One scoop to start: An activist firm launched by an alumnus of Elliott Management is calling for the break-up of Viasat, a satellite broadband provider that competes with Elon Musk’s Starlink.
Another scoop: Goldman Sachs is poised to buy into an ice cream maker at a €15bn valuation, backing a deal that would enable French private equity house PAI to complete one of the biggest transactions of its kind.
And an exclusive interview: Marc Lipschultz, who built Blue Owl into one of the largest listed private capital groups, has warned of “manic” levels of activity in the secondaries market, as capital floods into the sector.
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In today’s newsletter:
Figma’s antitrust nightmare turns into a massive windfall
When Lina Khan and Jonathan Kanter helped to prevent Figma from selling itself to Adobe for $20bn in 2022, there were howls in Silicon Valley about how Joe Biden’s trustbusters were over-reaching and harming the venture capital ecosystem.
Fast-forward a few years and Khan and Kanter may wind up spurring a recovery in the industry after Figma went public on Thursday and traded at a near-$70bn valuation.
The San Francisco-based company rallied 250 per cent to $115.50 a share as it started life on public markets, the DD’s George Hammond and the FT’s George Steer reported.
Figma’s IPO will begin to crystallise a massive windfall for the VC industry, which is just beginning to return cash to investors for the first time in three years. It follows a series of IPOs such as CoreWeave, stablecoin issuer Circle and the pending sale of Wiz to Alphabet.
Early Figma investors such as Index Ventures, Iconiq, Sequoia and Greenoaks are among the big winners of the IPO.
The deal works out nicely for co-founder and CEO Dylan Field, who will retain control of the company through super-voting shares.
One lingering question on Thursday: did underwriters Morgan Stanley, Goldman Sachs, Allen & Company and JPMorgan price the oversubscribed IPO correctly? Figma’s $33-per-share IPO price was less than a third of the value it wound up trading at.
Bill Gurley, a longtime scourge of underwriters who regularly criticised bankers for leaving money on the table in the hot IPOs of the 2021 bubble, has resurfaced with his old saw.
“With $FIG we have another massive ‘POP’ highlighting the gross inefficiency in the modern IPO process,” Gurley wrote on X.
DD will take the barb as a sign of healing for equity capital markets and hope Figma performs better than the crop of 2021 listings, many of which “popped” and then sank like a stone or even went bust.
A bloody nose for Saks Global’s public creditors
Private credit gets a lot of flak these days, but the situation unfolding at luxury group Saks Global, where debt issued in December is already trading at less than 40 cents on the dollar, might give some lenders cause for a little schadenfreude.
Richard Baker was hailed as a genius when his Hudson’s Bay Company bought what was then Saks Fifth Avenue in 2013, adding to a trove of ritzy department stores he scooped up in the global financial crisis.
But times have changed. Saks is reeling from the slump in luxury department store spending and an avalanche of debt it assumed to acquire Neiman Marcus last year.
The public creditors who lent money for the acquisition — which was underwritten by investment bank Jefferies — are being pushed to accept haircuts of up to 25 per cent on the debt, all while stumping up hundreds of millions of dollars for new borrowing.
At the heart of the problem is a frenzy to lend in the $3tn leveraged loan and junk bond market.
Too much money and too few new deals have allowed high-risk companies to dictate the terms of loans and issue aggressive financing packages with few covenants.
That leaves investors with weaker protections when companies come under pressure.
When the Saks debt issuance took place last year, public debt investors lined up for a piece of the pie, drawn by a tantalising 11 per cent coupon and equity investments from Amazon and Salesforce that valued Saks at about $8bn.
The demand allowed Saks to insert loopholes into critical protections for lenders that were later used against them. DD’s Eric Platt has a detailed yarn on the debt package’s shortcomings, which has left creditors to tussle over its restructuring.
The drama has given some masters of the private credit universe ammunition to turn the tables on critiques about their underwriting that have come from the banking system.
After many warnings about a private debt bubble from bank chieftains, it’s an aggressive bank loan that has rocked the leveraged finance world.
Speaking at a Moody’s conference last month, John Zito, an executive at private capital group Apollo, namechecked Saks specifically and said: “We talk a lot about private credit and risk but we never talk about public credit and risk.”
Chevron eyes the Big Oil crown
For most of its nearly 150-year history, Chevron has lived in the shadow of its larger rival ExxonMobil.
But after a tricky two years that forced it to announce job cuts of up to a fifth of its workforce, Chevron chief Mike Wirth appears ready to take the gloves off and challenge Exxon’s dominance, reports the FT’s Jamie Smyth.
Chevron scored a big win recently, closing a $53bn takeover of Hess that had been stalled by a 20-month arbitration battle with Exxon.
Exxon had argued it had first right of refusal to a lucrative joint venture in Guyana with Hess; the courts dismissed the case.
Hess’s 30 per cent stake in Guyana’s Stabroek oilfield is one of the most prized oil assets on Earth. The project was developed by Exxon in record time, holds up to $1tn in reserves and has a break-even price of less than $30 per barrel.
With both Chevron and Exxon due to report results on Friday, investors will be scrutinising every word from Wirth and his counterpart, Darren Woods, to determine which company can provide the best returns and growth prospects.
Chevron is certainly on a roll.
It’s stepped up international exploration and last week was handed a victory by the Trump administration, which restored its licence to operate in Venezuela.
But analysts say the only way it can close the $160bn gap in market capitalisation with Exxon is through more large-scale M&A.
Possible targets include Occidental Petroleum, Diamondback and BP — or more likely, select parts of BP.
Of course, as Woods demonstrated by forcing arbitration over the Hess deal, Exxon is unlikely to let Chevron take its crown easily.
Further skirmishes on the oil patch seem inevitable.
Job moves
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Latham & Watkins has hired David Marriott as a partner in its antitrust and litigation groups, DD reports. It’s the latest in a string of high profile corporate lateral hires for the firm. Marriott was previously with Cravath, Swaine & Moore, where his clients included Illumina and Amgen.
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Wells Fargo said it planned to appoint chief executive Charlie Scharf as chair. Scharf will retain his role as CEO.
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Thoma Bravo has named Jeff Levin as its head of credit. He was previously head of direct lending and co-head of North American private credit at Morgan Stanley.
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Bluestone Equity Partners has appointed Mark Cho as chief operating officer and general counsel. He was previously chief operating officer at Willow Tree Credit Partners.
Smart reads
Chip race Tech groups have spent vast sums on data centres as they rush to build the best AI models. The FT’s visual data team takes you inside the story.
Tunnel flop A decade ago Elon Musk told of how his Boring Company’s tunnels would revolutionise travel in cities. The reality on the ground today is far less exciting, Bloomberg reports.
La la land The FT’s latest city guide takes you on a tour of Los Angeles. Explore the best food, culture and architecture in the City of Angels.
News round-up
Brookfield strikes £2.4bn deal to buy London-listed insurer Just Group (FT)
Trump demands drug companies lower prices before end of September (FT)
De Beers sale is preferred option amid Botswana takeover fears, Anglo chief says (FT)
Schroders’ founding family has no intention to sell, says CEO (FT)
Jaguar Land Rover chief behind rebrand to retire (FT)
Thematic ETFs disappoint as market suffers from hype (FT)
Microsoft’s software rules harming cloud competitors, CMA panel says (FT)
Trump asks bank CEOs to pitch Fannie, Freddie stock offering (Bloomberg)
Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, Alexandra Heal and Robert Smith in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard, Maria Heeter, Kaye Wiggins, Oliver Barnes, Jamie John and Hannah Pedone in New York, George Hammond and Tabby Kinder in San Francisco, Arjun Neil Alim in Hong Kong. Please send feedback to due.diligence@ft.com
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