TheChek News Flow

Accord capping number of long-range nuclear weapons was due to expire in February but would be extended by a year

President Trump on Sunday praised a Kremlin proposal to continue the limits on long-range nuclear weapons for one more year, which would preserve a main element of the last major arms-control agreement between the U.S. and Russia.

“Sounds like a good idea to me,” Trump said Sunday when asked about the Russian offer.

Russian President Vladimir Putin said last month that he was prepared to adhere to the caps in the New START agreement for an additional year after the accord expires in February.

Proponents of the deal say that keeping the weapons ceilings in place will provide a measure of stability when there are sharp tensions between Moscow and the West over Russia’s invasion of Ukraine and provide time for the U.S. and Russia to negotiate a follow-on accord.

Critics say that keeping the New START treaty, which covers U.S. and Russian strategic forces, will preclude the U.S. from expanding its arsenal to respond to China’s growing nuclear capabilities.

The question over how to limit long-range nuclear weapons has become all the more important as the arms-control framework that has regulated the military competition between Washington and Moscow has crumbled over the past decade.

The U.S. withdrew from the treaty with Russia banning intermediate-range American and Russian missiles based on land in 2019 after accusing Moscow of developing an illegal ground-launched cruise missile. Lesser arms-control agreements have also gone by the wayside

President Joe Biden extended the New START treaty for five years in one of his first major foreign-policy actions. But the treaty was buffeted by tensions over Russia’s invasion of Ukraine.

In 2023, the U.S. accused the Russians of violating the New START agreement by denying on-site inspections, impeding strict monitoring of the treaty. Putin responded by suspending Russia’s participation in the treaty.

Even so, the two sides were careful not to abandon the caps in nuclear forces, which limits each side to no more than 1,550 deployed nuclear warheads. It also sets a limit of 700 on the land-based ballistic missiles, submarine-launched missiles and strategic bombers that carry them.

In his comments Sunday, Trump didn’t say if the U.S. was coupling its acceptance of the Russian idea with proposals of its own or whether it had formally responded to the Kremlin offer. The White House didn’t immediately respond to a request for comment.

The New START treaty entered into force in 2011 and can’t be formally extended a second time. But nothing prevents the two sides from opting to observe its weapons ceilings after it expires.

The idea of prolonging the treaty has drawn criticism from some nuclear-arms experts who say the New START treaty is out of date because it doesn’t apply to Russia’s shorter-range tactical nuclear weapons or cover China’s growing nuclear arsenal.

“China, not Russia, is America’s foremost geopolitical rival, and Beijing is engaging in the most rapid nuclear weapons expansion since the 1960s,” said Matthew Kroenig of the Atlantic Council, who was a national security adviser to the 2012 Mitt Romney and 2016 Marco Rubio presidential campaigns. “Bilateral arms control deals with Moscow alone won’t cut it. It is not the 1970s anymore.”

But other arms-control proponents said extending the New START ceilings would buy time for talks on a follow-on deal.

“Now, the Kremlin and the White House need to formalize the arrangement and immediately direct their teams to begin negotiations on a new more comprehensive agreement or agreements that address difficult issues with which the two sides have long struggled,” said Daryl Kimball, the executive director of the Arms Control Association.

Putin’s willingness to adhere to New START limits for another year doesn’t mean that negotiating a follow-on accord would be easy. In his comments last month, Putin also criticized the possible development of U.S. space-based antimissile defenses as a “destabilizing” action.

Trump is mounting a major program to develop space-based and other antimissile defenses, which he has dubbed “Golden Dome.”

Brothers in arms: Spanish defence merger raises conflict questions

EM&E’s co-founder seeks deal with aspiring national champion Indra — whose chair is his elder sibling

A top Spanish defence entrepreneur has made the case for the weapons maker he co-founded to be acquired by aspiring national champion Indra, batting away conflict of interest questions over deep entanglements he and his brother have in both companies.

Javier Escribano, a rough-edged entrepreneur who is chair of EM&E, said his company would give state-backed Indra the industrial “muscle” and technology it needed to rival top European groups.

“In a timeframe of five to 10 years we could be a business with much, much greater volume, which is what the Italian, British, German and French companies have,” he told the Financial Times, referring to the likes of Leonardo, BAE Systems, Rheinmetall and Thales.

The deal would give radar specialist Indra a clearer presence in the world of lethal force. EM&E’s signature weapons systems for tanks combine high-calibre gun barrels with cutting-edge cameras and software for identifying targets and precision firing.

Indra, which is valued at almost €7bn and part-owned by the Spanish state, would also gain a much-needed foothold in Ukraine, where it has not signed any big supply contracts since war broke out with Russia.

Heavy metal gun turrets marked with “UKR” await shipment at EM&E’s factory outside Madrid, where Escribano interrupts a tour to give a corrective tip to an employee shaving a component held in a vice.

But the Escribano family’s objectivity on a potential deal with Indra is in question because of a corporate governance snarl.

Javier’s brother and fellow EM&E co-founder Ángel Escribano is chair of Indra. With a 50 per cent stake each in EM&E, the brothers would be big beneficiaries of a takeover.

In addition, EM&E is already Indra’s second-biggest shareholder, owning a 14.3 per cent stake worth almost €1bn that has given Javier a seat on the bigger company’s board alongside his brother.

EM&E reported sales of €355mn in 2024 and is predicting they will rise to €465mn this year then more than double to €1.3bn by 2030. Analysts say they cannot value the company because it has not disclosed enough about its finances. The Spanish press has suggested a valuation of €1bn-1.5bn.

Javier Escribano, 51, bristled at the suggestion a deal would be a takeover of EM&E by Indra, declaring that it would instead be a “merger”.

He stressed that he and his brother, who is 54, were determined to keep working and would be paid in Indra shares, which he said showed they had no interest in cashing out.

“We’re young, we’re in our early fifties, and if we just wanted to sell our shares [for cash] we could go home or head to the park to feed the ducks in our tracksuits and act like retirees,” he said. “But we’re here giving it our all.”

Escribano said Indra had considered a deal with EM&E under previous chair Marc Murtra, who moved to Telefónica in January and was replaced by Ángel Escribano.

Indra chief executive José Vicente de los Mozos has advocated for acquiring EM&E, arguing that the two businesses together could bid for European contracts for anti-drone and anti-aircraft systems that Indra alone could not win.

“There is a conflict of interest, obviously. I was the first to say it on the very first day,” de los Mozos told analysts in July. “But a conflict of interest does not mean that a transaction cannot take place.”

Ángel Escribano has excluded himself from any discussions on the deal at Indra, as has his brother in his capacity as an Indra director.

The company in July set up an ad hoc committee of four independent directors to evaluate a possible deal to ensure “the proper management of conflicts of interest” and good governance.

On the day the committee was announced one independent director resigned from the board for “personal reasons”. At the end of August one of the directors on the ad hoc committee also resigned for “personal reasons”.

Indra said the committee’s work was advancing but there was no set deadline for it to reach a conclusion. Any deal would need to be approved by the board, excluding the brothers, then Indra shareholders.

Indra’s biggest shareholder is the Spanish state, which owns 28 per cent. Spain’s government is eager for the company to join Europe’s defence big league, although it is refusing to lift the country’s military spending by as much as the Trump administration wants.

Goldman Sachs is advising Indra while the ad hoc board committee has hired Morgan Stanley. EM&E is working with JPMorgan and Santander.

“There could be a conflict of interest if we were playing both sides,” Escribano said. “But think about this: we are not the ones who are going to put a price on the organisation, because top-tier global banks are going to do that.”

Escribano said a weakness of Spain’s defence sector was that most of its companies were suppliers of “subsystems” — mainly radars in Indra’s case — that other companies integrated into armoured vehicles, jets or ships.

EM&E, by contrast, “is a company that sells a weapons system that we send to you in a box. You screw it on, it works, and you fire,” Escribano said. “That is extremely important because I own the intellectual property, I have commercial control of the product, I set the price.”

Its main competitors in weapons systems are Rafael and Elbit Systems, which are both Israeli.

Unusually for European defence companies, EM&E did not grow by serving its own government, because Spain’s defence spending was so meagre for so long. Saudi Arabia was its first big defence client and continues to buy from the company, as does the United Arab Emirates.

With European defence spending now booming, Escribano said EM&E’s ambition was to grab a share of that pie, including in Germany. Another target is the UK, where EM&E is hopeful of signing a deal to sell mortar systems. “Breaking into the British market would give us a stamp of quality,” he said.

On the Indra-EM&E deal, Sepi, the state-owned entity that holds Spain’s Indra stake, said it would “respect the analysis provided by the company on the matter”. Sapa, a defence group that owns 8 per cent of Indra, declined to comment.

Another Indra shareholder Joseph Oughourlian, who owns 7 per cent as founder of investment fund Amber Capital, said: “EM&E has what Indra lacks: production sites. I don’t buy the argument that Ángel Escribano has a huge conflict of interest. The deal makes sense and it should have been done a long time ago.”

The fashion house has reissued its first foray into watchmaking. Will it be second time lucky?

On 9 January 2024 Allan Evensen, Louis Vuitton’s head of watch after-sales, received a WhatsApp message. It was sent from the brand’s sprawling Piscataway warehouse in the US, asking what should be done with an old, tattered cardboard box, a photo of which was attached. 

Not usually consulted on the company’s trash management, Evensen nevertheless opened the image. What he saw astonished him. His thumbs danced quickly across the keypad of his phone. The message to Jean Arnault, the watch director, was concise. “Hello! Look what I found.” 

Evensen was witnessing the rediscovery of one of horology’s most unlikely cult objects, buried for more than three decades in a New Jersey warehouse. The cardboard box contained 66 original Louis Vuitton Monterey watches, untouched since 1991, still in their white transport boxes with original price stickers.

If you don’t count the travel clocks that Louis Vuitton made during the 1920s, the Monterey marked LV’s debut on the watch market. It was designed by Italian architect Gae Aulenti, manufactured in collaboration with IWC and launched in 1988. That it was discontinued in the early 1990s suggests it was – how does one say this delicately? – somewhat ahead of its time. 

There were two versions. The first, in gold, featured world time, moonphase and alarm, along with time and date. The indications were arranged on concentric scales with a moonphase at the centre of the dial. It looked bewildering. The second, in a ceramic case, was a little less busy, with a date indication and alarm. Both featured the crown at 12 o’clock and the same pebble-smooth design; rather than lugs, there were two openings on the caseback through which the strap was fed. 

At the time I remember thinking it looked like a stopwatch and came to regard it as one of watchmaking’s dead ends. By the early 21st century, when LV launched its Tambour watches, no one talked about the Monterey any longer. 

It was only a couple of years ago that the Monterey started showing up again: on the social media feed of vintage Rolex expert James Dowling and, inevitably, the wrist of American rapper Tyler, the Creator. At the beginning of this year, those who attended Louis Vuitton’s AW25 runway show in Paris would have noticed the models wearing the – so I mistakenly thought – extinct timepiece.

“I would be lying if I said that I was fascinated with the watch ever since I started at LV,” admits Jean Arnault, who took over the brand’s watch division in October 2022. However, having bought one on eBay, he became “intrigued” and started to discuss it with Matthieu Hegi, the watch division’s creative director.

“What I didn’t like about the original was that it was quite busy,” explains Hegi. “For me, what is very important is that the watch be easy to read.” His solution for the Monterey 2025 has been to maintain the signature elements of the case and the distinctive syringe hands, but remove the clutter. “I don’t want it to be a fashion statement. I want it to be, before all, a watch rooted in savoir-faire,” says Arnault. As such the Monterey 2025 is an exemplar of the company’s transformation into a vertically integrated “manufacture”. “The way we want to do it is to make it the hard way, which is in-house movement, in-house case and enamel dial,” says Arnault. “This brings something different to the table.”

The 2025 version is limited to 188 pieces cased in gold. And as it will be produced at a rate of only 10 per month, don’t expect to get one in a hurry. Even so, at the time of writing, half of the watches have already been allocated.

Europe cannot rely on Elon Musk’s SpaceX, top investor warns

Revolut backer Balderton Capital says continent needs to accelerate development of space and defence industry

One of Europe’s top tech investors has urged the continent to accelerate development of its own space industry to reduce reliance on Elon Musk’s SpaceX and open up a new frontier in the booming industry of defence start-ups.

Bernard Liautaud, managing partner at Balderton Capital, the investment group that has backed successful European tech groups such as Revolut, said a growing part of “military supremacy” will be fought in space.

But he added European countries are “too dependent” on the US, where SpaceX has come to dominate both the launcher and communications satellite markets. That creates a “huge risk”, Liautaud said. “We need to be more self-sufficient.”

European investment in defence tech start-ups has rocketed this year, as Nato countries have hiked defence spending in the wake of Russia’s full-scale invasion of Ukraine.

That has driven the creation of dozens of new start-ups developing drones, battlefield software and other military technologies.

However, Liautaud said that Europe needs to build much stronger capabilities to launch satellites and build space-based defences, a sector in which Elon Musk’s SpaceX has become the “dominant force”.

Balderton was founded 25 years ago as an offshoot of US VC firm Benchmark and became fully independent in 2007.

It has backed more than 250 start-ups including fintech Revolut, robotics start-up Wayve and mobile games developer Dream Games. Lately Balderton has stepped up what it describes as “sovereign” European bets, including nuclear fusion venture Proxima Fusion and drone maker Quantum Systems.

Last year Balderton co-led a $160mn funding for Franco-German space start-up The Exploration Company alongside VC firm Plural.

The Exploration Company is building space vehicles, including a capsule for transporting cargo to the International Space Station, a rocket and a lunar lander.

Hélène Huby, a former Airbus executive who founded The Exploration Company in 2021, said at the Italian Tech Week event on Thursday that space was a “huge market”, thanks to drivers including telecommunications, earth imaging and defence, but warned: “We are quite weak right now in Europe regarding this space-based infrastructure.”

European groups face an uphill battle. The main challengers to SpaceX, which was recently valued at $400bn by investors, are other well-backed US players such as Jeff Bezos’s Blue Origin.

Even in a venture capital industry where the majority of tech start-ups are expected to fail, backing defence and related companies requires a different attitude to risk, said Suranga Chandratillake, another Balderton partner.

The fact that start-ups are being more actively included in government defence procurement programmes is a testament to how far the European tech ecosystem has matured, Chandratillake added.

“Twenty-five years ago, in trying to solve these problems, one of the last things that Europe would have done would have been to turn to start-ups,” he said. “Today that is a key ingredient of what the solution looks like.”

European private capital firms target €17bn in data centre deals

Oaktree Capital, Partners Group and EQT among those seeking to cash in on AI boom

Private capital firms are seeking to cash in on the US-driven artificial intelligence boom, launching €17bn of European data centre sales in a matter of weeks.

Oaktree Capital Management has started a process to offload part of its European and Middle Eastern data centre business Pure DC, which is valued at up to €5bn in total, while Swiss private equity investor Partners Group is seeking as much as €4bn from a sale of Nordic data centre operator atNorth, people familiar with the proposed transactions said.

Swedish buyout firm EQT has already launched a sale of GlobalConnect, its Nordic superfast broadband network and data centre business, at a potential valuation of €8bn. The pace of dealmaking is picking up as the prospect of long-term contracted revenues draws investors, while the assets’ owners seek funding for infrastructure upgrades.

The potential transactions come as BlackRock’s Global Infrastructure Partners is in advanced talks to buy Texas-based Aligned Data Centers from Macquarie, in a deal that could be valued at nearly $40bn.

Other European groups selling down their data centre holdings include Deutsche Bank’s asset manager DWS, which wants to raise about €2bn from the sale of its data centre business NorthC. Telecoms group Orange is looking to sell a stake in several data centres in France, according to people familiar with the process.

Burkhard Koep, JPMorgan’s head of media and telecoms for Europe, Middle East and Africa, said the general interest in data centre deals showed that “some of these platforms are outgrowing their existing owners and new investors with deeper pockets are stepping in to fund their multibillion cloud and AI infrastructure pipelines”.

Oaktree has not yet determined the size of the stake it will sell in Pure, according to one of the people familiar with the matter, while another person said it was too early to put a valuation on the data centres being offloaded by the French group Orange.

There have been 162 data centre-oriented M&A deals worth more than $46bn that have closed across the world this year, while another 45 worth about $35bn have been agreed but not yet completed, according to Synergy Research Group.

Last year, 287 deals closed worth more than $77bn, eclipsing all previous years, according to the research firm. That record could be matched as cloud providers and companies race to capitalise on the opportunity to sell assets. Deals in Europe, Middle East and Africa typically account for 10 to 15 per cent of the global total value.

“We do not forecast this M&A activity, but it is certainly possible that deal value in 2025 could match or come close to the record level seen in 2024,” said John Dinsdale, Synergy’s chief analyst. 

“What’s driving it? The usual — an insatiable appetite for data centre capacity, the need to keep on building new data centres, and the inability of current data centre operators to fund those investments internally.”

He added that potential buyers viewed data centres as “a safe bet for investments, so money is flooding into the market.”

Orange, Oaktree, Partners Group, atNorth and Pure all declined to comment.

Kremlin-backed crypto coin moves $6bn despite US sanctions

A7A5 token enables Russian financial flows after Washington cracks down on related exchange

A Kremlin-backed cryptocurrency operation appears to have succeeded in circumventing US sanctions, moving at least $6bn since August when some of its entities were blacklisted — highlighting the limits of western efforts to curb Russia’s financial flows.

More than 80 per cent of A7A5, a stablecoin at the heart of Russia’s growing cross-border payments empire, was swiftly destroyed and recreated to be cleared of links to a crypto exchange that had been just sanctioned by Washington, according to a Financial Times analysis.

A7A5 is part of A7, a growing cross-border payments system built as an alternative to the US-led financial system, from which Russian lenders were cut off after Moscow’s invasion of Ukraine in 2022.

Washington added Grinex, a Kyrgyzstan-based exchange, to its sanctions list in August, the latest step in its attempt to curb Russia’s crypto infrastructure. Grinex is an alleged successor of Garantex, which US law enforcement took down in March for “hacking, ransomware, terrorism and drug trafficking”.

Grinex denies any connection to Garantex.

According to the FT analysis, starting the day after the August designation A7A5 administrators deleted the contents of two wallets connected to Grinex, which were carrying a total of 33.8bn tokens worth $405mn. That represents more than 80 per cent of the total number of A7A5 in circulation.

The wallets’ account balances were set to zero using an instruction called “destroyBlackFunds” that designates their tokens as “dirtyShares”.

But soon after, tokens worth the same amount were created in a new wallet, in effect moving the funds and giving them a clean slate.

Unlike a regular transfer, this method breaks the link between the old and new accounts, making it harder to establish a connection between the tokens that had been targeted by sanctions and the newly-minted ones.

This wallet, named TNpJj, was involved in $6.1bn worth of transactions since August, the FT found.

Activity on the new wallet mirrors patterns observed on its predecessors. The wallet has shared 11 counterparties and executed transfers during Moscow working hours. Activity peaks between 10am-12pm local time, with little movement overnight or on weekends.

A7A5’s chatbot offers customer support “weekdays from 10am to 8pm Moscow time”. Clients can also buy the token in cash at their “over-the-counter section of Grinex” housed in a Moscow skyscraper. Garantex shared the same address — Federation Tower, 14th floor.

Setting up the new wallet suggests the operators of A7A5, which trades on Tron and Ethereum blockchains, have drawn lessons from the takedown of Garantex. Back then, Tether, the issuer of the dollar-pegged stablecoin USDT, froze $28mn held in wallets linked to Garantex.

A7A5 is registered in Kyrgyzstan, a jurisdiction Moscow designates as “friendly”, unlike most western countries. The coin’s registered issuer is a Kyrgyz company called Old Vector, which was also blacklisted by the US in August.

Russian authorities last week granted A7A5 formal digital financial asset status. This allows exporters and importers to use it officially through a platform owned by Promsvyazbank, which backs each token with a rouble, according to the A7A5 issuer.

A Russian state-owned defence lender under western sanctions, Promsvyazbank also holds a 49 per cent stake in the A7 cross-border payments network that is rapidly expanding, including to Africa.

The bank’s chief executive Petr Fradkov last month told Russian President Vladimir Putin “we are creating a system of cross-border settlements based on A7”. The network has also received significant loans from Russia’s VEB, a state development bank which traditionally supports the Kremlin’s priority projects.

VEB and Promsvyazbank did not immediately respond to requests for comment.

A7 claims to have moved more than $86bn in 10 months, according to its majority owner and chief executive, Ilan Șor — a fugitive Moldovan oligarch living in Moscow.

Overall, A7 may now account for a large chunk of Russia’s cross-border payments market, two financial professionals involved in that market told the FT. In addition to crypto, the A7 network also offers more traditional services, including payments via promissory notes.

“A7 is expanding at rapid pace funded in large part by loans from Russian state institutions,” the Centre for Information Resilience (CIR), a London-based non-profit research group, noted in a report. Russia’s worsening war economy was likely to increase the “political significance” of the network in enabling exports, it added.

A7 and A7A5 did not immediately respond to requests for comment.

In June, an A7A5 representative told the FT they had only “co-operated with the technical team of A7 at the early stage”, and then “decided to separate completely” in May.

“We’ve created a transparent and honest business: we pay taxes and operate openly,” A7 owner Șor told the Kommersant newspaper last month, noting other countries were showing interest in this “alternative payment system that is “beneficial” for the Russian state.

EU watchdog prepares to expand oversight of crypto and exchanges

Esma chair says move would help boost bloc’s capital markets by removing supervision from 27 separate authorities

Stock exchanges, cryptocurrency companies and clearing houses operating in the EU are set to come under the supervision of the bloc’s markets watchdog, according to its chair.

Verena Ross, chair of the European Securities and Markets Authority, told the Financial Times that under plans being drawn up by the European Commission, the regulation of several areas of EU financial markets is likely to be transferred from national authorities to Esma.

Such changes would provide a key impetus towards “having a capital market in Europe that is more integrated and globally competitive”, she said.

The plans, which are controversial among smaller EU countries such as Luxembourg and Malta, are designed to “ensure that we are addressing the continued fragmentation in markets and resolve that to create more of a single market for capital in Europe”, Ross added.

The EU initially proposed making Esma the main supervisor of crypto asset service providers — such as exchanges and custodians of digital currencies — when drawing up its landmark Markets in Crypto-Assets (MiCA) regulation, which came into force this year. 

But criticism of Esma’s ability to handle this meant oversight of the fast-growing crypto market was left in the hands of national authorities — a decision Ross said had created inefficiencies.

In July, Esma criticised Malta’s process for approving pan-EU licences for crypto companies, saying “some risks areas were not adequately assessed during the authorisation process” for one unnamed company.

“While we are doing a lot of work to try to make sure the implementation of MiCA is aligned, it clearly takes a lot of effort from us and the national supervisors to achieve that,” Ross said.

“It also means that people had to build up specific new resources and expertise 27 times in different national supervisors, which could have been done more efficiently once at a European level.”

Esma was established in 2011 to improve the harmonisation of rules across the EU. But many of the bloc’s financial market activities continue to be supervised by its 27 national authorities. 

“We have tried for quite some time with the capital markets union and other initiatives to build a more effective capital market,” said Ross. “The reality has been that it is not easy to do given we have very different market structures.”

Mario Draghi, the former European Central Bank president, in a landmark report last year identified the transformation of Esma into a single common regulator for all of the bloc’s securities markets — similar to the Securities and Exchange Commission in the US — as “a key pillar” in boosting Europe’s capital markets.

Some smaller EU countries, such as Luxembourg, Malta and Ireland, have opposed centralising powers at Esma, fearing it could undermine their thriving financial sectors. 

Claude Marx, head of Luxembourg’s financial watchdog, said recently that if Esma was made the main supervisor for all EU investment funds, this would create a “monster”.

However, the Esma chair said that the bloc’s need to find funding for its vast investment in defence, green energy and digitisation had given fresh impetus to the push for “breaking down the barriers and fragmentation that still exist”.

She added: “The demand for that is so high now given the need for finding private capital sources to support Europe’s strategic priorities, it has clearly gone up a level, not just at the EU level but also at member states.”

The Paris-based authority has already been given extra powers since the publication of Draghi’s report.

From next year, it will take over the supervision of new providers of consolidated tapes — a database of live stock information — for equity and bond prices, and also of agencies providing environmental, social and governance ratings.

Maria Luís Albuquerque, EU commissioner for financial services, said in a speech last month that it was “considering a proposal to transfer supervisory powers to Esma for the most significant cross-border entities” including stock exchanges, crypto companies and central counterparties. 

“All of this would imply changes to the governance and decision-making processes of Esma, and we have various models to consider based on other existing models of centralised supervision,” said Albuquerque.

French private equity firm joins rush to gain exposure to surging energy use by data centres

French investment firm Ardian has struck a deal to acquire one of Ireland’s largest energy utilities, in a major bet on one of the power providers expected to fuel the booming artificial intelligence sector.

Ardian will acquire Energia Group from its existing owner — infrastructure investment firm I Squared Capital — in a deal that values the Dublin-based firm at more than €2.5bn, according to people familiar with the deal.

Energia was acquired by I Squared in 2016, when the utility was known as Viridian, for about €1bn. The company provides power to more than 900,000 homes and business across the Republic of Ireland and Northern Ireland. It owns a large portfolio of renewable energy operations, including 16 onshore wind farm sites, and has also entered into a partnership to develop and power a 165 megawatt data centre in Dublin.

Infrastructure funds are clamouring to get exposure to the AI sector’s rising energy demands. In the US, BlackRock-owned Global Infrastructure Partners is nearing a $38bn deal to buy utility group AES, in what would be one of the largest infrastructure takeovers of all time.

Ardian has been a big investor in infrastructure, including a transaction earlier this year that increased its stake in London’s Heathrow airport, in which it is the largest shareholder, and it has also invested in German utility EWE.

Energia represents Ardian’s first deal in Ireland, the group’s co-head of infrastructure Juan Angoitia said in a statement. He added that Energia “has ambitious plans to grow, driven by secured capital projects and increasing energy demand . . . We have been impressed by Energia’s strong growth and resilience in the context of a volatile energy market.”

Ardian managing director William Briggs said in an interview that the investment firm will “be supporting a multibillion-euros capital expenditure programme to build new renewables and improve the efficiency of flexible generation assets in Ireland.

“Energia is a pioneering example of how to unlock growth by a novel approach of co-development of data centres and renewables,” he added.

For I Squared, the deal offers a big windfall as its largest ever asset sale. The Miami-based specialist infrastructure investor, which manages more than $50bn in assets, is led by Sadek Wahba, a former World Bank economist who became a top executive at Morgan Stanley before founding the firm in 2012.

Under its near decade of ownership, the group has taken a €540mn dividend while investing in the company’s expansion and reducing its debt load. I Squared has invested in other European assets including acquiring the operator of London’s famous red buses in 2023.

Under I Squared’s ownership, Energia’s growth “was organic, predominantly around pushing the renewable agenda,” rather than acquisitions, said I Squared senior partner Mohamed El Gazzar in an interview.

“One of the big growth drivers will also be that data centre coming on that will even further increase the ebitda [earnings before interest, tax, depreciation and amortisation].”

Watchdog believes motorists mis-sold auto finance could get payouts totalling up to £18bn

The UK financial watchdog is overestimating the £9bn-18bn in compensation it forecasts consumers will receive for mis-sold car finance, according to the motor finance industry.

Adrian Dally, director of motor finance at the Financing and Leasing Association, said the Financial Conduct Authority would struggle to prove the true losses suffered by consumers were as large as it initially estimated in August.

“We still don’t know what was behind the [FCA’s] suggestion,” said Dally. “They haven’t shown the workings . . . We think it should be less than £9bn.”

The FCA is set to publish a consultation paper as early as this week, outlining details of what is expected to be its biggest ever redress scheme for consumers who were mis-sold motor finance over the past two decades. 

The FCA said: “We’ve engaged widely as we considered how any compensation scheme should work. We’ll consult on it shortly and set out the evidence we’ve gathered and our analysis.”

The watchdog has estimated the redress scheme will cost £9bn to £18bn for the 38 lenders it believes mis-sold as many as 14mn finance agreements on vehicle purchases between 2007 and 2021.

Many of the cases covered by the redress scheme will stem from discretionary commission agreements (DCAs) in which lenders allowed car dealerships to earn a bigger fee by pushing up the interest paid by a consumer on a loan.

Dally said that when the FCA banned DCAs in 2021, it estimated they had cost consumers £165mn a year. Even after adding interest at an expected rate of 3 per cent and administrative costs, the total would still be well below £9bn, he said.

The Financial Ombudsman Service has awarded compensation in DCA cases equal to the amount of extra interest a customer had to pay above the minimum rate a dealership could have set. 

“We would say that is incorrect, that is not loss, because in a world without DCAs the customer would not have got that rate because the dealer would not have had discretion to go to that rate,” Dally said.

He added that after the watchdog banned DCAs, the average cost of car finance did not decrease. “In a world without DCAs, what would the customer have got?” he said.

The FCA redress scheme would have been much bigger if the Supreme Court had not in August overturned much of an earlier Court of Appeal ruling that had threatened to cripple lenders with compensation costs of up to £44bn. 

However, the judges upheld one claim against the banks for “unfair treatment” of a customer whose car financing included a poorly disclosed commission paid to the dealership worth 55 per cent of his total interest costs. The FCA redress scheme will also include similar cases.

AstraZeneca’s humbling blow to London highlights the need for change in the UK and elsewhere in Europe

If two of the main benefits of hosting a big company’s UK stock market listing are the tax revenue it raises through stamp duty and the cachet of the listing itself, then drugs giant AstraZeneca has just delivered another humbling blow to London as a financial centre.

On top of the symbolic humiliation, the decision by Britain’s biggest listed company to move its share listing to New York and leave only depository interests trading on the London Stock Exchange, will cost the Treasury an estimated £200mn in lost stamp duty (depository interests, securities that represent rights to shares listed elsewhere, do not attract stamp duty).

The LSE is clinging to the hope that there may yet be a silver lining for London liquidity — without a stamp duty charge, Astra’s trading volume could theoretically increase. More likely, a full NYSE listing will pull more of the trading liquidity across the Atlantic.

The broader trend is no different. The fashion for moving listings from Europe, particularly London, to New York is accelerating. Money raised via new London listings is at a 30-year low.

It is instructive to consider the sometimes neglected third leg of AstraZeneca’s triumvirate of listings: the group retains a Swedish quotation on the Nasdaq Stockholm exchange. Though the volume of shares traded there is only a fraction of that passing through London or New York, the retention of the listing — a relic of the group’s part-Swedish heritage — is telling.

Writ large, the Stockholm exchange — and the broader Swedish approach to the country’s equity culture — has much to teach the UK. Over a period of 50 years, a succession of tax policies, pensions launches and investment product innovations has spurred a vibrant equity culture in the country. According to Fondbolagens förening, the local fund management association, fund investment is more popular in Sweden than anywhere else in the world, with eight in 10 Swedes invested in funds.

A thriving pensions market provides ready anchor investors for Swedish initial public offerings. Market liquidity is also underpinned by widespread direct retail investment, much of it channelled through the ISK tax-efficient investment vehicle — which includes a SEK150,000 (€14,000) annual tax-free investment allowance. It is a rough equivalent of Britain’s ISA, though without the option to save in cash. At the end of 2023, according to the OECD, there were 3.8mn unique dedicated investment savings account (ISK) holders, in a total population of 10.6mn.

Returns have been impressive, too, especially over the long term. In recent years the US market might have been a runaway winner versus the rest of the world, thanks to its dominance of global tech. But Nasdaq figures suggest that over the past half century or so, Swedish returns actually outstrip any other major market, delivering an 8.2 per cent total return, compared with 5.9 per cent for the US and 5.8 per cent for the UK.

None of this is news to UK and EU policymakers, who are painfully aware of the Swedish example. Mario Draghi’s landmark report on European competitiveness, published a year ago, urged the EU to incentivise stock market investment for households’ €1.4tn of annual savings, citing Sweden’s gold standard. For the general good, Europe must persuade its citizens to abandon their cash-under-the-mattress caution.

Sweden is not impervious to the lure of higher US valuations. Swedish “buy now, pay-later” lender Klarna opted for a New York listing only last month. Music streamer Spotify made the move back in 2018.

But the appeal of the Swedish market endures. Just ask Hellman & Friedman-owned Verisure, the Swiss/Swedish security group, which last week said it was targeting a market capitalisation of up to €13.9bn in a Stockholm listing, having seen off a listing pitch from the London Stock Exchange. Verisure is set to be Europe’s biggest market debut since Porsche in 2022.

London’s revenge may come early next year if rival private equity group HG presses ahead with plans to list Norwegian software group Visma in London rather than on the exchange of its Scandinavian neighbour. But in the meantime the UK must do far more to burnish its credentials — building on the mooted exemption of new IPOs from stamp duty to overhaul the whole antiquated stamp duty system and its penal treatment of UK company share purchases. ISA rules need tightening to give an added incentive for share investment over cash. Without resorting to unwelcome mandation, pension funds should be incentivised to invest in UK stocks.

When Britain’s biggest listed company sends the signal it did last week, everyone with an interest in the country’s future prosperity should take heed.