The Information : OpenAI’s Next Round

OpenAI’s Next Round

This week, we and others reported that OpenAI has been in early talks with investors about a new private round that could value it at $1.2 trillion or more. That follows CEO Sam Altman’s recent statement that an initial public offering wouldn’t happen this year, not that anyone was actually expecting that!

There are plenty of unanswered questions about the recent turn of events. But the biggest—why stay private?—seems obvious. It buys the company more time to rev up sales without the pressure of disclosing on how much it’s paying for that growth, such as offering margin-crushing discounts to lure business from rival Anthropic.

It could also use the time and new cash to secure more AI servers. That could deepen OpenAI’s cash burn—but also make life harder for Anthropic, which seems to be in a mad dash to line up every last AI server it can get its hands on, as Valida’s scoop on Anthropic’s compute deal with a Trump-affiliated cloud provider shows.

There could well be demand for OpenAI shares in another private funding round from large hedge funds looking for a quick-ish pre-IPO pop. Say OpenAI values its IPO at $1.5 trillion, around the estimated valuation for Anthropic’s upcoming IPO. That would be a 25% bump from a $1.2 trillion valuation—a tidy return at a time when tech stocks look vulnerable to rate hikes and AI pacing fears.

The bigger question is which investors will write the big checks to anchor a round that will likely amount to the tens of billions of dollars. The company has already raised or received commitments for an incredible $182 billion in funding, by far the most equity ever raised by a private company, according to PitchBook, and topping Anthropic’s total $130 billion in equity funding.

As a reminder, OpenAI previously projected it would burn about $170 billion this year through 2028, largely due to rising AI training costs from renting or leasing servers. And OpenAI’s financial performance earlier this year sure made it seem like it would make good on that cash-burn promise. So putting in capital at this elevated valuation isn’t for everyone, even if the vibes around OpenAI’s GPT-6 Astra model are pretty good. After all, many of its researchers are saying publicly that it needs to slow down the pace of model development so that safety practices can catch up!

Plus, OpenAI has tapped many of the big pocketed private and public investors already. The blog post announcing $122 billion fundraise in March listed nearly 30, including asset managers such as T. Rowe Price, Fidelity and BlackRock, crossover funds such as Coatue Management, D1 Capital Partners and Dragoneer Investment Group, and Silicon Valley VC firms like Andreessen Horowitz and Sequoia Capital. All command big pools of cash, but few can write checks in the tens of billions of dollars that anchor these mega (super mega?) funding rounds.

Indeed, with the exception of SoftBank, which pledged $30 billion in the latest round, most of OpenAI’s biggest backers in its last fundraising were companies that supply the ChatGPT maker with chips and compute. Nvidia pledged $30 billion and Amazon committed to invest up to $50 billion in two stages. Amazon has since made the entire investment, after OpenAI negotiated a new agreement with long-term partner Microsoft so that it could run its AI on competing cloud services, according to a person familiar with the arrangement.

The wrinkle here is that several of OpenAI’s backers are dealing with their own capex strains—or, in SoftBank’s case, already are navigating loans to fund their past obligations.


For instance, SoftBank was seeking a $10 billion loan as it worked to deliver the last, $10 billion installment of its pledged OpenAI investment, Bloomberg reported in August. Amazon in July projected capital expenditures of $200 billion this year, likely far more than the cash its operations will generate. And Nvidia, as part of a dealmaking sprint over the last few months, is providing credit support covering up to $105 billion of a massive data center in Ohio that OpenAI will use for its AI. Any of these companies may be loath to rattle their own creditors and shareholders by taking another big slug of OpenAI equity.

Who does that leave? In theory, other suppliers that may expect OpenAI’s business will keep growing. These include Broadcom, with which it’s designing custom chips. The cash and marketable securities of its suppliers isn’t bottomless, of course (Broadcom had about $24 billion in cash and equivalents as of August) and some are facing their own funding constraints. With suppliers that have the cash, however, the gamble may seem smart—especially if OpenAI’s revenue picks up steam.

That’s the big question. OpenAI’s annualized revenue growth in July rose past $40 billion, well behind Anthropic’s $65 billion. In recent weeks, OpenAI has touted gains in use of its Codex coding product and from its recently released models, including 5.6 and Astra. But it also cut prices, a tactic that’s great for user growth but doesn’t help as much with cash receipts.

FT : Democrats vow to pursue ‘Trump crime family’ after midterm elections

Democrats vow to pursue ‘Trump crime family’ after midterm elections
Lawmaker on oversight committee says he will probe Donald Trump’s sons and Elon Musk if his party takes control of the House

Democrats will be “aggressive” in pursuing the “Trump crime family”, their business partners and billionaire allies if the party triumphs in the midterm elections, the man set to lead a powerful congressional committee has pledged.

“The single biggest part of our work is going to be focused on the Trump crime family,” said Robert Garcia, the highest-ranking Democrat on the US House oversight committee.

“If you are involved in any way with the Trumps, and if you’re part of an American business, you’re going to respond to the Congress,” he added.

In an interview with the FT, Garcia outlined his investigative priorities if he takes control of the committee’s agenda after the November elections, including amassing evidence that could lead to Trump’s impeachment and questioning Elon Musk.

Garcia said he believed President Donald Trump has “committed crimes” and “impeachable offences, and I think it’s our job to build the case and to provide the evidence”.

His comments come as Democrats — notably Georgia senator Jon Ossoff — have contrasted the Trump family’s alleged self-enrichment with America’s affordability crisis on the campaign trail in their push to flip the House and the Senate.

The FT last year revealed the Trump family had made at least $1bn through a variety of cryptocurrency ventures. Corporate donors from the crypto and tech sectors have developed close ties to the first family and been granted access to the president, with some receiving legal relief or pardons, winning government contracts or benefiting from policy changes.

“The scale and the scope of it is so outrageous,” Garcia said of alleged corruption in the Trump family and administration.

He said he had a number of questions for Donald Trump Jr, including how some companies his firm invested in received multimillion-dollar contracts with the Pentagon and why a Russian businessman spent hundreds of thousands of dollars on his wedding celebrations in the Bahamas.

Garcia, who will have the power to compel witnesses to testify under oath if Democrats win, conceded that getting a member of the president’s family to testify in front of Congress would be “an enormous task” but “one that we’re going to be aggressive on”.

He said it would be easier to get their business associates to respond to subpoenas. “We will get the information, whether it’s directly from the Trumps or through those that engage with them,” Garcia claimed.

The FT last year reported that Trump Jr’s 1789 Capital invested in rare earths start-up Vulcan Elements shortly before it received a $620mn loan from the Pentagon. Another company he backed, drone group Unusual Machines, received a military contract.

Trump Jr’s spokesperson has consistently said he has had no involvement in negotiations with the government on behalf of 1789’s portfolio companies.

A Pentagon official said: “No company receives preferential treatment,” and added that “outside affiliations, investors or political connections play absolutely no role in the department’s funding decisions”.

The White House said: “Democrats have no agenda to improve the lives of the American people, just plans to obstruct and baselessly target President Trump’s commonsense agenda.”

They added that Trump’s stock portfolio is “independently managed by third-party financial institutions”, that all investment decisions are made entirely by independent managers and that there are “no conflicts of interest”.

While in the minority, Garcia has attempted to probe the business dealings of Trump Jr, the president’s son-in-law Jared Kushner, Middle East special envoy Steve Witkoff and commerce secretary Howard Lutnick. The California Democrat has also pursued crypto deals, including those involving Binance founder Changpeng Zhao, whom Trump pardoned last year. They have all denied any wrongdoing.

The House oversight committee will continue its investigation into Jeffrey Epstein no matter who holds power next year.

Garcia said that under Democratic leadership the panel would also focus on the “abuses” involving Immigration and Customs Enforcement and the Department of Homeland Security “and anyone that’s ripping off the American public on the corporate side”. He expressed interest in Trump’s effort to build a new White House ballroom and Triumphal Arch, and renovate the Reflecting Pool.

He also said he has “a lot of questions” for Musk, especially regarding the billionaire’s actions while leader of the so-called Department of Government Efficiency.

While in the minority, Garcia and fellow Democrats have written to several large US companies, including Chevron, ExxonMobil and ConocoPhillips, probing their involvement with the White House’s plan to take control of Venezuela’s oil.

Investigating the donors to Trump’s ballroom could involve some of America’s biggest companies, including Amazon, Apple, Google and Palantir.

But Garcia said it was important the committee was “focused” on the most egregious allegations of corruption. “I think we’ve got to be very thoughtful about what our priorities are,” he said.

Garcia has risen quickly to lead Democrats on the oversight committee since being elected to the House in 2022.

He immigrated from Peru to the US as a young child. After becoming a US citizen in his early twenties, Garcia was elected mayor of Long Beach — south of Los Angeles, California — in 2014. The first gay immigrant in Congress, he put up portraits of Superman in his Washington office because he learnt to read English from comic books.

Some Democratic colleagues worry that a drive to impeach the president — which would traditionally be led by the judiciary committee but could use evidence from Garcia’s investigations — could prove a political mistake that distracts from the party’s positive agenda.

Garcia said the party’s top priority should be to “slow and stop the Trump agenda”, but that delivering legislation on healthcare and the economy is “everyone else’s job”.

“My job is . . . to hold people accountable for the injustice and the crimes, and the corruption that is leading [to] people losing trust in government,” he said.

FT : US regulator opens markets to tokenised stock trading Blockchain-based repr

US regulator opens markets to tokenised stock trading
Blockchain-based representations of traditional equities can be traded around-the-clock and more easily used as collateral

The US Securities and Exchange Commission has greenlit trading in tokenised stocks in a move that is expected to push crypto companies more firmly into traditional equity markets.

Tokenised stocks are blockchain-based representations of traditional equities. Proponents say they enable holders to trade them round-the-clock, more cheaply than traditional stocks and more easily used as collateral.

The SEC’s long-awaited order comes as the proliferation of stock tokens has come under fire, particularly from companies that object to tokenised versions of their traditionally issued stocks.

Retail brokerage Robinhood offers tokenised stocks outside the US, but has faced criticism for offering tokens tied to the stocks without the approval of the issuers.

The head of cinema chain AMC, Adam Aron, this month blasted Robinhood, saying “We have no connection to this at all, and do not condone it in any way”, calling the offering a “quasi-fake market” in a series of posts on X.

Under the SEC’s so-called innovation exemption, companies such as Robinhood which offer tokenised stocks in the US must “provide written notice and an opportunity to object” to the company whose stock they want to tokenise.

The blockchain-based tokens must also give investors “the same rights and privileges” as traditional stocks, such as voting rights, and trading in them must stop at the same time as any stoppage on a traditional venue.

Issuers including Robinhood and Kraken owner Payward will have to change the models they currently offer to investors outside the US in order to meet the SEC’s requirements, as they currently do not ask issuers for permission to list their shares and users do not have direct voting rights.

The tokens instead essentially act as derivatives that track a company’s share price. The firms can still continue to offer the derivative model to investors outside of the US.

The SEC’s innovation exemption comes as the agency’s role in setting rules for the crypto industry is expected to grow in lieu of US laws. A landmark US crypto bill, known as the Clarity Act, failed to advance in the Senate this week, as Democrats insisted on stronger limits on Donald Trump’s ability to profit from the digital assets industry.

The order gives venues that want to offer tokenised stock trading a five-year exemption from many rules that apply to platforms such as Nasdaq and the New York Stock Exchange, as the regulator tries to boost digital markets.

Crypto companies are fiercely trying to compete with longstanding exchanges and brokerages by giving customers access to tokenised stocks. They largely believe that stocks, bonds, commodities and other assets will all eventually be traded on the blockchain 24/7.

Some crypto firms have argued against Robinhood’s derivative model and believe corporate issuers must be involved in the process.

“Tokenisation should modernise equity ownership, not create a parallel version of it without the company involved,” said Carlos Domingo, chief executive of Securitize, which works with companies to put their shares directly on the blockchain.

Before the SEC’s latest rule, few companies had undertaken direct issuance. Blockchain technology company Figure Technology Solutions issued its own equity on to the blockchain in February.

Tokenisation firm Ondo Finance’s Matthieu de Vergnes argues that derivatives tied to equities already exist, such as equity-linked notes or American depositary receipts, which offer US investors exposure to foreign stocks.

“It’s most important to make sure it’s regulated and tightly linked to the actual market,” he said.

FT : Thames Water should be temporarily placed under public ownership, MPs warn

Thames Water should be temporarily placed under public ownership, MPs warn
Move would be ‘cost neutral’ for the Treasury while protecting 16mn customers served by UK utility, cross-party parliamentary committee says

Thames Water should be placed into temporary state ownership and current takeover talks with its creditors halted immediately, a cross-party parliamentary committee has urged.

The Environment, Food and Rural Affairs (EFRA) Committee said that it did not believe the “opaque consortium” of more than 100 hedge funds and other lenders that in effect control the company had the public interest or the environment at heart.

Ministers should immediately trigger the Special Administration Regime (SAR), a form of temporary nationalisation, the committee said. It argued the move would be “cost neutral” for the Treasury while protecting the 16mn customers served by the UK’s largest water utility.

“We believe Thames Water can be turned around, but not by giving the keys back to the people who have been joyriding in the family car,” said Alistair Carmichael, the Liberal Democrat MP who chairs the committee. 

The damning report will pile pressure on Andy Burnham, with the decision on what to do with Thames Water a key test of his premiership.

The MPs said they struggled to understand why the government had not already intervened and urged swift action, including emergency legislation if needed.

Thames Water has been in the hands of its senior creditors — operating under the name London & Valley Water (L&VW) consortium — since its previous shareholders walked away in 2024, branding the company “uninvestable”.

Saddled with £20bn in debt, Thames Water is being propped up by a highly expensive emergency loan carrying a near 10 per cent interest rate. Despite sharp increases in bills, the company is set to run out of cash by Christmas unless the government agrees a new deal with the creditors or takes it into the SAR.

L&VW includes prominent US distressed-debt specialists Elliott Management and Silver Point Capital, but there has not been sufficient public transparency over its membership and the MPs expressed “serious concerns” over “their suitability as owners of a critical resource”.

An investigation by the FT earlier this week revealed that Thames Water has incurred almost £2bn in financing costs and advisory fees over the 18 months to the end of September, adding to concerns about the supplier remaining in private hands.

The Efra committee accused the senior lenders of “keeping the company in limbo” to draw out negotiations while “simultaneously reaping millions in debt interest and fees”. It pointed out that investors were trading the debt on the expensive £3bn loan at 112 per cent of face value even before the deal was finalised.

Given the short-term interests of the creditors, the MPs concluded that the consortium is highly unlikely to deliver the “swift turnaround in performance” that the network requires.

The lenders have spent over a year negotiating a formal takeover plan with Ofwat, the water regulator. However, the creditors’ proposal includes a cap on financial penalties for sewage pollution and other operational offences, which MPs said should be rejected.

The MPs also questioned Thames Water’s ownership structure. While Thames Water has stated in court that its senior creditors are its “economic owners”, Ofwat maintains that the defunct 2024 shareholders remain the “ultimate controllers”.

Given that the current legislation only requires due diligence checks on equity shareholders rather than debt holders, L&VW has bypassed legal scrutiny, the MPs said.

L&VW said its plan provided the “fastest route to fix Thames Water’s complex problems”, adding that it “has never been in control of the company” and has never received a dividend.

“They [the creditors] have stepped in to fund a significant revenue shortfall to ensure Thames Water’s record capital investment programme can continue without disruption,” it added.

Thames Water warned that “anything that delays the recapitalisation risks slowing the turnaround, disrupting investment and increasing the cost of delivering the improvements our customers and the environment need.” 

FT : OpenAI’s listing delay raises stakes for SoftBank’s $50bn data centre IPO I

OpenAI’s listing delay raises stakes for SoftBank’s $50bn data centre IPO
Initial public offering of SB Energy set to test investor appetite for Masayoshi Son’s AI gamble

Growing uncertainty about when OpenAI will go public is heaping pressure on SoftBank’s looming listing of its US data centre developer — which has yet to bring a single facility online.

SB Energy is the Japanese investment group’s bet that soaring demand for AI will drive a sustained boom in data centres and is part of SoftBank founder Masayoshi Son’s sweeping vision of the technology’s future.

The listing, which could happen in the coming weeks at a target valuation around $50bn, is set to test investor willingness to keep backing Son’s bet as he tightens his entanglement with the two companies at the heart of AI. Both OpenAI and chipmaker Nvidia will own significant stakes in a listed SB Energy.

OpenAI has delayed its own IPO and is in early talks for a private funding round that could value it at $1.2tn. The moves added uncertainty to SoftBank, which has committed more than $60bn to the ChatGPT maker, as it sought to bankroll Son’s desire to spend heavily on new AI ventures next year, said people familiar with the matter.

OpenAI’s valuation has a significant effect on SoftBank’s own value and balance sheet. While much smaller in scale, a successful listing of SB Energy would also lift SoftBank’s net asset value, giving Son greater capacity to raise funds from banks and markets.

“This is very much the SoftBank ‘circle of life’,” said David Gibson, an analyst at MST Financial, adding that it would make the company even more financially exposed to OpenAI and help Son “fund more debt and investments”.

SB Energy’s aim is to build data centres, connect them to electricity grids and in some cases provide power. Yet its history since being founded in 2019 as a renewable energy group has been complicated.

It has a backlog of contracts worth $439bn in future revenue, with the vast majority related to 8.8 gigawatts of data centre capacity, with an average lease length of more than 19 years. Among groups developing computing power for third-party customers, only CoreWeave — a cryptocurrency miner-turned-cloud computing provider — has anything close to that, with more than $100bn in contracts.

However, SB Energy has no data centres in operation, helping explain why $357bn of the future contracted revenue is only “expected to be recognised” from 2034 onwards.

The group’s main development will be a campus in Ohio that is expected to deliver 8GW of new capacity by 2032. For comparison, Meta’s largest data centre in Louisiana is being expanded to 5GW of capacity.

Nvidia has agreed to provide a guarantee of $105bn for the Ohio project’s initial phase. OpenAI will be the tenant on the campus, as well as on an SB Energy site in Texas. SoftBank itself is a customer of a separate planned site in Texas.

SB Energy has acknowledged the potential perils of its dependence on its interlinked main backers, particularly its exposure to any shifts in OpenAI’s strategy.

“Our near-term revenues, project-level financing arrangements and development plans are significantly linked to OpenAI’s continued performance under our lease and related agreements,” it said in its IPO prospectus.

Recent concerns about the threat posed by AI have prompted renewed calls for a slowdown or pause in development. Senior figures at OpenAI said they would continue spending on chips and infrastructure, even if they moderated AI development, but any slowdown would have an outsized impact on the data centre company.

In contrast with its ambitious target, SB Energy had revenues of just $138.7mn in the first six months of this year, mostly from its existing solar business, and posted an operating loss of $551.6mn.

There are also big questions about the amount of cash that SB Energy will have to find in addition to the IPO, which is reportedly aiming to raise $5bn to $7bn while SoftBank will maintain a majority stake.

SB Energy has said it will need to fund more than $170bn in capital expenditure if it is to actually build the contracted data centres and start collecting rent.

People briefed on SB Energy’s strategy said the company intended to keep its equity share in those projects at roughly 10 per cent, within the range SoftBank tends to use for project financing.

That means the company will need to raise another $7bn or so on top of the IPO and other existing contributions to pay for its capex, according to Gibson’s estimates.

However, the people familiar with SB Energy said it could defray much of that need with cash generated when projects were operational. SoftBank and SB Energy are confident they can find willing investors in the future, the people added, both for any equity needed and the debt to finance the projects. 

Uncertainty around the financing of projects is a major reason why investors are struggling to value the company. Some investors said a $50bn valuation might be tough to hit, while Gibson added it “looks rich given the concentration” of SB Energy’s customer base.

“There is not enough information available to make the maths work,” said a SoftBank investor.

However, SoftBank is becoming more confident about hitting its target. People familiar with the company said bankers, on average, saw $50bn as a reasonable valuation.

SoftBank and SB Energy declined to comment.

CoreWeave, which reinvented itself for the AI boom, was similarly beset by doubts about inexperience and customer concentration ahead of its IPO in March last year. The company’s market capitalisation has since more than doubled to nearly $50bn, amid relentless demand for computing power.

More optimistic investors also trust Son’s ability to defy negative predictions, having seen him bring companies such as chip designer Arm to market, and believe he can squeeze more out of the ecosystem it is building.

This IPO was “another gamble on Masa”, said a longtime SoftBank investor, referring to Son. “You have to remember that he has always been successful in the face of cynicism.”

FT : Medical AI has a proof problem The technology’s advances have not yet trans

Medical AI has a proof problem
The technology’s advances have not yet translated into big improvements in real-life care

Kayla Secrest was a newly fledged doctor beginning a residency programme at a Michigan hospital when she had her first frustrating encounter with AI.

Managers had implemented an algorithm designed to scan patients’ records every 15 minutes and send an alert if red flags for sepsis were detected. It was the kind of innovation that the AI industry likes to highlight: taking a routine but vitally important task, and automating it.

But hopes it would lighten her load were soon dashed. “Over the course of a few months, I realised, ‘Gosh, this alert is coming up for every single one of my patients,’ and I would start to glaze over,” she recalls, likening it to the boy in the fable who cried “wolf”.

Eventually, she and her colleagues lost faith in the tool and no longer rushed to patients’ bedsides when the notifications popped up. Only later did she discover it had been rolled out to hundreds of hospitals without extensive testing in the real-life hurly-burly of a ward or emergency department.

Huge claims have been made for AI’s impact on healthcare, and many hard-pressed doctors and hospitals hope it can offset rising demand for their services.

But the experience of Secrest and others suggests a gap between the work of AI developers and medical professionals: there is often little independent oversight of what happens once an AI tool passes from the artificial environment of a lab into the unpredictable world of frontline healthcare.

Experts believe that, in some cases, this absence of scrutiny poses an active risk to patients. It can also make it harder to prove that specific tools improve treatment or justify the investment that they represent.

Jess Morley, an associate research scientist at the Yale Digital Ethics Centre and formerly AI subject lead for the UK’s Department of Health and Social Care, says tech companies tend to focus on “statistical validation” — looking at the accuracy, rather than the clinical efficacy, of a tool.

“But what we really care about in healthcare is that second bit: we want to know that it actually makes an impact on patient outcomes,” she says. “And there is really shockingly poor evidence that AI actually makes an impact on patient outcomes.”

Advocates for AI argue that it is being adopted at a faster rate in healthcare than other sectors, and that it is improving care partly by lightening the administrative load on doctors, such as by automating note-taking. “It’s already been very apparent for a decade or more now that we’ve lost our clinicians to typing,” said Kimberly Powell, head of healthcare at AI chip designer Nvidia, in June.

OpenAI said AdventHealth, a US hospital network, reported an 80 per cent reduction in time spent on certain administrative tasks using ChatGPT for Healthcare, while an independent review of its work with Penda Health in Kenya showed a 16 per cent reduction in diagnostic errors among clinicians using its AI assistant.

Other potential applications include monitoring patients using wearable devices, interrogating large datasets to predict the likelihood of future disease and speeding up the drug development process.

In some areas, such as diagnostics and imaging, evidence of AI’s impact is already irrefutable. Eric Topol, who runs the Scripps Research Translational Institute, cites a 2024 study showing that colonoscopies carried out by gastroenterologists with the assistance of AI detected substantially more polyps than those conducted without the technology. 

But rather than adopt tools with a proven record, Topol says healthcare managers have been captivated by “the wow factor” of generative AI. That advance, heralded by the launch of ChatGPT in 2022, enabled the technology to summarise voluminous medical literature to help a doctor make a decision, for example.

Gaps in regulation and a dearth of performance data make it hard to determine whether the rewards of generative AI outweigh the risks. The imperative now should be to “establish that benefit-to-harm ratio . . . in real-world medicine”, he suggests.

Topol sees little appetite among leading AI groups to measure performance against data collected after a model was developed, to check that results can be replicated in active use. “The tech titans are good at making models and testing and validating them [in the lab],” he says. “But by and large . . . they haven’t really demonstrated their enthusiasm or financial backing of the kind of [real-world] trials we’d like to see.”

The transparency deficit
Andrew Wong, a clinician and researcher, investigated the performance of the flawed sepsis tool while at the University of Michigan and, along with colleagues, worked with the developer to improve its performance.

He says companies often make highly specific claims about how AI tools improve workflow and generate financial savings, yet are under no obligation to release information that would make it easier to verify such supposed benefits.

This could include “how the model was trained, what kind of dataset was used, what methodology did they use to develop it, and where did they validate the model to come up with the reported performance statistics”.

Without such transparency, says Wong — now director of clinical AI research at the University of Utah — the work of testing the tools, whose effectiveness can depend on factors such as patient demographics and hospital working practices, will fall to individual institutions. Not all have the resources to do it.


Excessive hype about the transformational impact of AI tools can start surprisingly early in the development process, according to Constanza Andaur Navarro, assistant professor in the Department of Data Science and Biostatistics at Utrecht’s University Medical Centre. She and colleagues analysed papers describing new AI models and found a high propensity for what she terms “spin”. Of the 21 abstracts that recommended a particular tool should be used in daily practice, 20 “lacked any external validation of the developed models”, the research found.

Approaches to the regulation of AI in healthcare differ around the world. But according to Stephen Gilbert, professor of medical device regulatory science at the University of Dresden, in one respect they are similar: surveillance once a tool has entered the market tends to consist of “sanitised reports written by the manufacturer, which have no raw data”, meaning it cannot easily be interrogated by third parties.

A report published this year by Stanford University found the Food and Drug Administration authorised 258 AI medical devices in 2025, most of which did not require new clinical trials. Only 2.4 per cent of the approved devices were supported by the kind of trial data considered mandatory before a drug can reach patients.  

Some believe these studies underline the importance of rethinking long-established approaches to ensuring the safety of medical products for an era of generative AI.

Randomised controlled trials are designed to evaluate a molecule or a device such as a blood pressure cuff that will not change once in clinical use. But the algorithms that power large language models are changing all the time, says Morley at Yale University.

Some regulators are taking pains not to block the new technology even as they look at higher guardrails.

“We need to get these AI tools into the hands of clinicians more quickly and more widely than we have done up to now, because the potential to improve healthcare . . . is really, really large,” says Lawrence Tallon, chief executive of the UK’s Medicines and Healthcare products Regulatory Agency.

The MRHA’s National Commission into the Regulation of AI in Healthcare proposed measures this month including conditional authorisation for new tools until they have proved they are safe and effective, and continuous monitoring of those already in use.

The real-world monitoring the commission has recommended would help to build a robust body of evidence to show AI is making a clinical difference on multiple fronts, Tallon argues, although its conclusions have not yet been formally accepted.

He also highlights recent impressive results of a cancer vaccine developed by Merck and Moderna with help from AI as proof of the technology’s potential “at some of those more advanced ends, [to] really radically improve outcomes for patients with cancer [and] rare diseases”. 

Similar thinking is evident in the US. Gilbert, the regulatory expert at the University of Dresden, has been collaborating with the FDA on a pilot programme looking at how AI models in areas such as cardiovascular disease, diabetes and mental ill health — chronic conditions that will eventually afflict almost every American — may be able to win regulatory approval on the basis of evidence generated in real-world use.

But some clinicians warn that regulation is not yet keeping pace with the growth in AI capability, a rate that is without precedent in the fields of medicine and healthcare. 

John Paul Jeans, an NHS consultant anaesthetist and entrepreneur, cites evidence from Model Evaluation and Threat Research, a non-profit research organisation that tests advanced AI systems and which measured how long a software task an AI system could complete unaided at a 50 per cent success rate. It has found that since 2023, task length has been doubling roughly every four months.

“The test for any regulation being written now is whether it still delivers for the public after three doublings of AI capability,” he says. “If it’s written for the tool sitting in front of us, it could well be out of date before it’s published.”

Another concern is whether hospitals and other facilities have the resources and expertise to evaluate AI tools. Paige Nong, at the University of Minnesota School of Public Health, led research in 2024 that found only a little over half of hospitals surveyed had evaluated tools for potential bias before using them for resource allocation or patient care.


“A small rural hospital that’s already relatively understaffed may just not have the capacity to conduct that kind of evaluation,” she says, fuelling concerns that the onward march of AI risks compounding health inequalities. 

Ziad Obermeyer, a physician and researcher at the University of California, Berkeley, came across this problem after studying a “risk stratification” AI tool being used for resource allocation at his own hospital. He discovered it treated past expenditure as a proxy for future demand, with the result that people who needed healthcare but in the past had failed to get it — such as ethnic minorities and non-English speakers — continued to be overlooked.

Overall, hundreds of millions of patients are having decisions about the sums spent on their care influenced by such tools, he says.

“The scale at which these things are already being adopted is just enormous, and I don’t think many people know that.” 

Elusive data
There may be technical hurdles to monitoring performance successfully. Amy Abernethy, a former principal deputy commissioner of the FDA, says gathering more evidence from clinical settings will require infrastructure of a kind that has traditionally proved difficult to assemble.

She says the irony is that “we need algorithms and AI . . . to actually help us clean up the data so that we can evaluate algorithms, as well as other healthcare delivery interventions, with a much higher level of granularity”.

Legislation to ensure records can readily be shared across healthcare authorities, and to limit their legal liability for handling this data, would also be needed, she suggests. 

Patient data tends to be siloed within hospitals and carefully guarded to protect privacy, Obermeyer argues. “Regulators have a hard time saying to the companies, ‘Well, you claim this algorithm is great, go show me how it does on a dataset that your algorithm has never seen’ . . . because those data are very hard to find,” he adds.

He co-founded a company, Dandelion Health, in an attempt to circumvent this problem. It has worked with hospitals across the US to build a “very diverse and large” dataset that AI developers can use to test their algorithms.

Other researchers are experimenting within academic settings to refine more effective ways of generating data that can demonstrate an AI tool’s impact on patients’ health.

Sammy Chouffani El Fassi, based at Duke University, says the need for developers to back up their assertions about the performance of healthcare tools is increasingly recognised. He is working with researchers across industry and academia to develop applications that will help surgeons make better decisions. 

“We’re not trying to find out ‘does this tool work?’” El Fassi says. “We’re asking the question, how will this tool impact the patient’s outcomes?”

He adds: “We’re trying to get out of the theoretical, and into real clinical impact.”

FT : Liechtenstein royals threaten lawsuit over dynasty reforms Feud in Europe’s

Liechtenstein royals threaten lawsuit over dynasty reforms
Feud in Europe’s wealthiest monarchy deepens after Prince Alois tightens control over family members

A family dispute is consuming Europe’s wealthiest monarchy, with some royals threatening to sue Liechtenstein’s de facto ruler over reforms they say tighten his grip on their dynastic status — and the allowances that come with it.

The rebellion was sparked last month when Hereditary Prince Alois pushed through seemingly progressive overhauls, opening succession to women and giving them voting rights in family affairs. But the measures also weakened checks by relatives and expanded Alois’s authority over their titles, coats of arms and dynastic membership.

Two dissenting members of the Princely House told the FT the changes have financial implications because dynastic status affects allowances from the family’s multibillion-dollar fortune. Much of that wealth is centred on LGT, the private bank owned by the Princely House and overseen by Alois’s brother, Prince Max. For 2025, LGT paid the princely family a dividend of about $878mn.

The Princely House said Alois is the “beneficiary of the family assets” and is required by the House Law governing the family to support members who fall into financial difficulty “insofar as the income from the assets so permits”.

The dissenting royals insist their confrontation with Alois is not about money — but about having equal rights with their 42,000 subjects. 

“Our rights are cut off,” said a dissenting prince, who requested anonymity for fear of reprisals. “Just because we’re princes, it doesn’t mean we don’t have basic rights.”

The prince said a lawsuit against Alois’s reforms had been in the works for “a few months” with the support of “many” other family members.

The two family members said concerns about the reputation of both the bank and the dynasty had been heightened by recent revelations from the Jeffrey Epstein files, including that LGT employed a woman close to the late paedophile financier who remained in contact with him after he was convicted while at the bank.

A spokesperson for the bank said: “The individual referred to completed a four-month student internship at LGT,” adding the institution had “no knowledge of any private contact” between her and Epstein.

Dissent within the Princely House was substantial when the reforms were approved in August: almost a third of the 50 princes then eligible to vote opposed them, according to an internal letter from Vaduz Castle. The dissenting prince and the second family member who spoke to the FT believe the true level of opposition was “much higher”.

The Princely House denied that the reforms increased the monarch’s “constitutional powers”, saying many of the changes were technical or codified existing practice and that family members’ rights are subject to “oversight by representative bodies of the family”.

It declined to comment on the planned lawsuit, saying that “as a matter of principle, we do not comment on rumours or speculation”.

Lawyers advising dissenting family members are examining possible domestic proceedings, as well as a human rights challenge that could ultimately reach the European Court of Human Rights in Strasbourg.

One argument under consideration is whether their right to family life is adequately protected, given that the reforms affect their status within the family.

Their bid is complicated by the fact that the House Law sits outside the country’s constitution, even though it determines matters including who may inherit Liechtenstein’s throne — a position that carries the power to veto laws, dismiss governments and dissolve parliament.

The Council of Europe’s body of legal experts called this arrangement “astonishing” when it examined constitutional reforms proposed by the Princely House more than two decades ago.

“We can’t go anywhere to protect ourselves from Alois,” the dissenting prince said.

Patricia Schiess, a professor of constitutional law at the Liechtenstein Institute, said the House Law had never, to her knowledge, been reviewed by a court and that there was “no established legal doctrine” on its status.

“The right to a name, the right to marry and questions regarding children born out of wedlock are certainly matters that can be brought before the European Court of Human Rights,” Schiess said.

But she cautioned that any claim would first have to pass through Liechtenstein’s domestic courts and show a connection to an act or omission by the state before being taken up by the ECHR.

The planned legal challenge is expected to focus on how the measures were adopted. The dissenters say Alois broke protocol by holding a postal ballot instead of an in-person vote, as had been customary throughout the monarchy’s 300-year history.

The Princely House rejected “accusations of improper vote conducting” and said the ballots were counted inside Vaduz Castle on August 12 in the presence of Alois, his father, his private secretary and his chief of staff, as well as four other princes.

Relatives were then informed in an official letter that 70 per cent had backed the changes, narrowly clearing the two-thirds majority required to rewrite the House Law. The letter thanked those who had “reservations or held a different view” and urged them to unite behind the decision.

But the prince interviewed by the FT said the result stunned relatives. “We were absolutely surprised by the vote,” he said. “Why would anyone vote against their own interests?”

A lawyer advising the dissident family members wrote in messages seen by the FT that the House Law could be “absolutely void” if the required majority had not been validly reached.

With no obvious route through the Constitutional Court, the lawyer suggested asking Liechtenstein’s civil courts to rule on the amendments’ validity.

Schiess said the consequences of such a ruling were uncertain. “There is no precedent for this,” she said.

Early signs of trouble inside the dynasty had emerged before the vote. In June, Alois said he would veto an initiative to legalise abortion in the first 12 weeks of pregnancy even if Liechtensteiners approved it in a referendum. Dissenting family members describe his stance as imposing his Catholic beliefs on the population.

The Princely House said abortion was a legal matter for Alois as acting head of state and that individual family members had no role in it.

But with the feud deepening, the dissenting prince warned: “If he resists us, then we will have a republic. It’s better to have a republic.”

FT : The real risk of private credit’s involvement in the annuity business The c

The real risk of private credit’s involvement in the annuity business
The critical issue is liquidity and ensuring that long-term promises to pay retirement benefits are met

In the last decade, there has been a sharp turn in the market share of the US annuity business as a result of some big structural shifts.

The fastest-growing issuers of annuities now are a bunch of asset managers who have built their own insurance companies or acquired one to add to their stable of financial services. The pace of that takeover should worry anyone who owns one of these products.

A Federal Reserve Bank of Chicago working paper from 2025 found that private-equity-owned life insurers increased their market share of annuities sold in the US from 8.5 per cent to 18 per cent between 2017 and 2024. Some 61 per cent of this growth can be attributed to private credit investments. Legacy insurers have historically not had “in-house” access to such products, making it difficult for them to compete against private capital-owned insurers.

And what is also new in this private credit involvement are the destinations of the capital. Much of it is supporting the huge investment in AI infrastructure such as data centres and chips. And some of this, as the Bank for International Settlements has recently highlighted, has been through off-balance-sheet borrowing by the AI hyperscalers. This poses unknown risks for insurers and private credit funds alike.

But to be frank, my biggest concern here is not so much the quality of underwriting of these assets. The greatest risk is the timing. A promise to pay retirement benefits is inherently a long-term one. Plans for these long-dated commitments must be underwritten conservatively, of course, but in the end they must also be paid. And they must be paid with cash that is available on the date that the payment is due, not with hope that the asset will appreciate or that cash will become available at some later date. For disclosure, it is my firm’s job to assess such liabilities and I worked at Apollo from 2008 to 2014.

The real risk is that income from the long-dated assets currently in the market will not be sufficient to service the debt needed to be put in place to support a retirement promise in the decades to come.

Another point that seems to be commonly held by the annuity industry is that illiquid assets will balance out against long-term illiquid policyholder liabilities and interest rate risk over time will be neutralised. I used to agree with this viewpoint but no longer. First, policyholder behaviour is not fixed. As annuities indexed to market indices have become more popular, the rates of people surrendering their annuities and or letting them lapse have become highly volatile. They can move in a sharp, non-linear fashion with “shock lapses” typically occurring after the end of periods when surrender charges apply. If there are enough early surrenders of these types of contracts in an insurer’s portfolio of hard-to-price, illiquid assets, it could spur forced selling of those assets.

Recently, a number of the largest annuity issuers have begun to release more frequent marks to the net-asset-values of their private funds. While this is certainly a long overdue, positive step, reporting model-derived values is not the same as true price discovery. The manager’s view of value is still embodied in the reported numbers.

The risks associated with the increasing presence of private capital in the life insurance sector have been known to regulators for several years. Since 2022 the US National Association of Insurance Commissioners has been cataloguing the following risks: 1) disclosure; 2) affiliated transactions; and 3) management compensation. The US Treasury department has begun to convene with state insurance regulators to look at how the roughly $1tn of private credit in the life insurance sector can be structured and managed in a way that does not expose policyholders to excessive risk of loss.

None of this is a call to panic. Nor is it a suggestion that these platforms are engaging in imprudent underwriting. Rather, my worry is far narrower and, I believe, far more significant: the illiquid private investments of asset managers have quietly emerged as the decisive competitive advantage in retirement finance.

At its core, life insurance exists to guarantee long-term promises will be paid when it is needed. All else — including returns — is secondary to that end. The critical issue of liquidity is a matter that should concern regulators, the directors of sector companies and the policyholders of life insurers. Better to address risks now before the industry faces a wave of policyholder surrenders that compels the sale of illiquid assets into weak markets.

FT Lex : Will El Niño be the saviour of Europe’s energy market? The continent’s

Will El Niño be the saviour of Europe’s energy market?
The continent’s storage is 69 per cent full, compared with more than 80 per cent this time last year

Everyone has a plan until they get punched in the face. The saying, attributed to Mike Tyson, is a reasonably good description of how Europe — pummelled by successive energy crises — is positioned ahead of the coming winter. The continent’s strategy, insofar as it has one, is to hope it isn’t very cold.

To be fair, it is hard to pursue long-term plans when one is reeling from a one-two blow. Europe, already scrambling after the war between Russia and Ukraine removed a key supplier from its portfolio, has been hit by the war in Iran. In addition to disrupting oil flows, the war trapped Qatari liquefied natural gas accounting for about a fifth of global supply. That raised the fuel’s price: in August, prices at the European bourse were almost double those in August 2025.

High summer gas prices discourage operators from buying extra to store for winter. In any case, many hoped the Strait of Hormuz would reopen before the weather turned: the sudden arrival of the locked-in volumes would drive winter prices below summer ones, exposing traders to a potential loss. As a result, Europe’s storage is 69 per cent full, according to think-tank Bruegel, compared with more than 80 per cent this time last year, and the coming winter is looking uncomfortably tight.


For an idea of the numbers involved, just think that Europe needs about 250bn-260bn cubic meters (bcm) of gas during the average winter, Lex calculates based on historical numbers from the Oxford Institute of Energy Studies. Over the same period, it generally produces or buys perhaps 200 bcm of the stuff, and closes the remaining 50-60 bcm gap by taking gas out of storage.

That may not seem terribly daunting considering that there are currently over 70 bcm of gas in storage. Trouble is, a long cold winter can add perhaps 25 bcm to gas demand. And cold snaps can be correlated across the Northern hemisphere, meaning more competition between European and Asian consumers for the LNG that is available.

Unsurprisingly, Europeans are keeping a keen eye on the weather, and in particular this year’s super El Niño phenomenon. The currents and climate pattern, which sees sea surface temperatures rising particularly in the tropical Pacific Ocean, is generally associated with warmer temperatures, at least in the earlier phases of autumn and winter. On the other hand, the second half of an El Niño winter has been known to be cold and snowy.

More broadly, sniffing the air and feeling one’s joints is a poor substitute for an energy plan: banking on the weather, as Britons know all too well, is a losing strategy.

FT : Private equity turns to financial engineering to lure insurance billions St

Private equity turns to financial engineering to lure insurance billions
Structured financing helps fuel growth of secondaries funds by making investments more attractive to risk-averse investors

Private equity groups are turning to increasingly complex financing structures to allow cash-rich insurers to invest in their debt, helping alleviate a prolonged dealmaking drought for buyout funds.

Fund managers in one niche of the sector have increased their use of collateralised fund obligations (CFOs) and have started slicing and dicing another type of debt, net asset value loans, to appeal to investors with a broader range of risk appetites.

“From last year going into this year, we’ve seen more structured [debt] designed to attract investors with different risk tolerances,” said Thomas Speller, co-head of funds ratings at Kroll Bond Rating Agency.

The structures have helped fuel the rise of secondaries funds — specialist vehicles that have been buying cash-strapped investors’ stakes in mature buyout funds, giving the investors an exit during a dealmaking drought — by helping lower their cost of capital. In turn, that allows the secondaries fund to buy more stakes in buyout funds, or to return money to its own backers.

Both CFOs and tranched NAV loans — debt backed by the value of the secondaries fund’s holdings — slice obligations into junior and senior pieces.

That allows more risk-averse investors such as insurers to take the safest portion at a lower cost to the borrower and those with a higher risk tolerance, such as private credit funds, to take the junior slice.

“The evolution of what you can do in this space has developed so much because of private credit, insurance, rating agencies,” said one top private credit executive.

CFOs — which issue bonds backed by stakes in ageing buyout funds — are well-established structures. But issuance by private equity secondaries funds has soared in recent years, from just over $400mn in 2021 to $6.5bn in 2025, according to KBRA.

The phenomenon of tranching secondaries funds’ net asset value loans to target insurers is more recent, however, Speller and the private credit executive said.

“The senior note will have a higher rating that will appeal to fixed-income investors including insurance companies,” said Speller. The senior tranches receive cash flows from the underlying buyout funds first.

Secondaries funds use various forms of leverage to generate returns but have recently leaned more on CFOs to generate liquidity or raise money for further purchases.

Blackstone explored issuing a CFO to generate cash on more than $2bn of stakes it held in leveraged buyout funds, the FT reported in June, and in August Franklin Templeton’s secondaries arm finished raising a $1.5bn CFO.

Tranched NAV loans are similar to CFOs but are secured against a secondaries vehicle’s own stakes in hundreds of buyout funds, while CFOs issue debt secured against a secondaries fund itself.

Both structures controversially add leverage on leverage, because the underlying buyout portfolio companies already often hold significant debt.

Secondaries managers tend to take out NAV loans to return cash to their own backers, buy more fund stakes or for general working capital, three investors said. 

Tranching the loans could allow secondaries funds to borrow more, said another person who studies the loans. 

The credit executive said that for the past few years some banks had been lowering their capital charges by selling a risky portion of NAV loans they had extended to private credit firms. Private credit lenders such as Blackstone and Ares, and many banks including JPMorgan and Société Générale, extend NAV loans to secondaries funds.

But this year, a “handful” of secondaries funds had started tranching their own debt to bring in insurers, he said.