One battery bankruptcy to start: Northvolt is filing for Chapter 11 bankruptcy after Europe’s best-funded start-up and main hope for countering Asian dominance in electric vehicle batteries failed to agree a last-minute rescue package with investors.
And a Republican billionaire’s hot take: Ken Griffin has warned Donald Trump’s plan to raise tariffs would put the US “on a slippery slope to crony capitalism” and offered other harsh critiques of the incoming president’s agenda, in surprisingly sharp criticism from a big Republican donor.
In today’s newsletter:
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Josh Kushner’s big VC bets
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The big bank risk transfer trade
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A $6mn banana . . . say no more
Thrive Capital: ‘all in or all out’
As OpenAI raced to raise almost $7bn last month, it turned to some of tech’s biggest spenders. SoftBank forked out $500mn, Tiger Global invested $350mn, Coatue Management coughed up $250mn.
One venture capitalist, though, blew the rest out of the water.
Josh Kushner’s Thrive Capital put $1.3bn into the round, and negotiated an option to add another $1bn before the end of next year. The mammoth bet embodies Thrive’s strategy: get close to founders, remain loyal through crises and concentrate funds in a small number of companies.
“Diversification is for people that don’t know what they’re doing. Investors are paid to know what they’re doing,” said Vince Hankes, Thrive’s partner on the OpenAI deal.
The approach is a far cry from traditional VC, where investors back dozens of companies in the hope one mega-payout will cover the numerous start-ups that fail.
“They are trying to prove you can have a $5bn fund and be a boutique,” says the managing partner of a rival New York firm. Thrive has added big bets on payments company Stripe, data intelligence firm Databricks, defence tech start-up Anduril to its OpenAI investment.
If any of those start-ups go public it will result in a massive payday for Thrive and its backers. But the firm is piling up potential risk as well as reward as it plunges deeper and deeper into a small group of splashy companies.
Meanwhile, rivals and peers question whether they can ever generate “venture-style returns”.
Kushner, meanwhile, is Zen-like. “The only way to live life is to be positive sum,” he tells the FT. “I want Sequoia to win. I want Andreessen to win. The only person I’m competing with is myself.”
The next frontier for SRTs
So-called synthetic risk transfers — or SRTs — are the hot thing on Wall Street these days.
The instruments involve selling the initial risk of loss to investors in exchange for coupon payments. Banks love them because they help offload risk from their balance sheets, meaning the firms need less capital to offset loans. It also helps them boost returns.
Recent data says it all: lenders are on track to issue a record amount of SRTs this year, with Chorus Capital estimating that there have been $16.6bn of these types of deals in the first nine months of 2024.
And Bank of America’s making a splash with a new way to structure these deals. Its drawing up plans to structure risk transfer transactions for smaller lenders, which if successful, could turbocharge the nascent market at a time of heightened scrutiny.
The man behind the expansion is David Sklar, a managing director who leads BofA’s asset-backed securities. He joined back in 2011 after graduating from Harvard University, and is “wicked smart”, according to an investor at a large credit firm who’s worked with Sklar on previous deals.
SRTs are a rare instance where a financial manoeuvre first became popular in Europe, before spreading to the US. European banks have used them for more than a decade, and still dominate the market. But US lenders are now clamouring to take market share.
The boom comes with concerns. Some experts worry that the market is developing too quickly, and less sophisticated buyers could inadvertently wind up holding riskier assets.
Last month the IMF warned that leverage extended by banks to SRT investors — which include pension funds and private capital firms — could create “negative feedback loops”.
By that, the organisation means risk that’s shifted off banks’ balance sheets could still stay within the banking system.
Meanwhile, BofA’s plans are still being hashed out. But for all the details on what the bank’s considering — like whether a portion of the transaction could be rated investment-grade — read the full story by DD’s Ortenca Aliaj and Eric Platt and the FT’s Stephen Gandel.
A night at Sotheby’s: the $6mn banana
It was standing room only at Sotheby’s New York headquarters on Wednesday evening as bidders, fans and bemused onlookers turned out in droves to see the auction’s pièce de résistance (or piece of fruit): a real banana, stuck to a wall with duct tape.
Maurizio Cattelan’s “Comedian” sold in just over six feverish minutes at its auction debut for an un-peel-ievable price of $5.2mn, or $6.2mn including fees. The victorious bidder was Justin Sun, the founder of cryptocurrency platform Tron.
The buyer, whose bid far exceeded the presale estimated range of $1mn-$1.5mn, will receive a banana, a roll of duct tape, instructions for mounting the work and a certificate of authenticity signed by the artist.
David Galperin, Sotheby’s head of contemporary art for the Americas, said in a statement that “Comedian” is “about the conditions that characterise our understanding of what makes something art — and one of those conditions is value. So when we took in this artwork for sale, one of the big questions we had to address was how to value it.”
“For me,” he added, “the question is more specific: how do you value what, for me at least, is one of the most brilliant ideas in the history of conceptual art. And what better place to ask that question than in our salesroom, where tonight the answer came in at a resounding $6.2mn.”
Sun said after the auction that he planned to eat it, “as part of this unique artistic experience, honouring its place in both art history and popular culture.”
Job moves
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Gary Gensler plans to step down as chair of the US Securities and Exchange Commission when Donald Trump takes office as president in January, bringing an end to a term of bold rulemaking that met resistance from the industry and courts.
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Latham & Watkins has hired four restructuring partners in New York, including Ray Schrock, Candace Arthur, Alexander Welch and Andrew Parlen. The former three join from Weil, while Parlen joins from Paul Weiss.
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Linklaters has hired Elena Rubinov as head of infrastructure and private capital M&A in New York.
Smart reads
‘Numero uno’ Charges against Indian tycoon Gautam Adani and his associates paint the picture of an alleged $265mn bribery scheme, the FT writes. Adani had code names including “Mr A”, “the big man” and “Numero uno”.
Ivy League craze American parents are so wrapped up in the college-admissions game, they can make fine distinctions between universities like 18th-century aristocrats did with noble lines, The Atlantic writes. It might be time for something new.
Google query A call for the search giant to jettison Chrome would give users something they don’t obviously seem to want, Lex writes.
News round-up
US seeks Google divestitures including Chrome sale in search monopoly case (FT)
$20bn wiped off Adani corporate empire after bribery charges (FT)
Three Bank of America bankers in India depart over alleged client tips (FT)
Keir Starmer meets BlackRock boss Larry Fink in Downing Street (FT)
BP greenlights $7bn Indonesia gas project (FT)
Temu owner PDD misses sales estimates amid China slowdown (FT)
Nvidia’s revenue nearly doubles as AI chip demand remains strong (FT)
UK imposes sanctions on Isabel dos Santos in money-laundering crackdown (FT)
Read the full article here