FT : Activist shareholder intensifies campaign for Rio to quit London

Activist shareholder intensifies campaign for Rio to quit London
Palliser Capital says dual structure has been an ‘unmitigated failure’ that cost shareholders $50bn of value

Activist investor Palliser Capital has stepped up its campaign for Rio Tinto to abandon its primary London listing, demanding an independent review of whether the miner should follow rival BHP and unify its corporate structure in Australia. 

Rio Tinto’s dual-listed structure, with its primary listing in London and a secondary one in Sydney, had been an “unmitigated failure” that had deprived shareholders of $50bn in value, Palliser said in a letter sent to the board on Wednesday and seen by the Financial Times.

The UK-based hedge fund, which holds a stake worth about $250mn in Rio, first made its call for the company to quit London in May. The latest crusade has been timed to coincide with Rio’s investor day in London.

Australian investment firm Blackwattle Investment Partners has also backed the unification campaign, writing to the board earlier this year to highlight the deep discount at which the UK-listed Rio Tinto traded compared with its peer on the Australian Securities Exchange.

That valuation gap has widened to 19 per cent, from 15 per cent in May, according to Blackwattle.

A successful campaign by Palliser, whose chief investment officer James Smith was at Elliott Management when it campaigned for BHP to abandon its dual corporate structure, would deprive the FTSE 100 of the world’s second-largest mining company.

Rio shares would still be traded in London under Palliser’s proposal via a secondary listing. BHP moved its primary listing to Sydney in 2022.

Rio has repeatedly said that unifying its listing would cost “mid-single digit billions of dollars” in tax. The company has also said that it had conducted an internal review and concluded that such a move would destroy value. 

Chief Financial Officer Peter Cunningham said earlier this year that Rio wanted to do some “rebalancing” of its listing — which is split 77/23 in favour of London — and that conducting share buybacks in the UK could be an option to achieve that.

Rio is however constrained in how much it can buy back in London, because its shareholder Chinalco, the Chinese state owned aluminium group, cannot hold more than 14.99 per cent of Rio’s London shares owing to a national interest limit set by the Australian government in 2008.

Alternatively, Jakob Stausholm, chief executive of Rio Tinto, also said in October that the company was considering issuing shares in Australia after it agreed to buy lithium developer Arcadium.

Asked by an analyst why the company was paying cash for the acquisition, therefore increasing its debt, Stausholm said he was thinking “a little bit” about issuing shares.

Palliser’s letter calls for a committee of three to four independent directors, alongside an external shareholder representative, to review the change in corporate structure and listing. The fund has also targeted one of Japan’s biggest property groups in recent weeks.

Ray David, a partner at Blackwattle, said that collapsing the share structure into the higher valued ASX-listed stock “still makes sense for shareholders” especially in a consolidating market where companies can finance acquisitions by using shares instead of paying cash.

Since it adopted the dual-listed structure, Rio Tinto has done all its M&A transactions in cash, rather than in shares.

FT : Bundesbank chief calls for softer debt brake to ramp up investment

Bundesbank chief calls for softer debt brake to ramp up investment
German central bank president Joachim Nagel urges Berlin to relax rules to address defence and infrastructure shortfalls

The head of Germany’s Bundesbank has called on Berlin to soften its tough spending rules, warning that Europe’s largest economy faced a “complicated” and “weak” outlook.

Germans are set to head to the polls in February, with the post-pandemic stagnation of Europe’s largest economy feeding into widespread voter discontent with Chancellor Olaf Scholz’s ruling coalition.

Bundesbank president Joachim Nagel told the Financial Times the next government needed to reform its so-called debt brake, which bans Berlin from borrowing more than 0.35 per cent of GDP in any fiscal year, to address the longer-term economic risks facing Germany.

More fiscal space to address structural threats — such as boosting defence spending and modernising the country’s infrastructure — would mark a “very smart approach”, Nagel said.

The Bundesbank president’s remarks are the most outspoken yet on how he believes a future chancellor should deal with Germany’s limited fiscal leeway.

The current outlook was, Nagel said, even “more complicated” than at the start of the 21st century. While unemployment was much worse then, “there was no geopolitical fragmentation and world trade was growing strongly”.

Germany’s economy has effectively seen no real growth since the second half of 2021, with its dominant manufacturing sector under pressure from high energy costs and waning competitiveness.


The return of Donald Trump to the White House could exacerbate those challenges, with the president-elect threatening a blanket tariff of up to 20 per cent on all US imports.

The Bundesbank will not officially update its growth forecast until later this month, but Nagel said 2025 was likely to be “another year of weak growth” for the German economy, with the central bank’s estimate likely to be about 0.4 per cent.

Growth was likely to be even weaker, should Trump implement blanket tariffs on the scale he had pledged, the central banker said.

“If you put major increases in tariffs on top of current forecasts, the economy might broadly stagnate for even longer,” he said, adding that “even the labour market might show more noticeable weakness”.

Germany’s seasonally adjusted unemployment rate, as defined by the Federal Employment Agency, remains relatively low at 6.1 per cent. However, this level partly reflects the creation of an abundance of low-paid positions in the services sector, at the expense of well-paid manufacturing work.

Nagel said he was still confident that the country could overcome any crisis, saying: “Past experience shows that when Germany is feeling the pain, Germany will change.”

He singled out discussions over reform of the constitutional debt brake as an example of how Germany could cope.

“We can think about making a distinction between consumption expenditures and investments to get more leeway on the structural investment side,” he said, pointing out that German debt to GDP has fallen significantly and is approaching the level of 60 per cent set by the EU’s stability and growth pact rules.


The inability to balance spending needs with the limited financial leeway created by the debt brake was a main reason for the collapse of Scholz’s ill-fated three-way coalition between the Social Democrats, the Greens and the Free Democrats last month.

In the run-up to the snap election, which is likely to take place in February, an overhaul of the strict borrowing cap has become a central topic. The leader of the opposition and most likely candidate to secure the chancellorship, Christian Democratic Union party boss Friedrich Merz, has signalled he might be open for limited reforms of the debt brake.

The Bundesbank first floated ideas to reform the debt brake in 2022.

Nagel said in March that Germany “in certain periods of time” could run “slightly” higher deficits without putting stability on the line.

Nagel acknowledged that the debt brake, agreed in 2009, had been “a very helpful tool” after public debt shot up dramatically in the aftermath of the global financial crisis. During the euro crisis, having the break in place also delivered the message “that governments have to get their debt and deficit situation under control”.

The Bundesbank boss, who has a vote on the European Central Bank’s governing council, declined to give any indication of his views about the next rate decision, scheduled for December 12.

However, he said the ECB’s 2 per cent inflation target was “in sight” and should be reached “by the middle of next year at the latest”.

Eurozone inflation was 2.3 per cent in November. The ECB’s latest forecasts imply rate-setters will hit their goal over the course of 2025.

He stressed that he would not “over-emphasise” the risk of the ECB undershooting its 2 per cent target as core inflation — a measure seen as a better indicator of the persistence of price pressures — was “still very sticky”.

FT : Global macro funds roar back to life

Global macro funds roar back to life
Donald Trump’s US presidential election victory has led to huge paydays for some hedge funds.

Some of the biggest winners include Jeffrey Talpins’ Element Capital and Kenneth Tropin’s Graham Capital Management, which were positioned in “Trump trades”, or assets that did well when the president-elect prevailed.

Element gained about 9 per cent in November while Graham’s Proprietary Matrix Fund — which includes strategies run by fund managers and computer-driven ones — made about 3 per cent, two people familiar with the figures told DD’s Amelia Pollard. 

After years of middling returns following the 2008 financial crisis, hedge funds that specialise in trading currencies, commodities, bonds and stocks are back to making big gains from bets on market swings around last month’s presidential election.

Pablo Calderini, the chief investment officer for Graham, said the fund ran “many scenarios” and “stress tests” to ensure the portfolio was well guarded against any shocks that might come its way — especially if the race was so close that it sparked social unrest.

The US dollar has emerged as one of the biggest Trump trades, with the currency up 5.4 per cent against a bunch of other currencies since the start of October.

Still, the going’s good for almost everyone right now. The S&P 500’s also been on a tear, up more than 27 per cent this year.

“None of this is breaking the pound. None of this is a massive bet on the yen,” said Steven Kelly, the associate research director at the Yale Program on Financial Stability.

The real question is how long the good times will last. Kelly added: “If and when Trump blows something up, are the macro hedge funds on the right side of that trade as well?”

FT : BlackRock’s deal spree bestows fortunes across Wall Street


BlackRock’s deal spree bestows fortunes across Wall Street>

A little more than a year ago, BlackRock founder Larry Fink telegraphed to Wall Street that the world’s largest asset manager was on the hunt for “transformational” deals.

Twelve months on, he has delivered. The asset manager has struck deals worth nearly $30bn this year, reshaping Wall Street and putting BlackRock in direct competition with a new set of powerful rivals.

On Tuesday, the asset manager clinched its latest target: the $12bn acquisition of credit investing powerhouse HPS Investment Partners.

The push has moulded BlackRock — best known for passive equity and debt index products that spurred the demise of scores of traditional active asset management groups — into a new force in private capital.

It’s now in direct competition with Blackstone, Apollo, KKR and Brookfield.

The year of dealmaking started in January, when Fink agreed to buy private investment firm Global Infrastructure Partners. In July, BlackRock paid £2.55bn to acquire private capital data provider Preqin.

Both HPS and GIP are giants, each managing more than $100bn. The acquisitions give BlackRock more than $600bn in private capital assets and the private market data to create new indices.

Fink’s deal spree has also showered enormous wealth across Wall Street.

BlackRock paid $12.5bn in cash and stock to buy GIP, making its founders the asset manager’s second-largest shareholders. Co-founder Adebayo Ogunlesi enjoyed a multibillion-dollar windfall, and he joined BlackRock’s board of directors.

HPS initially planned to go public, but found a hungry potential buyer in BlackRock instead. While HPS’s co-founders — Scott Kapnick, Scot French and Michael Patterson — tried to reach the windfall that GIP’s partners had won months earlier, they came up slightly short.

The HPS acquisition price is a notch below that of GIP and comes with no cash, relying entirely on BlackRock’s stock. The GIP deal was also struck before a 30 per cent run in BlackRock’s shares this year, which has in effect pushed the takeover value towards $15bn.

But HPS is also in line for an additional 1.6mn shares if it meets certain targets within five years of the deal closing, a consideration worth $1.6bn at today’s levels. Add in the $400mn of HPS debt BlackRock may retire, and the total price inches up to roughly $14.4bn.

Advisers to BlackRock have also fared well. Robert Steel at Perella Weinberg, a close friend of Fink and vice-chair of the investment bank, had advisory roles in all three deals.

DD would note that perhaps the biggest winner of all is Mark O’Hare, founder and majority owner of Preqin. The data provider sold for cash, almost all of which went into O’Hare’s pocket, instantly making the former BCG consultant among Britain’s wealthiest people.

>>> US After Hours Summary: PSTG +23.8%, OKTA +14.5%, MRVL +9.6%, CRM +6.9% high

After Hours Summary: PSTG +23.8%, OKTA +14.5%, MRVL +9.6%, CRM +6.9% higher on earnings; CURV -23.8%, BASE -10% lower on earnings; CPB -3.3% names a new CEO, also reports earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PSTG +23.8%, OKTA +14.5%, MRVL +9.6%, CRM +6.9%

Companies trading higher in after hours in reaction to news: HRTX +92.4% (favorable court decision), JANX +3.2% ($300 mln stock offering), RUSHA +1.2% (authorizes new $150 mln share repurchase program), SGML +0.7% (production at full capacity; record shipment of quintuple zero green lithium), WULF +0.7% (announces Nov production data), RJF +0.6% (authorizes new $1.5 bln share repurchase program, also increases dividend), FTAI +0.5% (announces sale of remaining offshore energy vessels), RIO +0.2% (RIO and Sumitomo Metal to form JV), GSAT +0.2% (PSN and GSAT announce exclusive partnership), G +0.1% (signs strategic collaboration agreement with AWS), GENI +0.1% (announces collaboration with TNT Sports and NBA 2K), STC +0.1% (CEO contract extension)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: CURV -23.8%, BASE -10%, CPB -3.3% (also CEO to retire; names new CEO; increases dividend), BOX -3.1%, UNH -1.1%

Companies trading lower in after hours in reaction to news: TRVI -23.7% (announces topline results from study of oral nalbuphine), LUNR -13.7% (launches $65 mln stock offering and concurrent private placement), GXO -10.1% (CEO to retire), CRGY -3.6% (to acquire Eagle Ford assets from Ridgemar Energy for $905 mln; also announces 18 mln share offering), IREN -1.9% ($300 mln convertible notes offering), ODFL -1.1% (reports LTL operating metrics for Nov), ED -0.3% (7 mln share offering), DTE -0.1% (increases dividend)

FT : Italian prosecutors issue arrest warrant for Signa’s René Benko

Italian prosecutors issue arrest warrant for Signa’s René Benko
Nine people under house arrest or being sought for suspected malfeasance linked to property sector

Italian prosecutors have issued a warrant for the arrest of Austrian property tycoon René Benko amid an investigation into alleged improprieties with his business in the sud-Tyrol region, two law enforcement officials familiar with the matter confirmed.

In total, nine people — including the mayor of a small Italian town, a city manager, three business people and four professionals — have been put under house arrest or are being sought for suspected malfeasance linked to the property sector in the Trentino-Alto Adige region, the Trento prosecutor’s office said on Tuesday.

The arrest warrants mark the latest twist in the insolvency of Benko’s Signa conglomerate, which saddled banks, insurance companies and other investors in Austria and Germany with billions of euros in losses.

Creditors have accused a key entity in the Signa group of engaging in “unlawful transactions” before it filed for insolvency last December. Austria’s anti-corruption prosecutors in April opened an investigation into fraud allegations.

Prosecutors on Tuesday said investigations by Italy’s anti-mafia unit had revealed the apparent existence of “a business group capable of influencing and/or controlling” major public initiatives, “especially in the sector of building speculation” in Trentino-Alto Adige.

“The entrepreneurs involved would make themselves available to finance the electoral campaigns of public administrators, obtaining benefits, simplified procedures and concessions for real estate initiatives,” the prosecutors’ statement said.  

Norbert Wess, a lawyer for Benko, said in an emailed statement that no European arrest warrant would be executed against his client. He also said Austrian authorities “had not imposed any other conditions or obligations on Mr Benko”.

Austria’s postwar constitution forbids the extradition of its citizens to participate in foreign court proceedings. 

“Mr Benko will continue — as before — to co-operate fully with all national and international authorities and is confident that any allegations against him can be clarified as substantively incorrect.” 

Benko was one of Europe’s most flamboyant property developers, whose empire acquired stakes in New York’s Chrysler Building, London’s Selfridges and even the building that houses Austria’s constitutional court in Vienna.

But his flagship holding company, Signa, disintegrated last year under pressure from its billions of euros of debt, and Benko filed for personal insolvency earlier this year. 

Signa projects in the Alto-Adige region included an ambitious mixed-use shopping centre, office and apartment complex in the heart of Bolzano, just a short distance from the town’s historic cathedral.

Benko made the area his second home, buying several luxurious properties around Lake Garda for the use of him and his family through his Liechtenstein-based personal foundation.

In addition to issuing the warrants on Tuesday, authorities also searched more than 100 locations in Trento, Bolzano, Milan, Rome, Brescia and other Italian cities.

In total, the prosecutor’s statement said 77 people were under investigation in the case, including 11 public officials and 20 managers of local public offices and public sector companies, as well as some law enforcement officials and local businesspeople.  

Among the charges being levied against those suspected of involvement in the matter include criminal conspiracy, fraud, bid-rigging, illicit financing of political parties, undue receipt of payments to the detriment of the state, corruption and revelation of official secrets, the prosecutors statement said.  

WSJ : South Korea’s President Declares Martial Law Citing Threat of Pro-North Ko

South Korea’s President Declares Martial Law Citing Threat of Pro-North Korean Forces
Members of Yoon Suk Yeol’s own ruling party say they will try to block the move that halts certain political activities

SEOUL—South Korea’s president declared martial law, telling his country in a televised address Tuesday night that opposition parties had made the country vulnerable to North Korean “communist forces.”

Yoon Suk Yeol, a conservative who took office in 2022, accused the opposition party, which controls the country’s National Assembly, of holding the country hostage. He cited the rejection of a budget proposal and impeachment cases against South Korea’s top prosecutors as threats to the country’s constitutional order.

“The martial law is aimed at eradicating pro-North Korean forces and to protect the constitutional order of freedom,” the 63-year-old Yoon said.

Members of Yoon’s own ruling conservative People Power Party said they would seek to block the move—the first declaration of martial law since 1980 when South Korea was under military rule. The opposition Democratic Party, which can request a lifting of martial law, called for an emergency meeting at the National Assembly late Tuesday after Yoon’s address.

The martial law command proclaimed that any political activities by South Korea’s unicameral, 300-seat parliament are banned, as well as nationwide curtailment of rallies and protests. It also calls on all medical personnel to return to work within 48 hours, among other measures.

By law, the National Assembly can lift martial law through a majority vote and requires the president to comply. The opposition Democratic Party enjoys majority control with 170 seats.

But access to the National Assembly building, where a vote could take place, appeared to be limited with the entrance guarded by police, according to local news footage.