The fallout from the FT’s Crispin Odey investigation

One scoop to start: Insight Partners has slashed the $20bn target for its latest fund and said it would slow down its pace of dealmaking after almost a year of glacial fundraising as technology valuations have slumped.

And one invitation to start: Join us and top dealmakers from Goldman Sachs and Cevian Capital at an exclusive Due Diligence forum in London where we’ll be discussing the rise of corporate break-ups and what it means for companies, investors and advisers. 

There are a few spaces left, so if you’re interested please email due.diligence.forum@ft.com.

In today’s newsletter:

• Tracking the Odey fallout

• Inside Thoma Bravo’s big sale to Nasdaq

• US banks shut out of China listings

High finance begins cutting ties to Crispin Odey 

After making hundreds of millions of pounds betting on Brexit in 2016, Crispin Odey took to the BBC to boast about his accomplishments. “I still think tomorrow they’re gonna take it all away from me,” he said with a laugh.

The risk-hungry investor was used to wild swings in his portfolio. But his latest troubles will be hard to recover from.

The hedge fund titan has left his eponymous firm following an FT investigation by Madison Marriage, Antonia Cundy and Paul Caruana Galizia in which 13 women accused him of sexual assault or harassment in various incidents over a 25-year period. 

Odey confirmed to the FT that he had been notified of the firm’s decision but suggested he would fight it. “You have to have [a] willing buyer, willing seller,” he said, declining to comment further.

He also stated last week that “none of the allegations have been stood up in a courtroom or an investigation”, while his lawyers have previously stated that allegations made against him were “strenuously disputed”. 

Nonetheless, Odey’s ties to some of the world’s most powerful financial institutions have begun to unravel.

The move to eject Odey from his own fund came after Morgan Stanley, one of OAM’s prime brokers, moved to cut ties with the firm last week.

Goldman Sachs has also begun unwinding its relationship with the firm, according to people familiar with the situation. JPMorgan Chase is reviewing its own ties.

BNP Paribas-owned Exane told OAM it was terminating the relationship on Thursday night, according to people with knowledge of the development, while UK-based Schroders has parted ways with OAM by selling investments run by the fund manager.

The fallout has led EU funds managed by OAM to discuss restrictions on investors’ withdrawals as part of emergency measures to contain the damage, the FT reported on Monday. MPs also plan to grill the UK’s Financial Conduct Authority over its handling of the allegations. The revelations from the FT’s investigation prompted the FCA to broaden an existing investigation into the firm.

It’s a swift reversal in Odey’s reception on Wall Street and in the City of London, where murmurs of his alleged sexual misconduct remained just a footnote on his more than three decades on London’s hedge fund scene.

Now, though, it seems he’s in for a reckoning.

The dealmaker behind Thoma Bravo’s big windfall

The world’s largest trading venues such as Nasdaq and the London Stock Exchange are turning to private equity to become broader financial technology businesses, minting enormous windfalls for Wall Street.

On Monday, US exchange group Nasdaq struck its largest-ever acquisition, buying Adenza, a risk management and compliance software business, from buyouts group Thoma Bravo for $10.5bn.

Nasdaq chief executive Adena Friedman orchestrated the deal by reaching out to Thoma. She has transformed the exchange into a major technology vendor to large banks. Less than a quarter of Nasdaq’s revenues will now come from trading fees.

For Holden Spaht, the lead Thoma partner on Adenza, it was his second 11-figure sale of a financial software company to a large exchange group.

Spaht led Thoma’s 2018 takeover of mortgage software specialist Ellie Mae for $3.7bn. Eighteen months later, Thoma sold the business to Intercontinental Exchange, owner of the New York Stock Exchange, for over $11bn.

Thoma has invested tens of billions in software buyouts in recent years, causing some to question the prices it has paid. Monday’s sale signals some bets are paying off. Thoma’s Fund XIII and its $22.8 Fund XIV — raised in 2020 — own Adenza, a source told DD.

Thoma built the investment by purchasing compliance software company AxiomSL for a reported $2bn in 2020.

A year later, it used AxiomSL to buy Calypso, a seller of risk management software for the derivatives market, for $3.7bn. To finance the tie-up Thoma raised more than $2bn in private financing from a group of 13 lenders led by Owl Rock that included its own credit arm.

Other buyout firms have received windfalls from large exchanges.

In 2019, Blackstone sold Refinitiv, the financial data business it carved out of Thomson Reuters, to LSE Group, the parent company of the London Stock Exchange, for $27bn in stock. It turned Refinitiv into one of Blackstone’s best-ever investments.

Thoma is hoping for a similar outcome. It will receive $5.75bn in cash and a 15 per cent stake in Nasdaq worth about $5bn.

While Thoma has a positive view on the exchange’s prospects, Nasdaq plunged 11.8 per cent signalling investor unease with the 35-times cash flow multiple it is paying.

Bravo to Spaht, but for Thoma to win big, stockholders will eventually have to like the deal.

China listings: US bankers wonder, why bother? 

We wrote last month about how some of the biggest banks on Wall Street and in Europe have spent years pouring resources into setting up investment banking operations in mainland China, to little avail. 

Perhaps the most visible example of their difficulty comes in the form of their tiny — and falling — share of roles on Chinese listings. 

That has now fallen to its lowest level in more than a decade. This year, foreign banks have been involved in just 1.2 per cent of new listings by value, DD’s Kaye Wiggins and the FT’s Thomas Hale and Hudson Lockett report. 

And not a single US bank has been involved in any of the 109 initial public offerings on China’s stock market this year, even though $26bn has been raised in that time.

Worsening relations between the US and China are certainly part of the problem, making it harder for Chinese companies to justify bringing in American advisers. 

There’s also a due diligence issue: several executives at global banks said it was hard to carry out the checks required. 

Some senior bankers in Asia are now starting to wonder why they bother. “I’m amazed that there’s [billions of dollars’ worth] of issuance for IPOs in Shanghai every week, and the banks underwriting them are almost exclusively domestic,” said one executive from a US bank. 

“Something needs to happen — the big banks either need to be involved in these deals, or we should leave the business and stop having resources allocated to it.”

Job moves

• Illumina chief executive Francis deSouza has resigned following a bruising proxy battle with activist investor Carl Icahn over the gene sequencing group’s future.

• Five Credit Suisse senior executives departed hours after its takeover by rival UBS.

• Francesco De Ferrari, who had run Credit Suisse’s wealth management arm, will become a senior adviser to UBS wealth head Iqbal Khan.

• Goldman Sachs’ new consumer lending boss Stephanie Cohen is taking leave to focus on her family, Bloomberg reports. 

• Barclays is struggling to stem an exodus from its investment bank including managing directors Michael Gingue and Sam Jackson, who are moving to Jefferies, and Derek Keller, who is joining UBS, people familiar with the matter told the FT.

• Andreessen Horowitz has opened its first international office in London. 

Smart reads

Surprise successor After taking the reins from his father, Alex Soros is using his unexpected ascent through his family’s $25bn foundation to back even more left-leaning politics, The Wall Street Journal reports.

In the hot seat Mary Erdoes made JPMorgan a one-stop shop for billionaires. But new emails related to the bank’s legal troubles over Jeffrey Epstein have placed the star executive under scrutiny, Bloomberg reports.

Saudi’s golf king The New York Times chronicles the top-secret merger between the PGA Tour and LIV Golf that could make Saudi powerbroker Yasir al-Rumayyan one of the most influential figures in sport.

News round-up

JPMorgan agrees to settle with Jeffrey Epstein accusers in class action lawsuit (FT)

FTC plans to ask court to block Microsoft-Activision Blizzard deal (FT)

UBS sets ‘red lines’ for Credit Suisse staff as it completes takeover (FT)

Lex Greensill faces Swiss criminal case alongside ex-Credit Suisse bankers (FT)

Elon Musk’s refusal to pay rent adds to Goldman Sachs bad property loans (FT)

Calpers plans multibillion-dollar push into venture capital (FT)

UK sportswear group Frasers buys stake in AO World (FT)

UK ecommerce group THG faces shareholder rebellion (FT)

Pharma: M&A strategy gets dose of bitter medicine (Lex)