Wed. Jul 6th, 2022

One thing to start: Wyelands Bank has announced that it has “no viable future” and that virtually all of its loans are in default, nearly a year after regulators forced Sanjeev Gupta’s stricken lender to return money to British savers.

© Charlie Bibby / FT

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KKR and CPPIB’s tabloid nightmare

Money, power, reputation and truth are among the themes that run through DD.

The story of Axel Springer‘s #MeToo moment, based on a months-long investigation by the FT’s Erika Solomon and Olaf Storbeck and DD’s Kaye Wiggins and Arash Massoudi, has all of them and more.

Axel Springer, the Berlin-based publisher whose titles include tabloid Picture and broadsheet The worldhas big ambitions, and even bigger financial backers.

Mathias Döpfner and Julian Reichelt © FT montage / Bloomberg / Tristar Media / WireImage

Taken private with the backing of KKR and the Canada Pension Plan Investment Board in 2019, the publisher is trying to become “the leading digital media company of the democratic world”. It has bought Politico and Insider Incthe publisher of Business Insiderin recent years, after losing out to Nikkei in the race to buy the Financial Times in 2015.

Axel Springer connects a cast of powerful and well-known characters including KKR’s Henry Kravisformer CIA head David Petraeusbillionaire Palantir co-founder Alex Karpand Axel’s chief executive Mathias Döpfnerwho also sits on the board of Netflix. Kravis himself sits on Axel Springer’s shareholder committee, where the biggest decisions are discussed.

A quick precisely: last year an external investigation by law firm Freshfields found that Julian Reicheltthe powerful editor of Bild who was seen as Döpfner’s “political alter ego”, abused his power by promoting and demoting young female colleagues he’d slept with.

Law firm Freshfields’ team was led by former criminal prosecutor Simone Kämpfer, a white-collar crime expert © Action Press / Shutterstock

But Freshfields’ probe found he had committed no criminal wrongdoing nor broken company rules and he was allowed to return to his job following a brief suspension. He was only fired months later after The New York Times published details of some of the allegations against him just as Axel Springer was embarking on its largest deal yet – the near- $ 1bn purchase of Politico.

The FT’s reporting shows that where women saw wrongdoing, some within Axel Springer saw a conspiracy against a controversial editor.

The publisher threatened to sue the woman whose case the NYT reported on, while Döpfner and senior staff privately worked on a counter-investigation to try to expose a “conspiracy”, believing his company was “being punished by the leftist bubble, which pursues its views with great intolerance ”.

Döpfner is in a powerful position at Axel Springer. He controls 44 per cent of the voting rights, chairs the shareholder committee and – as chief executive – heads up day-to-day operations. But KKR and CPPIB’s executives are also enmeshed in the company’s decision-making and oversight committees, and were well aware of Freshfields’ findings.

Both would presumably have been aware that the leaders of multiple large US institutions, most recently CNN‘s longtime boss, Jeff Zuckerhave resigned after failing to disclose romantic relationships with colleagues.

CPPIB’s own former chief executive, Mark Wisemanwas ousted from his subsequent role at BlackRock in 2019 over a romantic affair with a colleague.

Both KKR and CPPIB say they play an active role in social and governance issues at the companies they back.

Yet neither provided direct answers to detailed questions sent by the FT.

And both supported the return to the office of a man found to have abused his power – at least, that is, until details were made public.

The story contains a wild series of twists and turns and we strongly recommend you read the whole thing.

Masayoshi Son: who needs a $ 66bn mega-deal?

When life sends you on a wild-goose chase, try to find some golden eggs.

Late on Monday, US semiconductor heavyweight Nvidia abandoned its $ 66bn takeover of the SoftBank-owned UK chipmaking champion Arm after regulators in the US, UK and EU flagged serious antitrust concerns surrounding the deal.

SoftBank’s Masayoshi Sonwho once compared the Japanese conglomerate’s business model to a goose laying “golden eggs”, appears to have a back-up plan.

“Arm is about to enter its golden age,” he told investors on Tuesday, adding that “deep down” he had wished to avoid the sale “as much as possible”. Uh-huh.

SoftBank’s Masayoshi Son © FT montage / Bloomberg

It’s a surprising reversal from Son, who has been working around the clock for the past 18 months with his leadership team in an attempt to offload the UK-based chip designer to an eager Nvidia.

The Japanese group intends to list Arm in New York as it looks to reclaim some of the windfall from what would have been the largest ever deal in the chip sector, dashing UK politicians’ dreams of relisting the chipmaker on the London stock market in the process.

SoftBank’s New York ambitions have already caused a stir in the UK, as the country scrambles to attract new listings and retain its hometown tech heroes within its borders.

Watch closely as British politicians begin to shout and holler to force a London listing.

© Bloomberg

But the logic for SoftBank to list Arm in the US is clear. The UK market routinely churns out lower tech valuations than the US, no matter how much it tries to loosen its listings regime.

And anyway, Son has to make a big impact if he wants to turn the collapsed mega-deal into a golden opportunity. It’s not easy egg-hunting in a blizzard.

Reddit shoots for the moon

The self-declared “front page of the internet” is becoming a hotly discussed topic on its own platform, as the host to the riotous r / WallStreetBets trading forum that helped fuel last year memestock mania readies for its own stock market debut.

To make itself more appealing to investors – beyond the ones that frequent its site – the company is exploring a partnership deal with WPPthe world’s biggest ad agency, two people with direct knowledge of the talks told the FT’s Hannah Murphy.

The idea is to build up digital advertising deals to underpin its future business.

But there’s one big problem: despite boasting a loyal audience of 330mn monthly users, some of its communities have a tendency to stir up controversy. Such content moderation issues have already landed tech groups including Facebook and Spotify in difficult positions.

If the platform can successfully stamp out the racism and conspiracy theories that proliferate on its pages and woo advertisers with loyal communities across gaming, crypto and more, keyboard warriors and traditional investors alike might be inclined to partake in the listing.

Job moves

John Foley, who has led Peloton since its foundation a decade ago, will become executive chair © Bloomberg

  • Peloton co-founder John Foley is stepping down as the fitness group’s chief executive to become executive chair following pressure from activists and potential bidders. He will be replaced by Barry McCarthythe former finance chief of Spotify and Netflix.

  • Sixth Street has appointed Nobel laureate and University of California, Berkeleyprofessor Jennifer Doudna as chief science adviser. She will continue to lead UC Berkeley’s Innovative Genomics Institute and the Doudna Lab.

  • Lakestar has hired former UK Minister for universities, science, research and innovation Sam Gyimah as a venture partner.

  • David Hutchinson is rejoining AlixPartners as a managing director, based in London. He worked at the turnaround consultancy from 2004 to 2018 before joining Boston Consulting Group.

  • Weil, Gotshal & Manges has hired Robert Rizzo as a partner in its private equity practice, based in New York.

  • Wilson Sonsini has hired Richard Goold as a corporate partner in its London office. He was previously global head of tech law for Ernst & Young.

Smart reads

Courtroom circus Illegal outside deals, strip club escapades on the company dollar, allegations of embezzlement and fraud – the trial of Switzerland’s former “Banker of the Year” will be one for the books, The New York Times writes.

Flipping houses An influx of private equity landlords in the US are bringing the same cost-slashing, profit-squeezing methods once reserved for corporate America into the homes of everyday citizens, ProPublica reports.

Call my agent! The hit French show is one of many popular European programs that big streaming groups like Netflix, Disney and Amazon will have to worry about if EU regulators tighten their grip on the global platforms.

News round-up

Sequoia and Silver Lake fund crypto infrastructure start-ups (FT)

France’s Iliad bids for Vodafone Italian business (FT)

BNP lifts payout target after annual profits jump (FT + Lex)

BP rejects calls for UK windfall tax after biggest profits in eight years (FT)

EQT readies $ 3.4bn sale of French water services firm Saur (Reuters)

Microsoft considers pursuing a deal for cyber security firm Mandiant (Bloomberg)

Former KPMG auditors say regulator failed to let them respond to Carillion claims (FT)

Wall Street learns to relax about returning to the office (FT)

India scales back corporate overhaul plans (FT Opinion)

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