One thing to start: The London Stock Exchange Group is set to announce this morning a €4bn deal to sell the Milan stock exchange (pictured below) to rival Euronext, a move the UK group hopes will persuade EU competition regulators to approve its $27bn acquisition of data and trading group Refinitiv.
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The relentless rise of Mukesh Ambani
In a complicated year for dealmaking, one man stands out.
Mukesh Ambani hails from India, a country that isn’t known for its outsized presence in the world of international investments. But that hasn’t stopped Asia’s richest man and his sprawling Reliance Industries conglomerate.
The deal spree should, by now, be very familiar to DD readers. Starting in April, with much of the world in lockdown-induced confusion, Ambani sold stakes worth $20bn in his fast-growing digital unit Jio to 13 global investors from Facebook and Google to Silver Lake and Saudi Arabia’s PIF.
The pace was electric. The world’s most powerful technology companies and some of the world’s most aggressive investors were falling over themselves to get a small bite of Jio. So much so that a joke was making the rounds on how landing cards in India should come with a Jio term sheet.
(As we have highlighted before, the big winners on the advisory side were bankers at Morgan Stanley as well as law firms Davis Polk and Mumbai’s AZB & Partners).
Mukesh is the scion of a polyester-to -energy empire founded by his father Dhirubhai Ambani, 20th-century India’s most celebrated rags-to-riches story. But since he took over in 2005, Mukesh has set about building the business into a conglomerate fit for the 21st century.
Over the past four years, Jio has acquired close to 400m subscribers by offering cheap, high-speed data to hundreds of millions of Indians, helping to revolutionise the country’s digital economy.
The company is now expanding into an ever more ambitious array of areas, from ecommerce to 5G. “He wants to be Netflix, he wants to be Alibaba,” one former employee says. “He wants to be everything.”
Securing a global tech partner “was an absolute must for him,” said Anshuman Mishra, who advises Ambani on international dealmaking. “He needed a big play.”
Ambani is now snapping up billions more by flogging stakes in Reliance’s retail arm, India’s largest. With the combined might of international tech, private equity and sovereign investors behind him, Ambani is set to dominate the booming digital and consumer market in India.
In this deeply reported magazine feature by the FT’s Benjamin Parkin and Anjli Raval, we take you inside how he built his empire and where he is going next, with all the drama along the way — including the legendary family feuds, his 27-storey home which reportedly cost $1bn and soirées with Middle Eastern royals.
Yes, he even gave a life-sized elephant made out of silver to one of those royals.
Ambani’s relentless rise — helped by his towering ambition, financial clout and political nous — is also prompting consternation about whether the tycoon is on his way to creating a monopoly that will overrun competition and hurt Indian consumers in the long run.
“It’s very difficult to have another major player because of the intensity of what he does, the magnitude of what he does,” one person who knows Ambani says.
Yet Jio’s success is not assured. Despite its roaring headline growth, the share of active Jio customers has fallen over the past year, as this FT scoop examines. Jio also needs to show that it can make apps and products to rival those of competitors like Amazon.
Having raised his billions — and cut Reliance’s net debt from more than $20bn to zero in a matter of months — Ambani now needs to show his new investors he can make good on his bold tech claims.
Morgan Stanley can’t stop, won’t stop shopping for asset managers
It’s hard to think of a banker who’s had a better pandemic than James Gorman. And that’s allowing for the fact that the 62-year-old is the only Wall Street chief executive known to have contracted Covid-19.
On Thursday, fresh from completing his $13bn acquisition of ETrade, the Australian announced another big deal, this time the $7bn acquisition of investment manager Eaton Vance.
“It’s unusual to be able to pull off all of what’s on your Christmas wishlist,” Gorman told the FT’s Laura Noonan of his dealmaking spree, adding that he was “absolutely” done buying big things for now.
Gorman is paying a rich price for Eaton Vance (a near 50 per cent premium to where it was trading on Wednesday) but the MS boss isn’t apologising for singing a big cheque. “People who are hanging around trying to buy great companies cheaply never get anything done.”
The deal catapults MS’s investment management house into the trillion-dollar club. After the deal goes through it will have $1.2tn assets under management, up from $700bn, and a much larger distribution chain in the US.
For Gorman the transaction is the last big piece in a quest that started more than a decade ago, when, bloodied by the financial crisis, MS took its first steps towards its eventual $13.5bn takeover of Citigroup’s Smith Barney.
Buying ETrade was the second step that tilted the bank’s business away from its traditional trading and investment banking businesses and towards investment management. Eaton Vance is the latest key step towards becoming a dominant player in the asset management space.
The bold move allows Gorman to claim victory in his goal of making sure that “in very difficult times, Morgan Stanley is steady in the water”.
As Lex put it: There is a Blackstone (the shrewd private capital specialists with around $600bn in AUM) and there is BlackRock (the world’s largest asset manager, with about $7tn AUM). Now Morgan Stanley has stepped into the gap. Rivals are warned.
More on the Vatican and its investments
Is Pope Francis an Elton John fan?
We can’t say for sure, but what we do know is that a portfolio of Vatican charity assets under the control of a cardinal sacked by the Pope last month made a series of colourful investments over the past five years.
One of these investments was into a fund that helped finance the films Rocketman, the Elton John biopic, and latest in the Men in Black franchise.
According to the fund manager who made these investments, the Rocketman bet paid off handsomely, while Men in Black: International was a flop. The Pope, however, was less than pleased when he discovered the Holy See had gone to Hollywood, and last year “the Holy Father gave instructions to liquidate the fund”.
What then will Francis make of news that the same Vatican-controlled pot of money also bought investment products that contained derivatives betting on the fortunes of the US car rental company Hertz, which defaulted on its debts earlier this year?
Francis in 2018 described credit default swaps as “a ticking time bomb” and “unacceptable from an ethical point of view”.
You can read more about the Holy See’s lucky escape from a credit default swap disaster in this story by Miles Johnson and Robert Smith.
Fresh from launching a special purpose acquisition company, former US House of Representatives speaker Paul Ryan has joined Teneo as a senior adviser. Ryan also serves as a board member of the Fox Corporation.
Financial flourish DD thinks of itself as the best newsletter in global finance. But that doesn’t mean we don’t have favourite writers elsewhere. Here’s a good look at one of them, Matt Levine, who is great, even if he does frequently remind you that he went to Harvard for undergrad, Yale for law school and worked at Wachtell and Goldman Sachs before becoming a finance writer. (New York Times)
Loan sharks A controversial lending deal by Oaktree Capital Management has highlighted a conundrum facing leveraged loan managers. Desperate for higher returns amid a period of severely low interest rates, they’ve relinquished much of their legal rights over their investments. (Bloomberg)
Nikola on notice The revenue-less electric truck start-up is in a race to convince investors not to dump shares in the company before a lock-up from its June listing ends on November 30. (FT)
Instacart consults with banks ahead of potential IPO (FT)
IBM spins out infrastructure business in major shift towards cloud (FT)
TalkTalk shares rise after Toscafund’s takeover bid (FT)
Thai IPO set to raise $1.5bn as investors look past unrest (FT)
Football super-agent Jonathan Barnett’s Stellar Group sold to ICM (FT)
China’s Lufax files for US IPO against backdrop of rising tensions (FT)
Shareholders revolt over Restaurant Group’s CEO pay plans (FT)