One scoop to start: Anheuser-Busch InBev is preparing to replace its longtime chief Carlos Brito, which would be the brewer’s third high-profile leadership change in 18 months as it continues to grapple with heavy debts from its £79bn takeover of SABMiller in 2016. Get the full story.

One invitation to start: join James Fontanella-Khan and Ortenca Aliaj on September 17 for the next gathering of the DD US Forum. The online event will focus on Spac-mania. They will be joined by former Blackstone partner Chinh Chu and Nikola board member Steve Girsky. Details and registration for the free event are here.

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SoftBank’s second act as . . . a hedge fund?

A banker once told DD’s Arash Massoudi that owning shares in SoftBank is like owning a triple-leveraged exchange traded fund linked to the Nasdaq 100, the technology-focused US market index. 

Certainly, if SoftBank’s share price during the past few months is a barometer of that sentiment, investors in the Japanese conglomerate have been rewarded by the incredible recovery in the US stock market, driven particularly by a handful of high-profile technology companies.

But if SoftBank is like a triple-leveraged Nasdaq ETF, what does it mean when SoftBank itself is juicing technology stocks?

Let’s take a few steps back. 

Last month SoftBank said that it had taken stakes worth almost $2bn in a series of US and Chinese technology stocks including Amazon, Google, TAL Education Group, Pinduoduo, and Tesla.

The purchases were all made in the second quarter of this year, and marked a strange shift in investing behaviour for SoftBank’s risk-addicted founder, Masayoshi Son (pictured above), who spent the last few years professing his exceptional skills around betting on private start-ups. 

The disclosures came right around the time that SoftBank announced it was creating a new asset management business at the group level. Importantly, this division would be distinct to SoftBank Investment Advisers, which runs its $100bn Vision Fund, a unit that bets exclusively on start-ups.

But in classic Masa Son fashion, the details were not given. Frankly, no one has a clue what SoftBank is up to with the division, including people inside the company. 

The plot thickened in recent weeks as rumours of a “Nasdaq whale” swirled on Wall Street — someone had been snapping up billions of dollars’ worth of call options, derivatives that give the user the right to buy a stock at a pre-agreed price. 

On Friday the FT team unmasked Masa Son as the mysterious call buyer behind the trades. 

What the FT revealed is that over the past two months SoftBank was not only buying shares in certain technology stocks, it was also purchasing derivative contracts on the gamble that those shares would rise further. 

Some on Wall Street have attributed SoftBank’s aggressive foray into the options market as having triggered a “melt up” in the technology sector, inflating share prices to nerve-racking heights.

Masa Son’s gamble met with some success. SoftBank gained about $4bn from its options spree across the tech industry, according to another scoop by the FT team.

But the manoeuvres were not rewarded by SoftBank investors, who sent shares in the group down 7 per cent on Monday. 

Our colleagues at Lex were equally unimpressed, concluding that SoftBank has all but become one big hedge fund living for the thrill of swinging markets rather than aiming to please its conservative Japanese retail investor base.

Stay tuned to see if SoftBank’s burgeoning hedge fund identity is more than just a phase.

Italy bids to keep Borsa Italiana in the family

DD has kept close attention on the London Stock Exchange Group’s planned $27bn deal for Refinitiv, even if it has required saintlike patience as the coronavirus slows down the EU antitrust process.

Brussels has several concerns about the combination, including the potential domination of trading European sovereign debt. As a concession, in July the LSE began exploring a sale of MTS, its Italian fixed income trading venue. To smooth a deal, it is also considering offloading Borsa Italiana, the parent company of MTS and owner of the Milan stock exchange.

Chart showing Borsa Italiana's recent performance

Borsa Italiana is likely to cost around ‎€3bn. A deadline for buyers to table their interest with the LSE is due at the end of the week.

Chart showing the market capitalisation of Borsa Italiana’s biggest companies

One party declaring its interest is Euronext, which runs six stock exchanges in Europe. Chief executive Stéphane Boujnah has led consolidation of the continent’s fragmented stock market in recent years and spoken publicly of his desire to buy the Milan bourse, if it were available. Germany’s Deutsche Börse is also interested, according to DD sources.

But an interventionist Italian government has a keen interest in what it sees as a strategic national asset, and has instructed state-owned lender Cassa Depositi e Prestiti to work on a joint bid for Borsa Italiana with Euronext. Some politicians want CDP to make its own bid, to give Italy full control of its public debt.

Chart showing number of Borsa Italiana’s daily trades

The winning offer will have to wait for Brussels to deliver its verdict on the LSE-Refinitiv deal. If Brussels makes further demands on concessions and the big deal falls apart — as happened with the LSE’s merger with Deutsche Börse in 2017 — then an agreement to dispose of any Italian assets is likely to bite the dust too.

Back to the office, private equity-style

The private equity industry is not one for doing things by halves. 

As workers’ thoughts turn to commuter trains and shop-bought lunches for the first time in months, some of the biggest buyout groups, flush with cash from those valuable management fees, are taking coronavirus health and safety measures to the next level. 

What does that look like? As DD’s Kaye Wiggins reports, every Blackstone employee can commute by taxi at the company’s expense, and at Advent International’s London office, they won’t even let you in unless you’ve tested negative for Covid-19 in the past fortnight (with a company-funded test of course). And you must have avoided public transport completely in that time.

Great news for taxi services (what a shame that Carlyle, which has also told staff to avoid the office after using public transport, no longer owns taxi service group Addison Lee). And great for companies like Bupa that sell employee testing schemes. Potentially less so for the environment and for traffic congestion.

Also handy, one could say, for a group like Blackstone — which owns quite a lot of commercial property — to demonstrate a safe way to get workplaces up and running again. 

Job moves 

  • Insurance company Aviva named former ING finance chief Patrick Flynn as a senior independent director. He succeeds George Culmer, who was appointed Aviva’s board chairman in May.

  • Law firm Squire Patton Boggs hired Jayson Marks and David Milne as partners in its London and Leeds practices, respectively. Marks joins from Holman Fenwick Willan, and Milne joins from Eversheds Sutherland.

Smart reads

Netflix and chart world domination Despite being a clear winner in the coronavirus economy, the streaming giant is “still in challenger status,” says co-CEO Reed Hastings. Instead of counting its billions in California, Netflix is setting its sights overseas to take on Disney for global entertainment supremacy. (FT)

Divisive data Software-consultancy hybrid Palantir is an anomalous newcomer to Wall Street, not only for its pioneering data surveillance tools, but for its ability to serve one side of a politically polarised America under its Trump-lauding co-founder, Peter Thiel. (FT)

Changing of the guard China’s top brokerage Citic Securities purchased Hong Kong’s once-unregimented CLSA in 2013, but has tightened its grip on the investment group in recent months, a reflection of the region’s wavering political dynamic. (Wall Street Journal)

News round-up 

Samsung seals $6.6bn 5G deal with Verizon as Trump targets Huawei (FT)

Veolia makes its move for rival Suez after years of talk (FT)

Spanish lenders Bankia and CaixaBank in €17bn merger talks (FT + Lex)

Chinese water brand’s IPO more than 1,000 times subscribed (FT)

McKinsey faces trial over disputed property bills (FT)

AI hedge fund Voleon suffers in choppy markets (FT)

SMIC shares tumble after reports US will blacklist Chinese chipmaker (FT)

Afterpay prospers from boom in online sales as rivals circle (FT)

Mediaset, Vivendi CEOs to resume contacts after EU court ruling (Reuters)

PizzaExpress secures backing for rescue that will cut 1,100 jobs (FT)

Goldman Sachs joins syndicate for Ant IPO of up to $30bn (Reuters)

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 due.diligence@ft.com


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