The Barclay family debts that caused a media circus

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In today’s newsletter:

• Telegraph Media Group goes up for sale

• How Wall Street mediated a golf truce

• Asset managers target Nvidia

For whom the debts toll

It’s a well-worn cliché for financial journalists to cite Ernest Hemingway’s observation that bankruptcy occurs “gradually, then suddenly”.

Nonetheless, DD could think of few better ways to describe the shock crash into receivership of the Barclay family holding company that owns The Daily and Sunday Telegraph newspapers.

There’ve been growing hints that the finances of the family of British billionaires have become increasingly strained. And yet Lloyds Banking Group’s move to put a Bermudian-based holding company that ultimately controls the Telegraph Media Group into receivership stunned the British media industry.

The newspaper and the Spectator magazine will now be put on the block, ending the nearly two decades of Barclay ownership that began when Sir Frederick Barclay and his late brother David acquired the Telegraph newspapers in 2004.

How did it come to this?

A bitter family feud spilled over into public view in 2020 when Sir Frederick and his daughter Amanda sued a group of Sir David’s direct relatives for allegedly being complicit in bugging 1,000 of his private conversations in the Ritz hotel.

Then last year, Sir Frederick found himself facing the possibility of a short prison sentence after a judge found him in contempt of court for failing to pay his former wife maintenance and legal costs totalling £245,000.

Once one of Britain’s wealthiest men, he told the court he could not afford to pay his ex-wife because he had handed control of the business empire he helped build with his late twin brother David to his three nephews.

An opaque thicket of offshore holding companies and family trusts have long obscured the true nature of the Barclay finances.

To get a sense of the tangled ownership structures, you only have to look at the curiously caveated statement in TMG’s accounts that its “directors regard [its parent company] as being ultimately controlled by the Sir David and Sir Frederick Barclay Family Settlements”.

Lloyds has now put one of the daisy chain of offshore holding companies that own The Telegraph into receivership. Our FT colleagues have reported that the debt at this holding company — which Lloyds assumed with the takeover of ailing lender HBOS in 2008 — has ballooned to nearly £1bn.

(While there’s little public information on the Bermudian entity B.UK Limited, interested DD readers can learn a few more details from the Paradise Papers leak.)

Who will be interested in buying the Telegraph now that it’s up for sale?

Potential runners and riders include the likes of rival media groups such as DMGT and even Czech energy tycoon Daniel Křetínský, who owns a slice of France’s Le Monde newspaper and previously took a look at the Telegraph in 2020. Rupert Murdoch, meanwhile, could take a tilt at the Spectator.

London’s restructuring advisers will also be casting a careful eye over the rest of the Barclay empire, which includes online retailer Very Group and delivery service company Yodel.

Wall Street brokers a golf world peace treaty

The chasm in men’s professional golf was perhaps most evident not at a fevered competition on television with a large prize check, but at a friendly outing in South Florida.

This past February, the “member-guest” gathering at the ultra-exclusive Seminole Golf Club in Juno Beach attracted most of the biggest stars in the game alongside titans of industry and finance.

Seminole’s president Jimmy Dunne, a prominent Wall Street dealmaker, however, hadn’t invited those previous stalwarts of the event who had ditched the PGA Tour for LIV Golf, the rebel league funded by Saudi Arabia that launched in 2022.

“We are doing what we have always done,” Dunne told Golfweek magazine prior to the event. “PGA Tour players get the first priority. This event has always been supported by the PGA Tour.”

Dunne has softened his tone towards the Saudis’ foray into golf. On Tuesday, the rival leagues revealed a merger that stunned the golf world. 

Dunne and Wachtell Lipton’s Ed Herlihy acted as architects on behalf of the PGA behind the scenes, both big hitters in the worlds of golf and M&A.

Dunne is close with several pros including LIV critic Rory McIlroy and boasts memberships at the most exclusive courses across America.

Dunne’s also known as a former executive of the investment banking firm Sandler O’Neill + partners, which lost dozens of employees in the 9/11 terror attack on the World Trade Center.

Dunne was playing golf that morning. In the years after, he has been widely credited with both resurrecting Sandler and honouring his deceased colleagues. His new partnership with Saudi Arabia has attracted plenty of criticism from onlookers on Wall Street.

DD and our colleagues broke down the monumental deal in detail here.

Money managers pile into Nvidia

Trading in Nvidia, the chipmaker now worth nearly $1tn as it becomes the go-to bet for artificial intelligence, confounded DD earlier this year.

The stock had more than doubled ahead of earnings and a number of big prime brokers had suddenly vaulted near the top of the shareholder registry: a tell-tale sign that hedge funds were piling in.

After 2021’s epic collapse of Archegos, the family office that had used equity swaps with a smattering of Wall Street’s biggest banks to supercharge its bets before it imploded, it only made sense to kick the tyres.

What DD heard over and over again: it wasn’t just one fund diving in, but gobs of them. Data from Goldman Sachs shows the company has quickly become one of the most popular bets by hedge funds. In total 113 hedge funds owned a stake at the end of the first quarter — with dozens either initiating a position or increasing their stakes.

Add in the swaps not reported on the funds’ individual 13-F filings with the SEC, and it’s clear why Nvidia’s now on Goldman’s so-called hedge fund VIP list.

“I haven’t seen a guidance change like that ever, frankly,” one tech trader at a Wall Street bank told DD, adding that after the company published its latest figures, “people do the math and it becomes something [they] have to own . . . the chase [was] on”.

It’s a major win for the hedge fund community, given their counterparts in the long-only mutual fund world were broadly underweight in the stock. That choice, and the fact that this year’s S&P 500 gains have predominantly been driven by just a handful of growth stocks, has contributed to the lagging performance of mutual funds.

The trade could still unravel, particularly if the surging revenues the company forecast prove to be unsustainable. But in recent days, mutual funds have been joining the hedge fund community: buying up the stock.

Job moves

• CNN chief Chris Licht is set to leave the network after a series of controversies. CNN’s Amy Entelis, Virginia Moseley, Eric Sherling will help run things until a replacement is found.

• One of Canada’s largest asset managers, The Alberta Investment Management Company, plans to more than double its headcount in London.

• Jefferies has hired senior Bank of America software investment banker Ron Eliasek, per Reuters.

• Shearman & Sterling partner James Duncan has quit the US law firm ahead of its merger with Allen & Overy to join Freshfields Bruckhaus Deringer in London.

Smart reads

On-air soap opera The departure of CNN boss Chris Licht is the culmination of a failed attempt by the network to shift from anti-Trump rhetoric to a centrist narrative, Semafor’s Ben Smith writes.

End of an era Sequoia’s venture capital empire was bridging hemispheres. Until geopolitical tensions became difficult to ignore, the FT reports.

SVB & McKinsey Three years before its implosion, Silicon Valley Bank turned to consultants at McKinsey & Co to help it grow. The advisory firm ended up playing a role in its demise, The Washington Post reports.

News round-up

Qataris make final bid in battle for Manchester United (FT)

Porsche SE board member charged with money laundering (FT)

Markus Braun told Wirecard’s top lawyer that compliance was ‘crap’, court hears (FT)

Ivan Menezes, businessman, 1959-2023 (FT)

Vodafone, Hutchison to announce UK merger as soon as Friday (Reuters)