The Information : Data Center Firm Rowan Explores Capital Raising or Sale

Data Center Firm Rowan Explores Capital Raising or Sale

The Takeaway
  • Rowan Digital Infrastructure explores capital raise or sale
  • Deal could value data center developer at $10 billion
  • Potential buyers include Wren House Infrastructure

A spike of investor interest in the data center sector has prompted one major data center developer, Rowan Digital Infrastructure, to consider whether this is a good time to raise fresh capital or possibly even sell, say people familiar with the company’s thinking.

If it were to raise money or sell, it would likely be valued at more than $10 billion, including its debt, the people said. Potential buyers include investment firm Wren House Infrastructure, a U.K.-based arm of the Kuwait Investment Authority, one of the people said.

Demand for new data centers is prompting heavy investment in the sector, both in construction of new facilities and in acquisition of existing operators, including those such as Rowan that historically have focused on non-AI data centers. In October, for instance, an investor consortium including BlackRock and Abu Dhabi’s MGX agreed to buy one of the largest data center operators in the U.S. at a $40 billion valuation, including debt.

Rowan, which is owned by U.K. private equity firm Quinbrook Infrastructure Partners, is working with investment bankers to evaluate its options, some of the people said.

Companies such as Rowan and Aligned typically have developed data centers for traditional computing and aren’t pursuing the kind of large-scale facilities startups such as Crusoe, Applied Digital and CoreWeave are developing for AI customers like OpenAI, Anthropic and Meta Platforms.

While valuations for AI-focused data center developers have exploded in recent years, some potential buyers see more mature developers as a better investment.

Rowan builds data centers in the Americas, including U.S. campuses in Texas, Oregon and Maryland. It has raised $3.1 billion in debt from banks including Sumitomo Mitsui Banking Corp. and Mitsubishi UFJ Financial Groups for building three campuses within TPG’s Quantum Frederick Park in Maryland.

Rowan’s projects in the U.S. total more than 1.5 gigawatts data center capacity, according to its website. In comparison, Aligned says on its website that it has 5 GW of operational and planned capacity across 50 campuses.

The Information : ‘ChatGPT for Doctors’ Startup Doubles Valuation to $12 Billion

‘ChatGPT for Doctors’ Startup Doubles Valuation to $12 Billion as Revenue Surges

The Takeaway
  • OpenEvidence valuation in talks to double valuation to $12 billion
  • Annualized advertising revenue has reached $150 million, tripling since August
  • OpenEvidence chatbot is used by 45% of U.S. physicians, OffCall survey says

OpenEvidence, which operates a ChatGPT-like product for doctors to find health information from medical journals and other trusted sources, is raising $250 million in equity financing that will value the three-year-old startup at $12 billion after the investment, doubling its last private valuation from a financing announced just two months ago, according to a person involved in the deal.

If the deal closes, the Miami-based company will become one of eight AI application developers to both reach a valuation higher than $10 billion and generate annualized revenue of more than $100 million, according to The Information’s Generative AI Database. It makes money by selling advertising space on its chatbot to pharmaceutical companies, similar to the way Google sells ads on its search engine.

That business is growing quickly. OpenEvidence is generating around $150 million in annualized advertising revenue, which implies it’s currently generating more than $12 million in revenue per month, the person involved in the deal said. That’s up three times from the advertising revenue it was generating in August.

OpenEvidence has told potential investors that it’s only selling one-tenth of its ad inventory, suggesting it could generate more than $1 billion in annualized revenue if it sold the rest.

The company’s gross profit margin is currently higher than 90%, putting it above many other AI startups in that regard. Gross margins measure how much companies earn from their sales after subtracting the direct costs of serving its revenue-generating products, known as cost of revenue. OpenEvidence’s costs of revenue include what it pays to run servers, including AI models that power the product, and money it spends to license content from medical journals, the person said.

The round comes as consumers increasingly use chatbots to look up medical information. That’s driven chatbot-makers to put resources towards healthcare-related features. OpenAI, for instance, hired longtime Facebook executive Ashley Alexander in August to develop health-related products.

OpenEvidence targets physicians, not consumers, who use its chatbot to answer medical questions or analyze peer-reviewed studies. The company has said its chatbot is more accurate than general chatbots such as ChatGPT because it was developed using information from medical journals whose content it licensed, such as the New England Journal of Medicine. It’s not clear whether OpenAI has similarly struck licensing agreements with medical journals.

OpenEvidence can also use user feedback to improve the ranking of its search results, the person involved in the deal said. It can also reach out to users who are physicians and experts in niche fields to help it train its AI to respond more accurately to niche questions, they said.

The company’s product uses open-source AI models to search through medical journals and return useful information and citations, as well as models it trains for tasks like retrieval and search ranking. It also uses AI from Google, OpenAI and other providers to summarize its chatbot’s responses, the person said.

OpenEvidence’s chatbot seems to be catching on with physicians. According to an October survey of 1,000 U.S.-based physicians by OffCall, a company that allows physicians to compare their salaries, around 45% of physicians use OpenEvidence, compared to 16% for ChatGPT and 5% for medical scribe startup Abridge, the next most popular healthcare-specific AI product. (There are about 1 million physicians in the U.S. total, according to the Federation of State Medical Boards.)

The company’s chatbot answers around 20 million questions from U.S.-based physicians per month, according to the person involved in the round.

OpenEvidence previously raised more than $500 million in funding from investors including GV, Sequoia Capital and Kleiner Perkins. Its CEO and cofounder, Daniel Nadler, previously sold an AI startup to financial research firm S&P Global for hundreds of millions of dollars in 2018.

CrunchBase : The Week’s 10 Biggest Funding Rounds: Security And Energy Deals Top

The Week’s 10 Biggest Funding Rounds: Security And Energy Deals Top The List

Startup investors this week demonstrated continued willingness to write big checks for promising companies in sought-after areas. Leading the pack was Saviynt, an AI identity security platform that picked up a fresh $700 million.

The next three largest rounds — Unconventional AI, Fervo Energy and Boom Supersonic — all shared some focus on energy. The rest of the list included companies in AI, biotech and space tech.

1. Saviynt, $700M, AI identity security: Saviynt, a provider of AI-optimized identity security tools, announced that it secured $700 million in Series B financing. KKR led the round, which set a $3 billion valuation for the 15-year-old, El Segundo, California-based company.

2. Unconventional AI, $475M, AI energy efficiency: Unconventional AI, a startup designing a computer to optimize energy efficiency for AI, raised $475 million in seed funding. Andreessen Horowitz and Lightspeed Venture Partners led the financing for the San Francisco Bay Area company.

3. Fervo Energy, $462M, geothermal energy: Houston-based Fervo Energy, a developer and operator of geothermal energy projects with a focus on technologies to scale this power source, picked up $462 million in Series E funding led by B Capital. The funding will go toward a geothermal project in Western Utah as well as other projects in its pipeline.

4. Boom Supersonic, $300M, fast airplanes, turbines: Boom Supersonic, a Denver company working to build what it says will be the world’s fastest airliner, closed on $300 million led by Darsana Capital Partners. In addition to its planes, Boom is also attracting investor interest for its Superpower natural gas turbine that can also have applications in delivering energy to AI data centers.

5. K2 Space, $250M, space tech: Torrance, California-based K2 Space, developer of a platform for building large, high-power satellites, landed $250 million in Series C funding. Redpoint led the round, which set a $3 billion valuation for the company, which was founded in 2022.

6. Harness, $240M, software development: Harness, a developer of tools to automate and simplify software delivery processes, raised $200 million in Series E funding and $40 million in a planned tender to provide liquidity to long-term employees. Goldman Sachs led the Series E, which set a $5.5 billion valuation for the 8-year-old company.

7. Impulse Dynamics, $158M, medical devices: Marlton, New Jersey-based Impulse Dynamics, a medical device company focused on patients with heart failure, secured over $158 million in a funding round led by Sands Capital Ventures and Braidwell. The financing follows an announcement from the Centers for Medicare and Medicaid Services extending coverage for its device.

8. Fal, $140M, generative AI: Fal, developer of a real-time generative AI platform for video, images, 3D and audio, picked up $140 million in a Series D financing Led by Sequoia Capital. The round was the third this year for San Francisco-based Fal, which closed a Series C in July and a Series B in February.

9. Sanegene Bio, $110M, biotech: Sanegene Bio, a biotech startup focused on developing RNAi-based therapeutics, said it raised over $110 million in Series B funding from a long list of venture investors. Founded in 2021, the startup is headquartered in Boston with significant operations in China.

10. BlossomHill Therapeutics, $84M, biotech: San Diego-based BlossomHill Therapeutics, a developer of medicines to treat cancer, pulled in $84 million in Series B extension funding. Janus Henderson Investors, Brahma Capital and BioTrack Capital led the financing for the 5-year-old company.

NY Post : Jared Kushner eyes Apollo, KKR to join Ukraine’s postwar reconstructio

Jared Kushner eyes Apollo, KKR to join Ukraine’s postwar reconstruction fund: sources

Donald Trump’s Ukraine envoy, Jared Kushner, has approached Marc Rowan’s Apollo Global Management and Henry Kravis’s KKR to assist with post-war reconstruction in Ukraine, The Post has learned.

Sources familiar with the matter said Kushner, President Trump’s son-in-law who has no formal role in the administration, was in New York City on Wednesday for exploratory discussions with the top asset managers in Manhattan’s swanky Hudson Yards development.

Insiders said the 44-year-old held meetings at the offices of both financial giants on how to rebuild the war-torn nation.

The talks, which are still at a very early stage and may not come to fruition, came on the same day that he took part in a call with Larry Fink of BlackRock, the world’s biggest money manager, Special Envoy Steve Witkoff, and Treasury Secretary Scott Bessent, as well as Ukrainian President Volodymyr Zelensky.

The names of the VIP participants were released in a statement by Ukraine’s presidential office that evening.

Reps for BlackRock, KKR, Affinity Partners, the Treasury Department, and President Zelensky did not return The Post’s requests for comment.

A spokesman for Apollo declined to comment.

BlackRock CEO Larry Fink halted his firm’s own multi-billion-dollar Ukraine Development Fund in July amid uncertainty over how President Trump would try to end the war.

But he is set to revive the idea, which would also include involvement from the World Bank, that aimed to drum up some $400 billion in fresh investment.

“This is not a huge money maker for whoever does it. They are not going to charge incentive fees. It’s a public service,” one person briefed on the situation added.

“But you are going to ingratiate yourself with the president and Mr Kushner,” the source added. “They are going to f–k the Europeans.”

Indeed, the move could raise fears amongst Ukraine’s allies in Europe that they will be cut out of any lucrative contracts to rebuild the war-torn country.

The Trump administration, via the US International Development Finance Corporation (DFC), in September pledged $75 million in equity intended to jumpstart the fund’s investment in critical minerals, hydrocarbons, defense, and related infrastructure in Ukraine.

That investment is set to be matched by Kyiv to bring it to an initial combined total of $150 million, but DFC stressed that much of the work would be done by “aligned private sector partners.”

Ukrainian government officials, including Prime Minister Yulia Svyrydenko, are set to hold what one source described as “marathon talks” about the US-backed peace proposal this weekend.

They will also focus on how to rebuild the nation that has been subjected to a brutal four-year attempt to wipe Ukraine off the map by Russian invaders.

Kushner, who is not formally part of the administration, has emerged as a central figure in the process of negotiating a peace settlement between Ukraine and Russia.

Alongside Trump envoy Steve Witkoff, he attended five hours of Kremlin talks last week with Russian President Vladimir Putin and then later discussions with a Ukrainian delegation in Florida.

Kushner, married to the president’s daughter, Ivanka Trump, previously played a major role in negotiating a ceasefire agreement in Gaza between Israel and Hamas and has also put forward proposals for reconstruction in Gaza.

A key point in plans for the reconstruction of Ukraine has been the establishment of an investment fund for sectors including rare metals – sought by the United States, with Svyrydenko playing a key role in setting it up.

Kyiv sent its own revised draft of the now 20-point plan to the White House on Wednesday, according to German Chancellor Friedrich Merz.

It reportedly includes the creation of a demilitarized zone along the line of contact, security guarantees for Ukraine in line with NATO’s Article 5, and membership for Ukraine in the European Union by 2027.

It removes language barring Ukraine from ever joining NATO, but does not mention if the country will ever join the military alliance — a key Kremlin talking point.

FT : Coca-Cola holds last-ditch talks in bid to salvage Costa Coffee sale

Coca-Cola holds last-ditch talks in bid to salvage Costa Coffee sale
Owner and preferred bidder TDR Capital are trying to rescue deal after failing to agree on price

Coca-Cola’s proposed sale of Costa Coffee is at risk of collapse and the soft drinks giant is holding last-ditch talks with private equity firm TDR Capital this weekend in an attempt to salvage it.

Asda owner TDR was selected as Coke’s preferred bidder for Costa earlier this week after a board meeting in New York, according to people familiar with the matter. However, talks with Coke and its advisers at Lazard have stumbled over the price, according to one of the people.

Coke will make a decision next week on whether to shelve the sale process altogether, the people said.

The deal on the table includes Coke retaining a minority stake in Costa, one of the people said, adding that the size of the stake could be adjusted in Coke’s favour in order to get a deal done.

Coke wanted to get roughly £2bn for Costa, the Financial Times previously reported.

The drinks group paid £3.9bn to acquire Costa from Premier Inn owner Whitbread in 2018. But the business has since struggled against competition from independent operators and mass-market rivals such as Greggs.

Rising costs of everything from coffee beans to staff wages have pushed the business’s finances into the red. In 2023, Costa reported an annual loss of £13.8mn on revenues of £1.2bn, according to the most recently available set of accounts at Companies House.

TDR, which co-owns petrol forecourt business EG Group, is seeking to buy Costa’s UK and international business, excluding its operations in China, one of the people said.

Other bidders for Costa included Bain Capital’s special situations division, which owns Gail’s and PizzaExpress. Centurium Capital, the private equity owner of China’s Luckin Coffee chain, has also been involved in the auction, according to people familiar with the process.

Private capital firms Apollo and KKR have both dropped out of the process in the past few months.

Coke announced this week that chief executive James Quincey will be replaced by chief operating officer Henrique Braun in March. Quincey, who told analysts in July that Costa had “not delivered”, will become executive chair.

Coke did not respond to a request for comment. TDR and Lazard declined to comment.

WSJ : U.S. Army Changes Tools and Tactics to Prepare for the Next Pacific War

U.S. Army Changes Tools and Tactics to Prepare for the Next Pacific War
A ‘terrifying’ era of warfare arrives, forcing America to rethink how it prepares for great-power conflict with China

  • The U.S. Army is rapidly adopting new drone technology and tactics to prepare for potential great-power conflict in the Pacific.
  • Soldiers are training with diverse drone systems, including 3-D-printed explosive drones and antidrone measures like wearable blockers and smart rifles.
  • The Army is shifting toward nimble, expendable equipment and aims to accelerate domestic drone production to match competitors like China.

SCHOFIELD BARRACKS, Hawaii—A winged drone circled 2,000 feet above the jungle. “Three pax,” said U.S. Army Specialist Josiah Whitt, counting enemy troops on a laptop screen.

It has been an unusual year for soldiers like him.

“We get a drone, we train on it…then we get a new drone, train on it, test it out,” said the 20-year-old, who learned to fly the Stalker less than a month earlier.

Crouched under a green poncho, Sgt. Nicholas Cole Hagler lifted a C100 quadcopter—one of five drone systems the 22-year-old has been taught in quick succession. In 23-year-old Sgt. Brock Beckman’s vehicle: 3-D-printed drones that dive and explode with a nudge of the thumb.

These young American soldiers are preparing for the next war in the Pacific.

They brought out some of their newest gear for large-scale Army exercises in November that unfolded over two weeks across several Hawaiian islands. Such systems dominate the battlefield in Ukraine and Russia. The U.S.—long reliant on expensive fighting kit and extended processes—is trying to catch up, shifting to a starkly new era marked by nimble, relatively cheap and expendable equipment.

The timing is tricky. The world’s pre-eminent military power must rethink its tried-and-tested tools and tactics even as it girds for one of its most vexing challenges since World War II: potential great-power conflict with China.

For the U.S. Army in particular, which spent two decades fighting insurgencies in Iraq and Afghanistan, future conflicts may be different on fundamental counts—where, how and against whom.

China has one of the world’s largest missile arsenals and unrivaled industrial strength to buoy forces in a protracted war. Fighting it in the Pacific would involve a vast, watery battlespace speckled with jungle-swathed island chains—all within reach of those missiles. That means the U.S. can’t expect to rule the skies and would struggle to resupply scattered troops.

The Army is thinking boats, buggies and bombardment. Docked at Joint Base Pearl Harbor-Hickam during the exercises was a small new watercraft designed to move equipment straight to a beach. Soldiers zip around in light, maneuverable vehicles out of a Mad Max movie that one military official called the biggest game-changer since night vision. To prepare for a cross-island fight, clunkier cannon artillery has made way for shoot-and-scoot Himars missile platforms, 16 of which arrived in Hawaii this year.

First contact
Atop the maritime littorals is the 21st-century problem of “air littorals”—airspace between the earth and high skies where drones lurk, hunt and kill. Soldiers navigating Hawaiian terrain took great pains to blend into it, shrinking command posts to a handful of trucks, draping vehicles with camouflage nets and vegetation, and painting their faces with thick stripes of green.

“The truth of the modern battlefield is that everyone can be seen,” said Maj. Gen. James Bartholomees, commander of the Army’s 25th Infantry Division that focuses on the Indo-Pacific.

Soldiers must prepare to fight with drones, against drones and via electronic warfare. Looking up and dealing with “first contact” from the sky or the electromagnetic spectrum is the new reality, said Bartholomees.

Troops are experimenting with a smorgasbord of buzzing, flying machines—launching more than 600 flights over two weeks during the exercises—and layering them through the depth of the battlefield. They are learning that drones tested successfully elsewhere in the world can wobble in tropical heat. Cloud cover can mean defaulting to human senses over drone sensors.

They are also thinking of ways to stymie enemy drones without accidentally thwarting their own. Several dozen M4 assault rifles now have “smart shooter” add-ons that can lock onto a flying drone and fire a round when the target is aligned.

A higher-tech new arrival: a wearable drone blocker with two units roughly the size of iPhones. One, called Wingman, detects incoming drones and the other, Pitbull, disrupts or jams the drone with what amounts to an electromagnetic arrow.

Jamming, however, means showing oneself on the electromagnetic spectrum.

“It’s a bit of a cat-and-mouse game that we’re watching and learning from in Ukraine,” said Bartholomees. “There are vignettes that are easily seen on YouTube of how you see a drone that’s defeated in one way, that then there’s a counter that’s already planned.”

‘Just insane’
The two mobile brigades that make up Bartholomees’s division—each about 3,500 personnel strong—have both been through what the Army calls “transformation in contact,” the whirlwind shift toward new technology.

The difference is night and day, said Sgt. First Class Kamakaniokalani Mann Tomita, 31. In about a year, his infantry platoon went from having one kind of drone, a small quadcopter, to seven types to experiment with. “The amount of systems and different assets that we’ve had is just insane,” he said.

On a recent afternoon, he learned the art of kamikaze-style attacks using a flock of drones. The chassis of the quadcopters were 3-D-printed in-house, while the technology to move and attack as a swarm came from Auterion, a company that makes autonomous drone operating systems. The firm’s crew was in Hawaii’s jungles to troubleshoot.

Seven drones soared. With clicks on a screen, two peeled off to swoop down for the kill. Tracking the hit from a shrouded nook between towering trees, Tomita reflected on the new world of deadly drone wars. “It’s very, very terrifying to be frank,” he said.

Tomita’s brigade was playing the adversary in an exercise scenario that could someday become reality: A U.S. ally’s island territory is under attack, enemy forces have landed, and America joins the fight several weeks in. China and Taiwan weren’t mentioned, but the parallels are evident.

If Beijing invaded and the U.S. decided to come to the island democracy’s aid, American soldiers might find themselves fighting in the “first island chain” where Taiwan is located, between Japan and the Philippines.

To better prepare them for a war like that, a new combat training center called the Joint Pacific Multinational Readiness Center was created in 2022 in Hawaii. During last month’s exercises, it brought together more than 8,000 personnel largely from the U.S. but also from places including Taiwan, France and Malaysia. Soldiers executed air assaults, simulated missile shots across islands, navigated gulches and slept fitfully under trees.

It was the first year of exercises where both sides—American soldiers playing themselves and the enemy—were given the latest systems the Army is trying out. “We have new tech against new tech,” said Col. Matthew P. Leclair, who leads the training center. Evaluators were looking to see who used it better, how and why.

“The best way to do it then becomes the doctrine,” he said.

Next year, one of the two brigades will go out to the Philippines to stress-test its takeaways—part of a rotation that allows them to take turns training in forward locations.

“We can quickly turn lessons learned,” said Command Sgt. Maj. Shaun Curry of the 25th Infantry Division. “Did it work here in Hawaii and then does it work in the first island chain in 100 degrees heat, in 100% humidity.”

Magazine depth
The Army wants to change not just what it buys but how it buys, since fast-paced technological shifts can render new equipment obsolete within months. It is trying to break out of a laborious acquisition process and give commanders some flexibility to curate their own shopping carts. Like Amazon, said Curry.

To be ready for a near-term conflict, however, the U.S. also needs to scale up. Ukraine and Russia are making millions of drones a year, and China can outproduce them both. The U.S. Army hopes to spur domestic drone production over the next few years.

“The one fear I have is that we develop an army of amazing prototypes but we don’t have a deep-enough magazine depth,” said Benjamin Jensen, a senior fellow at the Center for Strategic and International Studies.

The Army needs to move fast on attack drones in particular, military analysts and soldiers said. Russia routinely hits Ukraine with Iran-designed Shahed drones that explode on impact—a capability the U.S. has now copied. Cheap first-person-view, or FPV, drones steered using a live feed on a pilot’s goggles, have also proved highly destructive.

“Since the war between Russia and Ukraine broke out, everybody’s saying, ‘Oh, FPV, FPV,’ ” said Staff Sgt. Thanh Ho, a drone specialist. “We’re a little behind, we need to play the catch-up game.”

Ho used to pilot the RQ-7 Shadow, a surveillance drone used in Iraq and Afghanistan. After two decades, the Army decided last year to phase it out—among several bulky systems to go. The drones he now flies are compact and don’t need a runway.

Still, there’s a lot to figure out. One drone he pilots can throw up an effective cloak of invisibility against electronic onslaughts, but others he has trained on don’t hold up well in that domain, he said. That means a sophisticated adversary could knock them out.

The nerds
Ho belongs to a new formation called the multifunctional reconnaissance company, which brings together human scouts with drone pilots and electronic-warfare specialists.

Some of their new drones fly high and long, seeking enemy coordinates. Others sit closer to the fight, guiding scouts and ground forces into the fray. Alongside these are a few loitering munitions that don’t just “see” and “sense” but also strike.

“We have all these commercial off-the-shelf drones, they month-after-month just build one on top of the other,” said First Sgt. Karissa Lopez. “They’re just coming out of the woodworks.”

But the soldiers know that what they have the enemy does, too. That is why electronic warfare, although not new, has become more important than ever. Soldiers fighting with invisible waves and signals who once stayed in the back are now coming forward “up close and personal with the enemy,” said First Lt. Andres Rodriguez, an expert in the field.

The goal: to find and kill drone operators by detecting the signals their devices emit. “We’re trying to find the controllers out there, and then we call for fires—we call for rounds, bombs coming down on the actual drone controller,” he said.

Moving close to the enemy means soldiers adept in electronic warfare are now also training hard on the physical fight, signing up for programs like the Army’s jungle school. “We get a lot more of the nerds,” Rodriguez said.

WSJ : The Highflying Hedge Fund With a Habit of Giving Investors IOUs

The Highflying Hedge Fund With a Habit of Giving Investors IOUs
Despite decent performance, Armistice Capital plans to give clients shares in new investment vehicle in lieu of cash—again

  • Hedge fund Armistice Capital recovered from a midyear loss exceeding 30% to achieve a nearly 12% gain by the end of November.
  • For the fourth time in two years, Armistice will likely return client redemptions partially as IOUs.
  • Illiquid assets appear to be the source of the firm‘s issues.

Hedge fund Armistice Capital pulled off a remarkable rebound in 2025, turning a midyear loss of more than 30% into a double-digit gain in a few months.

Armistice’s clients aren’t exactly popping champagne, though.

For the fourth time in two years, Armistice told investors who want to cash out that much of their money would likely be returned in the form of what are essentially IOUs, people familiar with the matter said.

Few hedge funds have had as turbulent a ride as Armistice over the past few years. A fondness for owning thinly traded investments in volatile companies contributed to swings in performance and its struggles to cash out clients for the full amounts they are due.

The firm began this year by forcing clients into a holding pen that prevented them from redeeming any money until 2026 and limiting withdrawals thereafter. Several senior executives departed Armistice with little explanation given to investors, the people said. The firm has disclosed few details about the illiquid assets that appear to be the source of its issues, according to the people and investor documents reviewed by The Wall Street Journal.

Armistice declined to comment.

Steven Boyd, a former McKinsey consultant and hedge-fund analyst, launched Armistice in 2012. Its annualized return over the following dozen years topped 24%, with only one down year. It began 2025 with $2.1 billion under management that it amplified with borrowed money to trade mostly biotech and consumer stocks.

By June, it looked as though Armistice was headed for its second down year after it lost hundreds of millions of dollars over a five-month stretch. The firm blamed policy disruption of the Trump administration—from potential tariffs on drugs to layoffs at the Food and Drug Administration and budget cuts at the National Institutes of Health—for creating a “buying strike.”

The market punished three drugmakers in its portfolio—Travere Therapeutics, Cytokinetics and Biohaven—after they announced the FDA would take longer than expected to act on treatments seeking its approval. Armistice’s healthcare positions subtracted about 14% from the fund’s returns in the first half of 2025, according to a Sept. 4 letter to investors. Its consumer positions subtracted another 8% or so. Assets under management shrank to $1.4 billion.

“I want to acknowledge, candidly and unequivocally, how disappointed I am in our recent performance,” Boyd wrote in the letter.

As performance deteriorated, top consumer portfolio manager VJ Cerniglia took a job at Point72. Armistice also parted ways with its chief operating officer, its top trader, its head of marketing and investor relations and its head of data.

Things started to turn around in July. A pickup in merger activity and positive readouts from clinical trials helped spark rallies in beaten-down biotech companies. Shares in PTC Therapeutics, Armistice’s largest disclosed holding, traded as low as $36 earlier in the year; they reached $86 in late November.

“We believe we are now at an inflection point that allows us to capitalize on dislocations and inefficiencies,” Boyd continued in the letter.

By the end of November, Armistice was up nearly 12% for the year, according to people familiar with the matter.

What wasn’t clear to investors was how much of Armistice’s profit came from good stock picking and how much came from largely discretionary markups on illiquid investments. Armistice owned a large portfolio of warrants, or the right to buy shares in the future at a set price, in volatile biotech companies. Such assets are difficult to value and difficult to unload in times of stress.

At the end of 2024, Armistice’s book of warrants and similar investments stood at $1.1 billion, or about 54% of its net assets, according to the firm’s audited financial statements sent to investors and viewed by the Journal. A private-equity position accounted for another 7% of the fund’s net assets.

Armistice’s cost basis, or what it paid to acquire assets, for the warrants and privately held stock were $36 million and $18 million, respectively, suggesting significant markups over time.

The size of the illiquid portfolio was one reason Armistice ran into trouble last year. Armistice repeatedly couldn’t sell enough assets to raise cash needed to pay those who wanted out without adversely affecting those who would remain. Investors who requested redemptions in late 2024 received about two-thirds of their money in the form of shares in a liquidating investment vehicle known as a side pocket.

Armistice hasn’t told exiting investors how much money will be returned in side pockets next year or how long it would take to liquidate them. Boyd thinks some clients might change their mind and opt not to redeem after all, a person familiar with his thinking said.

Most of the underlying assets in a side pocket Armistice previously placed investors in were warrants, according to a midyear transparency report. Of those, about 87% were out-of-the-money, meaning the related stocks were trading below the warrant’s strike price.

FT : More than 9mn US borrowers miss student loan payments as delinquencies rise

More than 9mn US borrowers miss student loan payments as delinquencies rise
Share of balances past due has doubled as Biden-era forbearance expires

More than 9mn US student loan holders have missed at least one payment this year, as delinquencies in the $1.7tn market soar following the end of the Biden administration’s post-pandemic payments holiday.

The government’s Financial Stability Oversight Council said this week that student loans were “a notable exception” to low default rates on other loans held by American households.

While defaults on student loans have been historically higher than those for other forms of consumer credit, the share of balances now more than 30 days past their due date had doubled since the payments holiday began in early 2020, the FSOC said.

The rise in delinquencies comes amid broader concerns that recent graduates are struggling to find work in a US labour market that has cooled over recent quarters.

“They just don’t have the money,” said Charlie Wise, senior vice-president and head of global research and consulting at credit bureau TransUnion. “That speaks more broadly to some of the weaknesses that we’ve seen in the jobs market for recent grads.”


A TransUnion poll over the summer of 196 respondents who were missing payments found almost half said they could not afford them, while a quarter said they were waiting for more information about forgiveness.

The credit bureau’s data shows the median monthly payment on a student loan is roughly $200 a month.

While the FSOC did not specify the scale of the balances in default, New York Fed data for the third quarter published last month found that 9.6 per cent of the $1.65tn of US student debt was more than 90 days past due. That is down slightly from the second quarter but a leap from the 0.5 per cent a year ago.

“Over 9mn student loan borrowers have transitioned to delinquency since credit reporting resumed,” the FSOC said, adding that delinquencies had “driven steep declines in credit scores”.

A lower credit score makes it significantly harder to secure the financing needed to fund big purchases, such as auto loans and mortgages.

The FSOC quoted VantageScore figures showing an average drop of 100 points, taking a borrower who fell into student loan delinquency this year from near-prime status above 600 to below 550, or subprime.

While a third of the 9mn borrowers had now returned to current status, the FSOC annual report noted that “adverse credit impacts can persist long-term, increasing borrowers’ costs for other credit lines and limiting their access to new loans”.

A New York Federal Reserve blog post published in May found that borrowers formerly considered prime or super prime, with a credit score above 720, had seen their credit score dip by an average of 177 points.

Most of those — 56.6 per cent — who were “newly delinquent” had a credit score below 620, losing an average of 74 points and taking them below the “near prime” category, the New York Fed said.

“You’re talking about a swath of individuals that are going to be closed out on getting credit at a time when overall credit conditions are still pretty easy,” said Diane Swonk, chief economist at KPMG US. “It inhibits the ability to get on the rungs of wealth building via home ownership, which are already challenged.”

Some blamed the initial rise on borrowers failing to realise that the repayments holiday had ended, but New York Fed figures and data from Equifax show rates have remained elevated into the third quarter.

The TransUnion poll, conducted in August, found that only 4 per cent of the 508 consumers surveyed were not aware of payments restarting. Just 16 per cent of those who had not paid said they did not realise payments had resumed.

The Biden administration placed federal student loans into forbearance during the early stages of the coronavirus pandemic. While payments resumed in October 2023, late payments only counted towards delinquency from September 2024.

While Wise said the payments holiday was “very necessary” at the time, there had also been an “unwillingness to restart the payment engine”.

“They pushed it off and pushed it off and pushed it off,” he said.

Swonk said: “We overshot the stimulus during the pandemic.

“There was a reason we did it, but there was an echo effect and this is one of many.”

FT : Bonus season might see traders lose out again

Bonus season might see traders lose out again
Sales and trading businesses of banks have a structural problem in claiming share of incentive pool

“I didn’t see any of the shareholders putting in 80-hour weeks,” as the saying goes in investment banking. In the industry, there is always a delicate question of whether the money made ends up going to providers of human capital or financial capital. In a year in which profitability has been unexpectedly good, this might all turn on questions of internal politics.

Way back in April, it was possible to see that the unusual way that investment banking industry revenues were shaping up was likely to be a source of political tension in a lot of the big franchises. And now we can sit back and enjoy the action.

The consultants at Johnson Associates have estimated that the bankers who have most reason to be cheerful going into the compensation season would be those in equities sales and trading. They are on course to generate revenues up 15 per cent on last year according to Coalition Greenwich, compared with 8 per cent growth for advisory bankers (including capital market operations) and fixed income traders.

It has been a great year in the equity markets, as the “right kind of volatility” has been a constant presence, with few big market crashes to generate big losses and (so far) no embarrassing blow-ups in prime brokerage or derivatives. So the traders will have, for the most part, excellent personal profit and loss accounts, and will expect to be paid accordingly. Johnson Associates estimates that its bonus pools will be 15-25 per cent higher than in 2024.

But despite the industry’s reputation, bonuses are not wholly determined by individual performance. There are good reasons for this. Too direct a link between revenue and pay can create bad incentives; employees who have already made a lot will tend to “bank their risk”, while those who are underperforming might “gamble for redemption”. 

And a well managed bank will not want to risk a single bad year for a strong business unit turning into the start of a spiral if all the good people are disappointed with their bonuses and leave. So it’s accepted that there will be burden-sharing and income-smoothing between the divisions, including some annual transfers across the dividing line between the two great tribes of banking, the traders and the advisory bankers.


But sales and trading business units of all sorts have a structural problem when it comes to these negotiations. They lack a “pipeline”. Like retail or hospitality, many trading businesses start the day with an empty cash register and have to do their best to fill it, then start from zero all over again the next day. It means that they are quick to recover after a bad period, but the future is never certain.

M&A and capital markets business lines, on the other hand, work on transactions that could take weeks or even months from winning the mandate to “revenue close”. So they go into the meeting room at the end of the year prepared to either talk about all the revenue they’ve generated in the recent past, or all the revenue that they’re going to get in the near future. Whichever looks best. 

In the case of 2025, it seems unlikely that many advisory bankers outside capital market operations will feel satisfied with a bonus that’s only up 10 to 15 per cent on last year, as Johnson Associates was predicting. After all, they had a very strong third quarter, leaving year-to-date global M&A volumes up 41 per cent. Admittedly, this is because of an outsize contribution from the tech sector and from North America. And the mega deals which have driven up the headline numbers do not always carry the same generous fee margins as the private equity transactions that have driven profitability in previous years.

But the fact that things have accelerated allows the advisory bankers to claim they have a huge opportunity in 2026, if they are just allowed to pay their people properly. After all, wouldn’t it be galling to lose a load of your best bankers due to a disappointing bonus season, and then miss out as a result?

Unfortunately for sales and trading divisions, arguments like this tend to carry a lot of weight. This is why equities people tend to be used to disappointment — in the good years, they are always asked to share the wealth, but in the bad years there’s rarely any reciprocation. The best that the divisional managers can usually do is spread rumours that they have to match the hedge funds or risk losing their best traders. 

It’s a tactic which usually fails, but when it does the only people left to pick up the bill are the shareholders. So banking sector investors ought to be hoping that, once more, the perpetual Cinderellas of the investment banking industry don’t go to the ball this year.

FT : Apollo took bearish software view with bets against corporate debt

Apollo took bearish software view with bets against corporate debt
Private capital giant shorted loans and cut exposure to sector amid concerns over threat from AI

Apollo Global has grown increasingly bearish about technology companies vulnerable to artificial intelligence, betting against several large loans to software makers and cutting its exposure to the sector.

Apollo, with more than $900bn in assets, made bets against the loans of companies including Internet Brands, SonicWall and Perforce, which are owned by large private investment groups KKR, Francisco Partners and Clearlake, respectively, according to sources briefed on the matter,

Apollo’s short bets in the software sector, which lasted through a large part of 2025, have been closed, one of the people said.

Apollo believes AI may be a threat to many enterprise software companies, the largest area of investment for the $13tn private capital industry over the past decade. While AI poses a challenge to many industries, private lenders view the software sector as particularly vulnerable because AI can automate many products for coders, customer service representatives and workers doing rote financial tasks.

Apollo’s short bets amounted to less than 1 per cent of its overall $700bn in credit assets, said one person briefed on the matter. They added that some shorts had been used as market hedges for their various funds and capital pools. The precise size of the short positions and their returns was unclear.

The software loans Apollo shorted have sold off at times this year, but all are now trading above 80 cents on the dollar, indicating little fear of imminent distress.

Apollo, KKR, Clearlake and Francisco Partners declined to comment.

Software borrowings were practically non-existent on Wall Street because the companies did not have substantial physical assets or profits under standard accounting principles. But since the early 2010s, specialist buyout firms borrowed hundreds of billions of dollars to buy software companies as private lenders warmed to the idea of lending against their recurring subscriptions and high operating margins.

While Apollo has also judged AI as a potential opportunity for software companies, the group’s top leadership has decided to actively cut its exposure, believing that it should not be making directional industry bets.

“Technology change is going to cause massive dislocation in the credit market,” said Marc Rowan at a recent conference. “I don’t know whether that’s going to be enterprise software, which could […] benefit or be destroyed by this. As a lender, I’m not sure I want to be there to find out.”

Apollo has been rapidly cutting its lending commitments to the sector as a means of trimming risk through the course of the year.

Apollo entered 2025 with many of its private credit funds holding roughly 20 per cent exposure to software groups, but has cut that concentration by almost half, Rowan told some investors in private meetings at a Goldman Sachs conference on Wednesday, said a source who attended.

Apollo’s goal is to soon have its overall software exposure in its credit funds dip below 10 per cent of their net assets, Rowan told the investors. Internally, it has reviewed software companies to assess their potential risks from AI.

Apollo isn’t alone in seeing the potential for AI to disrupt many software business models. Jonathan Gray, president of Blackstone, said at an FT conference in October that investors were underestimating the potential disruption coming from the breakthrough technology.

Gray said he had challenged dealmakers to quantify AI risks at the top of every investment memo and highlighted certain types of companies as particularly vulnerable.

“We’ve told our credit and equity teams: address AI on the first pages of your investment memos,” Gray said at the October FT conference. “If you think about rules-based businesses — legal, accounting, transaction and claims processing — this is going to be profound,” he added.

Adding to investors’ fear over AI risks to software companies is the overall private capital industry exposure to the sector.

Leveraged buyouts of software companies surged in 2020 and 2021, commanding valuations that many now see as too high given a subsequent rise in interest rates and the looming technological change. Many of the largest private credit funds now hold a quarter to a third of their overall assets in software companies.