There’s one thing to start with. OpenAI establishes $4 billion in credit facilities from top banks including JPMorgan Chase and Goldman Sachs, giving ChatGPT maker access to more than $10 billion in liquidity as it seeks to stay ahead of rivals developing artificial intelligence tools is given.
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In today’s newsletter:
Blackstone expects real estate transactions to recover
Wall Street likes Kamala
US-China tensions hit pharmaceutical industry
Gray’s Anatomy of the $4 Trillion Real Estate Market
The world’s most prolific real estate trading firm expects merger and acquisition activity to return to the $4 trillion sector hit by rising interest rates and a spike in office real estate defaults.
Jonathan Gray, architect of Blackstone’s $300 billion-plus real estate investment arm, predicted that a rebound in valuations for publicly traded real estate companies is setting the stage for a wave of M&A activity.
Mr Gray told the FT that trading through listed property trusts was on the brink of recovery. That’s because the stock prices of many of these companies have soared this year, allowing them to issue new shares to fund acquisitions.
“I think there will be some REIT IPOs,” Gray told FT’s Joshua Oliver and DD’s Antoine Gala, referring to real estate investment trusts. “But I also think there will be existing public companies that issue stock to sellers or do secondary offerings. We expect REITs to end up being quite acquisitive.”
In July, the blockbuster IPO of Stonepeak-backed cold storage REIT Lineage Logistics helped restore optimism about the pipeline of new listings. Other investment firms, including Digital Bridge, are also reportedly considering listing large companies they own, such as data center operator Switch.
Blackstone has been one of the most prolific buyers in the real estate sector in recent years.
The firm used Bright, a non-traded real estate fund, to acquire about a dozen publicly traded companies between 2017 and 2022, with more than $50 billion in investor cash flowing into the fund.
But Bright has suffered from high redemptions in recent years, with funds becoming the main sellers. In the end, it released more than $15 billion in real estate to return cash to investors.
Despite this, Blackstone has been active in recent acquisitions, including taking Australian data center operator AirTrunk and apartment landlords Air Communities and Tricon Residential private for A$20 billion (US$13.5 billion). We are working on this.
The deal comes ahead of what Gray says is a clear bottom in valuations as interest rates fall.
Gray, the heir apparent to Blackstone co-founder Stephen Schwarzman, said real estate investors learned a hard lesson from the Federal Reserve’s aggressive interest rate hikes in 2022 and 2023. he told FT.
The sector’s absorption of widespread pain is “another reminder of the sensitivity of interest rates to asset classes,” Gray said, a lesson that is being forgotten cycle by cycle. “There tends to be a huge recency bias in the[investment]world.”
Kamala’s Wall Street Charm Attack
Big deals require a small army of pious advisors. The same goes for Kamala Harris’ candidacy for the White House.
Ms. Harris has helped broker relationships with the nation’s financiers, corralling Democratic donors and donors such as Mr. Gray of Blackstone, Blair Efron of Centerview and Ray McGuire of Lazard. are.
Despite some executives still leaning toward Donald Trump and his plans for deep tax cuts, Wall Street has warmed to Harris, and the courtship appears to be working well behind the scenes.
One leading private equity investor said he had planned to vote for Mr. Trump but may now reconsider. “Trump is still better on taxes, but Harris seems closer to Clinton than Obama or Biden,” he said.
Democrats’ efforts to court Wall Street support will be on full display at their August convention, with Ken Shenault, former CEO of American Express and current chairman of private equity group General Catalyst. He took the stage in a prestigious lecture slot.
And Ms. Harris’ attempts to rally support from corporate America were not limited to Wall Street.
She has hosted CEOs such as Karen Lynch of CVS, Ryan McInerney of Visa, Charles Phillips of Infor and Greg Brown of Motorola at her Washington home.
Her decision to sue Wall Street has also sidelined some prominent Republican donors. Citadel founder Ken Griffin, who backed Republican Nikki Haley’s White House campaign earlier this year, has not endorsed Trump and is now focused on supporting congressional candidates.
JPMorgan Chase CEO Jamie Dimon caused a stir earlier this year with positive comments about Trump, but recently declined to endorse either candidate.
The chief executive of a major US asset management company wondered whether the centre-left’s image of “loving capitalism” would stick.
“Even if you believe she is centre-left, could she govern there?”
US-China tensions hit biopharmaceutical sector
For years, China’s high-tech industry has been under fire from U.S. lawmakers. It culminated earlier this year when President Joe Biden signed a bill banning TikTok unless it severed ties with its Chinese parent company ByteDance.
China’s pharmaceutical industry is now a target of the US government. And the threat of imminent restrictions on China’s interests is starting to fuel potential deals, the FT’s Oliver Burns and Eleanor Alcott and DD’s James Fontanella-Kahn report.
The House of Representatives has already overwhelmingly passed the BioSecure Act, which would prohibit pharmaceutical companies with contracts with the US government from using the services of Chinese groups after 2032.
And although it has not yet passed the Senate, the bill’s impact is already beginning to ripple through the industry.
Two affiliated Chinese drug makers targeted by the bill, known as Wuxi Uptech and Wuxi Biologics, are working to sell some of their businesses, the people said. The combined value of both companies is approximately $36 billion.
WuXi AppTec has put its cell and gene therapy manufacturing division, which operates four laboratories and manufacturing facilities in Philadelphia, up for sale. WuXi Biologics is evaluating interest in some of its European production facilities, including two German manufacturing facilities acquired from Bayer.
European biopharmaceutical companies with or seeking federal contracts with the United States have been reluctant to use Wuxi in light of the pending legislation.
Wuxi Biologics told the FT that “business momentum remains good.” We are continuously securing new projects in all regions including the US, EU, China and the rest of Asia. ”
Wuxi companies are key cogs in the global pharmaceutical supply chain, playing a role in the production of AbbVie’s $3.5 billion-a-year cancer drug Imbruvica and Pfizer’s anti-coronavirus drug Paxlobid.
Even the threat of regulation was changing the shape of pharmaceutical M&A long before the bill was passed.
job change
Wall Street block trader Andrew Liebeskind is leaving hedge fund LMR Partners after less than a year to join rival Exodus Point Capital Management as global head of equity capital markets, according to people familiar with the move. I decided to join.
AustralianSuper, one of the world’s largest pension funds, has made several appointments in the US. Michael Limpalar has been appointed head of the Americas, Maria Reid will become head of fund services for the region, and Nick Ward will relocate to New York as head of private credit.
O’Melveny has hired partners David Carter and Braden Donnelly to focus on private equity. Join us from Ashurst.
smart read
Lavish kickbacks Luxury hotel suites, Mercedes-Benz convertibles and Michelin-starred sushi dinners are just some of the kickbacks US politicians are said to have received in recent days, the FT reported. Is it that easy to buy American influence?
The next frontier Private credit giants are working to bring the $1.7 trillion market to the masses, The Wall Street Journal reported. The regulatory hurdles are high.
Denise Coates, Britain’s richest woman, built a multibillion-dollar empire by allowing users to gamble at any time of the day, the Guardian writes. Will her great success come at a broader human cost?
News summary
Anglo American boss says it is ‘not inevitable’ that a buyer will appear after the group shrinks (FT)
Jupiter poachs team from rival Origin as part of foray into global equities (FT)
Revolut asks Meta to cover restitution costs to fraud victims (FT)
Former Steinhoff finance director sentenced to prison in South Africa (FT)
CEOs turn to podcasts to control message (FT)
Listed landlords have an advantage in private equity, says British Land chief (FT)
Tesco boss says British consumers are ‘doing well’ ahead of Christmas (FT)
Due Diligence was conducted by Arash Masoudi, Ivan Levingston, Oltenka Aliazi and Robert Smith in London, and James Fontanella Khan, Sujeet Indup, Eric Pratt, Antoine Gala, Amelia Pollard and Maria in New York. -Heater, Hong Kong written by Kay Wiggins and George. Hammond and Tabby Kinder of San Francisco and Javier Espinoza of Brussels. Please send feedback to due.diligence@ft.com.
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