How Citadel became an energy giant

In today’s newsletter:

• How Citadel the hedge fund became an energy giant

• Venezuela to reveal a $240bn debt pile

• Japan IPOs sink to 15-year low in first half

How Citadel became an energy giant

Spanning 9,000 square miles across Louisiana, Texas and Arkansas, the massive Haynesville Shale holds an estimated 152mn barrels of undiscovered oil and 47.9tn cubic feet of natural gas. It ranks among the world’s largest fields — and is a primary reason the US is now the leading global exporter of liquefied natural gas.

First exploited in 2008, the field has 62 rigs dotted across the region. Yet, the biggest owner and operator of gas drilling rigs at Haynesville is not an energy company, but a hedge fund: Ken Griffin’s Miami-based Citadel.

Although Citadel is mostly known for its huge bond market bets, skilled stock pickers and cunning arbitrage trades, its commodities business has become the hedge fund’s crown jewel over the past decade, writes Robin Wigglesworth. And as Haynesville’s landscape of rigs shows, it has evolved from a primarily financial actor — buying and selling derivatives contracts on oil, gas, corn, gold or soyabeans — into a player in physical commodities and America’s vast energy market.

Some insiders say that if you flick a light switch somewhere in California today, there is a decent chance that the electricity somehow comes from Citadel.

“We are a leading trader in power and natural gas and have a significant business in the oil and oil products markets,” Griffin says. “We continue to focus on what steps we need to take in the commodities market to position ourselves to meet the needs of consumers and producers.”

Rivals believe the division is one of the things that has helped distinguish Citadel since its inception in 1990. Izzy Englander’s hedge fund Millennium and DE Shaw have made roughly $70bn and $80bn respectively in that time; Citadel has generated net returns of $90bn.

Yet some wonder what Citadel’s growing commodity arm means for the investment management business itself.

“Once you begin acquiring assets then you’re more of a private equity fund than hedge fund,” observes one senior commodity industry executive. “You need locked-up capital. Citadel has locked up a lot of its investor money, but it’s still a difficult business to run out of a hedge fund. Unless they want to morph into something else.”

Venezuela to reveal a $240bn debt pile

Venezuela is poised to reveal a staggering $240bn debt pile — far exceeding market estimates of $150bn to $200bn — as it embarks on the largest sovereign restructuring in history following the US removal of Nicolás Maduro. According to people familiar with the plans, the country will formally lift the veil on its fractured finances for creditors in the coming weeks.

Delcy Rodríguez, Venezuela’s interim leader, is aiming to reach a deal with creditors by the end of this year that would pave the way for the country’s return to international markets after being frozen out for nearly a decade under Maduro, the strongman leader seized by a US military raid in January, write James Fontanella-Khan, Joseph Cotterill and Arash Massoudi.

US investment bank Centerview Partners, hired as a financial adviser by Caracas, has helped draw up a blueprint for returning Venezuela’s debt to a sustainable footing which will be published in early July, according to people familiar with the plans.

It will also release a long-awaited macroeconomic framework later this month, which will estimate the size of the country’s battered economy at about $100bn, down from $370bn in 2012 — the last year in power for Maduro’s predecessor Hugo Chávez — and putting its debt-to-GDP ratio above 200 per cent, the people added.

Unusually for a major sovereign restructuring, the debt sustainability analysis has not been authored by the IMF. Bondholders are likely to see the parlous assessment of the country’s finances as a cue for Venezuela to request a significant writedown in the value of their debts.

Venezuela’s bonds trade at about 55 cents on the dollar, up from 33 cents before Maduro’s downfall, but these prices exclude years of unpaid interest.

Bondholders are most focused on how quickly the country can revive oil production and how a US-brokered restoration of crude sales has worked since Maduro’s exit.

“The timeline makes this more complicated . . . could it be done by 2026? There’s a small chance. But I really think this is going to go on into 2027,” said Jeff Grills, portfolio manager at Aegon Asset Management. 

Japan IPOs sink to 15-year low in first half

The number of initial public offerings in Japan sunk to a 15-year low in the first six months of the year, a situation that is unlikely to improve in the short term due to a lack of start-ups that can quickly come to market, analysts have said.

A record increase in Japanese stocks, with the Nikkei 225 up about a third this year, has not been enough to jump-start Tokyo’s moribund market for listings.

There have been just 18 IPOs in Japan this year, according to data from Dealogic — the lowest number since 2011 and well below the annual average of 35. The amount of capital raised by IPOs was just $917mn, the lowest since 2022, writes David Keohane.

Bankers, advisers and lawyers said that performance was unlikely to be reversed in the second half of the year. That was partly due to Japan lacking the kind of start-ups that could quickly take advantage of the surge in valuation for companies linked to AI, data centres and semiconductors. 

“Maybe towards the end of the year and into the next year we should start to hopefully see IPOs start to pick up,” said Shu Nagata, head of Japan global capital markets at Bank of America in Tokyo. “Given the Iran conflict this year and market volatility, people are waiting and wondering whether there is a good time to go.”

Japan’s two main sources of IPOs are start-ups going public and private equity groups looking to exit companies they bought during the buyout boom in recent years.

Both have come under pressure since Japan lacks a large number of start-ups in AI-related sectors. Private equity has usually done business with companies in sectors that generate positive cash flow to pay down debt from leveraged buyouts.

The lull in Japanese IPOs comes as other regional markets have boomed, with Hong Kong’s stock exchange claiming the top spot globally for listings in the first quarter of this year.

Aware Super, one of Australia’s biggest pension funds with A$200bn under management, has halted investments in the UK housing sector, according to chief executive Deanne Stewart. Aware Super said planning policy was an issue.

US private credit managers still receive sizeable redemption requests on some of their funds. Both Apollo Global Management and Ares Management have had to cap withdrawals at some of their funds. The rising redemption requests at the funds signal that the broader investor exodus from private credit has not abated.

According to Standard Life, there’s been a rush to buy annuities using pension pots since Chancellor Rachel Reeves made pensions subject to inheritance tax again. Here’s why.

Boaz Weinstein has said he likes punching a bully in the nose. Yes, the bullies in this case are closed-end funds. In their defence, the UK has tightened investment trust rules to close gaps exposed by activists such as his Saba Capital.

Anyone who has watched the sitcom Silicon Valley will recognise some of the odd behaviour currently seen among US venture capitalists. A recent post on X by one entrepreneur highlighted these. Apparently, the “power dynamic is weird”.

And finally

The glass hall of the Neue Nationalgalerie Berlin will be the venue for the first major exhibition of the artist Constantin Brâncuşi in Germany in more than 50 years. His 150 sculptures and archive treasures will be framed by Mies van der Rohe’s architecture, and include a partial reconstruction of Brâncuşi’s studio.

Until August 9 2026