The art of cross-border deals under Donald Trump

One short seller shuts down to start: Activist short seller Nathan Anderson, famous for his campaigns against Adani Group, Super Micro and Nikola, is shutting down his firm Hindenburg Research seven years after he founded it.

Plus a scoop: Ardian has raised the largest fund for buying stakes in ageing private equity funds and signalled it would be open to acquisitions as it increases its US business.

And another scoop: Citigroup is on course to spend more than £1bn on the overhaul of its Canary Wharf tower, a sign of the huge costs involved in upgrading older skyscrapers as banks try to push their employees back to the office.

In today’s newsletter:

• Cross-border deal diplomacy under Trump

• Brookfield notches a massive dividend recap

• Singapore deal attracts a British activist

Will cross-border deals land on ice?

Corporate dealmaking always involves a dose of politics.

Key politicians can make all the difference in championing deals through the regulatory process, or dragging them into bureaucratic nightmares.

With Donald Trump’s looming presidency, the political calculation for dealmakers will never have been more important — especially as he’s not afraid to use every lever available to get the deal he desires, the FT’s Adrienne Klasa and Aime Williams, and DD’s James Fontanella-Khan report.

Advisers and investors who have been speaking with people close to the president-elect said Trump’s determined to make sure that only foreign companies whose state is supportive of his agenda get approved to do deals.

And one governmental panel, in particular, is central to that equation: the Committee on Foreign Investment in the US, or Cfius. The nine-person group can help guide the president on whether deals should be allowed through or blocked based on national security concerns.

“Danish companies wanting to do a deal in the US might only be allowed to do so after Denmark agrees to hand over Greenland to the US,” said an M&A lawyer who has been looking into the matter closely.

The panel isn’t supposed to be a quid pro quo operation. But it has become increasingly politicised, first under Trump, and then during the past four years under Joe Biden, people familiar with the decisions told the FT.

Trump has big and often brazen demands for the rest of the world. He wants Nato members to increase their defence spending to as much as 5 per cent of GDP, and has threatened to levy tariffs on imports from Europe and other allies.

During his first presidency Trump tried to restrict ByteDance-owned TikTok in part through a Cfius review. And he also blocked Singapore-registered chipmaker Broadcom’s $142bn hostile takeover of rival Qualcomm — also based on Cfius recommendations.

One large investor said: “Trump is a dealmaker, and it’s not beyond him to use any tool to strike a favourable deal.”

Brookfield takes a chunky dividend

Here’s some catnip for investors in private equity who are strapped for cash: a colossal dividend recapitalisation.

Brookfield this week finalised a mammoth capital raising against one of its portfolio companies, the battery maker Clarios, allowing it to draw a $4.5bn dividend from the business.

It’s cash that will appeal to endowments and pension funds, which have been starved of distributions as private equity sits on a record number of unsold companies.

The dividend, funded by a $5bn bond and loan sale, ranks among the largest dividend recapitalisations ever completed by a leveraged buyout group, according to PitchBook LCD.

It’s a nice return for Brookfield, without having to exit the company.

The $4.5bn was about 1.6 times the original $2.9bn equity investment when Brookfield and its co-investors bought Clarios from industrial conglomerate Johnson Controls in 2019, said people briefed on the matter.

Brookfield considered selling a minority equity stake in Clarios to large investors such as sovereign wealth funds, but found that buoyant debt markets made the dividend an appealing way to return billions in cash while retaining full ownership.

Demand for the debt was so high that banks increased the size of the capital raising by $500mn to $5bn, money that was used to pay down some of Clarios’ existing debt.

It’s a trade rivals will be watching closely, especially on the heels of the multi-billion-dollar dividend recap of a company backed by Clayton Dubilier & Rice, Hellman & Friedman, BlackRock and GIC clinched last year.

Here’s the thinking: if an exit is unappealing and the business is performing, why not leverage it back up? And with markets wide open, now is certainly the time to do so.

British activist investors arrive in Singapore

Singapore has long prided itself on its business-friendly culture, opening its doors to the biggest global banks, wealth managers and fund groups.

But another financial community is also taking an interest: activist investors.

As with other Asian business centres, activists are being drawn to Singapore and looking to take advantage of thorny governance issues and promote minority shareholder rights, as well as picking apart the biggest conglomerates.

Asia had a record number of activist campaigns last year, according to Lazard, with 57 companies targeted, up from a previous high of 44 the year before. Among those businesses coming under pressure were SoftBank and Nissan.

In Singapore, British activist Palliser Capital is trying to disrupt a takeover by the city-state’s second-biggest bank, OCBC, of its oldest and biggest life insurer, Great Eastern.

Palliser has taken on several high-profile targets since its founders split from Elliott Management four years ago.

Palliser has sent letters to Great Eastern’s board — as well as the Monetary Authority of Singapore and the SGX stock exchange — saying minority shareholders are being treated unfairly by the insurer’s “highly complacent” board.

In the correspondence, reported on by the FT’s Owen Walker, Palliser argues: “Great Eastern’s seeming unwillingness to engage with us in any meaningful sense has added to our sense of unease and frustration and made us determined to ensure that the interests of Great Eastern’s remaining minority shareholders are safeguarded.”

Job moves

• Morgan Stanley has promoted Lily Mahdavi and Ben Teasdale to co-head its M&A team in the Americas, a source tells DD. The bank also promoted David Khayat to head of financial sponsors M&A.

• Leerink Partners has hired Eric Stewart to lead a new office in London focused on healthcare deals, a source tells DD. Stewart joins from Lazard, and is one of six new staffers as Leerink hires up following its separation from Silicon Valley Bank.

• BDT & MSD Partners has hired Greg Olafson as president, co-head of global credit and co-chief investment officer. Olafson joins from Goldman Sachs, where he led private credit within the bank’s asset management business.

• KKR has appointed former Sky CEO Jeremy Darroch as an executive adviser to work on European private equity investments.

Smart reads

Zuck’s cravenness Changes to the fact-checking process at Meta make it look like founder Mark Zuckerberg is caving in to US president-elect Donald Trump, the FT’s Jemima Kelly writes.

Waning patience Murray Auchincloss promised he knew “exactly what we need to do to grow the value of BP” when he was formally appointed chief executive last year, the FT writes. So far, it hasn’t worked.

Dirty power Berkshire Hathaway’s coal plants emit more nitrogen oxide gases than any other coal-fired fleet in the country, a Reuters investigation finds. The company has resisted efforts by regulators to make plants cleaners.

News round-up

Live blog: US bank shares jump as investors cheer bumper results (FT)

Donald Trump’s policy pledges unleashing ‘animal spirits’, Wall Street bankers say (FT)

Apollo gives chief Marc Rowan five more years (FT)

Gucci owner to sell stakes in glitzy Paris properties to private equity firm Ardian (FT)

BlackRock reports record revenues as push into private markets fuels growth hopes (FT)

Continental Europe avoiding London’s listings ‘exodus’, says Euronext chief (FT)

Observer newspaper deal attracts government scrutiny (FT)

Lloyds to cut 500 jobs and close two offices (FT)

UK artificial intelligence start-up Synthesia hits $2bn valuation (FT)