One thing to start from the world of football: Italian club Inter Milan, which is owned by China’s Suning, is in talks over a sale to private equity, including BC Partners and EQT

If you are interested in the topic, you won’t want to miss the FT’s Business of Football Summit February 17-18. Keynote speakers include England and Manchester United footballer Marcus Rashford, Fifa secretary-general Fatma Samoura, Arsenal chief executive Vinai Venkatesham and many more. Register here.

And if you haven’t subscribed to Scoreboard, the FT’s weekly briefing on the business of sport, do so here.

Inter Milan striker Romelu Lukaku © AFP via Getty Images

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Hedge fund activism in 2021

After laying low for much of last year for fear of being labelled opportunistic during a global health crisis, activist investors are coming back with a vengeance. 

Take Dan Loeb, the billionaire founder of the hedge fund Third Point, who is known for having a way with words when it comes to taking companies to task. Who can forget the letter to Sotheby’s comparing the auction house to “an old master painting in desperate need of restoration”?

Dan Loeb © Bloomberg

Just before the new year, Loeb disclosed a near-$1bn stake in the US chipmaker Intel. He listed various reasons as to why the company had fallen behind its competitors in East Asia and aimed at its leadership. 

On Wednesday Intel announced the departure of its chief executive Bob Swan. Loeb had some kind parting words:

The trickle of campaigns — Third Point at Intel and Disney and Trian Partners at Comcast, Invesco and Janus Henderson — is expected to turn into a flood by many activism defence advisers. 

Activists may have remained quiet for much of 2020 but they were busy loading up on shares. Paul Singer’s Elliott Management was by far the busiest among them last year with 16 new campaigns and $8.9bn put to work, according to a report by Lazard

As well as the old guard, companies have new activists to worry about. Engine No 1 had been around for just 10 days when it launched a campaign at ExxonMobil in December with the backing of large institutional investors. According to Lazard, newcomers launched almost one-third of campaigns last year. 

There are two lessons here: even small activists can shake things up at large companies with the right backing and environmental, social and corporate governance, or ESG, issues are becoming more important.

But good old activism is still alive and well. Trian built its stakes in Invesco and Janus Henderson using money from a dedicated long-term fund aimed at spurring consolidation in the asset management industry. The Lazard report shows that mergers and acquisition is still the most common objective and advisers told DD it will take on more importance next year. 

Companies across the Atlantic should be on high alert, too.

Businesses in the UK are among those most vulnerable to an activist attack. DD’s Kaye Wiggins and the FT’s Peggy Hollinger and Laurence Fletcher reported earlier this month that funds are eyeing opportunities in Britain’s relatively weak stock market and pandemic-ravaged economy.

Elsewhere in Europe, Elliott is up to its old tricks in Germany. 

It has built a roughly 20 per cent stake in Rocket Internet, complicating matters for the German start-up factory which should never have been a public company and which its founders had been planning to delist

That’s an evergreen theme for activists, and DD will be watching the scene closely. 

Private equity’s borrowing bender

It’ll come as no surprise to DD regulars that M&A activity surged in the second half of last year despite the “slight” hiccup of a global pandemic.

Part of that was thanks to private equity, which gained unprecedented access to cheap debt to fund new deals following the Federal Reserve’s historic decision to cut US interest rates to zero as part of sweeping measures to reboot the economy.

Buyout firms played the coronavirus-induced low rate environment to their advantage, stacking business terms in their favour and pilling on leverage to pay themselves dividends.

And while some of the Fed’s emergency facilities expired at the end of 2020, debt markets remain red-hot, spiralling private equity’s borrowing binge even further.

Column chart of Global corporate bond and syndicated loan issuance, by year ($tn) showing Companies have binged on debt to outlast the pandemic

BC Partners has borrowed $480m to fund its buyout of the healthcare provider Women’s Care Florida, placing its debt at over nine times its ebitda margin.

Odyssey Investment Partners is employing a similar strategy, taking out loans totalling almost $600m to fund its purchase of personal protective equipment supplier Protective Industrial Products, which will leave the company over seven times leveraged.

Line chart of Trailing 12-month default rate of speculative-rated companies (%) showing Corporate defaults surge as pandemic hits businesses

The enthusiasm for all of this debt has been disconcerting to some heavyweights in the investment world. Markets have catapulted “far ahead of the economic fundamentals”, as optimism over a vaccine-led rebound drove US stocks to record highs earlier this month, Oaktree Capital founder Howard Marks told DD’s Eric Platt in an interview.

A former Disney exec and a Murdoch take on India

With hindsight, Walt Disney executives may somewhat rue paying a hefty $71bn for most of Rupert Murdoch’s 21st Century Fox empire in 2019.

But one part of that business that has proved its worth is Disney’s subsidiary in India, Star, which has been an invaluable platform in helping the Disney Plus Hotstar streaming service amass tens of millions of subscribers.

Uday Shankar and James Murdoch © FT montage; Getty

Uday Shankar, one of the masterminds behind Star’s turnround during the Murdoch years, left his Disney job last month, where he was overseeing its business in Asia-Pacific. His first move as a free agent has been to team up with James Murdoch, his old boss at Star, and Lupa Systems, the holding company borne out of Murdoch’s $2bn windfall from the Fox sale.

The younger Murdoch says their new unnamed venture will not “try to replicate” what he and Shankar achieved at Star, which went from being a sleepy, struggling television channel to the country’s pre-eminent media group and sports broadcaster.

Much of the detail has still to be fleshed out and will be defined in part by the acquisition opportunities that arise. But the ambitions are notable: to establish a “large scale” operation in the areas of digital media, education and healthcare provision. It will be centred on India, but pursuing opportunities across the region.

“We are doing something that has a broad scope . . . in the context of just extraordinary mobile connectivity,” Murdoch said. “It’s a great moment to start something with a blank sheet of paper.”

Job moves

  • Renaissance Technologies founder Jim Simons has named the hedge fund’s chief executive Peter Brown as sole chairman. Get the full scoop from DD’s Ortenca Aliaj.

  • Blackstone has appointed retired four-star General David L Goldfein, the 21st chief of staff of the United States Air Force, as a senior adviser.

  • Teneo has acquired its UK advisory firm rival Ridgeway Partners. As a result, Sue O’Brien, previously a managing partner at Ridgeway, will become Ridgeway’s chairman and continue to lead the firm’s team as part of Teneo.

  • Latham & Watkins has hired Hiro Takagi as a partner in its M&A practice. He joins the firm’s Tokyo office from Nishimura & Asahi.

  • Milbank has promoted five new partners across its corporate, capital markets, leveraged finance and project, energy and infrastructure finance practices. It has also hired Andrej Wolf as a partner in its global corporate group. He joins the London office from Kirkland & Ellis.

  • Akira Partners has hired dealmaker David Heimer as a partner in its London office. He was previously a partner at the rival boutique investment bank Perella Weinberg Partners.

  • White & Case is recruiting former Noble Energy counsel Taylor Pullins as a partner in Houston, former Linklaters partner Jérémie Marthan in Paris, and Latham & Watkins alumni Tim Fourteau and Jamie Franklin as partners in New York and Singapore, respectively.

  • Orrick has added three new hires to its global corporate team: private equity M&A adviser Leah Recht from Kirkland & Ellis and capital markets advisers Edward Dyson from Cooley and Mark Mushkin from Cravath.

Smart reads

Technical difficulties Derivatives linked to the defaulted debt of a French rental car company have been rendered useless thanks to a strange anomaly. For buyers of credit default swaps, it’s not the first time a market quirk has tarnished their investments. (FT)

Chip comeback Despite support from Wall Street and Silicon Valley, new Intel boss Pat Gelsinger’s mission will be incredibly daunting: restoring the ailing chipmaker to its former glory. (FT)

Low on (alternative) fuel Short-seller accusations and an investigation by the US Securities and Exchange Commission have halted hydrogen vehicle start-up Nikola’s Tesla-esque acceleration in its tracks. Now clamouring for outside investment, the company must forge new partnerships to survive. (Bloomberg)

News round-up

BlackRock assets surge to record $8.68tn (FT)

SoftBank-backed Auto1 plans to raise $1.2bn in IPO (BBG) 

Commerzbank suspends coverage of groups tracked by former Wirecard analyst (FT) 

Fitch to buy CreditSights in bid to bolster debt research (FT) 

Saudi Arabia steps up domestic investment as low oil prices and coronavirus bite (FT) 

Qualcomm bolsters 5G ambitions with planned $1.4bn acquisition (Wall Street Journal)

Carlos Ghosn feared dismissal if Renault discovered scale of Nissan salary, court told (FT)

SolarWinds hack leaves market-sensitive labour data intact, Scalia says (WSJ)

Goldman Sachs inches closer to offering Marcus checking accounts (BBG)

Due Diligence is written by Arash Massoudi, Kaye Wiggins and Robert Smith in London, Javier Espinoza in Brussels, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Francesca Friday in New York and Miles Kruppa in San Francisco. Please send feedback to

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