TheChek News Flow

Government and industry will invest £760mn towards critical skills and infrastructure

The UK government will launch a “national endeavour” to reinforce the country’s nuclear deterrent, including a promise to invest more than £760mn with industry over the next six years into critical skills and infrastructure.

Rishi Sunak, the prime minister, will on Monday also announce a separate £200mn investment into a “transformation fund” for Barrow-in-Furness, the Cumbrian town where Britain’s nuclear submarines are built by BAE Systems for the Royal Navy. Barrow has suffered from health inequalities, poor housing and some of the most deprived neighbourhoods in the country despite multiple attempts at lasting regeneration. 

The investments come as the government prepares to set out how it plans to sustain and modernise the UK’s nuclear deterrent in a new Defence Command Paper. It follows concerns that ageing infrastructure and a lack of investment were undermining the effectiveness of the deterrent, a cornerstone of Britain’s defence posture.

Ministers were forced last month to declare that the deterrent remained “safe, secure and effective” after a nuclear missile test failed when the Trident weapon crashed into the sea near the submarine that fired it. Adding to the embarrassment, defence secretary Grant Shapps was on board HMS Vanguard to witness the test launch which took place in January.

The Defence Command Paper will detail the government’s plans to bring new Dreadnought-class submarines into service in the early 2030s. The Dreadnoughts are due to replace the current Vanguard-class vessels which were commissioned into service in the mid-1990s. 

“Safeguarding the future of our nuclear deterrent and nuclear energy industry is a critical national endeavour,” Sunak will say on a visit to Barrow on Monday. 

“In a more dangerous and contested world, the UK’s continuous at-sea nuclear deterrent is more vital than ever. And nuclear delivers cheaper, cleaner homegrown energy for consumers.”

Investments into Britain’s nuclear capabilities and skills — both defence and civil — are seen as vital if the government is to build a new fleet of atomic power stations to bolster its energy security, as well as deliver on the new Dreadnought programme. The government is also committed to building a new generation of attack submarines under the trilateral Aukus pact with the US and Australia.

Aukus is seen by ministers as a key part of the government’s “levelling up” agenda to narrow regional economic differences. Cabinet minister Michael Gove name-checked Barrow in a speech in July, promising to make it a new “powerhouse of the North”.

Under the Barrow Transformation Fund the government will commit £20mn towards immediate projects, including supporting people towards work. This will be followed by a minimum of £20mn a year over 10 years to build more homes, develop the transport network and support local schools.

Britain’s nuclear industry will need an additional 123,000 people by 2030, according to the government. The £763mn investment, which includes more than £400mn from industry including BAE, Rolls-Royce, Babcock International and EDF, will create around 5,000 new apprenticeships over the next four years.

Customers ‘making a lot of money’ as appetite for luxury cars outpaces China and Hong Kong, says chief

Sales of Ferraris in Taiwan have doubled in the past four years, bolstered by the growing wealth of the country’s chip entrepreneurs and a return of capital as global supply chains diversify away from China.

Ferrari’s chief executive Benedetto Vigna said demand in Taiwan was growing faster than in China or Hong Kong because of a sharp rise in supercar sales to the country’s increasingly wealthy citizens.

“China is growing but . . . less than Taiwan,” he told the Financial Times. “In Taiwan you have more entrepreneurs, and the chip industry is booming”. He added: “You have a lot of people that are making a lot of money.” 

Ferrari last month reported record annual earnings, driven by customers paying for personalised add-ons. Although the bulk of its sales come from Europe and the US, the carmaker said shipments to mainland China and Taiwan increased from 5 per cent of the total in 2020 to almost 11 per cent last year.

Ferrari is tapping into a surge in private wealth that has made the island the fifth-richest country in the world, with €141,600 per capita, according to last year’s Allianz Global Wealth Report. The uptick in wealthy citizens has been driven in part by a booming industry for semiconductors, a sector dominated by Taiwan.

But it has also been boosted by Taiwanese manufacturers shifting their operations away from China, which has brought many entrepreneurs and wealthy executives back home.

“We have won a lot of new customers over the past four years,” said Vincent Liu, general manager of Modena Motori Taiwan, Ferrari’s official dealer in the country. “Ferrari played a major role in the growth of the supercar market here, which grew 30 per cent to 1,300 units last year,” he said, adding the brand now held 40 per cent of the two-door segment.

Along with the US, Taiwan has long had the highest ratio of private wealth to the size of its economy in the world. The country’s net financial assets increased 45 per cent between 2018 and 2022, according to the Allianz report, the latest year for which figures are available.

According to Modena Motori, 70 to 80 per cent of Ferrari buyers in Taiwan are entrepreneurs.

“The exotic car scene has really taken off here,” said Ryan Yeh, owner of a Ferrari Pista and one of only three Ferrari 360 Modenas in Taiwan. Yeh runs a car club and frequently participates in street races in the mountains that dominate the island’s geography.

“[For] my generation who have some financial freedom, these brands are much more recognisable [compared with] our parents’ [generation], where anyone who was successful would just buy a Benz or BMW,” he said. “I guess this generation is flashier, more keen on displaying wealth. And there is no better way of displaying wealth than driving that kind of car.”

Jeff Hsu, a board member of satellite company Aerkomm, who bought an Aston Martin four years ago, his first luxury car, said: “It’s very simple: Taiwanese are rich, and there’s only so many places you can put your money: you can buy property and you can buy cars.”

Goratty Zhang, a marketing manager at Gama, Lamborghini’s dealer in Taiwan, said Lamborghini sales in the country had greatly expanded since the brand’s launch of SUVs in 2017 broadened its appeal to a larger group of buyers.

The worldwide growth of wealthy motorists has also led to pockets of expansion for Ferrari in countries such as Poland and the Czech Republic, according to Vigna. He added that the brand had still only tapped a tiny portion of its potential global buyers.

In order to retain its luxury status, Ferrari suppresses production, often forcing buyers to wait for several years for its cars. This drives scarcity and increases both its prices and the resale value of its cars, helping the company enjoy the best margins in the auto industry. Last year, Ferrari reported €1.26bn of net profits on car sales of just 13,663. 

The company has sold only 300,000 vehicles in its history — the same number produced by Volkswagen’s Porsche brand every year.

Early movers profited from unloved assets, but higher interest rates and more competition mean windfalls will become harder to achieve

The turbulent years that followed the global financial crisis were not an ideal time for Michael Dorrell and Trent Vichie to be seeding a new infrastructure fund. 

Potential investors were reluctant to back new funds and they had little appetite for deals that offered less lucrative returns than large buyouts. At many points, it seemed the end was nigh for their nascent venture.

A dozen years later Stonepeak, the New York-based infrastructure-dedicated investment group they created, is a colossus in the private investment world, with $60bn under management.

Companies it controls transport about 10 per cent of the world’s seaborne natural gas, own over 120,000 kilometres of fibre networks and produce enough renewable electricity to power 200,000 households. 

The group recently drew a $2bn investment from a minority investor that valued it at nearly $15bn, according to people briefed on the matter. Dorrell, the Australian-born dealmaker who fought to keep Stonepeak alive in its early days as its chief executive, is now a billionaire. 

Stonepeak’s speedy rise has surprised many on Wall Street, but it is a story shared by a small circle of dealmakers who entered infrastructure investment in the US in the early 2000s. 

Adebayo Ogunlesi, for example, who in his days as a top Credit Suisse banker often sat opposite Dorrell and Vichie during negotiations, created Global Infrastructure Partners with the support of the Swiss bank in 2006. 

After building up a portfolio of over $100bn, this year Ogunlesi agreed to sell to BlackRock for $12.5bn in a cash-and-shares deal that will make him and his partners the second-largest shareholders of the world’s largest asset manager.

In the early days, Ogunlesi, Dorrell and Vichie and others bid against each other for mundane assets like toll road concessions and parking meter networks. The deals often carried high levels of debt and many quickly soured during the financial crisis.

“Infrastructure investment came to the US in the early 2000s and it was dominated by a handful of people who were mostly project finance, utilities and municipal bankers,” says one senior industry executive. “They saw it as a trend and capitalised by making big early bets around the crisis. Many of the people who didn’t get washed out became billionaires.” 

Today’s infrastructure market is more crowded. The success of entities such as Stonepeak and GIP, along with a decade of rock-bottom borrowing costs, prompted asset managers like BlackRock, CVC and General Atlantic to enter the fray by acquiring large infrastructure managers. A further wave of deals is brewing, according to bankers and private equity executives.

Once an investment backwater, infrastructure became a favoured area for pension funds looking for yield and protection against market volatility. Infrastructure assets under management worldwide have soared beyond $1tn, more than six times their level in 2008, according to data provider Preqin. 

The increased competition for assets has led big players to widen their definition of infrastructure; it now includes assets such as gas export facilities, the transmission masts that mobile phone networks are increasingly selling, or the data centres that will provide the computing power needed for artificial intelligence projects.

Their business is starting to face more scrutiny; politicians and consumers in some countries are starting to ask how desirable it is to have pieces of infrastructure key to the public realm owned by highly indebted and secretive private companies.

As asset prices and interest rates rise, windfalls have become harder to achieve. “There is always tension on how far you can push the frontier and what is infrastructure,” says Hamilton James, the former vice-chair of Blackstone Group, which initially backed Stonepeak. 

“My guess is we are in a part of the cycle where returns will be lower. Rising rates and high stock prices make it harder to do interesting deals and there is a lot of capital chasing after investments.”

Dorrell and Vichie, both native Australians, were sent by Macquarie to the US in 2000 to replicate the Sydney-based infrastructure group’s past successes in the world’s largest economy. 

During the 1980s and 1990s, Macquarie underwrote a wave of privatisations across Australia, Europe and Canada, countries where governments were looking to sell state monopolies such as utilities, airports and toll roads. It then began investing directly in the businesses that were being privatised.

But translating that strategy to the US was initially challenging. Federal and state governments were less likely to sell assets, fearing a political backlash. The existence of large municipal debt markets, which carried tax advantages for domestic investors and generated funding for public bodies, meant there was less financial incentive to privatise.

Dorrell and Vichie soon wondered whether they should just return to Australia. “Infrastructure wasn’t even a backwater in the US. It didn’t exist,” says Dorrell. “We almost didn’t bother.”

But the duo came to realise that many other pieces of infrastructure, like communications networks, pipelines and logistics assets, were owned privately and often neglected and undervalued on corporate balance sheets.

“We quickly worked out that the sectors available in the US have dwarfed the other asset classes,” says Dorrell. “Over time you started to realise that the US was different, and different in a good way. It makes it the most interesting infrastructure market in the world.” 

A small number of deals sparked investors’ interest. In 1999, the provincial government of Ontario sold a lease on 407 ETR, a toll road around Toronto, for about $3bn — a price that in Dorrell’s eyes wildly undervalued the highway. Macquarie quickly became a large investor and by 2019, 407 ETR was valued at around $30bn. “It is arguably the most successful infrastructure asset ever,” says Dorrell.

Canadian pension funds and those in Europe and Australia began pouring money into infrastructure and US municipalities started to sell assets such as the Chicago Skyway Bridge, acquired by Macquarie and Cintra for $1.8bn in 2004. Before long, large investment banks including Goldman Sachs, Credit Suisse, Citigroup, Morgan Stanley and Deutsche Bank were building their own dedicated investment teams. 

But the 2007-08 financial crisis brought the boom to an abrupt end and left many institutions nursing big losses. “The early deals were all levered to the gills,” says one senior executive involved with many transactions, who estimated some were priced at between 40 and 60 times annual operating cash flow. “They weren’t bad assets. They were a story of too much leverage and not enough time,” he adds. “It was the ultimate winner’s curse.” 

It was around this time that Dorrell and Vichie were headhunted by US investment group Blackstone to build an internal infrastructure investment unit inside the world’s largest private equity group.

But after failing to make much headway, their unit was quietly spun out in 2011. They used their savings to rent Manhattan office space for their venture, Stonepeak, and scoured the US for investment from large pension funds and endowments. The response was lukewarm.

By the summer of 2012 they were racing to secure $250mn of investment in the fledgling Stonepeak that would help them land a $400mn cornerstone commitment from a large US teachers’ pension fund.

Their best hope was a Washington state pension fund, but one Friday near the end of summer, it notified Stonepeak that it was putting its potential investment on hold. Both Dorrell and Vichie feared it was the end. “I have never been so nervous in my life,” says Dorrell.

The fund changed its mind the following Monday and ultimately invested $250mn, setting Stonepeak on the way to raising over $1bn for its first fund. “The investment put us in business,” says Dorrell. Vichie retired from the company in 2021 to pursue other projects.

Stonepeak, along with rivals like GIP and Canadian asset manager Brookfield, would soon have investors flocking to their doors as the era of low or even negative interest rates forced asset managers to look for returns from unlisted investments.

Another beneficiary was Sadek Wahba, an Egyptian-born banker who began his career as an economist at the World Bank before building up Morgan Stanley’s internal infrastructure unit.

That entity, spun out of the US bank in 2012 and now called iSquared Capital, manages nearly $40bn in assets. Antin Infrastructure, one of Europe’s most valuable listed asset private investment groups, followed a similar path after being seeded inside BNP Paribas.

The growth of private infrastructure groups bore similarities to previous structural changes in finance that gave rise to the private equity and credit markets that now manage assets of over $14.5tn.

The now expansive buyout and private credit industries were also pioneered by small teams of former bankers from groups like Bear Stearns, Lehman Brothers and Drexel Burnham Lambert, who devised new financial structures and underwriting techniques for corporate assets.

GIP, Stonepeak and iSquared helped to push the infrastructure industry away from auctions of government-owned assets and towards a strategy that more closely resembles that of private equity. Last year, iSquared agreed to acquire UK-based bus and train operator Arriva from Deutsche Bahn.

Dorrell and Vichie even recreated the culture they had observed inside Blackstone, recruiting dealmakers from private equity and hedge funds with expertise in restructuring financially distressed assets. 

Jack Howell, one of Dorrell’s early recruits, is now co-president alongside Luke Taylor, another Macquarie veteran. Under Howell’s direction, Stonepeak invested heavily in the US pipeline sector in the early days of the shale gas revolution but embedded financial protections such as enhanced seniority for its equity investments. 

That helped it avoid losses during the sector’s cyclical downturns. “Your structure doesn’t matter until it does,” says Dorrell. “It can really save your capital.” According to pension fund documents published publicly this past January, the group has not yet realised a loss on any of its deals.

Ogunlesi’s GIP has arguably been an even greater success, attracting over $100bn in assets using a strategy of making incremental changes to large businesses to improve their profitability and valuations before selling them on.

At London City airport, GIP reworked the take-off and landing schedules to allow for an increase in flight numbers, eventually selling its 75 per cent stake at a huge profit. At Gatwick, another London airport, it more than halved the time taken for security screening — allowing passengers to spend more time and money in the retail and catering outlets that pay revenue-based rents to the airport.

There have been misfires along the way. GIP acquired UK waste management company Biffa in early 2008, only to see the financial crisis expose its vulnerability to competition and economic downturns. It salvaged just $93mn of its $600mn investment. 

Stonepeak put $3.6bn of equity — its single largest cheque — into Astound Broadband in 2021, but the New York company wilted under intense competition from larger broadband operators. Profits evaporated and rating agencies cut its debt ratings, raising the cost of its borrowings. 

The diversification into investment areas previously dominated by private equity and real estate trusts, such as fibre networks, cellular towers and data centres, could bring more blow-ups. The sharp rise in interest rates is also putting pressure on many deals done in 2020 and 2021, say industry executives.

“So much capital had been chasing wind and solar energy it became heavily mispriced,” says Dorrell. “The music stopped and there has been real distress.”

Stonepeak has looked to capitalise on that; last month, it agreed to take a 50 per cent stake in a package of US wind energy projects from Danish renewables group Ørsted.

Data centres have been another area of almost unbridled optimism as investors gush over prospects for artificial intelligence. But some deals have already soured; Canada’s Brookfield Infrastructure Partners has been forced to inject more equity into Evoque, a data centre business it bought from AT&T in 2019 whose revenues have since declined. Evoque itself recently acquired a private equity owned rival out of bankruptcy.

Last week short seller Hindenberg warned that so-called hyperscalers such as Amazon, Google and Meta were changing the dynamics of the industry and stripping pricing power from smaller operators. It has also accused Equinix, a listed data centre operator, of manipulating the accounting treatment of capital spending to flatter its profitability. Equinix says it is investigating the claims.

“The data investment theme to me feels super, super toppy and the thing everyone is chasing,” says one infrastructure executive. “People are making huge commitments and huge bets.” 

Some early privatisation efforts have also backfired after being overloaded with debt. Water utilities privatised by the UK in the 1990s were taken off the stock market by infrastructure investors in a series of deals during the mid-2000s. 

But many of these heavily indebted operators have attracted public and political opprobrium for delivering poor customer service, polluting waterways and failing to invest in new assets — all while showering their overseas owners with dividends. 

“If you pay too much for the assets, the regulator will lower the regulated return,” says one infrastructure executive. “If the deal goes wrong, it goes wrong really quickly.”

When GIP and Stonepeak began they had few competitors, but large private equity groups Blackstone, KKR, EQT and Brookfield have built increasingly deep pockets of capital to invest in the sector. Ogunlesi believes trillions of dollars will still need to be invested in infrastructure, for instance, to reshore manufacturing supply chains, build modern digital networks and secure traditional and renewable energy supplies.

Furthermore, he says large public companies will struggle to deliver the revenue growth that investors demand and will look to release capital for investment in faster-growing niches by selling infrastructure assets or forming joint ventures with specialist investors. GIP’s investment portfolio now includes partnerships with many of the world’s largest companies, including Abu Dhabi’s state oil producer Adnoc, Shell, TotalEnergies and Vodafone.

Ogunlesi says the infrastructure boom has much further to run. “You are going to see a huge amount of investment activity going forward.”

But he also acknowledges that in the current economic and geopolitical environment, managers “are going to have to work much harder to earn their keep than they’ve had to do in the past”.

Government involvement in Petrobras and Vale alarms investors as president calls market ‘voracious dinosaur’

President Luiz Inácio Lula da Silva’s government has been accused of political interference in some of Brazil’s biggest companies, prompting alarm among investors who fear a repeat of heavy-handed interventions from the last period of leftwing rule.

Shares in state-controlled oil major Petrobras fell 10 per cent in a single day this month after it opted not to pay extraordinary dividends, contrary to analyst expectations, in a decision that its chief executive said came from Lula and his ministers.

Mining company Vale has also been affected after the administration faced accusations, which it denied, of improperly seeking to get a controversial ally of Lula appointed as its next chief executive.

In addition, Brasília has pushed to reverse an element of the privatisation of power utility Eletrobras by previous far-right president Jair Bolsonaro.

In a still unresolved case, last year it petitioned the Supreme Court to overturn a legislative clause capping the government’s voting rights at 10 per cent, below the roughly 40 per cent of equity it still owns in the listed group. 

The controversies have raised the spectre of state activism that often failed or proved costly when Lula’s party was previously in power earlier this century, which following a boom ended in a deep downturn for Latin America’s largest economy.

Eduardo Figueiredo, head of Brazilian equities at the UK asset manager Abrdn, said: “Given past experiences of undue political pressure did not end well, we see these incidents having an impact beyond the companies mentioned . . . ultimately making it harder for Brazil to attract investments.”

A former trade unionist who governed for two terms between 2003 and 2011, Lula’s election manifesto in 2022 called for a bigger role for the state and higher public spending, with the goal of boosting living standards in the nation of 200mn. 

During the campaign he promised to manage the economy with moderation, but recent antagonistic remarks by the 78-year-old veteran politician have dismayed the business class.  

“Brazilian companies need to agree with the Brazilian government’s development thinking. That’s what we want,” he said last month, after saying Vale — a private-sector multinational — “belongs to Brazil”.

After Petrobras’s share price drop, Lula described the market as a “voracious dinosaur” that “wants everything for itself, nothing for the people”.

The noise around Brazil’s two most internationally successful enterprises has caused concern in corporate circles, where executives had hoped that Lula’s pragmatism would dominate his second stint in office.

The leftist’s earlier presidency was characterised by steady growth and a widening middle class, with millions lifted out of poverty. He largely stuck to economic orthodoxy during his first four-year mandate, before shifting towards fiscal expansion and interventionist policies.

This more statist approach was turbocharged by his chosen successor, Dilma Rousseff, who was blamed by many Brazilians for dragging the country into its worst recession on record a decade ago, contributing to her 2016 impeachment.

Over 13 years in office, Lula’s Workers’ Party, or PT, lavished cheap public loans on favoured industries and companies to create “national champions” such as meatpacker JBS, with mixed results. Many big infrastructure projects went unfinished. 

Investor sentiment towards the South American nation has recently “deteriorated”, said Thierry Larose, emerging markets bond portfolio manager at Swiss bank Vontobel.

“These random statements by Lula are absolutely counterproductive,” he added. “It’s a shame because he’s done well in the past and the current state of the economy is not so bad.”

With robust gross domestic product growth of nearly 3 per cent last year and a strong trade balance, the country risked wasting a favourable moment by “trying to re-implement old toxic policies”, he added.

Mario Marconini, managing director at political consultancy Teneo, said the various episodes “all align with Lula’s antiquated view of how the government can and should intervene in ‘Brazilian champions’, since they somehow ‘owe it’ to the population.

“It also reveals the president’s increasing need to resort to catchphrases that might restore decreasing popularity,” added Marconini.

The presidency insisted there had been no political interference in any of the cases. It said Petrobras’ ordinary shares had gained more than 60 per cent since the start of Lula’s third term, while the company recently posted the second-highest profit in its history.

Lula’s backers have insisted the government has the right to influence Petrobras, given it is the controlling shareholder with just over half of voting power. 

However, opponents fear a repeat of the mismanagement of the PT years, when fuel subsidies enforced by the government to tame inflation cost the company an estimated $40bn. Petrobras was also at the centre of a massive bribery scandal revealed in the vast “Car Wash” investigation.

While Bolsonaro fired a series of Petrobras chief executives in anger at high fuel prices, he otherwise left the company to pursue its strategy of divestments as it focused on petroleum production and profits. 

By contrast, Lula wants it to reduce shareholder payouts in favour of greater investment in areas like renewables and refineries, aiming to stimulate economic activity. 

In the case of Vale, corporate governance experts said there was no legal basis for government involvement in chief executive selection at the group, which was privatised in 1997 and is one of the world’s largest iron ore suppliers.

An independent board member at the miner resigned this month alleging “nefarious political influence” in its leadership succession process.

Officially Brasília only has a dozen special “golden shares” in the company that grant veto rights such as blocking a change in name or relocation of headquarters, but in practice it can exert sway through the pension fund of a state-controlled bank that is among Vale’s top investors. 

The government has now ditched attempts to place Guido Mantega, a former PT finance minister, at the helm of Vale, according to people familiar with the matter. 

Energy and mines minister Alexandre Silveira denied there had been intrusion at either Vale or Petrobras. “This doesn’t stop us, as policymakers and regulators, from keeping a firm hand on the companies with regard to the country’s interests,” he told the Financial Times.

Lula supporters say his industrial policy to revive Brazilian manufacturing is already bearing fruit, with investments totalling $14bn announced so far in 2024 by global carmakers. 

With Brazil’s congress dominated by conservatives, analysts said the president could encounter a backlash if he shifted in a more radical direction. 

Jive Investments chair Luiz Fernando Figueiredo said: “Without a doubt, the [government’s] impulse is terrible. Once again, we’re going to test our institutions to see how much they can resist.”

War budget

Could the EU’s treaties, long considered to unequivocally prevent the bloc from buying weapons with its shared budget, have been misinterpreted this whole time? That’s what some in the European Commission are hoping.

Context: Russia’s war has forced the EU into a top-to-bottom rethink of its defence and security policies. It has also sparked a scramble to raise money, quickly, to fund the continent’s biggest rearmament programme since the cold war.

Article 41(2) of the Treaty on European Union states that the budget cannot fund “operations having military or defence implications”. The Financial Times reported last week that the commission, the bloc’s executive, has established a legal task force to reassess what that really means.

The question the EU’s in-house lawyers are being asked to ponder is whether “operations” refers only to the EU’s own operations. If so, could the budget buy weapons for operations conducted by other entities (such as the Ukrainian army)?

Proponents describe it as a natural consideration given the drive to find more “creative” methods of funding, saying it would “streamline” existing off-budget instruments such as the Ukraine Assistance Fund which finances weapons for Kyiv.

Such a change would mark the most significant shift in the EU’s approach to defence since the formation of the bloc’s Common Foreign and Security Policy more than 30 years ago.

But convincing Brussels’ legal brains is likely to be far easier than getting all the 27 member states to accept such an interpretation. Especially the militarily neutral states of Ireland, Austria and Malta.

At a summit of EU leaders last week, various “innovative” defence funding ideas were discussed, including using the European Investment Bank to invest in weapons production and issuing new joint “defence bonds”.

“It is a bad idea, a bad idea to try to actually change the treaties on a subject like this,” Charles Michel, the EU Council president who chaired the summit, told reporters afterwards. “Now is not the time to open an institutional battle or a battle of competencies on such a subject.”

Japanese carmaker aims to make electric vehicles more affordable but still profitable in new manufacturing strategy

Nissan plans to slash the cost of manufacturing its electric vehicles by 30 per cent as the Japanese carmaker turns to new partnerships and manufacturing methods to counter the rising threat from Chinese rivals.

Nissan, which has an alliance with France’s Renault and a partnership with Honda that was announced last week, has wrestled with flagging sales in China as the automotive industry struggles to build profitable battery-powered vehicles at affordable prices.

Following months of delay, Nissan released a business plan on Monday addressing how a carmaker of its size — with annual sales of fewer than 4mn vehicles — would finance the costs of new technology development and survive the transition to electric cars. The strategy aims to lift annual sales by 1mn units by the end of its fiscal 2026 year.

Under the plan, Nissan will launch 30 models over the next three years, about half of which will be electric vehicles and hybrid cars. In China, it will launch eight “new energy” vehicles and begin exporting cars made locally from next year. In North America, it aims to sell 330,000 more vehicles in fiscal year 2026 compared with 2023, while India will become a pivotal hub for car exports.

The carmaker will also aim to launch an electric vehicle powered by solid-state batteries in fiscal 2028.

“Faced with extreme market volatility, Nissan is taking decisive actions guided by the new plan to ensure sustainable growth and profitability,” its chief executive Makoto Uchida said in a statement.

The new business strategy came after Nissan surprised investors by striking a partnership with its historic rival Honda to develop electric vehicles, in a bid to address the coming wave of high-tech, low-cost models from China. 

The group will maintain its long-term alliance with Renault and Mitsubishi Motors in certain markets such as Europe, south-east Asia and Latin America. However, investors have questioned the future of the trilateral partnership after the French carmaker recently reduced its 43 per cent stake in Nissan to 15 per cent.

Nissan will aim to make electric vehicles more affordable and still profitable by developing the models in family groups, integrating components, cutting procurement costs and advancing battery technology. It plans to make the cost of producing electric cars the same as for traditional combustion engine vehicles by fiscal 2030. 

In February, the group cut its annual sales target for the fiscal year ending in March from 3.7mn to 3.5mn vehicles, due to weaker than expected sales in China, the US and Europe. 

Analysts have said its new business plan needs to address how the company will shore up its operations not just in China but also in the US, where Nissan has failed to benefit from a boom in hybrid vehicle sales due to a lack of offerings.

EXCLUSIF - Le patron de Onepoint, premier actionnaire du géant français de la tech, révèle son plan pour garantir l'intégrité du groupe, en grandes difficultés.

Empruntée à Nicolas Sarkozy, dont il est proche, la formule ne lui déplairait pas. Atos, David Layani y pense, « et pas simplement quand il se rase ». Depuis deux ans, l’ex-fleuron de l’informatique française est une obsession pour le patron fondateur de la société de services numériques Onepoint. Ambitieux, le quadragénaire n’a jamais caché ses intentions de présider aux destinées de la société basée à Bezons, en banlieue parisienne. Il se prépare, entouré d’une armée d’avocats, banquiers d’affaire et autres conseils en influence.

Autodidacte pressé, David Layani se doit d’être dans le bon tempo pour mettre en musique sa « Symphonie », nom de l’opération visant à lui permettre de prendre le contrôle d’Atos. Il se faisait discret depuis octobre et son entrée fracassante au capital du groupe, dont Onepoint détient 11,4 %. Refusant toute interview et explication sur sa stratégie dans ce dossier aussi compliqué que sensible.

Survenant quelques semaines après l’échec des négociations sur la cession à Daniel Kretinsky de Tech Foundations (l’activité d’infogérence d’Atos), l’arrêt brutal et inattendu, mardi dernier, des pourparlers en vue de la vente à Airbus des activités cybersécurité, big data et des supercalculateurs du groupe (BDS) l’oblige à sortir du bois. Après deux ans passés à tenter de céder des actifs, la stratégie du conseil d’administration est mise en échec. Confronté à une fuite de ses talents, à la dégradation de sa trésorerie et à l’inquiétude de ses clients, Atos peut-il être sauvé ? « Non seulement Atos peut se relever, mais il doit se relever, assure David Layani au Figaro. Malgré toutes ses difficultés, le groupe peut s’en sortir, grâce à ses actifs de grande qualité, ses 100.000 talents dans 70 pays, ses clients prestigieux et sa marque encore reconnue. » Beaucoup craignent que le groupe se rapproche de la faillite ? Son premier actionnaire redouble d’ambitions : « Mon projet est de faire d’Atos l’Airbus du cyber et du digital : la plateforme européenne du digital, de la cybersécurité et de l’intelligence artificielle, et le premier opérateur européen de cloud souverain, dans un marché émergent dominé par les Chinois et les Américains, détaille l’entrepreneur. Il y a urgence, suite à ces échecs successifs. Quand on est un client d’Atos ou un salarié avec un talent reconnu et très demandé par le marché, je comprends qu’on se pose des questions. C’est pour ça qu’il faut agir très vite, avant les JO et avant l’été. »

Le patron de Onepoint veut incarner le nouveau chapitre de l’histoire d’Atos et rompre avec la stratégie menée depuis deux ans. « Il faut mettre fin immédiatement à tout projet de cession en préservant l’intégrité des actifs pour bâtir un New One Atos qui reparte sur des bonnes bases, martèle David Layani, qui avait jusque-là soutenu la stratégie. Si on ne se base pas maintenant sur une solution industrielle qui préserve la totalité de l'actif, c'est le chaos et la fin d'Atos. BDS est une pépite. Ce n'est pas au moment où l'on doit se réinventer et repartir qu'il faut vendre ses bijoux de famille. Ce n'est pas en se coupant une jambe qu'on va aller plus vite. Quand je suis arrivé, la scission d'Atos était engagée. J'ai dit clairement qu'elle devait être faite avec une vision industrielle et organisée par un industriel, avec les moyens de son développement. Or, pendant deux ans, cette séparation a coûté très cher et a conduit à une désorganisation totale de l'entreprise et créé énormément de disynergies. La promesse était de sortir définitivement de la crise financière et de donner de la cohérence aux activités. Or, deux ans après, la situation financière est pire et on a des activités encore plus incohérentes dans le découpage. »

Il faut désormais rassurer les salariés du groupe, et pas seulement ceux des branches Tech Foundations (50.000 salariés) et BDS (10.000), qui s’étaient préparés à rejoindre Daniel Kretinsky et Airbus. « Il y a des gens pleins de talents et passionnés, en attente d’une vision et d’une solution industrielles, souligne David Layani. Cette vision, nous l’avons. Onepoint est prêt à investir et à organiser la recapitalisation de l’entreprise avec le soutien des salariés. »

Convaincre les créanciers

La principale urgence est de bâtir un plan stratégique pour redonner de la perspective aux marchés financiers. Depuis trois semaines, les managers des différentes business units d’Atos ont été chargés de participer à un travail collectif visant à faire émerger une nouvelle stratégie. Le cabinet Accuracy, de son côté, est chargé de mener une « Independent Business Review », autrement dit de soulever le capot de l’entreprise pour examiner sa situation. Mais David Layani a bien l’intention de donner le tempo au top management : « Mon intention est d’avancer au plus vite avec la société sous l’égide du mandataire ad hoc et de négocier avec toutes les parties prenantes, assure le premier actionnaire. Notre ambition est que, après sa réorganisation financière, Atos retrouve, et c’est possible, d’ici deux ou trois ans, 6 % à 8 % de croissance et des marges comparables à celles de ses concurrents. »

Avant cela, il faudra convaincre les créanciers. Au-delà de l’apurement du passif, remettre Atos à flot demandera l’apport d’argent nouveau, les spécialistes estimant que la facture pourrait dépasser les 2 milliards d’euros. « Chacun doit prendre sa part, assure David Layani. Les créanciers vont faire un effort et les actionnaires vont devoir mettre de l’argent. Il faut arrêter de jouer aux apprentis sorciers. De mon point de vue, il n’y a pas 50 solutions. Il est trop tôt pour déterminer précisément les montants de créances à capitaliser de celles à rééchelonner et de l’augmentation de capital nécessaire. Il va y avoir une négociation sur une part de capitalisation de dettes, une part d’extension de maturité, une part d’aménagement d’instruments pour ramener le levier à un niveau acceptable tout en s’assurant que la société aura les liquidités nécessaires à son développement. On a une vision très claire, on sait précisément où on veut aller, mais il faut, bien sûr, discuter avec tout le monde. La chance d’Atos, c’est qu’il y a un premier actionnaire avec 11 % du capital, qui est prêt à participer au côté des créanciers à une solution de recapitalisation. »

Autre tâche ardue, convaincre le gouvernement, qui surveille de près le dossier. Mardi, Bercy a indiqué sa volonté de construire « dans les prochaines semaines une solution nationale de protection des activités stratégiques », autrement dit BDS, qui gère les supercalculateurs utilisés pour la simulation d’essais nucléaires, la gestion du parc nucléaire d’EDF et dispose de certains contrats avec l’armée française. Mais pour le premier actionnaire d’Atos, il n’est plus question de céder BDS. « La souveraineté, cela ne se découpe pas, assure David Layani. Chez Atos, elle est partout et pas seulement dans BDS. La souveraineté concerne le nucléaire, l’énergie, les données des Français, notamment en matière de santé, et une grande partie des données du CAC 40. Le nouvel One Atos est la meilleure réponse à la préoccupation légitime de Bruno Le Maire en matière de souveraineté. » Et l’homme d’affaires de brandir son savoir-faire : « Onepoint, notamment à travers sa filiale défense-sécurité, traite déjà de sujets sensibles auprès de nos armées et de ministère de l’Intérieur. Onepoint est une société française créée par des Français, avec un capital quasi exclusivement français, détenu par son fondateur et les salariés. Onepoint est la seule solution souveraine pour l’ensemble d’Atos. »

Une revanche sociale et personnelle

Déterminé à préserver l’intégrité d’Atos, David Layani estime pouvoir lui faire retrouver son lustre et en devenir le sauveur : « Aujourd’hui, avec Onepoint, Atos est plus français qu’il y a un an. J’entends occuper ma place d’actionnaire de référence d’Atos et rester le premier défenseur de son intégrité et de son intérêt. Pour sortir de l’ornière dans laquelle le groupe se trouve, j’assume ma responsabilité d’actionnaire de référence pour accompagner cette transformation. » Pour l’homme d’affaires, il s’agirait d’une double revanche. Sociale, d’abord, pour celui qui a quitté l’école sans diplôme à 16 ans et a commencé sa carrière comme assistant au sein de l’éditeur de logiciel EMC, racheté par Dell. S’il a pu lancer Onepoint, en 2002, c’est grâce à un crédit apporté par un membre de sa famille et des connaissances, écrivait il y a quelques mois Libération. Depuis vingt ans, l’homme cultive ses réseaux dans le Paris politique et des affaires, avec l’ambition non dissimulée d’être un membre de l’establishment. « Dans nos sociétés, quand on n’est pas né à la bonne table, on a l’impression de ne pas être invité au banquet républicain », insistait-il lors de son discours pour la remise de l’ordre national du Mérite.

Une revanche personnelle ensuite. Lorsque, en 2022, il monte déjà à l’assaut d’Atos avec son groupe Onepoint, le président de l’époque, Bertrand Meunier, lui ferme brusquement la porte au nez, évoquant avec un quasi mépris ce « Petit Poucet ». Plus petit par la taille, Onepoint ne démérite pourtant pas, question ambition. Depuis 2002, David Layani a déjà procédé au rachat d’une demi-douzaine de sociétés, de rangs certes inférieurs. Certains lui ont confié un intérêt pour Sopra Steria (5 milliards de revenus), ou encore Inetum (2,4 milliards) par le passé. Il y a deux ans, David Layani s’était également donné pour objectif d’atteindre en 2025 un chiffre d’affaires de 2 milliards d’euros. Ses concurrents sur le dossier Atos, banquiers, observateurs, voient la nouvelle initiative avec perplexité. Ils jugent que David Layani s’attaque à un poisson très gros pour lui. Après tout, son groupe Onepoint, et ses 3000 salariés, ne pèse 500 millions de chiffre d’affaires. Bien qu’en difficulté, le paquebot Atos, avec ses 10 milliards de chiffre d’affaires en 2023, est vingt fois plus gros que lui. « Si toutes les conditions sont réunies, sur la base de notre vision, de notre projet, on est prêt à participer à l’augmentation de capital pour conserver notre position d’actionnaire de référence, à la coordonner, et même à la sécuriser », assure le patron de Onepoint, qui a levé en octobre 500 millions d’euros auprès du fonds américain Carlyle. Et d’enfoncer le clou : « De l’autre côté, il y a quoi ? Des purs financiers et des opportunistes qui attendent qu’Atos aille au tapis pour ramasser des bouts à la casse. Soit on règle le problème vite avec notre solution industrielle, soit on attend et on laisse Atos aller au tapis. » De quoi balayer d’un revers les ambitions du canadien CGI, concurrent de Onepoint, qui a manifesté début janvier un intérêt pour la reprise des activités digitales d’Atos.

L’entourage de Daniel Kretinsky rappelle qu’il reste intéressé par la reprise d’une partie au moins d’Atos. S’il a refusé l’offre faite par Jean-Pierre Mustier, le président d’Atos, lors d’une rencontre organisée le 27 février dans les bureaux d’Hélène Bourbouloux, la mandataire ad hoc, le milliardaire reste en embuscade. Pourrait-il participer au projet monté par David Layani ? « Je ne vais pas faire de la finance-fiction, mais tous les investisseurs de la place qui ont envie de soutenir une solution industrielle et souveraine sont a priori les bienvenus. »

Quentin Koffey’s hedge fund is eyeing two more seats on the medical-device maker’s board

An activist investor who holds two seats on the board of Masimo MASI 1.40%increase; green up pointing triangle is planning a proxy fight for two more.

Politan Capital Management, founded by veteran activist Quentin Koffey, plans to nominate two director candidates to the company’s six-person board, according to people familiar with the matter.

Irvine, Calif.-based Masimo has a market value of around $7.1 billion. It is a major supplier of monitoring technologies including pulse oximeters to hospitals.

Politan has held a roughly 9% stake in Masimo since 2022. It won a pair of board seats last year at Masimo’s annual meeting, including one for Koffey.

The company’s stock took a huge hit in 2022 when it agreed to buy a consumer-technology company specializing in high-end audio equipment for around $1 billion, irking analysts and investors who questioned the rationale. Masimo’s founder and chief executive officer, Joe Kiani, argued the deal gave the business access to retail channels such as Best Buy.

Kiani, who is also chairman, said Friday that his company would explore separating its consumer business, which in addition to the audio equipment includes baby monitors and smartwatches. That would leave Masimo focused on professional healthcare and telehealth products. Kiani is expected to remain chairman and CEO of Masimo and to be chairman of the newly created company.

Kiani said he proposed a separation of the consumer business in January, and the board has now agreed to move ahead. The company said it will be completed “as soon as feasible.”

Masimo shares, which had climbed about 15% so far this year through Friday, surged more than 10% in after-hours trading on the news.

While Politan supports a review of Masimo’s consumer business, it is concerned the company won’t conduct a comprehensive process and follow through on a separation, given what it views as poor corporate governance, the people familiar with the matter said. Politan also feels Koffey and its other director have been boxed out by Kiani since joining the board.

Masimo said in a statement it’s fully committed to conducting a comprehensive review of the separation and that Koffey has been a key part of discussions about it.

Kiani is one of the two directors up for election this year, given Masimo’s staggered board terms.

Politan’s candidates are William Jellison, former chief financial officer of medical-device maker Stryker, and Darlene Solomon, former chief technology officer of Agilent Technologies, the people said.

Masimo in January appointed former Disney CEO Bob Chapek to its board. The company also recently won a yearslong and costly legal battle against Apple over certain features in its watches.

Koffey focused on activist investing at D.E. Shaw Group and Senator Investment Group before establishing Politan in 2021. Politan ran a behind-the-scenes campaign at managed-care company Centene, which added several new directors to its board. Late last year, the firm reached a truce with biotech company Azenta after it agreed to replace two directors and buy back stock.

Politan in early 2023 helped fend off an attempt by Masimo to require hedge funds to disclose their investors, among other measures, when running a proxy fight. The influential proxy-advisory firm Institutional Shareholder Services criticized Masimo for the move, which was eventually reversed.

The developer had filed for the offshore debt restructuring with a U.S. court last August

China Evergrande Group EGRNQ -22.45%decrease; red down pointing triangle is withdrawing its applications for Chapter 15 offshore debt restructuring filed in the U.S.

The heavily-indebted Chinese property developer said that it, along with SJ and Tianji Holdings, had submitted documents to pull their applications for offshore debt restructuring on March 22, according to a filing on the Hong Kong Stock Exchange late Sunday.

Tianji and SJ are Evergrande’s main overseas financing platforms.

The developer had filed for the offshore debt restructuring with a U.S. court last August, but has since been ordered to liquidate by a court in Hong Kong in January.

Evergrande defaulted in late 2021 after running up liabilities of more than $300 billion.