The next Millennium’s slow start

One scoop to start: Diageo chief executive Debra Crew has quit with immediate effect, confirming an earlier report by the FT that she was to be replaced. The Guinness and Johnnie Walker owner is struggling with falling alcohol sales and waning investor confidence.

And another thing: Canada’s Alimentation Couche-Tard has withdrawn its record-breaking $46bn proposal to acquire Japan’s Seven & i Holdings, bringing an end to its year-long campaign to pull the 7-Eleven owner to the negotiating table on friendly terms.

In today’s newsletter:

The (near) impossible task of starting a multi-strat fund

In the world of hedge funds, Bobby Jain is near royalty. 

Jain first made his name as one of the best-connected bankers at Credit Suisse, and most recently worked as the co-chief investment officer of Millennium Management besides Izzy Englander.

So when Jain set out to launch a new multi-strategy hedge fund last year, he was well placed to succeed.

Even at a tough time for fundraising, Jain Global was able to pull in $5.3bn in the biggest hedge fund launch since 2018 (though well short of an initial target of $8bn-$10bn).

One year on though, Jain’s results show just how hard it is to launch a rival to hedge fund giants such as Millennium and Citadel, DD’s Amelia Pollard and the FT’s Costas Mourselas report.

The fund has gained just 2.7 per cent in the past 12 months. That puts it behind the dominant duo of Citadel and Millennium on 9.3 per cent and 9.9 per cent, respectively. 

But since the start of the year, it’s done better, raking in as much as Citadel with 2.2 per cent and falling just slightly behind Millennium. 

Jain gave himself an uphill climb by launching with seven strategies on day one.

Multi-manager platforms are extremely expensive businesses to run: you need cutting-edge infrastructure to support trading and risk controls, plus there’s intense competition for talent. 

Even when Jain found the right portfolio managers, they were sometimes locked up in two-year non-compete agreements, keeping them on the sidelines for the firm’s first months of trading.

Drawing and investing all of its $5bn also took a year, which burned a hole in Jain’s pocket. 

It bore the costs of a $5bn firm, without having invested all of its capital. “You have all the drag without the performance benefits,” said one person close to the firm’s strategy.

Investors don’t seem concerned. “The first year for us was about setting the firm up for the future,” said one. 

But ultimately, returns are everything in hedge fund land, and the investor added that those figures would soon matter. 

“The real race is starting for them now.”

Citigroup’s rising investment banking ambitions

Citigroup’s new head of banking, Viswas Raghavan, in recent months celebrated the first anniversary in his new role.

Part of the belated festivities appears to have included snapping up his former colleagues from his previous employer JPMorgan, now that restrictions on his ability to recruit from his old shop have lapsed. 

Raghavan, who had previously run investment banking at JPMorgan, has now hired at least five senior bankers from there, including two senior equity capital markets bankers announced this week.

In an internal memo publicised on Wednesday, Citi said it had hired the two bankers responsible for JPMorgan’s international equity capital markets business.

Aloke Gupte will become global co-head of ECM in London, while Alex Watkins will lead technology financing from San Francisco.

The pair join Drago Rajkovic, who jumped ship to co-head M&A at Citi, and Sidharth Punshi, who now leads Citi’s financial sponsors and alternative assets group across Emea.

Those hires followed Achintya Mangla, a 22-year JPMorgan veteran who joined Citi in a newly established role as head of financing for investment banking.

DD’s main question is if Raghavan has been wining and dining his prospective hires in his New York penthouse — a property once rented by Bad Bunny, according to the New York Post.

The hires haven’t all been one-way traffic: JPMorgan recently recruited senior private equity bankers Anthony Diamandakis and Theodoros Giatrakos from Citi.

Raghavan has also looked outside JPMorgan to beef up the ranks, with Citi having hired James Manson-Bahr from Morgan Stanley and Ed Sankey from HSBC, who are both joining its equity capital markets team in senior roles in London.  

There have been some early signs of success. Citi’s investment banking fees rose 13 per cent year on year in the second quarter, with the bank advising on high-profile deals, such as Nippon Steel’s $15bn acquisition of US Steel.  

Yet, Raghavan still has a daunting task if he wants to snag more business from the dominant investment banks.

Second-quarter earnings this week showed JPMorgan had earned $2.5bn in investment banking fees, more than double Citi’s figure. 

The five stages of Wall Street’s Zohran grief

First came denial. Then came anger. That was followed by backroom bargaining as masters of the universe plunged into the depths of despondency and searched for “anyone but Mamdani” for New York mayor.

Now some Wall Street titans are — dare we say it — learning to live with the reality that the man Jamie Dimon labelled a “Marxist” stands a pretty good chance of becoming the next mayor.

That’s after Democratic party nominee Zohran Mamdani faced his Wall Street critics on Tuesday.

The 33-year-old was quizzed by a crowd of about 100 business executives on his fiscal policies and his views on the Israel-Palestine conflict, for which he’s been accused of antisemitism.

“The meeting was a net positive,” said one top finance executive in the room.

“He listened, he was genuinely wanting to engage and ultimately gave most people present a sense that he cares about New York and wants to be the mayor of all New Yorkers.” 

Mamdani’s defeat of former New York governor Andrew Cuomo in the Democratic primary shocked the party establishment. On Wall Street, Mamdani’s proposals on tax and welfare went down like a ton of bricks. 

The candidate’s plans include city-run grocery stores, freezes on rents as well as increases to the corporate tax rate. He also wants to increase the city income tax on those who earn $1mn or more by two percentage points. 

Financiers critical of Mamdani said he fell short of reassuring them about his intentions at the meeting, but admitted that he came across as a likeable candidate. 

“Do I or any of my friends want him to win? The answer is no. Emphatically no. But I think there is some room to work with him,” said another top Wall Street financier. “I don’t think we have another option.”

But let’s not get ahead of ourselves. Mamdani’s geniality is unlikely to sway the bulk of New York’s corporate elite.

Many still view him as a danger, and for now, it seems they’re playing a waiting game to see if a plausible challenger emerges.

“Everybody is watching the movie for a bit to see how things develop and then go from there,” said one New York banker.

Job moves

• Bain Capital has hired Paul Kelly as chief operating officer of its credit business. He joins from DWS, where he led the global alternatives business.

• AIG has named former Lloyd’s of London CEO John Neal as president. He had previously been set to join AIG rival Aon.

• Hewlett Packard Enterprise has appointed former Citrix CEO Robert Calderoni as a director and chair of its newly formed strategy committee, after agreeing to work with activist investor Elliott Management.

• ICR has appointed Gabriel Hasson as its global head of governance and shareholder advisory. He joins from BlackRock.

Smart reads

Defence spending Just last year, Europe’s venture capitalists were moping about the region’s lack of world-class AI start-ups, the FT’s Tim Bradshaw writes. Now, they’re feverishly excited about military tech.

Smart listen The FT’s Stephen Foley has delivered a series of scoops that reveal the extent of BCG’s work in Gaza. On Behind the Money, he breaks down the story.

Goldman’s success Goldman Sachs is in rude health, Bloomberg’s Paul Davies writes. That’s been driven in part by its overtures to hedge fund clients.

News round-up

OpenAI to take cut of ChatGPT shopping sales in hunt for revenues (FT)

Goldman Sachs profits jump 22% after investment banking gains (FT)

Morgan Stanley says wealthy clients ‘bought the dip’ amid tariff turmoil (FT)

Barclays fined £42mn for failed money laundering checks (FT)

Japanese pharma executive sentenced to 3.5 years in China for espionage (FT)

‘Amazon of guns’ backed by Donald Trump Jr sinks on stock market debut (FT)

Stellantis to end development of hydrogen vehicles to focus on EVs (FT)

UK insurance industry wins lower capital requirements for in-house risk managers (FT)

‘What reforms?’ City leaders underwhelmed by Rachel Reeves’ financial strategy (FT)

Trump trade rep pushes defence start-ups to fill manufacturing gap (FT)