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It will take a long time before new routes become more than a niche commercial activity

There is plenty of hype around business potential in the Arctic and how new shipping routes will change global trade patterns.

About a third of the world’s undiscovered gas and an eighth of its oil lie in the far north. And abundant hydropower and geothermal energy in countries from Norway and Sweden to Iceland and Greenland mean it is the perfect place to position data centres and other electricity-hungry industries.

But the pace of change in the polar region is often slow, dare one say glacial, despite it being the fastest-warming region in the world. For instance, take a look at US President Donald Trump’s recurring obsession, Greenland, where no oil and few minerals are being exploited despite decades of exploration.

The latest potential Arctic business breakthrough was reported this week: Sea Legend, a Chinese container shipping company, will launch the first regular service through the Arctic. It is sailing a vessel between Ningbo in China and Felixstowe on the UK’s east coast, using the so-called Northern Sea Route over the top of Russia. This comes after a record number of full transits last year of the Northern Sea Route, which can halve journey times from Asia to Europe.

Still the cold, hard fact remains that Arctic shipping is nothing more than a niche commercial activity. There is a long way, and time, to go until it becomes a viable business proposition of scale. Nonetheless, moves like Sea Legend’s are hugely interesting geopolitically.

“The commercial aspect is not there yet. For the majority of [trade] volumes, this is really far away,” Vincent Clerc, the chief executive of Danish shipping giant Maersk, told me late last year, suggesting a timeframe of decades.

The Northern Sea Route has not lived up to Russia’s expectations, not least as sanctions following the full-scale invasion of Ukraine have curbed foreign ships. That has left it mostly used for transporting Russia’s own petroleum and mineral resources from its frozen north.

But there is clear potential for China, especially as it looks for alternatives to popular trade routes that could have chokepoints controlled by the US or its allies. That is an acute concern for Beijing, something that has led it to look at building a potential Ice Silk Road.

The Northern Sea Route is not exactly problem-free here either, though. Given the entire route is under Russian control, it merely substitutes one choke point for another. Worse, the entrance to it is via the Bering Strait, on one side of which sits the US.

Journey speed is another consideration — Sea Legend’s weekly service touts that it will cut the 40-day normal journey between the two ports in half. But there are issues here, too. The service is only planned for three months in the summer, hardly offering the reliability that most businesses require. There are also fears it could end up being more expensive with fuel savings offset by higher costs for icebreakers and more.

Clerc himself says there are three problems to be solved before the route gains traction. The first is geopolitical, with sanctions on Russia making it currently off-limits for most shipping groups. Then, there are environmental considerations around any potential accident in the Arctic.

“The third one is commercial: because it’s relatively unpredictable when the route opens and closes, there is no commercial demand to switch. Customers don’t want you to flip-flop because their entire lead times get thrown in the air, and it’s very difficult to plan with this,” adds Clerc.

The Maersk boss says the route might compete against rail freight from Asia to Europe but not ocean-borne containers, the main motor of globalisation.

So no big commercial container shipping line is likely to offer anything any time soon to rival the hundreds of container ships sailing through the Suez Canal and the Strait of Malacca.

But with the Arctic warming so quickly — the Norwegian archipelago of Svalbard is, for instance, seeing temperature rises five to seven times the global average — and the big powers jostling for position in the polar region, the new shipping route is also a reminder that slow change still can bring momentous shifts with time.

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Legal AI start-up Legora seeks funds at more than $10bn valuation

Swedish company was valued at $5.6bn only four months ago as interest in artificial intelligence tools for professional services soars

Legal AI start-up Legora is looking to raise funds at a valuation roughly double the $5.6bn it achieved only four months ago in a sign of the intense interest in artificial intelligence companies powering professional services.

Legora is in the early stages of discussions with investors at a valuation of at least $10bn and could include the company raising new money as well as selling existing shares, according to people familiar with the financing.

The Swedish start-up offers lawyers and in-house legal teams tools to review and draft documents, speed up due diligence and keep on top of regulations. Its customers include law firm Linklaters, consultants Deloitte and brewer Heineken.

Its main rival is US start-up Harvey, which is reportedly in talks to raise funds at a valuation of about $15bn.

Law firms are jostling to get ahead of the AI race, with some opting to build their own models rather than relying on third parties. Kirkland & Ellis, the world’s largest law firm, said in May that it would build its own AI platform instead of relying on tools available to competitors. The US law firm has partnered with tech groups including Palantir.

However, Legora chief executive Max Junestrand told the FT in June that he did not think it was “a buy or a build” decision and that firms should just “utilise the best stuff that exists”.

He is attempting to position Legora as a European AI champion in the face of so many dominant US AI players.

Legora is growing rapidly, having increased its annual recurring revenue by 50 per cent to $150mn in the second quarter this year compared with the first. It is also planning to more than double its employee numbers from 700 to 1,500 by the end of the year as its customers, such as law firms and in-house legal teams, have risen by a quarter to 1,500 in three months.

Sweden has become one of the AI hotspots in Europe with Lovable, the “vibe-coding” start-up which promises to make app programming as easy as writing a few sentences, this week raising $400mn at a valuation of $13.3bn amid explosive growth.

Large Silicon Valley venture capital firms such as Sequoia and Andreessen Horowitz have been in Stockholm recently eyeing up potential investments, especially in AI, according to local investors.

“There are suddenly a lot of Swedish decacorns [start-ups valued at more than $10bn]. It is one of the hottest places in Europe right now,” said one Swedish investor.

An executive with experience from multiple Stockholm start-ups added: “The venture capital firms were here when Spotify and Klarna went big. Then it went a bit quiet for a few years. Now they’re here all the time again.”

Legora, which was founded in 2023 and counts Benchmark, Accel, Bessemer, Iconiq and General Catalyst among its investors, declined to comment. People familiar with the financing said it was “early days” and the terms could change. One investor said the valuation could be as much as $11bn-$12bn.

Investors in Sweden said they expected some interest from the biggest US tech groups in trying to buy some of the local start-ups. Sana, a Swedish enterprise AI group, was bought by Workday for $1.1bn last year. “Lovable and Legora are getting so big that only the largest companies can afford them,” added one investor.

Sweden’s broader business community, led by the Wallenberg family of industrialists, signed a deal last year with Nvidia, the world’s most valuable company, to build new AI infrastructure including a supercomputer and technology centre.

Wall Street giants bet Nvidia’s AI chips will defy the laws of finance

Private capital firms are wagering that the crucial hardware will hold its value for years to come

Wall Street is betting that AI chips can defy one of finance’s basic rules: that fast-moving technology quickly loses its value.

Nvidia unveiled this week a $500bn deal under which tech groups will be able to lease semiconductors with financing from groups including Apollo Global, KKR, Brookfield, BlackRock and Goldman Sachs.

The blockbuster partnership was underpinned by expectations that chip prices would remain higher for longer than many analysts had anticipated as a result of the clamour to secure the components powering the AI boom, finance executives involved in the deal told the FT.

Nvidia chief Jensen Huang has said the pact will create a new asset class backed by chips, which would be ripe for investment from the $22tn private capital industry.

Investment industry titans, including Blackstone’s Jon Gray and BlackRock’s Larry Fink, have similarly said that their firms are keen to deploy capital to tap into the insatiable appetite for new data centres to train and power the latest AI models.

But the new funding model also comes with the risk that financiers misjudge the durability of demand for — and the value of — Nvidia’s chips.

“The whole thing is predicated on continual investment,” said Ben Bajarin, a technology analyst at Silicon Valley-based Creative Strategies. “There’s a risk of overbuild, that demand eases, that models improve and don’t need as much compute.”

Unlike rental cars or commercial jets, which have a reliable pool of buyers if a customer defaults, chips’ long-term value remains in question as the technology evolves quickly and demand fluctuates.

For debt backed by chip leases, many lenders currently require the loans to be fully paid off within three to five years, under the assumption that the value of the underlying asset will be minimal after that.

Buyers or lessees of chips also have to construct data centres, meaning anticipated revenue streams lag far behind their spending plans. 

Huang, however, has argued that even Nvidia’s older H100 chips are holding their value longer than many forecast due to breakneck demand for computing power. In a post on X on Monday evening, Huang said the rental pricing for its recent chips had increased, and even its six-year-old A100 chips were still in use, longer than initial estimates of their lives.

Nvidia’s most powerful chips, which are also known as graphics processing units or GPUs, remain in high demand from AI labs training cutting-edge models, but tech groups are willing to use older hardware for simpler tasks such as answering queries.

Nvidia has also extended the life of chips by regularly updating its software platform Cuda. The platform is central to Nvidia’s dominance in AI processing, enabling customers to use GPUs, originally designed for graphics, to speed up AI applications. 

Bajarin said rampant demand for chips of all kinds was likely to bolster Nvidia’s scheme in the medium term and that longer term its success would depend on continuing to lower the total cost of ownership for its products. 

Nvidia will also guarantee that the chips hold at least 25 per cent of their value through the lease term, putting the $5.3tn chip giant on the hook for any of their initial losses.

“There is an intrinsic value to the GPU. Nvidia has a decade-long track record on what the rental unit for a GPU is,” one executive participating in the $500bn Nvidia deal told the FT, referring to current rates on A100 chips. They characterised Nvidia’s guarantee as “the first lost piece” of coming financings, meaning the company would absorb early losses in the value of chips beyond certain projections.

Nvidia’s guarantee has led private capital firms to believe that chip financing deals can be packaged into securities and sold to debt buyers such as insurance companies whose assets they manage, tapping large pools of capital inside firms such as Apollo, KKR and Brookfield.

“Private capital has a unique role here,” said another executive partnering with Nvidia, who predicted GPU leases would standardise pricing and create efficiencies for AI groups. Public debt investors would eventually enter the space, making the asset class easier to trade as “people begin to figure it out”, they said.

The structure of the deals will vary between financial companies. Some firms may create speciality finance companies for chips and structure their loans similarly to vehicles used to fund private equity buyouts, known as collateralised loan obligations. CLOs are broken up into multiple rating slices, allowing investors to choose between different risk levels.

“You can capitalise the GPUs in different layers of risk, sort of like a CLO,” said one executive. But others balked at that approach, with one noting that “everyone will fund it differently”.

The Wall Street financing could also solve another difficulty for Nvidia, relieving the pressure to finance its customers.

The support from the world’s largest financial institutions would mean that Nvidia could pivot away from vendor financing, through which Nvidia provides direct guarantees to help its clients raise debt in the capital markets, Vivek Arya, a research analyst at BofA Securities, said this week.

Nvidia’s deal with the Wall Street heavyweights was positive for the chipmaker, as “the burden sits with the consortium, not [Nvidia’s] balance sheet”.

Zambia’s election becomes battle over copper windfall

Polls on Thursday will test whether African nation’s voters believe they have benefited from mining boom

When Zambia’s president Hakainde Hichilema kicked off his re-election campaign with a visit to Chingola, in the country’s copper-mining heartland, it was meant to showcase his government’s economic success amid record-high prices for the red metal.

But as Hichilema spoke last November, a crowd began chanting “Senseli” — the name of a nearby mine where small-scale miners have been fighting for access to prospective sources of copper. Stones flew towards the podium and the presidential holding tent was set alight before security officials bundled Hichilema away.

On Thursday, Hichilema will seek a second term in an election widely seen as a test of whether ordinary Zambians believe they have benefited from the copper windfall, as young people on the continent grow increasingly impatient for a greater share of its mineral wealth.

Hichilema can claim strong economic growth on his watch: the IMF projects growth of 4.3 per cent this year. And Zambia’s statistics agency says the annual inflation rate has halved to 6.5 per cent from a year earlier.

But the president’s opponents charge that the economic turnaround is more visible in capital markets than on the streets. Zambia, Africa’s second-largest copper producer, is among the world’s poorest and most unequal countries, with more than 70 per cent of the country’s 22mn people living on less than $3 a day.

Hichilema’s strongest challenger is Brian Mundubile, a lawyer and former MP with a substantial political base in the pivotal Copperbelt region. He has campaigned on a platform of criticism of the government’s handling of the cost of living and a sharp critique of its human rights record.

Mundubile, who was himself briefly detained earlier this year, has seen his supporters tear-gassed in recent days. “I have to warn that democracy is going to the grave today in Zambia right before the eyes of the world,” he said earlier this year.

After 15 years as an opposition politician, Hichilema swept to power in August 2021, nine months after Zambia had defaulted on its sovereign debt, promising to revive a battered economy and make life better for ordinary people.

International investors and financial markets have welcomed the economic results on his watch — restructuring the country’s debt and maximising profits from the copper industry — as global prices rise to record highs this year.

But many ordinary citizens say they have yet to see the benefits. “Sixty-something years after independence, many Zambians are not happy with the way politicians are managing the mining industry,” said Trevor Simumba, an economist and analyst based in Lusaka. “We can’t have all this resource and wealth and we are not seeing the benefits — it doesn’t make sense.”

Hichilema returned to Chingola last month and directed that two dumps of slag deposit — potentially rich in unused residual copper that could be extracted — should be opened to local young people for small-scale mining, with equipment and training to help them work the sites safely. 

“He may just be able to squeeze a second term,” Simumba said. “But because of what he’s been hearing on the campaign trail, he will also have to adjust his way of looking at foreign direct investment and especially the mining sector”, suggesting that Hichilema may seek to renegotiate contracts.

Hichilema, who has positioned himself as more business-friendly than his predecessors, has drawn around $10bn of investment into Zambia’s mining sector since 2021. He has said he plans to double copper output to 3mn tonnes annually by 2031, and to restore the country’s access to international capital markets after its debt restructuring in 2024.

“We will double the size of the Zambian economy, permanently end load-shedding, and create millions of new jobs,” Hichilema said in a May election address.

He has chosen to prioritise economic stability over the kind of populist spending that might have offered more immediate relief, said Lubinda Haabazoka, director of the University of Zambia’s Graduate School of Business.

“The economy knows no quick fixes,” said Haabazoka. “In many respects, his government’s economic ‘trick’ was to prioritise macroeconomic repair first, while betting that visible growth and improved stability would arrive before the electorate votes in 2026.”

But voters have not necessarily felt the impact. “The copper is going out, but what are we getting from it?” said Branham Chitalu, a worker at a Chinese-owned copper mine in Kitwe.

Emmanuel Mwamba, a former diplomat and senior official in the previous ruling party who is now in exile, claimed that well-connected mining companies were extracting the country’s wealth at the expense of ordinary citizens. “These multinationals have gotten benefits . . . [through] policies to benefit them,” he said.

Mundubile, the principal challenger, says he will focus on ensuring Zambians get more value out of their mineral wealth.

But investors are watching him with caution: “Zambia cannot easily afford to abandon the fiscal discipline and debt restructuring that restored its access to international capital markets,” said an executive at a large copper mining company in the Copperbelt. “For investors, the priority is continuity and clarity.”

A record number of independent candidates are tapping the discontent with the ruling UPND, with 14 presidential candidates and some 360 independents contesting 226 parliamentary seats. Under Hichilema, the constitution was amended to expand parliament despite objections from the Constitutional Court and civil society groups.

Recent, reliable opinion polls are hard to come by. But analysts expect Hichilema’s UPND to fall short of a majority in parliament, potentially leaving the president with less leeway to continue his project.

Mulenga Pascal Bwalya, who spent 38 years working at Konkola Copper Mines, says he has watched Zambia’s mining wealth pass through successive eras of private and state ownership without making people like him substantially richer.

“We have a problem of political negligence,” said Bwalya, who said he would make a final decision once in the voting booth.

The low price of the company’s bonds suggests even senior creditors are gloomy about their prospects

Close a door and a window opens. Close the window and it turns out there’s a trapdoor hidden under the rug. This is, in essence, how things work in corporate debt. A fight at Aston Martin shows the problem.

The UK carmaker beloved of fictional spy James Bond was a £4bn company with a little debt when it went public in 2018. Now it’s a £350mn company with more than four times that much in net borrowings. Interest expenses consumed almost all of last year’s ebitda; raising new debt in the market now would be tricky and costly. The low price of Aston’s bonds suggests even senior creditors are gloomy about their prospects.

Now gloom has turned to indignation. Last month, Aston Martin borrowed up to £550mn from new lenders led by BlackRock subsidiary HPS, but did so by moving assets into a newly formed subsidiary. Collateral existing bondholders thought backed their claims is now out of reach.

This sort of thing isn’t supposed to happen any more. After a famous case involving US clothes retailer J Crew roughly a decade ago, bond documents — including Aston Martin’s — commonly come with provisions limiting companies’ ability to move collateral into new “unrestricted” shells that fall outside bond covenants.

In this case, though, the “J Crew blocker” wouldn’t restrict moving intellectual property assets into what is known as a “non-guarantor restricted subsidiary”, or sales to a third party like Authentic Brands, according to Covenant Review analysts.

Moreover, it seems bondholders might have been implicitly protected thanks to safeguards attached to a different loan — its £170mn revolving facility. But once that had been repaid, according to a person familiar with the situation, Aston Martin may have had more leeway to make the controversial transfer.

The bondholders have threatened legal action, which isn’t surprising, since rating agency S&P reckons they would get back just 25 per cent of their investment, absent the relocated assets.

The question, then, is whether J Crew blockers are up to the job. Such clauses are increasingly widespread: in Europe, half of last year’s high-yield bonds included a J Crew blocker, according to Moody’s.

The problem is that the rise of these blockers is increasingly accompanied by generous exceptions. In 2020, European bond agreements typically allowed companies to transfer assets worth about 60 per cent of ebitda through various carve-outs. By 2025, that had risen to roughly 100 per cent of ebitda, according to Moody’s.

Their sheer complexity also adds risk, because disputes rely on finely balanced interpretations. US photocopier maker Xerox found a technically legal way to move assets out of its original lenders’ reach to secure new financing through a joint venture. Aston Martin’s creditors, who believe the deal breaks English insolvency law, may hope a different jurisdiction brings a more favourable outcome.

Lenders to other companies will no doubt see this as a cautionary tale, and try to be even more vigilant. The best thing they can do is assume there’s always a trapdoor — and that desperate borrowers will go all out to find it.

Anthropic investors bet on $2tn valuation in record IPO

Rapid revenue growth fuels hope that the Claude maker can overcome challenges to become the biggest listing in history

Anthropic investors expect the AI start-up to float at a valuation of $2tn or more in October, a dizzying figure that would vault SpaceX to make the AI lab’s debut the largest ever initial public offering.

Half a dozen of the company’s backers told the FT that Anthropic’s rapidly rising revenue would enable it to more than double its current valuation in a planned autumn float.

A listing at that level could unlock billions of dollars in gains for the five-year-old company’s early investors but would also test public markets that are becoming more nervous about the AI boom.

Anthropic’s backers say booming demand for the lab’s advanced AI models and tools justifies their lofty expectations. Investors expect the Claude maker’s annualised revenue to be between $100bn and $120bn by the end of 2026 — using the start-up’s preferred measure, which infers full-year sales from recent performance — up by more than 10 times over the course of 2026.

“If Anthropic is growing 800 per cent a year, you’d think at the incredibly low end they would trade at 30 times [revenue],” said one investor in the group. “That would make them a $3tn company.”

Anthropic lacks a publicly listed US peer that would provide a benchmark for its valuation. But companies that are seen as AI beneficiaries, such as data intelligence group Palantir and cloud company Nebius, have traded this year at roughly 55 times revenue.

Several investors said senior Anthropic executives had yet to fix the valuation target for the IPO, even in private conversations. But investors have built their own financial models.

Their bullish projections come despite mounting challenges, including rising competition from Chinese rivals, pressure for AI regulation and a simmering feud with the US government.

Those concerns, particularly the commerce department’s temporary ban on Anthropic’s best models, contributed to overall revenue growth slowing in the month of June, according to two investors with knowledge of the matter. Even so, they said the company had rebounded and continued to grow at an extraordinary rate even by Silicon Valley standards. 

Anthropic declined to comment.

Fees for boarding pupils rose slightly faster than day pupils to nearly £440,000

Parents of private day school students picking up their A-level results this week have spent an average of £216,189 in fees to get them from reception to year 13, according to new research. 

The cost of a complete private day school education for leavers rose 5.7 per cent from last year, Weatherbys Private Bank said in a study published on Thursday, prompting fresh debate over the Labour government’s decision to remove the VAT exemption for independent schools. 

The rise in fees was steeper at boarding schools, where the average bill for the full 14 academic years increased by 6 per cent to £438,444. The total cost for day pupils at boarding schools was £274,061. 

“Providing the high standards parents expect is becoming increasingly expensive thanks to VAT, the loss of business rates relief, increases in employer national insurance contributions and falling pupil numbers,” said Weatherbys’ head of private clients, Oliver Barnett. 

Barnett said some schools had refrained from passing on to parents the full 20 per cent VAT charge that came into effect in January 2025 in order to help parents bear the rise in costs, but were unable to continue absorbing the increase themselves. 

Peter Woodroffe, deputy chief executive of the Independent Schools Association, which represents headteachers of more than 800 private schools, said: “The operating costs of schools have increased considerably [over the past two years], but, despite this, they have done and continue to do their utmost to keep fee rises to a minimum.”  

Government figures show that in the first full year after the introduction of VAT on fees, the number of private school pupils in England fell by more than 22,000, representing a 3.8 per cent drop, while pupil numbers in state schools dropped by 1.1 per cent.

Stuart Hoddinott, associate director of the public services team at the Institute for Government, an independent think-tank, said it was difficult to disentangle the impact of the VAT charge from other factors driving costs at private schools, including rising teacher wages and general inflationary pressures on service delivery costs.

“We’ve seen private school fees rise pretty considerably over the last 15 or 20 years. It’s not unusual to have year-on-year increases,” Hoddinott said, adding that the feared exodus of pupils from private schools to state schools had yet to materialise.

HM Treasury said: “This government ended the tax breaks for private schools, raising billions of pounds to pay for over 6,500 new teachers and raise state school standards. This supports 94 per cent of children across the country.

“Private schools choose to raise their own fees and have increased average fees by 75 per cent in real terms since 2000, and this has not affected pupil numbers.”

Weatherbys estimates that a child starting reception at a private day school this year will rack up a total bill for their family of £393,492 by the time they finish their A-levels in 2040, based on an assumption of 3 per cent annual inflation. The estimate rises to £796,921 for boarding school students.