TheChek News Flow

WeWork’s new owner pitches no-drama turnaround for Adam Neumann’s old company

Low-profile software tycoon Anant Yardi sees ‘tremendous opportunity’ after a turbulent bankruptcy

Anant Yardi will not be caught up in any private jet mischief like Adam Neumann. The low-key California software tycoon is set to take over WeWork on Thursday when a federal bankruptcy court hands control of the co-working business the hustling Neumann once ran to its creditors.

Yardi, an engineer who immigrated from India in 1968, has quietly amassed a multibillion-dollar fortune over four decades selling property management software to commercial and residential landlords. Yardi Systems, the business he started with his wife Eileen, remains family-owned even as its annual revenues approach $3bn.

Less than two years ago, Yardi put in more than $200mn in equity and debt through an anonymous vehicle to prop up WeWork. He agreed to inject another $337.5mn two months ago to counter an offer from Neumann, who wanted back into the company that had funded his jet-setting party lifestyle until his abrupt exit in 2019.

Yardi favoured economy seating on commercial flights until back problems recently sent him to business class. But by gaining control of one of the most polarising companies in recent memory, he will become a pivotal figure shaping the future of urban real estate, with a public profile he has been unused to.

“WeWork is such a popular and well-known brand, it didn’t seem right to let it go down,” Yardi explained in an interview with the Financial Times. “I realise financial decisions are not made on right and wrong. But there’s also a tremendous opportunity in terms of turning around WeWork.”

Judge John Sherwood of the New Jersey district bankruptcy court is set to confirm a reorganisation plan on Thursday that will wipe out $4bn of existing WeWork loans and bonds. That will end a seven-month process in which WeWork cut its aggregate rent liability by a projected $12bn.

In April, WeWork advisers pegged its official new enterprise value at roughly $750mn, sharply below its peak private market valuation of $47bn, and projected that its annual revenue would double to $2.5bn by 2028.

Neumann, in court filings, challenged that outlook as too optimistic but Yardi said he was comfortable with the figures. WeWork’s operating costs have “been contained”, he said: “[WeWork’s] in a good spot. The balance sheet looks very good to us.”

The billions in equity invested in WeWork as a private company and when it went public through a special purpose acquisition company have gone. Holders of its pre-bankruptcy debt may recover just 5 cents on the dollar.

The bankruptcy proved expensive enough that creditors were asked to put in $450mn of new cash. Yardi Systems put in the largest share, giving it a majority stake in the new WeWork. Other lenders including SoftBank and King Street will have minority stakes.

After the bankruptcy, Yardi wants to expand WeWork’s marketing to small businesses and to embrace technology used by hotels, such as real-time bookings. The company also hopes to launch an affiliate programme, in which it would team up with other co-working operators.

“Our view of co-working is that it’s an interesting combination of hospitality or hotelling, apartment leasing and commercial leasing,” he said.

This is new territory for Yardi’s asset-light software company, but he said he had no doubts that he could make a success of WeWork. “If there were doubts, I think we would’ve been much more cautious.”

The companies will be managed as separate entities.

Office properties have been under pressure but Yardi told the FT that their owners should embrace flexible space to make better use of vacant space. Over time, he said, “office buildings will continue to be in demand, and flex will be an integral part of all office buildings”.

He has kept a low profile, in stark contrast to Neumann’s fondness for appearing in the media, sometimes with celebrities, to promote his start-up. Neumann tried throughout the bankruptcy to get a foothold in WeWork, first by offering $200mn in financing, and then with an unsolicited offer of more than $550mn.

During the proceedings, Neumann objected to the company’s plan to let existing lenders including Yardi determine WeWork’s fate, calling Yardi “a potential insider”.

Yardi declined to comment on the allegation. Neumann withdrew his objection on Tuesday and abandoned his bid.

“For several months, we tried to work constructively with WeWork to create a strategy that would allow it to thrive,” he said in a statement. “Instead, the company looks to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”

Acquiring WeWork was not part of Yardi’s original plan, but came about unexpectedly in recent weeks after the company disclosed its cash crunch, Yardi said.

Yardi Systems and WeWork first teamed up in 2022 on an office management and data analytics product. WeWork then turned to Yardi for help when it restructured its debts in early 2023. At that time, the software group agreed to buy $175mn in secured notes and about $40mn in shares through a legal entity called Cupar Grimmond.

Its identity was a mystery until April, when the FT revealed that Yardi was behind the pseudonym. It combines Cupar, the town Eileen Yardi’s ancestors immigrated from in Scotland, and Grimmond, a family name.

Then WeWork made an even bigger ask: whether Yardi would be willing to become its majority owner with the second investment, taking its total commitment above $500mn.

Yardi Systems is happy going unnoticed by most of the business world, but it is well-known in real estate circles as a back-end software company with a large market share.

“Every commercial landlord I’ve ever spoken to uses Yardi Systems. Anyone sizeable — shopping mall, apartment building — they use Yardi,” said Daniel Gielchinsky, a partner at DGIM Law who often advises on real estate matters.

In contrast to WeWork’s dash for growth, its evolution has been more measured. Yardi fondly recalls his wife writing its first tech manual and says the family has no interest in taking the company public.

“I’m hoping that over the course of time, most people will know RentCafe and WeWork,” Yardi said, referring to the prominent online rent payment platform Yardi Systems runs, whose customers do not associate it with the parent company. “And Yardi can go into its shell.”

Jim Esposito left Wall Street lender in January and will become president of high-frequency trading firm

Billionaire Ken Griffin’s Citadel Securities has hired former Goldman Sachs executive Jim Esposito as president of the high-frequency market-making firm, underscoring the ambitions of upstart trading businesses to rival traditional Wall Street banks. 

Esposito, known to colleagues as “Espo”, was one of Goldman’s most senior bankers until his surprising departure in January. The role of president is a new one at Citadel Securities, and a person familiar with the hire said Esposito’s primary role would be helping to grow the firm’s ranks of clients and partnerships.

“I am excited to join Citadel Securities, a next-generation capital markets firm with world-class talent and cutting-edge analytics and technology,” Esposito said.

Esposito will start at Miami-based Citadel Securities in September, reporting to chief executive Peng Zhao. 

“We are thrilled to welcome Jim to Citadel Securities during a period of significant expansion and opportunity for our firm,” Zhao said. 

Citadel Securities was founded in 2002 as a separate entity to Griffin’s $63bn hedge fund Citadel, and has emerged as a player in global markets in its own right. It has capitalised on new regulations that have constrained investment banks that traditionally acted as the principle middle men in financial markets. 

One of the largest beneficiaries from the move to high-speed trading, Citadel Securities acts as an intermediary between sellers and buyers in stocks, bonds and derivatives. It has grown into the biggest market maker for US stocks and is responsible for about a third of all US retail stock trades. Citadel Securities is also expanding into new asset classes and geographies, including Eurozone sovereign bonds. 

Net trading revenue at the privately held Citadel Securities jumped about two-thirds to $2.3bn in the first quarter, according to a person familiar with its performance. This puts it on track to beat the $6.3bn in net trading revenue it recorded last year and about $7.5bn a year earlier.

Rival Jane Street had expected first-quarter net trading revenue to be roughly $4.4bn, more than double the level it achieved a year prior and up 35 per cent from the end of 2023, the Financial Times reported last month.

Two years ago Griffin sold a $1.2bn stake in Citadel Securities to venture capitalists Sequoia and Paradigm, valuing the trading firm at about $22bn and paving the way for an initial public offering of one of the world’s biggest market makers.

Funding would help to bolster stockpile as CDC reports third dairy worker infected

The US government is nearing an agreement to bankroll a late-stage trial of Moderna’s mRNA pandemic bird flu vaccine, hoping to bolster its pandemic jab stockpile as an H5N1 outbreak spreads through egg farms and among cattle herds.

The federal funding from the government’s Biomedical Advanced Research and Development Authority, known as Barda, could come as early as next month, according to people close to the discussions.

It is expected to total several tens of millions of dollars, and could be accompanied by a commitment to procure doses if the phase-three trials are successful, they said.

Talks between the government and Pfizer over supporting the development of its mRNA vaccine targeting the H5 family of viruses are also ongoing. Pfizer, like Moderna, played a pivotal role in supplying mRNA vaccines for Washington’s jab rollout during the Covid-19 pandemic.

Bird flu has been detected on poultry farms in 48 states and in dairy cow herds across nine states as part of one of the worst outbreaks in recent history, according to the US Centers for Disease Control and Prevention.

The CDC has also reported three cases affecting dairy workers in recent months, adding to concerns about the virus spreading in human populations. The agency on Thursday said it had found a fresh case in a Michigan dairy worker, who was the first infected individual to experience acute respiratory symptoms typically associated with flu.

US health authorities continue to classify the public health risk from bird flu as low, but their efforts to build up and diversify the pandemic vaccine stockpile have gathered pace. Federal health officials said last week that the government was moving ahead with plans to fill 4.8mn vials from its existing portfolio of protein-based bird flu vaccines and was in discussions with Moderna and Pfizer.

The possibility of contributing to the US pandemic vaccine stockpile also represents a commercial opportunity for the mRNA vaccine makers, whose market valuations have fallen significantly from pandemic highs. Moderna’s share price is up nearly 37 per cent since the start of April.

Moderna has completed dosing of a mid-stage trial of its H5 pandemic flu vaccine, with interim data expected soon. Pfizer said in a statement on Wednesday that it “would be prepared to deploy the company’s capabilities to develop a vaccine for strategic stockpiles”, confirming that it had launched a phase-one trial for a pandemic flu vaccine last December.

Applications for Barda grant funding for an mRNA-based pandemic flu vaccine closed in December last year, according to a project proposal seen by the Financial Times. But the bird flu outbreak has increased the urgency of talks, with federal officials acknowledging that the speed with which mRNA vaccines were designed and deployed during the Covid-19 pandemic showed their value compared with more traditional vaccine technology.

The jabs from GSK, Sanofi and CSL Seqirus, which make up the US government’s existing pandemic vaccine portfolio, provide immunity to the current strain of bird flu, according to laboratory testing, but rely on a more time-intensive manufacturing process using egg- and cell-based cultures.

The US health department, Moderna and Pfizer declined to comment on the potential funding.

Financier’s anticipated announcement comes as Wall Street warms to former US president

Hedge fund billionaire Bill Ackman is leaning towards backing Donald Trump in the US election, according to a person briefed on his thinking, as some of Wall Street’s leading figures throw their weight behind the former president.

Ackman, who backed Trump’s Republican rivals, including Nikki Haley, in the party’s primary contest this year, is likely to make his endorsement on X, the Elon Musk-controlled social media platform in which he is a minority investor.

Ackman has previously donated money to Democrats, including Dean Phillips, who mounted a primary challenge to President Joe Biden this year.

The person familiar with Ackman’s thinking said the billionaire did not believe alternative candidates such as Robert F Kennedy Jr, whose long-shot White House bid he had also supported, were likely to win.

They added that Ackman’s dislike for Biden far outweighed his ambivalence for Trump.

The expected endorsement by the Pershing Square Capital Management founder follows last week’s announcement by Stephen Schwarzman, another Wall Street billionaire, that he would support Trump as a “vote for change”.

The Blackstone chief also cited a rise in antisemitism in the US as among reasons for supporting the former president.

Ackman, who has led a vocal campaign against US university bosses he claims have tolerated anti-Jewish discrimination on campuses, had previously indicated that he was considering switching his support to Trump.

The growing support on Wall Street for the former president — including from donors who abandoned Trump after the January 6 2021 attack on the US Capitol — comes as the Republican candidate pledges to slash taxes and eliminate government regulation if elected.

Wall Street bosses have criticised the Biden administration for what they describe as regulatory over-reach, with private equity executives arguing that the Federal Trade Commission’s antitrust agenda has suppressed dealmaking.

“Wall Street is definitely swinging in Donald Trump’s direction,” said Key Square Group founder Scott Bessent, who has raised funds for the former president.

Schwarzman’s backing would be an “all-clear signal for others sitting on the fence”, he added. 

One investment banker said the growing support for Trump reflected investors’ increasing confidence that he would succeed in reclaiming the White House.

“Wall Street always wants to pick winners and most people think Trump is going to win — very simple,” the banker said.

Other billionaire donors, including Citadel founder Ken Griffin, who donated to Haley in the primary, remain on the sidelines.

Griffin has said he might support Trump depending on the presumptive nominee’s pick for a running mate. Haley has announced she will vote for Trump.

Tech venture capitalist Keith Rabois, who gave Haley’s campaign more than $1mn, declined to tell the Financial Times if he would back Trump, but said it was “inconceivable that I will vote for Biden”.

Some leading Wall Street investors who were leaning towards Trump said it remained socially awkward to endorse the former president publicly.

The Republican candidate is awaiting a verdict in a trial in New York relating to payments to porn actor Stormy Daniels and faces an array of other criminal charges.

One top New York investor said he felt it was too risky for him to publicly endorse Trump, despite the former president being the “obvious choice” for Wall Street, adding that their children attend a liberal school.

“Nobody likes Trump for his family values,” the investor said, “but he’s a more commercial guy, our kind of people like that”.

A senior corporate lawyer in New York said Trump was also making inroads with disillusioned Democrats on Wall Street. 

“The Democratic party’s messaging has been terrible,” said the lawyer, who asked to remain unnamed for fear of criticism from friends and colleagues. 

“Wall Street Democrats are still pro-capitalism,” he added. “Unfortunately, you have a lot of far-left folks who have hijacked the party . . . they don’t understand what it takes to win the country.”

Trump would be a “no-brainer for our industry . . . we’ll get richer if he wins”, said a private equity executive who manages tens of billions of dollars in the media, tech and retail sectors. 

“But I can’t make my views public because I’ll get immediately cancelled . . . many of our customers would immediately start boycotting the services and products sold by our portfolio companies,” the executive added.

The U.S. Commerce Department is probing whether a South Korean maker of parts for machines that produce semiconductors has been selling to Chinese companies that are subject to U.S. sanctions, said two people with knowledge of the investigation. The review signals a new effort by the U.S. government to root out how companies such as Huawei are getting access to crucial chip-making technology, despite escalating U.S. export controls.

The officials are investigating whether Ronda Korea has been selling components using technology developed by Fremont, Calif.,-based Lam Research to sanctioned Chinese companies, the people said. The Commerce Department is also looking into whether other equipment manufacturers in South Korea are using U.S. technology to supply sanctioned Chinese companies, the people said.

The investigation into Ronda is ongoing, and it’s not clear whether the Commerce Department will penalize the South Korean manufacturer, such as by putting it on a list of companies barred from trading with the U.S.

A spokesperson for Lam said Ronda was not an authorized supplier of its products, and the company is actively engaged with the Commerce Department to ensure it is complying with restrictions on semiconductor technology shipments to China. Representatives of Ronda did not reply to multiple requests for comments. The Commerce Department declined to comment.

Chinese chip makers have faced increasingly tough restrictions on obtaining components and equipment necessary for producing advanced semiconductors since 2020, when the U.S. government imposed restrictions on sales to Huawei. Two years later, the U.S. introduced sweeping controls on exports to other Chinese chipmakers. Along with the U.S., the Netherlands and Japan are among the largest makers of semiconductor manufacturing equipment. The two countries have followed the U.S. in enacting restrictions on Chinese chipmakers, strengthening the blockade on China's high-end semiconductor technology imports.

South Korean companies emerged as a primary alternative to keeping the Chinese chip plants running since early last year, according to employees at Chinese chipmakers. South Korea is known for making memory chips and nurtures a niche semiconductor equipment industry with smaller manufacturers. The country has not yet imposed strict rules on chipmaking technology exports.

But since March, the Commerce Department has been urging South Korea to restrict exports of equipment and technologies for advanced chipmaking to China, one of the people with direct knowledge of the situation said. The investigation into Ronda Korea is part of this effort. Details on the other companies being investigated couldn't be learned.

South Korea, however, faces possible retaliation from Beijing that could limit its manufacturing exports to China, an important trading partner. (Bloomberg earlier reported the U.S. was pushing South Korea to restrict semiconductor exports to China.)

Ronda offers parts for etching tools used to make advanced chips for smartphone and data centers, such as silicon electrodes and radio frequency transmitter parts. It’s been expanding its footprint in China. Since last year, the company has set up three subsidiaries in China, including two chipmakers and one equipment part manufacturer, according to Chinese information provider Qichacha.

U.S. officials have grown increasingly concerned that Chinese companies, including Huawei and Semiconductor Manufacturing International Corp., are able to make advanced chips despite the sanctions.

The U.S. government’s examination of possible export violations has already had a chilling effect on some manufacturers. Early this year, some South Korean and European equipment component suppliers cut off sales with Chinese customers after being interviewed by U.S. investigative officials, the two people with direct knowledge of the situation said.

Networks linked to Russia and China use OpenAI tools to spread disinformation

Covert influence perpetrators from Iran and Israel also creating misleading content, says Microsoft-backed group

has revealed operations linked to Russia, China, Iran and Israel have been using its artificial intelligence tools to create and spread disinformation, as technology becomes a powerful weapon in information warfare in an election-heavy year. 

The San Francisco-based maker of the ChatGPT chatbot said in a report on Thursday that five covert influence operations had used its AI models to generate text and images at a high volume, with fewer language errors than previously, as well as to generate comments or replies to their own posts. OpenAI’s policies prohibit the use of its models to deceive or mislead others. 

The content focused on issues “including Russia’s invasion of Ukraine, the conflict in Gaza, the Indian elections, politics in Europe and the United States, and criticisms of the Chinese government by Chinese dissidents and foreign governments”, OpenAI said in the report.  

The networks also used AI to enhance their own productivity, applying it to tasks such as debugging code or doing research into public social media activity, it said.

Social media platforms, including Meta and Google’s YouTube, have sought to clamp down on the proliferation of disinformation campaigns in the wake of Donald Trump’s 2016 win in America’s presidential election when US investigators found evidence that a Russian troll farm had sought to manipulate the vote.

Pressure is mounting on fast-growing AI companies such as OpenAI, as rapid advances in their technology mean that it is cheaper and easier than ever for disinformation perpetrators to create realistic deepfakes and manipulate media and then spread that content in an automated fashion.

As an estimated 2bn people head to the polls this year, policymakers have urged the companies to introduce and enforce appropriate guardrails.

Ben Nimmo, principal investigator for intelligence and investigations at OpenAI, said on a call with reporters that the campaigns did not appear to have “meaningfully” boosted their engagement or reach as a result of using OpenAI’s models. 

But, he added, “this is not the time for complacency. History shows that influence operations which spent years failing to get anywhere can suddenly break out if nobody’s looking for them.”

Microsoft-backed OpenAI said that it was committed to uncovering such disinformation campaigns and was building its own AI-powered tools to make detection and analysis “more effective”. It added that its safety systems already made it difficult for the perpetrators to operate, with its models refusing in multiple instances to generate the text or images asked for.

In the report, OpenAI revealed several well-known state-affiliated disinformation actors had been using its tools. These included a Russian operation, Doppelganger, which was first discovered in 2022 and typically attempts to undermine support for Ukraine, and a Chinese network known as Spamouflage, which pushes Beijing’s interests abroad. Both campaigns used its models to generate text or comment in multiple languages before posting on platforms such as Elon Musk’s X.

It flagged a previously unreported Russian operation, dubbed Bad Grammar, saying it used OpenAI models to debug code for running a Telegram bot and to create short, political comments in Russian and English that were then posted on messaging platform Telegram.

Telegram and X have been approached for comment.

It also said it had thwarted a pro-Israel disinformation-for-hire effort, allegedly run by a Tel Aviv-based political campaign management business called STOIC, which used its models to generate articles and comments across Meta’s Instagram, Facebook and X.

Meta on Wednesday released a report stating that it removed the STOIC content. The accounts linked to these operations were terminated by OpenAI.

Plan to target €42bn of imports could cover food, medicines and nuclear fuel

The EU is considering levying tariffs on up to €42bn of Russian imports that have been spared by the sanctions regime imposed by the bloc in response to Moscow’s full-scale invasion of Ukraine.

EU trade ministers on Thursday asked the European Commission to draw up a plan to place duties on products that are exempt from the measures, such as food, nuclear fuel and medicines, with the revenues likely to go to Ukraine. The initiative was put forward by Sweden.

Ministers also endorsed tariffs on cereals and oilseeds from Russia and Belarus, which will take effect on July 1, after a surge in imports. 

While most EU trade with Russia has been halted as a result of the war in Ukraine, some imports are still allowed either because there are no alternatives for supplies or because of fears of causing global market disruptions.

The EU has set the tariffs on Russian wheat so high — €95 a tonne — they amount to an effective ban, but it has stopped short of imposing sanctions to counter Russia’s claim that the bloc is halting food exports to the developing world. 

Valdis Dombrovskis, the EU’s trade commissioner, told reporters: “Sweden has initiated a discussion on a broader use of tariffs on imports from Russia. From the European Commission’s side, we will be assessing this and providing member states with options to move forward.”

He added that the tariffs on cereals, oilseeds and derivatives would ensure that “Russia cannot destabilise the EU market through redirected grain exports”.

“It will tackle illegal Russian exports of stolen Ukrainian grain products into the EU market, and will prevent Russia from using the revenues from the export of these goods to the EU to fund its aggression against Ukraine.”

The UK, Canada, US, Australia and New Zealand have already imposed tariffs on many Russian imports.

Swedish trade minister Johan Forssell told the Financial Times it was important to cut Russia’s revenues. “A lot of the income is used for funding Vladimir Putin’s war machine. So, what we said today is that we need to address these exports that are still in place despite the sanctions.” 

He called for “broad tariffs on all that trade”, but accepted that “it’s sensitive in some areas”. Still, according to the Swedish minister, there was “very strong support for this around the table”. Tariffs require approval by a majority of member states.

“I also think that the income from these tariffs could be spent to help Ukraine to win this war,” Forssell added.