The Maga Medicis

One scoop to start: Elon Musk’s artificial intelligence start-up xAI has pledged to expand its Colossus supercomputer tenfold to incorporate more than 1mn graphics processing units, in an effort to leap ahead of rivals such as Google, OpenAI and Anthropic.

In today’s newsletter:

• The Arkansas billionaire anointed UK ambassador

• Big Tech braces for new antitrust watchdog

• Mubadala steps up its ties to Milken

The UK’s new banking billionaire

US president-elect Donald Trump has nominated a somewhat unlikely ambassador to the United Kingdom, a press-shy multi-billionaire banker based in Arkansas.

Warren Stephens, scion of a banking dynasty that took its state’s most famous company Walmart public, is a mainstream Republican who didn’t always support Trump.

Stephens joins what stands to be the wealthiest administration in US history in nominal terms. It counts banking executive Howard Lutnick, hedge fund mogul Scott Bessent, private capital founder John Phelan and energy investor Chris Wright as key members.

He’ll be Trump’s eyes and ears in the UK, holding a pivotal diplomatic role just as the US contends with wars, trade disputes and the spectre of confrontation with China.

The ambassadorship to the Court of St James’s will also put him at the heart of one of the US’s longest and most important alliances — just as London’s status as a global financial centre is being tested.

Stephens, who’s worth $3.4bn, according to Forbes, is an emblem of how conservative dynasties in the US have seen their wealth soar from trends such as shale fracking and fast economic growth outside of star cities.

Stephens took control of his family’s investment bank in 2005 after the death of his father Jack, just as Wall Street entered a debt bubble that would nearly collapse the global financial system.

But while many banks collapsed in 2008 under hugely levered balance sheets, Stephens Inc, the firm founded by grandfather Witt during the Great Depression, survived thanks to its decision to carry debt of just two times its equity.

Afterwards, Stephens expanded into lucrative private equity deals — and into London where it’s presently advising the sale of local steakhouse chain Hawksmoor.

Stephens’ conservative traits mirror that of Beal Bank, led by multibillionaire Andrew Beal, one of the wealthiest backers of Trump-aligned political action committees.

Both Beal and Stephens have designed their unleveraged balance sheets to survive through financial washouts — essentially modern-day Medicis, albeit in less glamorous locales than Florence.

“Warren Stephens knows what it takes to build a business and create value,” said Paul Singer, founder and co-chief of Elliott Investment Management, told the FT. “He is a patriot and a thoroughly decent person. President-elect Trump could not have picked a better emissary to our closest ally.”

Dealmakers put champagne back on ice

DD told you. Repeatedly! Trump might be the author of the Art of the Deal, but he’s no fan of M&A. Neither is his deputy, JD Vance. So, don’t expect a boom in dealmaking — at least not an even one across sectors.

The president-elect has nominated Gail Slater, a top aide to Vance, to lead the Department of Justice’s antitrust division (as DD’s James Fontanella-Khan and the FT’s Stefania Palma predicted).

Slater is set to be an aggressive enforcer, operating in line with the progressive trustbusters of today — Lina Khan at the Federal Trade Commission and Jonathan Kanter at the DoJ.

Top dealmakers are worried. Slater is a protégé of Vance, who once praised Khan as “one of the few people in the Biden administration . . . doing a pretty good job.”

Ahead of the election, many on Wall Street told DD’s JFK that Harris was better for M&A than Trump. One dealmaker even said: “Implementing JD Vance’s policies would actually make Wall Street long for Lina Khan.”

Vance leads a new wave of Maga populists who attack anti-competitive practices by US corporations, view Big Tech as a threat to free speech, and blame it for hindering job growth while pushing leftist values. Slater shares this outlook.

Trump’s pick, an Oxford-educated lawyer who advised an Obama-era FTC commissioner, is known for her tough stance on Big Tech — and may also take a hard line on media and healthcare.

However, sources suggest she will be less interventionist in sectors strategic to the Trump administration. Deals aligned with “America First” priorities — such as those in energy, industrials, mining and supply chains — are more likely to proceed.

For the venture capitalists who backed Trump hoping for favours and Big Tech acquisitions to take out their overripened private bets, the cavalry may not be coming.

Mubadala Capital and Milkenworld

Mubadala Capital — an arm of Abu Dhabi’s state investment fund — is buying a 42 per cent stake in Silver Rock Financial, a Los Angeles-based credit investment specialist backed by “junk bond king” Michael Milken’s family office.

The deal’s an important sign of Mubadala’s ambitions to build a regional third-party private capital manager in the mould of Blackstone and Apollo. It also shows the group’s close ties to Milken.

Thursday’s deal cuts both ways. Mubadala Capital will pay with a mixture of cash and stock.

Existing equity owners of Silver Rock, including chief executive Carl Meyer and Milken’s family office, will take minority equity interests in Mubadala Capital, becoming its first outside equity investors. Separately, Mubadala Capital will also invest more than $1bn into Silver Rock’s funds.

Silver Rock is run by executives who used to manage Milken’s sprawling portfolio of private investments. The $10bn in assets credit specialist is the perfect target.

Mubadala, the $302bn in assets Abu Dhabi-based state investment fund, doesn’t want to just passively invest its capital any more. It has bigger ambitions: it established Mubadala Capital in 2011 to manage and guide decisions and deals for others.

Mubadala Capital chief executive Hani Barhoush told DD’s Antoine Gara in an interview that the deal’s a big milestone for the fund.

“Our strategic objective since we were established was to build a significant Abu Dhabi-based third-party asset manager,” he said. “We are pretty advanced, but there is still a long way to go and a lot of room to grow.”

There are already existing ties with Milken. His family office M-Cor is an investor in Mubadala Capital funds. Presently, Mubadala Capital manages $27bn — third party investors like Milken’s family offce account for two thirds of that plus the $9bn it manages for Mubadala.

Over the past 18 months, Mubadala Capital has hit the gas on dealmaking. It acquired a majority stake in Fortress Investment Group in May for about $3bn, and recently announced a C$12.1bn ($8.6bn) deal for CI Financial, a large asset manager.

Job moves

• Donald Trump nominated cryptocurrency advocate Paul Atkins to chair the US Securities and Exchange Commission. He must be confirmed by the Senate. 

• Ardea Partners, the boutique bank expanding in the UK, is set to add Houlihan Lokey’s Christian Kent as a partner in London, a source tells DD. Kent advises on deals in areas such as wealth management and professional services.

• Campari has named Simon Hunt as its new chief executive after Matteo Fantacchiotti abruptly resigned in September just six months into the job.

• Deutsche Bank’s private division has named James Whittaker as the head of UK and the Nordic region, expanding his coverage of just the UK, a source tells DD. 

• KKR has appointed Andrew Williams as an executive adviser. He was previously the chief executive of Halma. The private capital titan has also announced 41 managing directors.

Smart reads

Billion-dollar squirrel The Trump effect is fuelling crypto’s “memecoin” boom, with tokens based on viral moments outpacing bitcoin, the FT reports. Critics say they reflect the market’s over-exuberance.

Semiconductor superpower The Japanese government is backing a start-up that aims to upend the economics and geography of the microchip industry, the FT writes. Does it have a chance of success?

Cautionary tale An airline had grand dreams of a sprawling resort in Florida, Bloomberg writes. The reality is more like a nightmare.

News round-up

UnitedHealth executive shot dead in ‘targeted’ attack in New York (FT)

GM takes more than $5bn charge against China business (FT)

Private equity group Cerberus ordered to pay Sabadell €400mn (FT)

City minister warns FCA on ‘name and shame’ plans (FT)

Top Direct Line shareholders hold out for higher Aviva bid (FT)

Stellantis chief’s exit pay deal to be less than last year’s €36.5mn package (FT)

Canary Wharf bondholders sign off on £610mn refinancing (FT)

Deutsche Bank chief calls for relief on regulation and ‘rethink’ on tax (FT)