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Europe’s defence tech start-ups attract investment surge

Russia’s war in Ukraine and fears over US security relationship drive wave of VC funding

Investment in Europe’s booming defence technology start-ups has surged since Russia’s full-scale invasion of Ukraine, as venture capital firms abandon earlier caution and pile in to military businesses.

Companies in the sector have raised €2.4bn since the start of 2022 including €1.4bn in the first seven months of this year alone, up from just €30mn in 2020 and €150mn in 2021, according to data compiled for the Financial Times by PitchBook.

The figures are the latest evidence of the strength of investor appetite for the wave of new companies developing everything from unmanned mini-submarines and autonomous drones to “bio-robotic” cockroaches.

Europe now boasts three defence start-ups with a “unicorn” valuation of more than €1bn: drone makers Helsing, Quantum Systems and Tekever.

Several VC executives said there had been a step change in investor interest in defence tech after February’s Munich security conference, when a combative speech by US vice-president JD Vance stoked alarm that America’s long-standing alignment with Europe was under threat.

At the time of the speech “there were just a handful of European venture investors specialising in defence tech”, said Mikolaj Firlej, co-founder and general partner of VC firm Expeditions Fund. “Now we are getting to the point where these tier 1 branded funds are recognising defence tech as a viable opportunity”.

Start-ups based in Germany have captured the biggest share of VC funding. Europe’s largest economy is the biggest supplier of military support to Ukraine after the US and has unleashed unlimited borrowing to fund defence in the years ahead. 

Prominent German players such as Helsing have secured the lion’s share but money has also flowed into others including Swarm Biotactics.

The company, which is developing controllable living cockroaches equipped with micro-backpacks that can covertly conduct surveillance in the most inaccessible of places, said in June it had raised €13mn in early-stage funding, with the latest round backed by investors from Europe, the US and Australia.

The UK has also started to attract more attention, with several start-ups, including Tekever and attack drone maker Stark, committing to set up manufacturing facilities in the country. Technology start-ups will also feature strongly at this week’s flagship arms trade show in London.

Rana Yared, partner at recent Quantum Systems backer Balderton Capital, said there was “movement to Europe being more participatory in its own security . . . That is, I think, the arc of the next 10 years.”

Ukraine remains the drone capital of the western world with a thriving domestic start-up scene. Foreign companies have also flocked to the country, offering their technology to its armed forces while embracing the ability to test it on the battlefield.

“One of the really important things in this space is practical feedback vs theoretical building,” said Yared, adding that the companies likely to emerge as winners were “the ones who are able to be practically in the action. Today that means getting field-tested in Ukraine.”

Below are some of the defence tech companies that European investors are talking about this year.

Tim Bradshaw

In just four years Helsing has established itself as Europe’s most prominent new defence-tech company. The business was recently valued at €12bn in a round led by Spotify founder Daniel Ek’s investment group, Prima Materia.

Co-founded by a video-games entrepreneur, a former German defence ministry official and an artificial intelligence researcher, Helsing started out focusing on software to track battlefield data.

But over the past year it has built strike drones for Ukraine, bought German aircraft manufacturer Grob (which came with its own airfield) and unveiled plans to manufacture autonomous submarines in the UK.

“We are going from a software company to an all-domain AI software and hardware company,” Ek, Helsing’s chair, told the FT in June.

Laura Pitel

After the full-scale invasion of Ukraine in 2022, Munich-based reconnaissance drone maker Quantum Systems wanted to move into producing lethal weapons but the idea was opposed by some investors.

Co-founder and former German army officer Florian Seibel instead set up a sister company, Stark, which since launching in 2024 has become one of Europe’s fastest-growing defence tech companies. In August it closed a new €60mn funding round that valued the company at €500mn, with backers including Thiel Capital and Sequoia Capital.

Along with its rival Helsing, Stark this year received an order for a “large number” of lethal drones from the German armed forces so they could test, experiment with and help develop the weapons.

The company has not yet secured any other government or military contracts, although it has a team in Ukraine engaged in testing and development. In July it announced it would open a factory in the English town of Swindon.

Christopher Miller

A video posted on Telegram in June showed southern Ukraine from an altitude of 11km. But it wasn’t shot from one of the commercial airliners that fly at that altitude but by a copter drone that could soon be used to knock down Russia’s high-flying reconnaissance drones.  

Its maker is Wild Hornets, a start-up founded in 2023. It has half a dozen drone models including the Hornet Queen bomber and its newest, the high-speed Sting interceptor, designed to take down the Iranian-designed Shahed-type drones that Russia launches by the hundreds.

Emblematic of Ukraine’s ingenuity, design prowess and grassroots manufacturing culture, Wild Hornets is financed by donations and crowdfunding on social media, where it shares photos of civilians teaming up to help with production.

It collaborates closely with some of Ukraine’s elite combat units to test and improve its drones and boasts that it has neutralised 1,738 enemy assets worth $1,69bn, including at least 150 Russian tanks, 800 military vehicles and 122 heavy artillery systems.

Sylvia Pfeifer

Founded in late 2024, the UK-based start-up hopes to tap into the growing market for more cost-effective air defence systems to counter threats such as drones and missiles, and this year launched its first product, Skyhammer.

Designed to be a low-cost interceptor for cruise missiles and large drones, Skyhammer has a range of up to 30km and a speed of up to 700km/h.

The company counts Lakestar, Lux Capital, Accel and Spark Capital among its backers and has raised $136mn to date with its latest round, led by Spark, valuing it at $400mn.

Grant Shapps, a UK defence minister under the previous Conservative government, has been recruited as chair.

Sylvia Pfeifer

Headquartered in Munich, Arx Robotics has raised €54mn to date to expand its fleet of autonomous land drones.

The company, which counts the Nato Innovation Fund and venture capital firm Project A among its backers, has developed a range of vehicles that can be fitted with equipment for reconnaissance purposes or casualty evacuation. Some of its vehicles are in active deployment in Ukraine.

Its AI-based operating system, Mithra OS, can also be integrated on to legacy fleets to modernise them. The start-up is partnering with Daimler Truck and Renk to integrate it on to existing vehicles.

Arx this year also announced plans for a UK factory.

The hedge fund billionaire aiming to be king of Queens

Steve Cohen already owns the Mets baseball team and now wants to build one of New York’s first casinos. But that has drawn him into local politics

Throughout 2020, Tom Grech could only watch as the borough of Queens inched towards a financial and human calamity. Sirens wailed day and night as ambulances shuttled patients to Elmhurst Hospital, ground zero for the pandemic in New York.

Nearby, the dead piled up so rapidly that a refrigerator stored dozens of bodies outside a funeral home. Grech, the president and chief executive of the Queens Chamber of Commerce, stood helpless as the relentless march of Covid cases in his working-class borough pushed scores of local businesses towards financial ruin.

Into this unfolding catastrophe stepped Steve Cohen. The hedge fund billionaire, who had just acquired control of the New York Mets baseball team in a $2.4bn deal, was not yet a household name in the diverse district that’s home to New York’s two airports and scores of immigrant communities.

Early in 2021, Cohen wrote Grech a cheque for $15mn, instructing him to hand out money to hundreds of business owners with no strings attached. It was a sum that might have paid for the annual salaries of one or two portfolio managers at the Manhattan offices of Cohen’s Point72 hedge fund. But it went a long way in Queens.

“For a number of months, I was like Santa Claus giving money out to people,” says Grech. “Courtesy of Steve.”

The cheque was the first move in what would become a multiyear campaign to win hearts and minds in the borough, as Cohen quietly shifted his energy and vast resources to building a business empire there.

While his initial focus was on turning round the perennially underachieving Mets, his attention is now also set on a more lucrative and ambitious endeavour: winning one of New York City’s first casino licenses.

His planned gambling and entertainment mecca, known as Metropolitan Park, is to be developed in conjunction with Hard Rock Entertainment and sited in what loosely served as the desolate “valley of ashes” in The Great Gatsby. While Citi Field, the Mets’ stadium, is only a home-run hit away from Flushing Bay, it is encircled by so many highways that the criss-crossing ramps obstruct most views of the water.

The project will be a test of whether Cohen can succeed in a different realm, bending New York’s fractious politics to his will, in the way that Ken Griffin, another hedge fund star, has managed to do in Chicago and now Miami.

Entities affiliated with Cohen have so far spent about $9mn on lobbying costs associated with the bid, according to an analysis of regulatory filings. Last year, one of the companies he controls spent more on lobbying than any other single firm in New York, a city teeming with lobbyists.

He has deployed a small army of advisers to win support from elected officials, and disbursed thousands of dollars on a campaign that has included newspaper and social media ads.

Then there is the philanthropy. While Wall Street’s top financiers are often high-profile donors, even those who grew up in Queens — JPMorgan Chase boss Jamie Dimon, for instance, or fellow hedge fund manager John Paulson — tend to distribute their largesse elsewhere.

“I’ve been in government for 22 years and I have never met a billionaire who’s done more for Queens,” says Donovan Richards, the borough president. “It’s easy to invest in the conservancy for Central Park, or the museum of whatever. Billionaires do that everyday,” he adds. “What differentiates Steve Cohen is that he’s willing to do it in an outer borough.”

To a large extent, the campaign is working, as Cohen has managed to persuade reluctant local officials over the past few years to back the project. But some residents are still opposed to having a casino nearby. The Fed-Up Coalition, a grassroots organisation made up of local environmental and community activists, has been the most co-ordinated and vocal opponent.

“Any billionaire running over a community like this and who’s able to dangle money over them is horrible,” says Bill Bruno, a member of the group’s steering committee. “But a billionaire with his track record is even worse,” he adds, referring to Cohen’s run-ins with regulators during his hedge fund career.

“The benefits [of the project] are somewhat illusory, while most of the money’s going to go to Steve Cohen.”

When Cohen bought the Mets, a team he had supported since childhood, it marked a new era for one of Wall Street’s wealthiest and most closely followed figures.

The financier known as the hedge fund king had just emerged from a multiyear entanglement with state and federal regulatory authorities, which had threatened to derail his hedge fund business and ultimately put one of his managers behind bars.

SAC Capital Advisors, the forerunner of Point72, pleaded guilty to insider trading charges in 2013 and later paid a $1.8bn penalty to settle them. Cohen was never charged with insider trading, but reached an agreement with regulators in 2016 in which he neither admitted nor denied allegations of failing to supervise one of the employees found guilty of insider trading. He began managing client funds again in 2018.

Taking control of the Mets, which had long languished in the shadow of the more illustrious New York Yankees, allowed Cohen to present himself as a working-class kid made good, rather than a ruthless hedge fund manager at odds with securities regulators.

He has spent billions of dollars on the Mets over the past five years — including a league record $765mn to land star hitter Juan Soto — and soon became known among fans as Uncle Steve, a legend among truck drivers and accountants alike.

Cohen is now bidding for one of the three casino licenses that New York will issue this year, and if he is successful, he could mint an entirely new fortune for himself.

“He’s very comfortable spending money to get his projects done,” said Mitchell Moss, a professor of urban policy and planning at New York University, adding that Cohen had also spent effectively. “For a guy who lives in Connecticut, he’s done a great job figuring out New York.”

New York had long kept casinos featuring live games like blackjack and roulette away from the city, forcing New Yorkers to travel upstate or to resorts like Atlantic City or Foxwoods in neighbouring states.

That changed in 2022, when the state budget included plans to hand out up to three licences for the city and surrounding area as a way to boost tax revenues. Interested bidders have mounted unofficial campaigns over the past few years, but the real race has only recently officially begun, with Cohen and seven other groups submitting bids to the state’s gaming commission in late June.

Cohen and Hard Rock are facing off against casino heavyweights such as MGM Resorts, Bally’s Corporation and Caesars Entertainment, and the eventual winners are expected to pull in billions of dollars.

The Cohen project forecasts gross revenue of $3.2bn in its first year, with $1.5bn of that from slot machines alone. By year 10, a cumulative $38bn will have rolled in.

The exact ownership split between Cohen and Hard Rock has not been disclosed, and sections from their application that might include those details have been redacted. A spokesperson for Cohen declined to say how much he stands to benefit financially.

While the casino would be the development’s “economic engine”, the $8bn complex next to Citi Field would also include a concert venue, a hotel, a food hall and a new park.

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“The biggest complaint from my fans is when they come to a game, there’s nothing to do at the stadium,” Cohen said in an interview at a conference in June. “This is a real opportunity to transform the neighbourhood,” he added, “and do something for Queens and the city that’s nothing that anyone has done before.”

The project, he says, is an extension of his ownership of the Mets, which he has previously described as a “civic responsibility”.

Cohen declined to be interviewed for this piece, but those who know him say his energy remains undiminished. “He’s hyper-focused,” says one Wall Street executive who worked with him closely for years. “He uses his money to bully and get what he wants.” While Cohen’s sharpest tendencies have softened over the years, some traits have remained. “He always wants to win,” the executive adds. “That hasn’t changed.”

In June, at an event to promote local businesses at Citi Field, Michael Sullivan glad-handed local officials and residents. They treated him like a hometown celebrity as he posed for photos and gave a television interview.

“The reason we’ve come as far as we have is we stand on the shoulders of our local community boards, our local churches, our Mets fans,” said Sullivan, who is chief of staff for Point72 and goes by the name Sully, on the edge of the crowd. “It was important to Steve that we did this right and listened to the community,” he told the FT before rushing away for another photo.

Sullivan heads the battalion of lobbyists and publicists recruited by Cohen to drum up support for the casino proposals. He and his lieutenants have knocked on 44,000 doors to convince the community that having a casino in their backyard will benefit the neighbourhood.

Cohen hosted them for games at Citi Field, but also met them at local restaurants and bakeries. “Queens has some incredibly diverse communities where people have come from all over the world to settle in New York and pursue the American dream,” says one executive from Queens who runs a political consulting firm. “Understanding that tapestry is very difficult.”

“I don’t think there’s a kitchen table that [Cohen] hasn’t sat at in Queens,” says Richards, the borough president. “There was a trust built with people who, you have to understand, would never trust a billionaire. This is AOC’s backyard,” he adds, referring to the outspoken left-wing congresswoman Alexandria Ocasio-Cortez, who has said very little in public about the proposals.

But another Democratic lawmaker, state senator and one-time mayoral hopeful Jessica Ramos, has been among the most vocal and thorniest opponents for Cohen. “There’s a predatory nature to the casino business model,” she says over lunch in Astoria, a neighbourhood in Queens.

“He’s selling a lot of my small businesses on this fictitious multiplier effect that we just don’t see,” she adds, asking: “Why should we reward a bad actor with our land and the ability to make money off our people?” The project responded by pointing out that “unions, Community Boards, small businesses and our neighbours all overwhelmingly support Metropolitan Park.”

To be eligible to submit a bid for the area next to Citi Field stadium, which is technically leased parkland, Cohen needed the state legislature in Albany to rezone the 50-acre site.

Ramos refused to introduce the necessary legislation. But her colleague John Liu, a supporter of the project whose district includes a small portion of the area, stepped in and in May, the legislature passed the bill — removing the final obstacle to the project just weeks before bids were due.

“My reservations still stand,” says Liu. “I’m not a fan of gambling, casinos or other types . . . but the reality is that there will be three casinos opening in the vicinity of New York City. And this project has had the most robust community outreach and buy-in.”

Cohen has vowed to spend about $1.8bn on projects to benefit the community, including 25 acres of new parkland and improvements to the subway station that brings trains from Manhattan. Local officials say they have long begged for funds to improve such sites, but have never been able to obtain them.

He has also bolstered his case with a list of other benefits: promises for tens of thousands of jobs, hundreds of affordable housing units and a $163mn fund that will give out grants to non-profit organisations.

“I’m fully cognisant that these improvements — which I’ve been waiting for my entire life — wouldn’t be realised without some kind of economic boost,” concludes Liu. “And that’s what the casino and hotel accommodation provides.”

Last year, the foundation Cohen runs with his wife Alex donated $116mn to LaGuardia Community College, the largest-ever gift to such a college in the US. Since its launch in 2001, the foundation has donated more than $185mn to non-profit organisations and projects throughout Queens.

“A dollar goes a lot further in Queens than it does in Manhattan, and he’s figured that out,” says Moss, the NYU professor. “The benefit of Queens is that it’s an undernourished place in terms of philanthropy, and Cohen’s finding a way to fill that gap.”

The eight casino proposals will be judged by local and state representatives before a state-level board chooses up to three winning bids, a process that should be completed by December.

“There can only be one king of Queens, and the king has a vote on the project,” says Richards, referring to his own role on the selection committee. “But hey, if he’s going to give Queens another $1bn for something else, he can take the title.”

Despite the lobbying and heavy investment, Cohen is by no means a shoo-in. At least two of his rivals have the advantage of operating racinos — horseracing tracks that also offer virtual lottery games — while he is likely to encounter protesters at two further public meetings scheduled for the coming weeks.

Until the winners are announced, Cohen will stay busy. He will need to steer Point72 through financial markets strewn with trade policy gyrations. He will also be dutifully attending Mets games — the team is expected to squeak into the play-offs, barring a late-season collapse — leading up to the World Series in October.

“I’m relentless, I’m hard-wired, I just don’t give up,” Cohen said at a hedge fund conference earlier this year, in perhaps the most candid rationale he has given for his decision to tackle another colossal project. “I’m just tenacious. I can’t help it.”

Today, Ramos remains the only prominent local official still adamantly against the project. She says that having previously courted her, Cohen refused to shake her hand at the first game of the 2024 season, before she publicly said she would not back the project.

“The thing about Steve Cohen is not just that he’s a billionaire,” she says. “He wants a licence to print money. Twenty billion dollars just isn’t enough.”

Amid loose financial conditions and a bubbly market, it’s exactly the wrong time

As Donald Trump pressures the Federal Reserve to cut rates, the fear is that he is undermining the central bank’s independence, with potentially damaging consequences for the US economy. Yet most mainstream economists and investors seem convinced the Fed will cut rates anyway at its September 16-17 meeting, particularly after Friday’s employment report confirmed some signs of weakness in the labour market.

This is unfortunately the same alarmist reflex — rush to the rescue at the slightest hint of economic trouble — that has been undermining Fed credibility and fuelling financial bubbles for decades. And the timing could not be less opportune.

Financial conditions are very loose. The economy is still resilient. The basic Fed lending rate is not restrictive. Signs of job market weakness are minor compared with the evidence that inflation has become entrenched. And cutting rates with AI mania gripping US markets risks driving them to greater heights. All this makes it an odd moment to follow Team Trump, which includes past critics of easy money flip-flopping to please their boss.

While interest rates have moved up since the pandemic, financial conditions reflect much more than rates. And it’s the broader signs that show conditions are loose.

Capital pouring into the US stock market has driven valuations close to historic highs. Venture capital is pouring into profitless tech firms. Credit growth is surging, particularly in private markets. Junk firms can borrow at rates only marginally higher than solid ones or even the government; the premium they pay over Treasuries is as low as at any point in the last half century. And not once during that period has the central bank cut rates, much less launched a cutting cycle of the scale the market is now pricing in, based on Fed guidance.

Trump aides want to stimulate an economy that doesn’t need help. Despite the tariff shock, GDP is on track to expand by more than 2 per cent this quarter. Regardless, juicing up growth is not the central bank’s job. Its mandate is to control inflation while maximising employment. And standard guidelines on how to achieve this, such as the Taylor rule, show that the Fed’s basic lending rate is not currently restrictive.

If anything, there is an equally strong case for a rate increase. While the latest report showed disappointing job gains, that is unsurprising when labour supply is weak due to declining immigration. More tellingly, the unemployment rate is still just 4.3 per cent, close to historic lows. Meanwhile, consumer price inflation has exceeded the Fed’s 2 per cent target for five years running and is expected to remain stuck at an elevated pace for the foreseeable future.

It’s also a mistake to ignore prices for stocks, homes and other financial assets. Since failing to anticipate the 2008 financial crisis, the central bank has incorporated financial stability into its “mission.” Some argue that a rate cut will make homes affordable again, but easy money was one driver of the affordability crisis in the first place. The main factor was and is over-regulation limiting housing supply, and new rate cuts won’t address that problem.

By easing every time the markets falter — including as recently as last August — the Fed has been fuelling asset price inflation and wealth inequality. Now, it seems poised to go further, easing in a boom.

Tech investment is following the path of past bubbles: at nearly 6 per cent of GDP, it roughly matches investment in tech at the 2000 peak as well as investment in real estate at its 2007 peak, and greatly exceeds investment in oil at the 2013 commodity boom peak. Speculators focusing on the least profitable and most expensive stocks are amped up on AI too. Their share of US trading is now approaching the dotcom era high.

The “asymmetry” of Fed policy — always rescue but never restrain the markets — is tilting further towards promoting bubbles. Yet prominent Republican critics of easy money now call for more of it, in the name of “reform”. Stephen Miran, Trump’s appointee to the Fed board, is one of the enemies-turned-advocates of central bank dovishness.

Real reform would hold the Fed more accountable for errors of easy money. What’s needed is a return to symmetry, including periods of restraint. With the economy holding steady while AI mania is showing similarities to the dotcom boom, cutting rates now could push the market to crazier highs and set up a bust reminiscent of 2000. It would be exactly the wrong move at the wrong time.

ONLINE

Ethiopia celebrates opening of giant hydropower project while Sudan and Egypt warn of threat to water security

Ethiopia will be celebrating a development milestone when it formally opens Africa’s largest hydropower dam on the Blue Nile river on Tuesday, but for Sudan and Egypt downstream the launch is no reason to rejoice.

After years of failed negotiations, both downstream countries warned of “grave consequences” in the absence of an agreement on how water flows will be managed once the Grand Ethiopian Renaissance Dam, or Gerd, becomes fully operational.

Construction of the dam has fuelled nationalist fervour in Egypt, which relies on the Nile for almost all of its water needs, and also in Ethiopia, where use of the river is seen as a sovereign right and where members of the public contributed to its financing through crowdfunding.

Celebrations for the opening of the 5,150MW capacity dam, which has been under construction for 14 years, will be held across Ethiopia, according to the foreign ministry in Addis Ababa.

The Ethiopian government is also hoping that numerous African heads of state attending a climate summit in Addis Ababa will also attend the inauguration at the dam itself.

“For Ethiopians this is a celebration of a generational aspiration . . . to make use of this natural resource for development,” said foreign ministry spokesperson Nebiat Getachew.

The Blue Nile, which originates in Ethiopia and joins the White Nile in Sudan’s capital Khartoum before flowing into Egypt, provides 85 per cent of the waters of the combined river.

Getachew said that the dam, as well as providing access to electricity for some of the nearly half of the 120mn Ethiopian population who live without it, would bring benefits to downstream countries in the form of flood control and power purchase agreements.

“The main thing is we do not envisage for Egypt or Sudan to have shortages of water supply. For us it is not an Ethiopian dam. It is a regional dam with collective aspirations.”

But Sudan and Egypt repeated in a joint statement last week that the Renaissance Dam “breached international law and would cause grave consequences to the two downstream countries”.

They described it as a “continuing threat” to water security in the east Nile, citing “serious concerns” as a result of Ethiopia’s “unilateral steps” in filling and operating the Gerd.

Egypt, a country of 110mn people, is completely reliant on the Nile for its agricultural and other water needs and now finds that what it has considered its rightful share of water could be threatened by developments upstream.

The Egyptian and Sudanese positions have been underpinned by a bilateral treaty between the two countries signed in 1959 governing use of the Nile’s resources.

Ethiopia describes that treaty, which did not take into account the other riparian states, as “obsolete” and has won support from Burundi, Rwanda, Kenya, South Sudan and Uganda. They have joined Ethiopia in a new Nile River Basin Cooperative Framework Agreement, which came into force in October 2024. 

Egypt contends that Ethiopia has consistently stymied efforts to reach a binding agreement to guarantee that agreed quantities would be discharged from the dam during prolonged or severe droughts, when Ethiopia might want to build up levels in the reservoir for hydropower generation.

The dam has gradually increased electricity generation during the period it has been filled, with six of its 13 turbines already functioning. On Tuesday, according to the foreign ministry in Addis Ababa, all of them will be used.

“There have been no adverse impacts downstream during the filling of the Gerd reservoir,” said Ana Cascao, an independent consultant and Nile specialist. “But if severe or prolonged droughts occur in the future, damaging impacts can indeed occur. These can only be minimised by a co-operative agreement acceptable to all parties.”

Some technical co-operation is already taking place between Ethiopia and Sudan, which has an older dam, built in 1966, only 70 miles downstream from the Gerd.

Getachew from the Ethiopian foreign ministry said that Ethiopia wants a collaborative approach with Sudan and Egypt and remains open to reaching agreement on how water flows are managed, describing the waters of the Nile as a “shared resource”.

Russian ‘panda bond’ sales would be first since 2017 and reflect deepening ties between Moscow and Beijing

China is preparing to reopen its domestic bond market to major Russian energy companies, in a shift of policy that reflects deepening diplomatic and economic ties between Beijing and Moscow.

Two people familiar with the matter said senior Chinese financial regulators told top Russian energy executives at a late August meeting in China’s southern city of Guangzhou that they would support their companies’ plans to sell renminbi “panda bonds”.

Such borrowing would be first Russian corporate fundraising in mainland China since Moscow’s full-scale invasion of Ukraine in 2022 and the first Russian debt sold on China’s public onshore market since state aluminium producer Rusal’s panda bond issue raised a total Rmb1.5bn in 2017.

Russian President Vladimir Putin held talks with Chinese leader Xi Jinping in Beijing on Tuesday, saying strategic ties between the two countries were at an “unprecedentedly high level”.

After the talks, Moscow announced it had reached agreement with Beijing on construction of the long-discussed Power of Siberia 2 pipeline, a project led by Russian state monopoly Gazprom that analysts say could reshape global energy flows.

Extensive US and European sanctions have closed off Russian borrowers’ access to global financial markets since 2022 and Chinese banks have shunned public financing deals involving Russian companies out of fear of being subjected to secondary sanctions.

However the tightening ties between Beijing and Moscow are now making the banks less cautious. At the same time, the renminbi is becoming an increasingly important foreign currency for the sanction-hit Russian economy.

In 2022, Russian companies began selling renminbi-denominated bonds on their domestic market. Most such bonds are issued by a small group of companies that includes Rusal and Gazprom.

The revival of Russian panda bonds was likely to be limited to two or three companies at first, the people familiar with the plans said.

Russia’s state nuclear corporation Rosatom and its affiliates, which are not subject to broad sanctions by major western countries, were expected to be among the first borrowers to tap the world’s second-largest bond market, they said. 

Lawyers warned that a successful bond sale would require Russian companies to address lingering concerns about sanctions among Chinese banks, which are the main buyers and brokers of panda bonds.

“The broker would still face the risk of secondary sanctions from the US Office of Foreign Assets Control (Ofac),” said Allen Wong, a partner at Beijing Jincheng Tongda & Neal Law Firm, adding that banks would struggle to conceal their involvement in a public market.

One potential workaround was to issue panda bonds through Russian entities not yet under sanctions, but there was a risk the entity could be targeted after the debt was sold.

“The idea is appealing,” Wong said. “But to make it work needs further study and top-down approvals.”

More than 40 Russian business people and Chinese financial experts met at Moscow’s embassy in Beijing in July to discuss how to improve Russian companies’ creditworthiness in order to raise capital in China.

On Friday, Gazprom secured a crucial triple A rating and stable outlook from Shenzhen-based Chinese rating agency CSCI Pengyuan. A strong credit rating is a prerequisite for foreign firms to tap the domestic bond market.

The rating was based on Gazprom’s strategic importance to Russian’s oil sector and its solid financial profile despite high geopolitical risks and oil price volatility, CSCI Pengyuan said. Gazprom has been under Ofac sanctions since 2022.

An increasing number of important Russian energy firms have secured Chinese credit ratings. They include Atomenergoprom JSC, an affiliate of Rosatom; top LNG supplier Novatek, whose recently sanctioned Arctic plant supplied a cargo to China in August; and Zarubezhneft, which develops Russian energy projects overseas.

The People’s Bank of China, China Securities Regulatory Commission, Beijing’s National Association of Financial Market Institutional Investors, Rosatom and Gazprom did not immediately respond to requests for comment.

US credit rating agency Fitch Ratings downgraded Gazprom to CC in 2022 — a level that signals default is “probable” — before withdrawing its ratings on all Russian entities to comply with EU sanctions. 

An escalating sanctions regime “could impose insurmountable barriers to many corporations’ ability to make timely payments on foreign and local currency debt to certain international creditors”, Fitch said at that time.

But a project manager at one of the top Chinese rating agencies said that “one person’s trash” was “another’s treasure”.

“Fitch’s call may be true to its own clients, but for Chinese or even Indian investors, these Russian deals, if they get done, would offer the most credible assets they can find on the market.”

Former Nestlé CEO Laurent Freixe was fired after a senior executive said to be his mistress allegedly caught him in a Zurich hotel with a subordinate — and then filed a complaint through the company’s anonymous hotline that triggered an internal investigation, according to an explosive report.

Freixe, the 63-year-old Frenchman who was shown the door earlier this week, was canned after a company investigation revealed that he had been carrying on a romance with an underling — a senior marketing executive who left the company earlier this year.

But a new report claims that the now-former company chief had previously been involved with another subordinate known as his “official” mistress who caught him and his lover in the act.

The Zurich-based financial news site Inside Paradeplatz reported that the confrontation set off a chain reaction inside the world’s biggest food company.

Nestlé Chairman Paul Bulcke and vice chair Pablo Isla reportedly humiliated Freixe in person after learning of the affair — telling him he was out “effective immediately” and, according to the outlet, ordering him to hand over his phone while calling him a “liar.”

According to the site, the “main mistress” received a severance package as a result of the complaint. The woman, who has not been named, recently moved to a high position at another large company, the report claimed.

The other subordinate involved with Freixe also departed the firm and was given a large severance package that was arranged by the fired CEO, according to the site.

“Everything that needs to be said on the matter has been said, and I will not engage in further wild conjectures and speculation,” a company spokesperson told the site when asked for comment.

The Post has sought comment from Nestlé.

Nestlé said it fired Freixe, a nearly 40-year veteran of the company, on Monday for failing to disclose a relationship with a direct report — a violation of its code of conduct — but has not confirmed the explosive allegations about how the affair was exposed.

He did not receive any severance payout for his four decades at the food giant.

After the drama, Freixe re-emerged on LinkedIn, boasting, “I got my mobile back, I am reachable anytime,” and sending a congratulatory note to his successor, Philipp Navratil — misspelling his name as “Philippe,” according to the Swiss report.

Freixe had been named CEO less than a year ago, making his downfall one of the fastest in Nestlé’s history.

Bulcke and other senior executives said the move was necessary to protect Nestlé’s values and ethical standards, stressing that top leaders are held to the same rules as the rest of the 270,000-strong workforce.

Dubai-based Zachary Cefaratti has become a go-to dealmaker who connects Middle Eastern money to Silicon Valley

When an Abu Dhabi artificial intelligence company wanted access to an enormous data centre in France earlier this year, it turned to a former child actor turned investment banker to broker the deal.

Zachary Cefaratti, founder of boutique advisory Dalma Capital, has leveraged an eclectic contacts book that includes OpenAI chief Sam Altman and senior Middle Eastern politicians to become a below-the-radar fixer for data centres, cryptocurrency mining and technology groups in the Gulf.

The 37-year-old’s clients include G42, the AI group chaired by powerful Emirati royal Sheikh Tahnoon bin Zayed al-Nahyan; Abu Dhabi sovereign investor ADQ; and the encrypted social media network Telegram, whose founder Pavel Durov lives in Dubai and was detained and charged in France last year.

According to executives who have worked on transactions with Cefaratti, the Californian is one of a few niche dealmakers to profit from two new trends: the insatiable desire for more computing capacity to run AI, and the Gulf’s desire to fund the nascent technology.

“I’d like to think that I’m more than just riding a wave,” Cefaratti told the Financial Times. “It’s not completely by accident . . . I spend a lot of time thinking about and researching these things . . . not being like most investment bankers, really getting into the tech.”

“He’s an invisible kingpin in data centres,” said Andy Tang, partner at Draper Associates.

Dalma advised companies in the G42 group, including on a “partnership with a tier one hyperscaler”. Microsoft acquired a $1.5bn stake in the Abu Dhabi-based company last year. Cefaratti also sourced the French data centre deal between G42 subsidiary Core42 and France’s DataOne, which closed this year.

This May, Dalma was joint arranger for Telegram’s $1.7bn bond issuance, which was led by Jefferies. Cefaratti had previously arranged meetings for Telegram with Abu Dhabi investors. 

For Cefaratti, the UAE’s bet on becoming an AI hub is a natural fit: “AI consumes massive amounts of energy and it’s very capital intensive.” The nation can then become “an exporter of intelligence”.

Cefaratti’s Dubai office features a sculpture of Babar the elephant holding a bag of bitcoin, a gift from the daughter of Dubai property tycoon turned data centre investor Hussain Sajwani. Cefaratti said he counted Binance founder Changpeng Zhao, another UAE resident who served jail time in the US, as a friend.

The AI boom came after Cefaratti suffered a career low. Between 2019 and 2023, he was investigated by the financial centre’s watchdog, which had become stricter after Dubai investment firm Abraaj imploded under its supervision.

He was charged with misleading the regulator, and hit with a $162,500 fine and barred from acting as senior executive officer for two years. The Dubai Financial Services Authority accused him of giving “false, misleading and deceptive information” about trades placed in 2016 on Dalma’s behalf, by a person who was not employed by the fund.

“I think the big mistake I made was not taking it seriously,” said Cefaratti. “It just seemed like such a small thing from so long ago.”

Cefaratti’s early career was as a child actor appearing in shows such as Star Trek: Deep Space Nine, while his grandmother encouraged him to invest his earnings in bonds and shares.

He dropped out of college to care for his father in 2009, starting a small health insurance brokerage business to cover medical bills. He returned to his studies and joined students opening a hedge fund; they were mocked as “Clueless Capital”.

The finance-focused student left an impression on academics at Franklin University Switzerland. Cefaratti was “one of those students you don’t forget”, remarked his former professor Roberto Cordon, saying he would receive emails from Cefaratti at 4am.

Cefaratti headed to the Gulf in late 2012. “I bought what [Dubai was] selling,” he said. “I probably bought it a little too early.” His fledgling hedge fund Dalma Capital managed just a “couple of million dollars”, and local investment never materialised.

Pivoting, Cefaratti used his expensive Dubai International Financial Centre licence as a platform for other funds, including one in cryptocurrency, and later started an investment conference.

In 2018, he decided to expand Dalma into advisory and hired an investment banker from Morgan Stanley.

“We were getting calls from organisations that have huge portfolios of excess energy that they were looking to monetise,” Cefaratti recalled. These clients included ADQ, which Cefaratti steered into mining bitcoin — a way to convert electricity into cryptocurrency.

At about the same time, Cefaratti said he was getting to know Draper Associates, which formally appointed him venture partner in 2023.

As Dubai took off during the Covid-19 pandemic, when it bet on reopening as other cities stayed locked down, Cefaratti said his business finally started to do well. Using venture capital terminology, he said: “That’s when the product market fit aligned.”

In 2022, he took autonomous driving company Pony.ai on a funding roadshow in Saudi Arabia, alongside investment bank Moelis. The investment fund belonging to giga project Neom later announced a $100mn investment in the Chinese group. Work with G42 and others followed.

Dalma has just 21 employees. But according to Cefaratti, he is filling a gap. Clients raising funds could just call a bulge bracket bank, but if they are “putting together a complex deal that has multiple layers, that needs customers and technology; there’s not many one-stop shops that can do that”.