TheChek News Flow

Summary

• Blackstone's Multi-Asset Investing unit to invest $300 mln with Brigade
• Blackstone's Strategic Alliance Fund IV allocates $150 million to new private credit strategy
• $150 mln to support Brigade's existing CLO business

NEW YORK, Nov 12 (Reuters) - Hedge fund Brigade Capital is receiving a $300 million investment from Blackstone (BX.N), opens new tab to help build its new private credit strategy and expand its collateralized loan obligations (CLO) platform, two people familiar with the matter said.

Brigade, an established credit investment specialist that made headlines earlier this year with a joint bid for department store Macy's (M.N), opens new tab, is building expertise in the hot private credit market where some $2 trillion in loans are being made to corporations by non-banks.

The Multi-Asset Investing unit of Blackstone will allocate $150 million to the new Brigade strategy. Brigade raised some $500 million this year for the strategy and plans to focus on opportunities in the lower middle market, where companies generate between $10 million and $50 million in earnings before interest, taxes, depreciation and amortization, one of the sources said.

Blackstone and Brigade representatives declined to comment.

The lower middle market is full of lending opportunities with higher spreads and yields because there is less competition. Some examples of lower middle market borrowers include vacation rental company Awayday and mattress and bedding retailer Saatva.

Brigade's efforts in private credit began in earnest when it poached Jenny Lee from JPMorgan Chase and Jim Wolf from Whitehorse Capital two years ago to spearhead the strategy. Their strong networks and years of experience are expected to help source smaller deals that are often tougher to find, one of the sources said.

Blackstone is also allocating $150 million to support Brigade's existing CLO business with dedicated equity commitments for new CLOs globally. The capital is coming from the Multi-Asset Investing unit's Absolute Return platform, which is also run by Ben-Ur. The Brigade CLO business currently has some $11 billion in assets across 25 deals in the U.S. and Europe.

CLOs offer a diversified exposure to the broadly syndicated loan market and CLO equity is structured to take advantage of volatility in the loan market given non-mark-to-market leverage and term financing.

Marc Lore’s Wonder is close to a deal to buy the food-delivery startup from Europe’s Just Eat Takeaway.com

Wonder, a food-delivery startup led by former Walmart WMT 0.93%increase; green up pointing triangle executive Marc Lore, is in advanced talks to buy Grubhub from Europe’s Just Eat Takeaway.com TKWY -1.87%decrease; red down pointing triangle, according to people familiar with the matter.

The details

A deal for Grubhub could be finalized imminently, assuming the talks don’t fall apart, the people said. Amsterdam-based Just Eat bought Grubhub in 2021 in a deal valued at over $7 billion. Grubhub had been in discussions to sell itself to Uber before it made a surprise move to join forces with Just Eat instead.

But the deal drew criticism from Just Eat’s shareholders, some of whom argued it was a distraction. In 2022, Just Eat said it was considering selling Grubhub after its U.S. subsidiary reported a decline in orders following a sales boom during the pandemic.

Grubhub is likely to be valued below $1 billion in any deal.

The rationale

Wonder, launched in 2018, originally focused on operating mobile kitchens from a fleet of trucks that aimed to recreate meals from popular restaurants.

Last year it switched strategies, closing the trucks and opening physical locations instead. It has a few dozen locations in the New York City area and aims to have 100 locations by the end of next year, Lore said in an interview last month.

Buying Grubhub would boost Wonder’s revenue as it continues to raise money. It also offers a direct source of delivery drivers and related technology.

Wonder was last valued at around $3.85 billion in a 2022 financing round, according to PitchBook. The startup also owns meal-kit provider Blue Apron, another once-highflying startup that struggled in more recent years.

Lore joined as CEO in 2021 after leaving his role as chief of U.S. e-commerce operations for Walmart.

The context

Grubhub, which was founded in 2004, pioneered online ordering in the U.S. But it came under pressure as it warded off competition from newer entrants such as DoorDash and Uber Eats.

Just Eat was created in 2020 through the $11.1 billion merger of the U.K.’s Just Eat and Netherlands-based Takeaway.com. The deal combined one of the biggest food-delivery companies in the U.K. with a major player in the space in continental Europe.

After its discussions with Grubhub fell apart, Uber pivoted and made a $2.65 billion acquisition of smaller food-delivery rival Postmates Inc. in late 2020.

Billionaire says ‘complex’ financial ties triggered withdrawal from consideration for top economy role

Wall Street investors Scott Bessent and Howard Lutnick are the leading contenders to be Donald Trump’s treasury secretary after hedge fund billionaire John Paulson dropped out of the race for the job.

Paulson said on Tuesday that his “complex financial obligations would prevent” him from entering the administration “at this time” but he would continue advising Trump’s economic team.

“I’m ecstatic that President Trump will be back in office,” he wrote. “He is off to a fast start with his appointments, and his policies will have an immensely positive impact on all Americans.”

News of the withdrawal leaves Bessent, a former chief investment officer at George Soros’s family office, and Cantor Fitzgerald chief executive Lutnick, who is also co-chair of the Trump transition team, in pole position to compete for the job.

Both have been spotted around Palm Beach and Mar-a-Lago, Trump’s Florida home and resort, since the former president won a convincing election victory last week.

Trump has moved quickly to fill the key posts in his administration, including appointing a national security adviser and nominating a secretary of interior, but several top jobs remain including that of Treasury secretary, the new government’s most significant economy position.

Paulson emerged as a Trump Treasury candidate earlier this year but told the Financial Times in September that it was “not so easy” for him to unwind his significant holdings.

He had been a major money-raker for Trump, including earlier this year hosting a fundraiser at his Palm Beach home, which the Trump campaign said raised more than $50mn.

Bessent, chief of Key Square Capital Management, appeared on rightwing ideologue Steve Bannon’s podcast “War Room” on Tuesday and floated cutting government spending by $1tn over the next decade. Musk has called for even deeper cuts to the federal budget.

“I think if we could get $100bn a year over 10 years that scores at $1tn in this cockamamie CBO scoring that’ll stabilise the bond market and we can go from there,” said Bessent, referring to the Congressional Budget Office. “It’s an incredible opportunity.”

Bessent said “the really insidious part” of the Biden agenda was not necessarily taxes but the “regulatory burden”. He called for “a big push in bank deregulation”, saying “community banks need to be allowed to lend to their communities”.

He also remarked upon the state of the overall economy, saying that rich people and big companies have done well, while the bottom half of wage earners have gotten “crushed”.

“I’m a Wall Street guy who loves Main Street,” said Bessent. “Main Street has to drive this Trump boom.”

One former Republican congressional aide said Bessent’s candidacy could face resistance from some close to Trump because of his past work for Soros. The aide also claimed that Bessent was more devoted to pro-business deregulation than to the president-elect’s plans for sweeping tariffs.

“My general view is that at the end of the day, he’s a free trader,” Bessent told the FT last month, referring to Trump. “It’s escalate to de-escalate.”

Writer has raised $200 million at a $1.9 billion valuation to expand its enterprise-focused generative AI platform.

The Series C round was co-led by Premji Invest, Radical Ventures and ICONIQ Growth, with participation from Salesforce Ventures, Adobe Ventures, B Capital, Citi Ventures, IBM Ventures and Workday Ventures.

Writer CEO May Habib says the new cash, which brings the startup’s total raised to $326 million, will be used for product development and “cementing the company’s leadership in the enterprise generative AI category.”

“At Writer, we’re not just creating AI models that can execute tasks, but developing advanced AI systems that deliver mission-critical enterprise work,” said Habib in a statement. “With this new funding, we’re laser-focused on delivering the next generation of autonomous AI solutions that are secure, reliable, and adaptable in highly complex, real-world enterprise scenarios.”

Writer was founded in 2020 by Habib and Waseem AlShikh. The two previously launched Qordoba together, which helped companies localize products to new markets.

Writer has grown over the years into a full-stack generative AI platform, with products that can be customized for various enterprise use cases.

In 2023, Writer launched its own family of models, Palmyra, for text generation. Later that year, the firm debuted features that connect business data sources to its models, along with the ability for customers to self-host Writer-created models.

Just in October, Writer released a model, Palmyra X 004, trained almost entirely on synthetic data. Developing it cost just $700,000, Writer claims — compared to estimates of $4.6 million for a comparably-sized OpenAI model.

Writer’s current focus is on “AI agents” that can plan and execute workflows across systems and teams, as well as customizable AI guardrails and a suite of no-code development tools.

Despite the intense competition in the generative AI space, Writer has done quite well for itself. The company has hundreds of clients, including Mars, Ally Bank, Qualcomm, Salesforce, Uber, Accenture, L’Oreal and Intuit.

“There’s a tremendous amount of engineering required to transform models into reliable business tools,” Patrick Stokes, EVP of product and industries marketing at Salesforce, said in a press release. “Writer provides a refined, AI-powered solution that’s effective, easy to deploy, and has rapidly accelerated our workflows here at Salesforce. We’re excited to join them on this journey not only as an investor, but also as a customer.”

Accenture, Balderton, Insight Partners and Vanguard also participated in Writer’s Series C.

Writer’s latest funding is another sign venture capital’s enthusiasm for generative AI isn’t waning. According to a report from Accel, generative AI startups will get 40% of all VC cash poured into cloud technologies this year. And in the first half of 2024, investments in generative AI startups topped $3.9 billion, per Pitchbook — not counting OpenAI’s $6.6 billion round.

The generative AI market is projected to surpass $1 trillion in revenue within the next decade. It faces headwinds, however, like privacy and copyright challenges, and architectural issues that cause phenomenons like hallucinations.