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Ares Management has held talks to buy Leonard Green & Partners

A deal between the LA groups would dramatically expand the size of Ares’ private equity business

Private capital group Ares Management has held talks to acquire Leonard Green & Partners, one of the oldest and most profitable private equity firms, in a deal that would more than quadruple the size of its PE business.

The two held discussions about a potential tie-up recently, according to people familiar with the matter, who cautioned that the groups could ultimately decide to walk away from the deal.

An acquisition of Leonard Green would dramatically expand Ares’ presence in corporate private equity, where it lags behind rivals such as Blackstone, Apollo and KKR, and would transform the Los Angeles-headquartered investment group into a diversified alternatives giant from a specialist best known for its private credit investments.

Ares manages $644bn in overall assets, but just $25bn is in private equity fund strategies. Leonard Green, which is also based in Los Angeles and manages roughly $85bn in assets, is considered one of the premier private equity groups, having earned large windfalls including its recent $18bn sale of a building-products distribution company to Home Depot.

A deal would hasten a wave of consolidation in private markets as large listed players such as BlackRock, Brookfield, TPG, CVC and EQT use their financial resources to broaden their investment operations.

It would also give Ares a significant foothold in traditional PE at a time of trouble for the industry, which has seen fundraising slow as a $4tn logjam of ageing, unsold deals grows.

Nonetheless, many established firms continue to attract new money and have grown enthusiastic about the opportunity to offer PE to individual investors such as wealthy savers and retirees, expanding their backers beyond traditional institutions such as pensions.

Ares and Leonard Green declined to comment.

Leonard Green’s approach of buying companies with predictable earnings such as goods distributors, restaurant and fitness franchisees, car washes and healthcare service companies is considered a strong fit for such retail-oriented strategies, a marketplace dominated by Blackstone.

The firm is also considered by PE executives to be one of the leanest and most profitable buyout groups in the world, with a small staff of dealmakers who carve up the spoils of large windfalls.

Merger activity has been high across the industry as groups look to diversify their businesses and drive the growth of lucrative management fees that are prized by investors in publicly listed asset managers.

Many firms, including Ares, are also coalescing around the view that pension plans and sovereign wealth funds are keen to conduct more of their business with fewer managers.

The acquisition spree has seen leading independent firms such as infrastructure specialist Global Infrastructure Partners, private credit manager HPS, specialist debt firms Castlelake and Angelo Gordon and secondaries managers Lexington Partners and Coller Capital to sell to larger rivals. Many of the pioneers in private markets that helped shape the buyout business, including KKR and Apollo, have also used acquisitions to expand in new areas of private markets such as insurance-based investments.

Ares chief executive Michael Arougheti told the FT last year that the firm was open to an acquisition that would bolster its legacy private-equity franchise.

“We have a lot of financial capacity to buy and we have a lot of financial capacity to build,” he said in December. “Even the largest global private equity managers would not be significant from a market cap standpoint relative to where we are.”

Both Leonard Green and Ares trace their roots to the 1980s boom in leveraged finance ushered in by Michael Milken’s Drexel Burnham Lambert.

Ares was co-founded by Antony Ressler, a Drexel banker who would help co-found Apollo Global in the early 1990s after the collapse of the junk bond pioneer. But Ressler eventually left Apollo to found Ares in 1997 alongside a group of partners.

Arougheti has helped to grow the once-niche firm into a huge player, turning to a number of acquisitions to push Ares beyond its core credit franchise and into markets such as real estate deals and managing second-hand private equity fund stakes.

Leonard Green, meanwhile, is an offshoot of private markets pioneer Gibbons Green, which has been built up over the past three decades by managing partners Jonathan Sokoloff and John Danhakl, two Drexel alumni who remain close to Milken.

Mundane trade fuelled large Wall Street windfall as indices rebalanced

Betting on which companies’ stock will be added or dropped has made a lucrative comeback this year

A banal strategy of profiting from changes in stock index membership is emerging as one of the hottest trades on Wall Street, as volatility and the historic SpaceX listing rippled through markets last quarter.

The trade involves buying stocks set to join — or selling stocks set to be dropped — from various stock indices, before passive index-tracking funds adjust their portfolios. Last quarter saw record trading volumes, giving hedge funds that specialise in the strategy multiple chances to make money.

Index rebalancing events generated a record $1.3tn in trading flows during the second quarter, according to data compiled by Min Moon, the head of global index and delta one strategy at JPMorgan Chase.

That figure is double the quarterly average last year and roughly equal to the entire trading volume in 2022. These changes included the reconfiguration of the S&P Dow Jones and Russell indices, as well as the addition of SpaceX into the Nasdaq 100, as traders took leveraged bets that billions of dollars in flows from passive investors would lift the stock.

“You just [landed] heads four times in a row,” said an executive at a multi-manager hedge fund that trades the strategy.

He added that it was one of the biggest ever months for the strategy.

While the tactic is relatively straightforward, generating substantive profits requires a huge amount of capital, meaning only the largest hedge funds have the firepower to do well.

“You are just anticipating the flows” from passive index funds, said one senior New York-based equity portfolio manager. “The edge comes from being faster and more accurate, your entry and exit points, and sizing.”

The stars aligned for index rebalancing last month, netting billions of dollars across the industry as SpaceX went public in the largest public listing on record. Analysts at JPMorgan estimated that SpaceX’s inclusion in the Nasdaq 100 alone would pull in $4.3bn in passive funds, boosting the share price.

Around the same time, the Russell reconstituted its holdings, and S&P rebalanced the proportions of various companies in its indices.

Two teams at Millennium Management, the $92bn multi-strategy hedge fund led by Izzy Englander, made a combined $3.7bn last month, a profit practically unheard of during such a short period. The first team, called SRBL after the initials of the group’s primary portfolio managers running the strategy, is led by New York-based Glen Scheinberg. Pratik Madhvani runs the other out of Dubai. Bloomberg reported earlier on Millennium’s rebalancing haul.

Larger firms had an advantage over specialist players because of their ability to borrow large sums from their bank brokers to scale up their bets in the one month of the year that it counts, said one of the hedge fund executives.

“I’ve been waiting for this moment when we were going to see that some big player got back into it and made a ton of money,” said Marco Sammon, an associate professor at Harvard Business School. “With any strategy that involves risk, there will be cycles.”

The rebalancing of the group of Russell indices at the end of June was expected to generate nearly $150bn in net trading activity, according to an analysis by Stephens.

Millennium, the biggest player in the trade, has held on to its index-rebalancing teams even through big losses in recent years. In the first few months of 2025, those same trading teams reportedly lost $900mn as volatility roiled markets. Rivals such as Citadel scaled back their index-rebalancing strategy in 2024, while ExodusPoint pared back its strategy the year prior.

“It’s not a cool, sexy thing that’s new,” said one hedge fund executive. “But every once in a while there’s something that makes everything weird, when something with that big of a valuation comes in,” they added, referring to SpaceX’s IPO.

Stock indices raced to change their rules in order to make way for a speedy entry for SpaceX, which will similarly pave the way for this year’s other new blockbuster listings to join their ranks, including Anthropic and OpenAI.

“This is a bit supernormal,” said one adviser in the hedge fund industry, referring to the anticipated upcoming listings for the AI companies.

Nasdaq made a bevy of changes in May to make way for SpaceX. It slashed its minimum float requirement, introduced a fast track to its Nasdaq 100 for megacap companies and changed its index weight calculation rules. Rival index providers Morningstar CRSP and Russell similarly changed their rules.

Yet most indices weight their holdings of companies based on a company’s float or the shares that are available to trade. Since SpaceX only had a $75bn float when it first listed, a small fraction of its overall market valuation, it had a smaller impact on index rebalancing than it might have otherwise.

Melissa Roberts, a managing director for Stephens who has analysed index rebalancing for two decades, said that because these huge public listings were entering the market with relatively small floats, there would not be instantaneous cataclysmic effects for indices.

“They’re not coming in and disrupting everything,” she said. “The market will have time to adjust.”

How French theory captured the American mind

The roots, rise and heady influence of the intellectual movement that swept US universities and sparked the early ‘culture wars’

In 1994, Emily Eakin, then a graduate student in English and comparative literature at Columbia University, was considering her options. In her captivating new book The Frenchmen, an elegant combination of literary memoir and intellectual history, Eakin, who is now an editor at the New York Times, revisits her decision to abandon her doctorate. She’d read a study which showed that too many literature PhDs were competing for too few academic jobs. But there was another, deeper reason for her disenchantment. “The clincher,” she writes, “was theory. I had had enough of it.” 

“Theory”, the name given in the US to an intellectual movement that emerged in France in the 1960s, would change the face of the humanities in American universities and in the process become a casus belli during the early skirmishes in what were later dubbed the “culture wars”. 

Eakin, who first fell “under the Frenchmen’s spell” as an undergraduate at Harvard, traces theory’s origins to the structuralist revolution in the human sciences, which, she asserts, was “really two revolutions in one”. First, the structuralists replaced Jean-Paul Sartre’s existentialist notion of a self imbued with agency and the capacity to choose with the idea of the impersonal system. And second, they anointed language the master system above all others. They took from the Swiss linguist Ferdinand de Saussure the view that language is a system without positive terms, in which the meaning of words derives entirely from their relation to one another.

The increasingly rancorous battles over the significance and implications of theory in the 1980s weren’t confined to the academy. In 1987, for example, the conservative philosopher Allan Bloom topped the bestseller lists with The Closing of the American Mind, a book that railed against the corrupting effects of “jargon derived from the despair of European thinkers”. Today, Bloom’s jeremiad continues to influence many of those who criticise the state of American universities from the political right. 

But for students like Eakin, “deconstructing” the fundamental assumptions of western metaphysics was heady stuff, even if you had only a “glancing familiarity” with the great works of the philosophical tradition. So why, having fallen so comprehensively for theory, did she come to regard it as a “dangerous substance” to be renounced or forsworn? 

The Frenchmen attempts to answer this question. And in doing so invites us to see Eakin’s own story as somehow symptomatic of the experience of what the critic Nicholas Dames has called the “Theory Generation”. (It is ironic, incidentally, that this cohort should have seen its college years frequently depicted in a form — the realist novel — that theory did so much to “denaturalise and demystify”, as Dames puts it. Think of books such as Jeffrey Eugenides’ The Marriage Plot, Jonathan Franzen’s The Corrections or Lorrie Moore’s A Gate at the Stairs.)

At the same time as tracing her own journey through theory, Eakin also seeks to “re-embody” its master thinkers, “to recover the hidden human element” beneath their often austere and impersonal theorising. Onur Erdur tries to do much the same in his more conventionally scholarly book, School of the South, on the “colonial roots” of French theory. 

For both Erdur and Eakin, it is of decisive significance, for example, that the philosopher Jacques Derrida should have been raised a Jew in what was then French Algeria and that he was expelled from school in 1942 after the collaborationist regime in Vichy introduced a quota for Jewish pupils. Derrida himself said that the episode caused a “disorder of identity” that he never quite got over. He, like several of his contemporaries, was forever a kind of outsider.

Eakin’s “Frenchmen” are a varied bunch. Alongside Derrida are the philosophers Michel Foucault and Gilles Deleuze, the psychoanalyst Jacques Lacan, the Marxist thinker Louis Althusser, Félix Guattari, a psychiatrist and Deleuze’s sometime co-author, and the literary theorists Roland Barthes and Paul de Man.

The latter was in fact a francophone Belgian who’d emigrated to the US after the second world war. But his close friendship with Derrida is central to the story of theory in America, and therefore to the story Eakin wants to tell here — as is Derrida’s sometimes fraught relationship with Foucault.

By the mid-1970s, French theory had set up outposts on both American coasts: Derrida at Yale, where de Man, who chaired the department of comparative literature there, had arranged a visiting post for him; and Foucault at Berkeley in California, where he became an enthusiastic patron of San Francisco’s gay bathhouses. 

Eakin argues that Derrida and Foucault represented two divergent paths for theory in America: “Along one path stretched rhetorical analysis, obsession with paradox, and the scrupulous close readings proposed by Derrida; along the other, investigations of political and social power in the form of ‘discourse’, championed by Foucault.”

The latter, in particular, seemed to carry with them a borrowed “whiff of rebellion”, lingering traces of the “insurrectionary mood” that had reigned on the Paris barricades in May 1968. But, in truth, this was surrogate politics, a kind of revolutionary cosplay that had little actual political effect. 

As for Derrida and de Man, what looked like an obsessive preoccupation with arcane linguistic subtleties began to attract the charge of nihilism or worse — and not only from traditionalist literary scholars or more sober-minded philosophers of language. William Bennett, secretary of education in the second Reagan administration and a particularly doughty culture warrior, also had it in for the so-called Yale school of deconstruction, which he claimed encouraged a “perverse embarrassment . . . about the achievements of our civilization”. No matter that, as Eakin points out, Derrida’s interest was in “reading, not trashing, the canon”.

Worse was to come. In 1987, a Belgian researcher discovered more than a hundred articles that de Man, who died in 1983, had written for a collaborationist newspaper during the Nazi occupation of Belgium. At least one of the pieces was explicitly antisemitic. 

This discovery stunned de Man’s colleagues and students, and was particularly traumatic for Derrida, who attempted a tortured but ultimately unconvincing reckoning with what his friend had written as a young man. For theory’s enemies, the revelations simply confirmed everything they’d thought all along about the pathologies of deconstruction. “The timing of the de Man revelations,” Eakin observes, “could not have been less auspicious for theory’s advocates — or better orchestrated by America’s newly ascendant political right”.

It must have been tempting, in the face of all that, to write a repentant latter-day version of the cold war communist apostasy memoir. But it is to Eakin’s credit that she doesn’t really go in for what Erdur calls “theory bashing”. Her book ends not with an obituary for a “god that failed” but with a provocation — that, for all its excesses and its broken political promises, theory’s legacy of “vigilant questioning, of scrupulous attentiveness to language’s complexities and contradictions” might not be as “antithetical to the common good” as many of its critics have charged. 

The Frenchmen: Or, My Life in Theory by Emily Eakin Penguin Press $35, 496 pages

School of the South: The Colonial Roots of French Theory by Onur Erdur, translated by Andrew Brown Polity £25, 288 pages

Funding gaps hobble western critical mineral objectives, report says

Government-backed financing needed to entice private investment to break China’s grip on production

Western critical minerals projects are being hamstrung by public funding gaps, impeding their ability to challenge China’s chokehold on materials essential to tech and defence manufacturing, according to a new report.

According to the SAFE Center for Critical Minerals Strategy, an NGO, the west’s ability to boost its supply chains now hinges less on access to plentiful geological resources than on addressing “a persistent financing gap” from public entities.

Critical minerals often require 20 to 30 years of investment and operating certainty, without which private capital is reluctant to commit. Stronger commitments from government-backed lenders would encourage private investors and banks to back critical minerals projects, the report said.

“Governments have spent the last several years agreeing that critical minerals dependency is a strategic problem. The harder work now is proving that public finance institutions can actually get capital into the ground, into processing facilities, and into the hands of developers fast enough to matter,” said Abigail Hunter, executive director of the Center for Critical Minerals Strategy.

China controls more than 90 per cent of the world’s processing capacity for rare earths and critical minerals such as cobalt, nickel and lithium, which are essential for batteries and weapons.

Between 2001 and 2023 China poured about $94bn into overseas critical minerals projects, helping it secure a dominant position in refining and processing.

The International Energy Agency estimates more than $500bn in critical minerals investment will be needed to secure western policy goals.

The trade war between the US and China and the Iran war have made achieving self-sufficiency a strategic goal. Since 2024 China has placed export restrictions on minerals such as antimony and tungsten. The price of tungsten, an important input of missiles and ammunition, has soared 70 per cent since the war started.

The US has moved more aggressively in recent years to finance critical minerals in unconventional ways. In July 2025 the defence department extended a $150mn loan to MP Materials, a rare earths producer and magnet manufacturer, and made a $400mn equity investment in the company. The administration also set a price floor for certain minerals and an offtake backstop for all magnets produced over the next 10 years, and similar price floor commitments with Lynas Rare Earths and a joint venture of MP Materials and Saudi mining company Maaden.

The International Development Finance Corporation has deployed $1.2bn of equity financing for critical minerals in 2026.

However, funding has been undercut by mandate mismatches, since many export credit agencies and development finance institutions were built to promote exports and development, not resource security.

And public finance institutions are expected to be responsible stewards of taxpayer money. Since many projects may be difficult to justify, some lenders were “rationalising this risk”, said Milo McBride, a fellow in the sustainability, climate and geopolitics programme at the Carnegie Endowment for International Peace.

“It’s a massive question,” he said. Was the point of public funding “supposed to be return on investment, or for grander national geostrategic interests? And are there ways to overlap those?”

To create wealth, Europe must reap the dividends of radio spectrum

The EU cannot ask its telecoms to compete globally while organising one of its most important sectors nationally

As the EU debates its next shared budget, one assumption has gone largely unchallenged: that despite Europe’s expanding ambitions, its resources are fixed. Defence, AI and the green transition all require greater investment. It has become a familiar exercise in redistribution, asking how existing resources should be divided among competing priorities. That is the wrong question. 

Europe’s greatest advances have rarely come from redistributing wealth. They have come from creating it. The single market enlarged the European economy. The euro deepened financial integration. At decisive moments, European integration increased Europe’s productive capacity before increasing its fiscal capacity. Rather than asking only where Europe can find new revenues, we should also ask whether Europe already owns strategic assets whose value could be multiplied through deeper integration.

One such asset is radio spectrum. Every AI application, connected factory and digital public service ultimately depends on it. Yet despite building a single market for goods, services, capital and people, the EU continues to organise one of its most strategic economic resources through 27 separate licensing regimes. Europe cannot ask its telecoms companies to compete globally while organising one of its most important sectors nationally.

This fragmentation is becoming increasingly costly. Telecoms is no longer simply another infrastructure sector. It is the platform upon which the digital economy is built. AI, cloud computing, defence communications and industrial automation all depend upon resilient, high-capacity networks.

Yet operators continue to invest according to 27 different auction calendars, licence durations, renewal frameworks and regulatory conditions. Fragmentation raises regulatory uncertainty, increases the cost of capital, complicates long-term investment planning and delays network deployment.

The transition from 5G to 6G offers a rare opportunity to correct this. Over the coming years, the principal 5G spectrum bands will progressively require renewal across Europe. At the same time, the Upper 6 GHz band (6425–7125 MHz) has not yet been allocated. Rather than having 27 independent licensing exercises, Europe should establish a European Spectrum Union. Spectrum would remain the property of member states and existing licences would be fully respected until their expiry. Future strategic spectrum is allocated within a European framework, with co-ordinated renewal calendars, harmonised licence conditions and common technical and security standards.

The economic gains would be large: greater regulatory certainty, improved long-term investment planning, reduced financing costs and faster deployment of 6G networks. It would reinforce the EU’s telecoms ecosystem and technology base. Better spectrum policy is also industrial policy.

There is a second dividend. Spectrum allocations generate public revenues that today accrue almost entirely to national budgets. In an EU Spectrum Union, although member states could decide to retain part of the proceeds, the goal should be to channel up to 75 per cent of future revenues into the EU budget as a new own resource, with the remaining 25 per cent capitalising a European Investment Bank connectivity and technology facility.

Because the EIB can leverage its capital through market borrowing, that quarter of the proceeds could support investment well beyond its nominal value, financing AI infrastructure, quantum technologies and new digital networks. Rather than redistributing a fixed pool of resources, the proposal would expand Europe’s investment capacity. It is also aligned with Europe’s fiscal framework. Because spectrum revenues are not treated as discretionary revenue measures under the EU’s fiscal rules, member states have less reason to retain these one-off proceeds than they did under previous fiscal regimes. This creates an opportunity to redirect a substantial share of their value towards European public goods, while preserving flexibility for member states to retain part of the proceeds. 

The goal is not to co-ordinate spectrum just because Europe needs more “own resources”. It is to complete the single market for connectivity because Europe needs stronger investment, more competitive telecoms markets and greater technological scale.

Critics argue spectrum is a national competence. They are right. But many of the EU’s greatest successes began as national competences before economic reality made deeper integration a better option. The question is not whether states can manage spectrum individually but if fragmentation is the most effective way to organise a strategic asset in a continental digital economy.

It is not. Europe’s history has advanced by pooling strategic resources. Coal and steel powered the industrial age. Today, connectivity powers the digital one. The EU budget should not simply determine how to spend Europe’s resources. It should also determine how to create them.

Nvidia behind $50bn lease on Texas data centre that will use its chips

CEO Jensen Huang deploys balance sheet to backstop growth of AI computing market

Nvidia has signed leases worth up to $50bn for a massive Texas data centre, a previously undisclosed commitment that shines a new spotlight on the chip group’s growing role in financing AI.

The nearly $5tn company is leasing the entire 1 gigawatt facility that developer Hut 8 is building, which will house hundreds of thousands of Nvidia’s graphics processing units, said five people familiar with the deal.

The move is the latest example of Nvidia’s chief executive Jensen Huang aggressively using the company’s financial strength to keep it at the centre of the fast-growing market for AI computing power.

These efforts have included spending billions of dollars to foster a new generation of AI infrastructure providers, such as CoreWeave, to buy and run its GPUs. The Texas lease goes further, putting Nvidia behind the facilities that will house its chips.

The Texas site has secured access to electricity, something that is increasingly rare as developers compete for grid power. Nvidia wielded its financial muscle to lock in the site for its own chips, said an executive familiar with the deal.

“They have the balance sheet to acquire power, and in doing so, ensure their product is deployed,” the person said, asking not to be named.

Once completed, Nvidia could sublease capacity to its “neocloud” partners that buy its GPUs and sell AI cloud computing, the person said.

The arrangement will intensify concerns about circular financing, as the chip group underwrites more of the market for its chips.

Nvidia is also in talks to provide a $250bn backstop to OpenAI to help it lease a 10GW data centre SoftBank is building in Ohio, according to people familiar with the move. Details of Nvidia’s involvement in the Ohio project were first reported by The Information and The Wall Street Journal.

Nvidia’s 15-year lease commitment for the Texas site is worth $19.6bn, and renewal options would take the total value to $50bn over 30 years, according to Hut 8.

The chipmaker’s leases are central to Hut 8’s ability to cheaply finance the project, with about $4.3bn in bonds issued at 6.129 per cent in June to support the first phase of the project. The bonds drew an investment-grade rating from Moody’s because of the lease and were priced at roughly 100 basis points above the chip group’s own 30-year debt.

Hut 8 is expected to seek further financing to support a second phase of the project which will double the campus’s size and which was announced last week.

Nvidia is facing increasing competition from Google as the search giant also uses its balance sheet to push its tensor processing unit chips, including backstopping data centres and unlocking cheaper debt for developers. When a Big Tech group guarantees the data centre leases, the cost of financing roughly halves, according to bankers.

Hut 8 has publicly described its tenant at the Beacon Point project only as “a high-investment-grade company” with bond documents identifying six Big Tech companies including Nvidia as permitted tenants. The people familiar with the matter said Nvidia was the data centre’s tenant.

Nvidia’s most recent quarterly filing shows $32.4bn of data centre lease payments that have yet to commence, primarily to support research and development, up from $7.4bn a year earlier. The $9.8bn lease on the first phase of Beacon Point, which was signed in March, would account for nearly one-third of that figure.

Hut 8 said the company would not “comment on rumours or speculation regarding tenant identity” and that it has not provided guidance regarding additional financing beyond its public disclosures.

The company has said the data centre would be built around Nvidia’s DSX architecture, which standardises a site’s computing power, networking, power and cooling around the chip group’s hardware and software.

Asked about the Texas lease, Nvidia said it was “working with ecosystem partners to accelerate the deployment of efficient AI infrastructure through the DSX AI factory architecture”, which is a “blueprint for building and operating AI factories”.

TotalEnergies benefits from EU sanctions reprieve on Russian gas

French energy major can continue selling LNG from its Yamal project in Siberia to Asian customers

TotalEnergies will be able to continue selling gas from its flagship Siberian project to Asia after the EU bowed to demands to allow European companies to keep shipping Russian liquefied natural gas to countries outside the bloc.

Greece had demanded the LNG sanctions U-turn in exchange for agreeing to an unrelated slate of measures against Moscow. The EU’s move enables Greek shipping company Dynagas to continue making lucrative deliveries of Russian gas around the world.

Three people familiar with the matter said they also expect TotalEnergies to benefit from the decision, as it will be able to continue selling gas to clients in Asia from Yamal LNG, the Siberian mega-project in which the French oil and gas major owns a 20 per cent stake.

The exemption reverses Brussels’ decision last October to ban such shipments from the end of 2026. EU companies will now be able to continue honouring “transfers” of LNG to third countries if the contracts were signed before Russia’s February 2022 invasion of Ukraine and volumes do not exceed 2025 levels.

An EU official said that the move was justified because vessels transferring the cargo would otherwise have been “very rapidly repossessed and taken by Chinese operators . . . we would have had a ban but we would not have had an effect on Russian flows”.

Total’s ability to fulfil existing contracts to supply Asian customers will help to offset the impact on the energy company’s business of a ban on imports of Russian LNG to the EU under long-term contracts from the end of this year.

TotalEnergies chief executive Patrick Pouyanné had said in February that “ambiguities” related to the EU ban could force the company to stop shipments altogether from Yamal.

But last week he suggested there could be a reprieve, while stressing that the company was still poring over the EU’s rules.

The new sanctions could enable sales “outside of the EU if we use some EU LNG tankers”, he told analysts on the company’s second-quarter results call last week.

“Honestly, to let Russian LNG be sold outside the EU, not by EU companies but only by our competitors, was a little odd to all the EU companies involved,” Pouyanné added.

The company declined to comment in response to a request by the FT.

Total has now exited most of its Russian ventures after taking hefty charges on its former businesses there in 2022. It confirmed last week that it was in the process of transferring a 10 per cent stake in Arctic LNG, another major Siberian project, to a unit owned by Russia’s Novatek.

But it retains the Yamal stake, and the company has said it would only exit the Siberian project under sanctions.

According to Pouyanné, Total earns about $400mn a year from selling LNG from Yamal, as well as dividends from its 20 per cent stakes in both Yamal and parent company Novatek, although these have been irregular in recent years.

Contracts are linked to the price of Brent crude, he told analysts last week, meaning that Total has increased its earnings from the plant owing to higher oil prices triggered by conflict in the Middle East.

Most of Yamal’s cargoes are currently sent to Europe, with a record 9.89mn tonnes being sent from the gas project to EU ports and just 510,000 tonnes sent to Asia in the first half of 2026.

But the sanctions decision paves the way for Total and Novatek to use Dynagas’s fleet of ice-class LNG tankers to ship more gas to China.

One industry expert said that traders expect Total to be “happy” about the latest sanctions package, as the company will be able to continue shipping gas from Yamal as long as it is within the existing terms of their contracts.

A commission official said the LNG exemption was “limited to the transfer of Russian LNG to third countries”, or to purchases linked to transfers.

The official added that the transportation of LNG from Sakhalin-2, a project in eastern Russia, has also been exempted from sanctions until March 31 2028, to avoid disruptions to gas supplies for Japan and South Korea.

Chinese company challenges Toyota on home turf in bid to become world’s largest carmaker in five years

China’s BYD is challenging Toyota and other Japanese carmakers in one of their most important market segments with the launch of its mini electric kei car.

The release comes soon after BYD’s founder and chief executive, Wang Chuanfu, announced a plan to topple Toyota as the world’s largest carmaker by sales within five years through rapid advances in charging technology and explosive overseas growth.

Its push into Japan, Asia’s second-biggest economy, is a key part of that expansion plan. BYD has become the world’s biggest EV producer but now faces slowing growth and rising competition in China, the world’s biggest car market.

Beyond aggressively expanding exports — helped by the construction of eight purpose-built ships to carry EVs — the carmaker is expanding its manufacturing footprint with new factories in Hungary, Brazil, Thailand, Indonesia and Uzbekistan.

BYD’s answer to the kei car — a class of boxy compact vehicles suited for Japan’s narrow roads and tight parking spaces — is the Racco, which the company said on Tuesday could cost less than ¥2mn ($12,000) after subsidies are taken into account.

On a full charge, it will offer a range of 210km to 320km, beating out best-selling Japanese electric kei models such as the Nissan Sakura. 

Last year, Atsuki Tofukuji, president of BYD Auto Japan, told the FT that his company saw an opening for low-cost EVs of a similar size to “Mr Bean’s Austin Mini Cooper”, as high taxes push up conventional fuel prices and as petrol stations rapidly disappear in depopulating rural Japan.

Kei cars made up 36.5 per cent of new vehicle sales in Japan last year, according to the Japan Light Motor Vehicle and Motorcycle Association.

However, their popularity has also been driven by tax and insurance breaks for cars that do not exceed certain dimensions, contain an engine smaller than 660cc and have a power output of less than 47 kilowatts.

Despite its price point, BYD’s Racco faces an uphill battle in Japan, where foreign brands make up a small portion of sales. The Chinese carmaker sold only 3,742 vehicles in Japan last year, according to the company.

While up 68 per cent from 2024, it was only a fraction of the 4.5mn new cars sold in Japan last year, according to the Japan Automobile Dealers Association.

US President Donald Trump made his own pitch for kei cars last year, calling for US production of the “very small” and “really cute” vehicles during a White House announcement on fuel economy rules.