Trump’s ‘hot commie summer’

One scoop to start: Almost three-quarters of HSBC’s Hong Kong commercial property loan book was flashing warning signs by the end of June, as a prolonged slump in retail spending and sluggish demand for office space weighed on Europe’s largest bank.

And another thing: The European Commission has approved the €4.1bn takeover of Just Eat Takeaway by Prosus, after the technology investment group offered to make significant concessions in order to gain permission for the food delivery deal.

In today’s newsletter: 

• Nvidia splits China revenues with Uncle Sam

• Dan Loeb’s shareholder problem

• Zuber Issa calls for an EG US sale

Donald Trump’s Nvidia deal

“It’s officially hot commie summer.” 

That was the declaration from hedge fund magnate Dan Loeb on X in late June, after the surprise victory of democratic socialist Zohran Mamdani in New York City’s primary election.

Turns out, someone else is delivering on that mandate: US President Donald Trump.

The Trump administration has secured an agreement with Nvidia and AMD to get a 15 per cent cut of revenues from their chip sales in China, the FT scooped on Sunday.

The two American chipmakers will be allowed to sell semiconductors in China, provided Uncle Sam gets a slice of the action.

Trade experts say it’s a deal without precedent in US history: no American company has ever agreed to pay a portion of revenues in order to obtain export licences. 

(Dallas Mavericks minority owner Mark Cuban says it’s simpler than that and progressive Democrats should be thanking the president.)

Trump had previously told Nvidia it couldn’t sell chips to China, but U-turned after a meeting earlier this year with the company’s chief, Jensen Huang.

As the weeks rolled on, export licences failed to materialise, setting the scene for a second meetup between Huang and Trump last week.

The Nvidia boss met the president in the White House on Wednesday, and two days later, the commerce department began to issue the long-awaited licences, conditional on the revenue-sharing agreement.

It’s a style of dealmaking that America’s corporate leaders are becoming ever more familiar with.

The closest analogue is Nippon Steel’s acquisition in June of US Steel. After 17 months and objections from two presidential administrations, Nippon finally clinched a blessing from Trump — but only once it agreed to give the government a golden share. 

A more recent case came last week, when Apple committed to invest $600bn in the US over four years and secured an exemption from the president’s threat of a 100 per cent tariff on semiconductor imports.

Apple chief Tim Cook shook Trump’s hand in the Oval Office, presenting him with a plaque made partly of 24-karat gold. The president called Cook one of “the great and most esteemed business leaders and geniuses and innovators anywhere in the world”.

Once, three-letter agencies and lawmakers in Congress were the people to get on board if you wanted to do big business in the US. Now an audience with the president seems paramount, and you’d better bring along a sweetener.

Dan Loeb’s fight to invest for America’s grandparents

Dan Loeb wants to turn his London-listed investment trust into a Cayman Islands reinsurer. Not all the activist investor’s shareholders are on board.

That’s forcing a fight as Loeb tries to push into managing money for America’s growing elderly population.

The spat kicked off in May when Third Point Investors Limited, which was set up to feed into Loeb’s New York hedge fund Third Point, announced that it would absorb reinsurer Malibu Re in a reverse takeover.

Malibu Re is Loeb’s path into the fast-growing market for annuities, already the stamping ground of private capital giants Apollo and KKR.

Retirement products are all the rage with alternative asset managers, since they provide a captive client base that frees them from the need to regularly raise money.

But the market is getting crowded, and a group of TPIL investors says Loeb is late to the party.

“Every alternative asset manager now has some sort of reinsurance or insurance client,” an investor opposing the takeover told the FT’s Lee Haris and Costas Mourselas.

Cayman vehicles have proved more contentious — even compared with other offshore reinsurance destinations such as Bermuda — since they are more lightly regulated and required to hold less capital to meet their obligations.

TPIL did give shareholders a partial way out of the takeover, which would value Malibu Re at about $68mn. Then it sweetened its initial tender offer, offering shareholders a redemption offer with a narrower discount to net asset value.

But the shareholder group still isn’t sold and has raised questions about ties between Third Point and Jefferies, the investment bank tapped to give an independent opinion on the transaction.

The chair of TPIL’s strategy committee described the group’s claims of “poor governance and undisclosed conflicts of interest” as “fantastical”.

Cracks in the forecourt

The private equity-backed petrol station giant EG Group had appeared to be headed towards an initial public offering in the US.

A public listing for EG Group, which is co-owned by TDR Capital and its billionaire co-founders Mohsin and Zuber Issa, would mark a milestone for the business that includes brands such as Cumberland Farms. 

It would also allow TDR to begin exiting its investment. 

But there’s a wrinkle in those plans. Zuber Issa has now said EG Group should explore other options, particularly a sale of its more than $5bn US business.

“There are people who want to buy the US assets,” Zuber told DD’s Ivan Levingston in an exclusive interview at EG’s global headquarters in his hometown of Blackburn, Lancashire.

“It will be an auction process which would get to a clear end goal much quicker [than an IPO] and we can pay the debt off.” 

The comments mark a rare public intervention from Zuber and suggest a divergence of opinion with TDR on the best way to exit what has been a highly successful investment.

Zuber and Mohsin both own 25 per cent of the business that they founded years ago as Euro Garages, and they also sit on the board.  

Among the reasons Zuber gave for a sale of EG’s US assets was that such an event would leave the group with leverage of about three times earnings, compared with current levels of about five.

In the wide-ranging interview, Zuber also addressed other topics including the controversy over the Issas’ decision to buy two private jets using interest-free loans from EG, saying that they had been paid off. Read the full story here. 

Job moves

• Oxford Nanopore chief executive Gordon Sanghera plans to step down next year, the FT reports. Sanghera co-founded the UK biotech and has led it for more than two decades.   

• iCapital has named former Bloomberg TV anchor Sonali Basak as chief investment strategist.

• Arctos, the sports-focused private equity group, has promoted Alastair Seaman and Brian Lafemina to partners.

• Paul Weiss has hired Leo Kitchen as a partner for its litigation team in London. He was previously a partner at Quinn Emanuel.

Smart reads

Great jeans American Eagle has cooked up a political storm with its advertisement featuring the blonde, blue-eyed actress Sydney Sweeney. While that may give it a brief sales bump, it’s a risky ploy, Lex writes.

Comeback king Running a successful multi-strategy hedge fund is no mean feat. But 38-year-old Ryan Tolkin has managed to steer Schonfeld through choppy waters, and it’s on a rebound, Bloomberg writes.

Dip buyers Retail investors are propping up markets through Trump’s tariff wars, The Wall Street Journal reports. It might be more than just a passing trend.

News round-up

Paramount seals $7.7bn exclusive US rights deal with UFC (FT)

Luxury brand Fabergé sold to tech investor for $50mn (FT)

AXA IM in talks to take stake in Telefónica Spanish fibre venture (FT)

Martin Sorrell’s S4 Capital in takeover talks with ad agency MSQ Partners (FT)

Nuclear reactor groups tap into Spac revival to fuel atomic energy boom (FT)

Rolls-Royce agrees deal to offload £4.3bn pension liabilities to PIC (FT)

BlackRock and Vanguard lead US ‘super league’ dominating Europe (FT)

Barrick Mining seeks $3.5bn from US and other lenders for Pakistan copper project (FT)

Big Oil heeds call to ‘drill, baby, drill’ as green transition slows (FT)