Trump, BlackRock and a $23bn Panamanian jackpot | USAEMALL.com

One thing to start: Businesses have begun stockpiling materials, reviewing manufacturing footprints and preparing to raise prices as Donald Trump’s trade war has entered “uncharted territory” with sweeping tariffs on Canada, Mexico and China.

In today’s newsletter: 

• BlackRock takes a stake in the Panama Canal

• Private equity’s total assets drop

• Adnoc creates a new plastics giant

BlackRock’s $23bn deal in the Panama Canal

Along with Greenland and Canada, the Panama Canal has become a sort of fixation for Donald Trump. The US president loves to fashion himself a dealmaker, and he’s said — with varying degrees of seriousness — all three could be takeover targets.

And Trump can sort of, with some big asterisks, now claim a victory.

The Hong Kong-based owner of two major ports along the Panama Canal has agreed to sell its stake in the business to BlackRock as part of a deal that values those assets and dozens of other ports included in the transaction at nearly $23bn.

Trump’s election victory in November and his calls for the US to retake control of the canal prompted Hong Kong-based CK Hutchison, the owner of the two ports, to consider the sale.

What followed was an intense few weeks that brought CK Hutchison together with BlackRock, its private infrastructure investment arm Global Infrastructure Partners and Terminal Investment Limited, the shipping behemoth controlled by Italy’s secretive Aponte family.

To navigate the potential political fallout, BlackRock chief executive Larry Fink briefed senior leaders in the Trump administration, including the president, to secure their backing for the takeover, two people told the FT.

One of the people added that the consortium wouldn’t have gone forward with its bid if they believed the US government wouldn’t support the deal.

Let’s get to those asterisks. While Trump is getting a big American investment firm behind the ports, the real owner will be the hundreds of limited partners within GIP’s funds, which are drawn from all corners of the world.

But CK Hutchison doesn’t control the canal itself. The Panamanian government owns and operates it through the Panama Canal Authority.

So what’s BlackRock and its consortium getting?

It will own about 90 per cent of the controlling company of the two Panama ports, called Balboa and Cristóbal, as well as 80 per cent of CK Hutchison’s ports business, which owns 43 ports around the world.

(The remaining 20 per cent is held by PSA, a ports operator owned by Singapore’s Temasek.)

There’s perhaps another valuable aspect of the deal for BlackRock: Trump’s blessing. The investment giant has been the punch bag for Republican lawmakers over its diversity and sustainability efforts.

But being perceived as doing Trump a solid within his first 100 days of office and winning some praise might help shift that narrative, providing a boon to the asset manager’s other business lines.

When Trump eventually takes his victory lap, DD will be eyeing whether he provides an explicit endorsement to BlackRock.

Is the decline of private equity beginning?

The private equity industry just hit a grim milestone. Its total assets under management fell last year for the first time in decades.

DD’s Antoine Gara and Alexandra Heal report that industry AUM fell about 2 per cent to $4.7tn, according to Bain & Co’s annual report on the state of PE.

The figure begs the question of whether an industry that has minted countless billionaires and fuelled epic Wall Street conquests is entering a tame era.

Just as the mutual fund giants and commercial banking supermarkets before them, are PE giants on the path to commoditisation?

A few factors make the risk feel more real than ever before.

First off, the PE industry’s challenges are entirely of its own making. The AUM figure is a symptom of firms in aggregate not doing their primary job these days: making repeatable cash profits for their investors including pensions and endowments.

For the past three years, buyout groups have struggled to sell investments and return cash, with distributions about half historical averages. In 2024 the ratio of distributions to industry assets fell to 11 per cent, the lowest in a decade.

Investors have responded by refusing to commit new money until they get cash back from more than $3tn in ageing deals in the ground.

PE fundraising fell 23 per cent last year to $401bn. That wasn’t enough to replace the $468bn in cash that exited the industry as buyout groups finally began to sell assets.

“It was a brutal fundraising year,” Hugh MacArthur, chair of Bain & Co’s global private equity practice, told DD. It would take many more years for the PE industry to tide its investors over, he added.

Meanwhile, the fee rate on PE funds has fallen by about half over the past decade — a significant price cut — due to discounts and the rise of fee-free coinvestments.

And industry giants like Blackstone and Apollo Global Management are now pinning much of their future expansion hopes on lower-fee-paying retail investors.

BlackRock, the world’s largest asset manager, is also trying to create low cost private equity indices. If they happen, it might further spoil the party.

Abu Dhabi’s latest big deal

The Abu Dhabi National Oil Company (Adnoc) has shown that it can pull off megadeals. Slowly.

Late on Monday evening, Adnoc and Austria’s OMV announced a large and complex transaction that will create a new plastics giant worth more than $60bn.

However, the combination wasn’t a complete surprise because the framework for a deal had been announced publicly as far back as July 2023. At one point an agreement was less than 24 hours away before talks stalled around the start of 2024.

Ultimately, both sides and their bankers — OMV was advised by Rothschild & Co and Barclays, and Adnoc by Citigroup — revived the discussions to reach the finish line around two years later.

The deal will create a new company called Borouge Group International to specialise in polyolefins, a group of plastics derived from oil and gas that are present everywhere from shopping bags to car parts.

Adnoc and OMV will each own about 47 per cent of the company, which will be headquartered in Austria and listed in Abu Dhabi as part of a complex merging of various assets.

As part of the deal, the Abu Dhabi side will buy the $13.4bn North American group Nova Chemicals and add it to the new company.

“This deal was both a merger, and an acquisition,” said Khaled Salmeen, Adnoc’s head of downstream, explaining why it had taken time to finalise.

It’s the latest massive transaction to emerge from Adnoc’s investment team, coming a few months after Adnoc launched a €14.7bn offer for the German chemicals company Covestro.

The Covestro takeover came about 16 months after the talks were first revealed. So, also not the most rapid M&A transaction.

The two deals taken together are among the largest that Europe has seen in recent years. And for both the companies and the deal advisers, DD assumes that it paid to be patient.

Job moves 

• HSBC is replacing the chief executive of its UK business, announcing that longtime head Ian Stuart will take on a newly created role as group customer and culture director. He’ll step into the new role once the bank finds his replacement.

• Starbucks has hired Cathy Smith as chief financial officer. She joins from Nordstrom, where she held the same role.

• White & Case has hired Jonathan Polkes as co-head of its global litigation practice, and Stacy Nettleton and Adam Banks as partners. They all join from Weil Gotshal.

• Freshfields has hired Jessamy Gallagher and Stuart Rowson as partners for the firm’s global energy and infrastructure practice. They will be based in London, and both join from Paul Hastings.

Smart reads

Delaware’s future Elon Musk and other entrepreneurs have berated Delaware for having excessively punitive standards on M&A and corporate governance, Lex writes. Insiders are worried that the state will bend to companies’ demands.

Oval Office showdown The intensity and hostility of the clash between Donald Trump, JD Vance and Volodymyr Zelenskyy left many observers taken aback, Craig Coben writes for the FT. But for those who have spent careers in investment banking, the scene had a familiar ring.

Tether vs Circle Trump’s call to bring crypto into the mainstream has raised the stakes in a struggle between an Italian billionaire and his American foil, The Wall Street Journal reports. And the battle for crypto’s future begins.

News round-up

Apple launches legal challenge to UK ‘back door’ order (FT)

Google urges Trump DoJ to reverse course on breaking up company (Bloomberg)

BaFin fines Deutsche Bank €23mn for string of regulatory lapses (FT)

UK watchdog bans ex-Credit Suisse bankers over tuna bond bribes (FT)

Saudi Aramco chief says DeepSeek AI makes ‘big difference’ to operations (FT)

Starlink rival in talks to boost satellite services to Ukraine (FT)

UK asset manager Abrdn renames itself Aberdeen (FT)

Target warns Donald Trump’s tariffs could cut into profits (FT)

Chinese EV maker BYD raises $5.6bn in share sale to drive overseas expansion (FT)