July 25, 2024

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Meet Goldman’s newest board member

7 min read

One resignation to start: The Moelis investment banker who was filmed punching someone during a New York City Pride event this month has resigned from the Wall Street firm. Moelis confirmed the departure of Jonathan Kaye in a statement on Monday.

And a push to revive London’s market: Top executives have been meeting regularly in recent years to help confront a prolonged drought in London listings. Two years on, the Capital Markets Industry Taskforce, and the fortunes of the City’s market, are at a critical juncture.

Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an onsite version of the newsletter. Premium subscribers can sign up here to get the newsletter delivered every Tuesday to Friday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters. Get in touch with us anytime: [email protected]

In today’s newsletter:

  • Goldman’s newest board member

  • Adnoc nears deal for one of Germany’s biggest groups

  • HPS gets ready for its next act

The oil tycoon to join Goldman’s board of directors

Goldman Sachs is adding oil tycoon John Hess to its board of directors.

Hess isn’t just a friend of the bank. He’s also a client. His family-run oil company has directed a heap of work — and ahem, fees — to Goldman in recent months, including hiring the investment bank to consult on its planned sale to energy major Chevron.

The deal has hit a snag in recent weeks, with a challenge from rival ExxonMobil that could drag into next year. But if it eventually closes, Goldman’s set to reap as much as $80mn in fees.

Tapping Hess for the board raised a few eyebrows. One senior Wall Street adviser said it was “very rare” for an executive to join the board of an investment bank that is advising their own company.

The bank’s board of directors are, of course, a critical bastion of support for chief executive David Solomon. Its members stood by their CEO last year even amid a torrent of criticism about how he was running Goldman.

His stint on the side as a DJ — famously going by DJ D-Sol at events as big as the Lollapalooza music festival in Chicago — didn’t help things. (He’s since stopped DJing publicly.)

But a wave of prominent departures recently has rocked the boat yet again, and the FT reported in February that Goldman was facing even more resignation threats from several partners.

Some high-profile exits include co-head of the financing group Beth Hammack and treasurer Philip Berlinski. And of course, the departure of longtime lieutenant Jim Esposito disrupted the delicate balance of power at the bank.

Hess has ties with supporters of Solomon.

He’s close with Adebayo Ogunlesi, the co-founder of Global Infrastructure Partners and Goldman’s longtime lead independent director. GIP acquired a stake in Hess’s pipeline business in 2015 and the two grew close while the business faced numerous downturns.

Earlier this year, Ogunlesi stepped down from Goldman’s board as part of GIP’s $12.5bn sale to BlackRock. He was replaced by David Viniar, the chief financial officer who steered the bank through the 2008 crisis. Internally, Ogunlesi was known as a steadfast Solomon supporter amid waves of outside scrutiny.

On top of the prestige of running one of the most important banks in the world, there’s also a big financial incentive for Solomon to stick around. He’s set to earn a special stock award if he remains in the top job through 2026.

So Solomon is likely to rely on Hess in the most trying of times.

Adnoc’s long pursuit for German chemical group Covestro

After nearly a year of on-again-off-again talks, Abu Dhabi’s national oil company appears to be nearing the finishing line in its €14.4bn bid for one of Germany’s largest companies.

In a final push last week, Sheikh Mohammed bin Zayed al-Nahyan, president of the United Arab Emirates and also chair of Adnoc, was asked to sweeten the offer by just €2 a share — equivalent to 3 per cent. He agreed.

While the deal with German chemical group Covestro isn’t finalised yet, negotiations could be wrapped up soon, one person familiar with the talks said.

If it does go through, Adnoc’s bid for Covestro is set to break a few records: it would be the largest takeover in Europe this year, the largest cash-deal in the chemical industry and the first big takeover of a Dax 40 company by a Gulf state.

But the hold-up over the deal hasn’t just been over the price. Adnoc has spent months reassuring the German company.

“Sometimes these things just have to be digested by both sides,” said one person familiar with the talks. “You need to reach the right trust level and if you rush it, then you might never get there.”

The bid for Covestro is just one piece of a much bigger strategy Adnoc has set in motion. Through a $150bn plan, the company is in the process of trying to transform itself from a traditional state-owned oil group into an international energy giant.

Adnoc has already completed a number of smaller deals, including a stake in the first phase of the US liquefied natural gas developer NextDecade’s Rio Grande project.

The company has amassed a nearly 50-strong team of dealmakers that insiders have described as similar to an “internal investment bank”.

Now that it appears like Adnoc’s mini-Wall Street is in full swing, DD’s already wondering who its next target might be.

HPS plots next move armed with $21bn private credit fund

Top executives at HPS Investment Partners have, for the past year, been debating its future.

With $114bn under management, it’s no longer a medium-sized player in the industry, and insiders have debated transforming the business.

Yesterday, DD’s Eric Platt revealed HPS had amassed $21.1bn for its latest flagship fund, underscoring its rapid growth.

It’s one of the largest private credit funds ever secured. The firm raised $14.3bn from investors over 15 months, and plans on using another $7bn of bank loans to supercharge its ability to invest.

“Performance attracts capital,” Michael Patterson, a governing partner of HPS, said in an interview. “You then have to put that capital to work [while] maintaining that performance. This is a big, very public demonstration of what’s happening at HPS.”

Top leaders at HPS have for some time been debating its next steps. It has already filed paperwork with the Securities Exchange Commission for a potential IPO. (HPS declined to comment on its future business plans.)

But they’ve also considered a tie-up or takeover. Insiders have viewed private equity group CVC as a logical partner given their existing business models have relatively little overlap.

The space has been rife with consolidation. T Rowe Price acquired Oak Hill Advisors in 2021, while TPG bought Angelo Gordon in 2023. And there are only a handful of independent players the size of HPS.

HPS is already branching out beyond its core credit business, with Patterson saying the business is eyeing investment-grade private credit and asset-backed debt. But it doesn’t yet have a toehold in PE or infrastructure investing.

It will all depend on whether Patterson and his HPS co-founders Scott Kapnick and Scot French have ambitions to turn the business into a one-stop shop in the private investment business.

Job moves

  • Partners Group is opening an office in Hong Kong, which will be led by Henry Chui in addition to his role as head of private wealth for Apac. 

  • Getir is being broken up, with its Turkish delivery business set to be led by longtime manager Batuhan Gultakan. The group’s founder Nazim Salur will continue to have a role in the entity as a minority investor and board member. 

  • Teneo’s chair of strategy and communications in the UK, Andrew Grant, is leaving the firm by the end of this year, The Sunday Times was first to report and DD confirmed. Grant sold his Tulchan business to the company in 2023.

Smart reads

Sinai’s powerbroker With help from Egyptian elites, Ibrahim al-Organi for years dominated trade into Gaza. The war has put his interests under the spotlight, the FT reports.

FTX bets Hedge funds specialising in distressed assets appeared poised to make a killing buying up claims in FTX’s bankruptcy. Then things got messy, The Wall Street Journal reports.

Shaky loans Banks have quietly begun offloading commercial real estate loans as they try to dodge potential losses, The New York Times writes.

News round-up

Shein files confidential paperwork ahead of possible London listing (FT)

Novo Nordisk invests $4bn to expand weight loss drug production in US (FT)

Private equity sale of can maker reaps rare windfall from buyout boom (FT)

Polish state energy group seeks to show political independence through media sale (FT)

TikTok advertisers prepare contingency plans as US ban looms (FT)

Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, William Louch and Robert Smith in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard and Maria Heeter in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco, and Javier Espinoza in Brussels. Please send feedback to [email protected]

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