (FT)

Microsoft’s $13bn OpenAI tie-up cleared by UK competition regulator (FT)

Bayer warns of third straight year of falling profits amid turnaround effort (FT)

Bank of England plans to ease leverage rules on UK lenders (FT)