One scoop to start: KKR’s lost one of its top dealmakers, Edouard Pillot. Get the full story from DD’s Kaye Wiggins.

Another scoop to follow-up: the US private equity shop Silver Lake is in talks to buy a $1bn stake in Mukesh Ambani’s Reliance Retail. More here

And an invitation to start: the September 10 DD Forum discussion on the downfall of Germany’s Wirecard is less than a week away. The online event is open to everyone and free to join. Details and registration are here.

Welcome to the Due Diligence briefing from the Financial Times. Not a subscriber? Sign up here. Drop us a line and join the conversation:

Ever feel like someone’s watching you? Dan McCrum’s reporting on Wirecard

FT investigations reporter Dan McCrum is all too familiar. 

Or as the Commerzbank analyst Heike Pauls once called him in a poorly-aged research note titled “More fake news”, the “serial offender Dan McCrum, journalist at the otherwise renowned FT”.

So what happens when you expose a €1.9bn fraud at the German fintech goldenchild Wirecard, knocking it off its pedestal along with any chances it has at taking on Silicon Valley?

© AFP via Getty Images

As Dan (pictured above) would learn throughout his five-year investigation into Europe’s stock market sweetheart, the process involves taunting Twitter bots, serious criminal charges levelled against him by German regulators, and the shadows of Wirecard’s band of thugs trailing him at every turn.

Paired with unrelenting attacks from Wirecard’s pilfering top ranks (one’s in jail and another’s on the run), lawyers, hackers, analysts, investors and the German business press, we imagine Dan might’ve had a few sleepless nights.

And let’s not forget the well-respected financial institutions that unabashedly sided with the payments group along the way (cheers, SoftBank).

At least he never had to suffer through trivial small talk in the FT newsroom. There’s no time for dull comments on the weather when your colleagues are constantly asking whether you’ve been arrested yet.

© Charlie Bibby

Dan’s explosive account of his strange trip down the Wirecard rabbit hole is not one to miss. We’ve outlined a few of our favourite highlights:

  • That time Wirecard’s chief operating officer and now international fugitive Jan Marsalek tried to bribe the FT’s Bryce Elder into quietly removing Dan’s initial FT Alphaville House of Wirecard series from cyber space, the reporting that first opened a Pandora’s box;

  • That time Wirecard teamed up with an Indian hacker team to orchestrate a “whistleblower” dossier, the Zatarra Leaks, alleging Dan conspired with London hedge fund traders to manipulate the market;

  • That time the FT investigations team recorded what seemed to be a sting operation against the paper through a high-tech handbag camera, as the FT’s Paul Murphy met Marsalek on the premise that he’d be paid $10m to make the story disappear.

Like Wirecard’s laundry list of lies, the story just keeps going.

Listen to the latest episode of our Behind the Money podcast for a play-by-play on Dan’s Wirecard odyssey, and keep up with the latest news in the FT’s Inside Wirecard section.

Plus, don’t miss DD’s Wirecard forum on September 10 to hear first-hand from the FT journalists who covered the saga.

Hong Kong’s double life

According to some headlines, Hong Kong is a thriving financial hub, ready to be blessed by what’s storied to be the largest share offering in history thanks to Jack Ma’s Ant Group.

According to others, it's a hotbed of political unrest as pro-democracy activists rally against the Goliath strength of China’s Communist party and its sweeping new national security law.

Both depictions are correct.

Hong Kong Lawmakers Ted Hui, left, and Lam Cheuk-ting, who were detained hours after Ant Group filed for its IPO © FT montage; Bloomberg

As Hong Kong detains pro-democracy lawmakers and investment bankers excitedly await a projected $300m payday from the IPO, a tale of two cities unfolds.

The massive IPO offers some hope that capitalism may still be able to prosper in Hong Kong despite China’s tightening grip on its civil liberties.

Line chart of Value of total equity market, $tn showing Hong Kong's stock exchange is more valuable than London's

But China’s efforts to squash dissent in Hong Kong, triggered by heated mass protests in the region, has sent various international funds and businesses running. 

About 75 per cent of respondents to a survey by the American Chamber of Commerce in Hong Kong felt pessimistic about the city’s business prospects, and 39 per cent planned to relocate assets from the territory.

Beijing has argued the opposite, insisting Ant’s blockbuster IPO will attract inflows from US investors and pension funds eager to get in on the action.

Bar chart of IPO proceeds in 2019 ($bn) showing Hong Kong stock exchange is on a roll

And they’re not too far off. If all goes to plan, the listing will top the record-breaking $29bn raised by Saudi Aramco last year, with the US investment banks Citigroup, JPMorgan and Morgan Stanley at the ready to pull in some much sought-after American institutional funds.

Trade wars may be all the rage in the White House but as far as Wall Street’s concerned, nothing’s getting in its way of heading east for the party of the decade.

For more on Hong Kong’s identity crisis, check out the FT Big Read.

Why are H2O Asset Management’s funds frozen?

Nothing happens in France in August, or so the old cliché goes. Due Diligence readers who’ve received an out of office message from a Parisian banker over the summer will know it is barely a joke.

But on the last Friday of August, a bombshell announcement from the French markets regulator late in the evening showed that this isn’t quite true. 

France’s AMF revealed that it had asked H2O Asset Management to suspend redemptions on some of its flagship funds, due to the “valuation uncertainties” around their “significant exposure” to illiquid debt.

We say “bombshell”, but the announcement would not have shocked regular DD readers. 

DD’s Rob Smith and FT investigations team stalwart Cynthia O’Murchu revealed last year that H2O owned well over €1bn of hard-to-sell bonds linked to the flamboyant financier Lars Windhorst (pictured above).

The FT’s investigation set off a chain of events that included rattled clients withdrawing €8bn from H2O’s funds, the influential fund rating firm Morningstar censuring the fund manager’s “loose risk controls” and even sent the share price of the asset manager’s parent, the French bank Natixis, tumbling.

But why has the French regulator stepped in more than a year later? To find out, read the FT’s explainer on the twists and turns of just how a €22bn asset manager ended so exposed to a racy German entrepreneur with a history of legal trouble.

Job moves

  • Kim Lew was named the new chief of Columbia Investment Management Company, which manages the $11bn Columbia University endowment. She was previously investment chief of the Carnegie Corporation.

  • The direct-to-buyer real estate start-up Opendoor named Carrie Wheeler as its new finance chief. She has served on the company’s board for the past year, and previously worked at TPG Global.

Smart reads

Billionaire bottles Billions of tiny glass vials will be necessary to bottle the coronavirus vaccine once it’s ready to be rolled out to the masses. The billionaire Stevanato family of Italy is ready to cash in. (Forbes)

WeCensor Tencent’s WeChat is looking a little too cozy with Beijing. The app shrugged off accusations by the Trump administration that it poses a national security threat, and continues to police content that veers from Communist party lines. (Bloomberg)

Balancing act Japan has found itself caught in the middle of the US-China trade war. As it navigates the treacherous territory between the duelling nations, the pandemic and Donald Trump’s threats of more sanctions, Asia’s second-largest economy wears its tightrope even thinner. (The Economist)

News round-up 

TikTok buyer will face huge challenge, Snap’s Evan Spiegel says (FT)

Hedge fund manager in Neiman Marcus bankruptcy charged with fraud (FT) 

German prosecutor drops Wirecard investigation into FT reporters (FT)

GM and Honda agree to pursue deeper tie-up in North America (FT)

QIA will commit £75m to Hut Group flotation (FT)

China raises scrutiny of financial holding groups ahead of Ant IPO (FT)

Melrose losses swell to £685m on ‘severe coronavirus disruption (FT) 

Robinhood faces SEC probe for not disclosing deals with high-speed traders (Wall Street Journal) 

Premier League terminates $700m China TV rights deal (FT)

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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