Private capital’s consolidation fever

One scoop to start: More than a dozen politicians and former policymakers have called on the UK’s competition watchdog to launch a “full review” of Netflix’s $83bn bid for Warner Bros Discovery, even as the regulator comes under pressure to take a more business-friendly approach.

Another scoop: Ford and General Motors are negotiating a potential lifeline for First Brands Group as the bankrupt car-parts supplier races to raise additional money in order to buy time to sell itself.

And one last thing: Private credit firms sold a record amount of debt to themselves last year as the buyout sector’s slowdown pushed them to find new ways to generate cash from loans to companies owned by private equity.

In today’s newsletter: 

• The private capital roll-up

• Cantor’s “America first” mandates

• The “Czech Sphinx’s” next move

Private capital groups make deals — with each other

The private capital industry first emerged as a breaker-up of behemoths, as buyout firms such as KKR bought and dismantled conglomerates such as biscuit and tobacco maker RJR Nabisco. 

Those firms are now, of course, the ultimate conglomerates, with their funds not only owning but now also lending to hundreds of companies that employ people around the world. 

Now, in further contrast to the sector’s cudgel-like beginnings, a long-predicted wave of consolidation among the firms themselves appears to be gathering momentum.

On Monday CVC, the €200bn-in-assets European buyout beast that listed in April 2024, finally completed its long quest to buy a US credit firm. 

CVC will pay up to $1.6bn for New York lender Marathon Asset Management, with $24bn in assets. It comes after the Amsterdam-listed group’s other unsuccessful talks to buy more high-profile US lenders such as HPS, which eventually sold itself to BlackRock, and Golub Capital. 

It may not be a coincidence that CVC announced its deal just two working days, and probably a frantic weekend, after its closest peer announced a far bigger acquisition. Stockholm-listed EQT will pay up to $3.7bn for British group Coller Capital, a trader in private capital fund stakes that manages nearly $50bn in assets.

KKR is also in the process of buying the Texas-based sports investor Arctos in a deal that will push the private capital group into the market for second-hand fund stakes, the FT first reported in December. 

A number of factors are driving the M&A fever.

Private equity fundraising has fallen in recent years. Smaller asset managers, which easily pulled in funds in the bygone era of stable geopolitics and low interest rates, are now scrambling to sell themselves to the biggest firms that can offer products across private equity, private credit, real estate, infrastructure and the rest. 

The industry is seized by a conviction that squeezed pension plans want to do due diligence on fewer, potentially more reliable managers.

There’s also the succession issue, as founders who came of age when the private capital industry was still a baby start to think about retirement. 

Take Jeremy Coller, who held 100 per cent of the equity in his eponymous group until just a few years ago and did not bring up a clear successor in the years before signing with EQT on Thursday. 

Listed private capital firms are under constant pressure to grow their assets under management to bring in predictable management fee revenue growth for their shareholders.

Plus, their escalating push into the retail and insurance markets is adding to their wish to diversify into more types of products.

Cantor rides the wave of Trump-linked deals

The investment bank once led by US commerce secretary Howard Lutnick has been seizing on the opportunities presented by the Trump administration’s agenda. 

Cantor Fitzgerald, now run by Lutnick’s sons, has advised on Trump Media & Technology Group’s Bitcoin treasury deal and the IPO of Fermi America, the data centre real estate start-up with close ties to the Trump administration. 

Over the weekend DD scooped yet another deal in which Cantor has landed work advising Trump-adjacent companies. 

The US government is investing $1.6bn in USA Rare Earth, a publicly traded Oklahoma-based miner, and taking a 10 per cent stake in the company. The miner confirmed the deal on Monday after the FT report.

A condition of the government investment in USA Rare Earth was that the company raise at least an additional $500mn from investors. It ended up raising more than $1bn because of high demand for the financing deal.

Cantor did not play a role in advising on the US government investment in the company. But USA Rare Earth tapped Cantor to raise fresh equity financing from other investors. The company also sought advice from Cantor when it went public via a blank-cheque vehicle in March last year.

It’s the latest in a series of deals where the Trump administration has taken stakes in companies in sectors viewed as critical to US national security.

Last year, the Trump administration invested in at least six minerals companies, including MP Materials, Trilogy Metals and Lithium Americas. It also has a stake in Intel and a so-called golden share in US Steel. 

Daniel Křetínský expands his business empire

The “Czech Sphinx” is on the hunt again.

After taking a stake in oil major TotalEnergies late last year, billionaire investor Daniel Křetínský on Monday announced a friendly takeover for French electronics retailer Fnac Darty.

The offer didn’t come as a big surprise to Fnac’s board: Křetínský is already the company’s largest shareholder with a 28.5 per cent stake.

The Czech businessman built his fortune in energy, but has since broadened his investments into media, retail and logistics across Europe. He’s keen to add the French company to a portfolio that includes the UK’s Royal Mail, stakes in Sainsbury’s and West Ham United football club, and food retailer Casino.

Fnac Darty’s board welcomed the offer “unanimously”, no doubt encouraged by the 19 per cent premium Křetínský was offering investors over Fnac Darty’s closing share price on Friday night as he tries to take his stake over 50 per cent.

Křetínský said he was committed to supporting Fnac’s management with his “friendly offer” while “providing an attractive liquidity opportunity to shareholders”.

The offer values the company at €1.1bn and sent the shares up 17 per cent for a market value of €1.05bn. While the prospective deal requires regulatory approval, it looks likely that the avowed Francophile will soon be adding another French asset to his growing collection.

Job moves

• Goldman Sachs has named seven partners from its asset and wealth management group to the bank’s management committee.

• UK fintech Monzo’s board ousted its chief executive TS Anil last year and replaced him with Diana Layfield who will take over in February. Now Anil is set to take a position on the board, the FT reports in a deep dive on the neobank’s boardroom battle.

• The Boots Group chief executive Ornella Barra is stepping down and will replace Stefano Pessina as board chair. Anthony Hemmerdinger, managing director of Boots UK and Ireland, will assume an expanded role.

• Babcock International head David Lockwood will retire at the end of this year. He will be succeeded by Harry Holt, head of Babcock’s nuclear business.

• Davis Polk has hired Brian Grieve as a tax partner in New York. He joins from Paul Weiss.

Smart reads

Staying quiet Bank executives are riding high in a friendly policy environment, the FT reports, but remain wary of crossing US President Donald Trump. Jamie Dimon and Brian Moynihan have seen how that goes.

Critical faculties AI has entered the boardroom but won’t be any replacement for human judgment — at least for now, writes Blair Effron of Centerview Partners for the New York Times.

Offshore empire A sanctioned Iranian banker has built a sprawling portfolio of properties across Europe, the FT reports. The luxury holdings include a Mallorca golf resort, a stake in an Austrian ski resort and a German shopping centre.

News round-up

Nvidia invests $2bn in CoreWeave in new data centre push (FT)

Lloyds fined for opening bank account for ally of Vladimir Putin (FT)

FTSE Russell aims to ease path for overseas groups to join City’s blue-chip index (FT)

Former Citigroup executive sues bank over handling of sexual harassment claims (FT)

Trading 212 sold crypto-linked securities without authorisation (FT)

Spire Healthcare shares jump almost 20% on sale talks with buyout groups (FT)

Rheinmetall and OHB in talks over Starlink-style service for German army (FT)