English football is for sale

One scoop to start: Software focussed private equity group Francisco Partners has raised $21bn across two funds, beating a $18bn target, in the first large fundraise since February’s “SaaS-pocalypse”.

Another one: Private equity group Platinum Equity is nearing a deal to acquire a stake in Nestlé’s European water business that would value the company at close to €5bn.

And a last thing: Aston Martin has struck a deal to borrow £550mn from BlackRock-owned private credit firm HPS, defying opposition from a group of existing lenders who branded the transaction “extraordinary”.

In today’s newsletter:

The World Cup of English football deals

Once again in this summer’s World Cup England’s footballers failed to bring it home. But the English can still claim the world’s most popular domestic football competition, the Premier League, home to many of the best players and the highest calibre of play.

Just as the World Cup ended, the FT scooped this week that some English football club owners are looking to sell.

On Tuesday, the FT revealed a consortium was in talks to buy a minority stake in Liverpool FC. Then a day later, the FT reported the Thai owners of Leicester City have put the club on the block.

The two clubs have one thing in common: they’ve both won the Premier League title in the past decade (Leicester in 2016 in one of sport’s great underdog tales).

But that’s where the similarities end. Since being crowned champions in 2016, Leicester’s fortunes have soured on and off the pitch. The club now finds itself in English football’s third tier after relegation last season and has suffered a six-point penalty for breaching spending rules.

Liverpool, meanwhile, overtook Manchester City last year to become the top club in England by revenue, according to Deloitte. The club’s status as one of football’s few truly global brands is reflected in the potential deal that would value the club at more than $6bn. 

The ownership profiles and reasons for selling are distinct too.

For Liverpool owner Fenway Sports Group, this looks like the chance to take a bit of money off the table at a bumper valuation. For Leicester’s Thai owners, whose core retail business has been under strain, the prospect of putting more money in the push for promotion and to revamp the stadium must look very unappealing.

So what, if anything, do these two stories tell us? Well, it could confirm the bulls’ belief that this summer is a good time to seek investment in the afterglow of the World Cup. Football proved a big hit with US audiences. The high valuation for Liverpool (the club made a small profit last year) is helpful for those looking to drum up interest.

But these stories may also feed the bears. If executives at FSG are happy to sell a chunky stake now, it suggests they don’t see much upside from here. Indeed, they looked at selling the club three years ago. Meanwhile, Leicester’s predicament is a reminder of how quickly things can go wrong.

Either way, both clubs and investors can expect to be getting a lot of phone calls from M&A bankers this summer.

The reversal of fortunes on Wall Street

Wall Street banks just reported their best results in more than a decade on the back of a very friendly climate. The Trump administration has rolled back regulations, volatility has helped create a Goldilocks environment for trading and investment bankers have been busy on the record-breaking initial public offering of SpaceX and a flurry of other listings and megadeals.

Over the past 12 months, shares of large investment banks Goldman Sachs, Morgan Stanley, JPMorgan and Citigroup all rose more than 18 per cent, some outperforming broader American markets.

But the good times haven’t been shared by all on Wall Street. Over the same 12-month period, the shares of private capital giants fell more than 20 per cent.

Private capital’s slump amid banking’s “as good as it gets” era amounts to a dramatic reversal of fortunes in finance.

For much of the past decade private capital groups such as Apollo and Blackstone were the ones on the ascent, enjoying soaring valuations. At times over the past six years, Blackstone even traded at a larger market value than both Goldman Sachs and Morgan Stanley. Now the private equity group carries a market capitalisation that is less than half of either bank.

As banking experienced a boom over the past year, private capital’s most powerful players were grappling with fears that AI would upend the software and professional services companies that had been the linchpin of the growth in private markets over the past decade. They also faced rising redemptions at some of their largest credit funds.

Blackstone is scheduled to report second-quarter earnings on Thursday that could show its fundraising is stronger than investors expect because of new institutional investments and continued growth in its retail funds outside of credit investments. In credit, investors will be looking for signs or commentary that a tide of redemptions is abating.

The great British bear hug

The largest takeover of a London-listed company this year started with a bear hug.

On Wednesday, the UK property group Segro said it was minded to recommend a £14bn takeover offer from its large US rival Prologis.

That step towards a deal came after an intense weeks-long takeover battle that led to Prologis making four bids, including a best and final offer on Wednesday morning just ahead of an afternoon deadline.

Rather than attempt to woo Segro behind the scenes, this deal played out in the public eye, kicking off in late June when Prologis announced it had made a first offer at a £12.6bn valuation.

Prologis sought to apply pressure on Segro at various turns. The US group urged Segro’s shareholders to encourage board members to engage with its proposals, and Prologis’s chief executive, Dan Letter, warned Segro was relying on “very aspirational” projections.

Prologis is not the only group to turn to such tactics this year in London’s surging market for M&A. Swiss insurer Zurich’s bid for UK rival Beazley was another such episode, while some private equity groups have also gone public to drum up support for their takeover plans.

It marks a shift in the local market, but one that has delivered results. “More and more negotiations are being played out in public as would-be buyers seek to turn the screws on their targets. Breaking cultural norms looks increasingly worthwhile,” Lex notes.

Job moves

• KKR has hired Roy Gori, former CEO of Manulife, as a senior adviser across financial services and insurance in the Asia-Pacific and other international markets.

• JPMorgan Chase has hired Ian Carnegie-Brown as vice-chair of consumer and retail investment banking in London. He joins from UBS.

• Citi has hired Chris Grosse, Florian Plath, Dhruv Fotadar, Anand Agarwal and Josh Sheets as tech investment bankers in the US. Grosse joins from Bank of America; Plath, Fotadar and Agarwal join from JPMorgan; and Sheets joins from UBS.

• Shareholders elected lead independent director Manuel Oliveira as chair of Brazilian mining group Vale.

Smart reads

Missing billions Since taking control of Venezuela’s oil exports, Washington has collected more than $13bn in revenues from that nation’s oil sales, the FT reports. But it’s not clear where the money has ended up and the Trump administration has given diverging accounts.

Moneyball The Wall Street Journal declares hedge fund billionaire Steve Cohen’s New York Mets the “biggest waste of money baseball has ever seen”. As of Wednesday evening the team’s record for the season was 43-60.

Car math The electric-car maker Lucid has fallen far short of its financial forecasts, and its public performance has been a disaster. But the backing of Uber and Saudi Arabia’s Public Investment Fund might just be enough to get it through this crunch period, Lex writes.

News round-up

EU review of airline ownership rules clouds Apollo’s £5.7bn easyJet bid (FT)

Clifford Chance partners paid record £2.3mn despite US slowdown (FT)

Lloyd’s of London says ex-CEO failed to disclose ‘close’ relationship with employee (FT)

Blackstone debuts funds to bring private markets to Main Street (Bloomberg)