Blackstone’s big IPO bet

One excellent story to start: Europe’s last major cross-border bank merger was cooked up in 2007 by the continent’s banking elite at Geneva’s Four Seasons. It didn’t end well. But 17 years on, bank executives in the region are once again contemplating tie-ups. 

And a NYC pub quiz: Our friends at FT Alphaville are hosting another of their finance and economics-themed pub quizzes in New York on November 12. Here are all the details.

In today’s newsletter:

• Blackstone’s deal machine spins

• The chase for Japan’s beloved convenience chain 

• 23andMe founder’s takeover drama 

Blackstone crosses $200bn

It’s been a rough two year slog for bankers taking companies public. Volatile markets, cratering valuations and high interest rates caused many private companies to delay their IPO plans. 

But rejoice! Blackstone, the bellwether of the private equity industry, says business is about to come back in a big way. 

The owner of Medline Industries, software group UKG and the world’s largest portfolio of data centres says it is preparing to take some of its largest investments public.

Blackstone president Jonathan Gray has told the FT a stock market rally has given the $1.1tn-in-assets group confidence that public markets can handle some of its biggest bets. 

“When you have this strong of an equity market it’s almost like a magnet pulling companies out of the private market,” said Gray, who added that discussions inside 345 Park Avenue had “gone from theoretical to practical and we are talking about things like timing”.

Gray’s optimism on IPO markets provided a positive gloss to its muted asset sales in third-quarter results released on Thursday.

The biggest story at Blackstone is its continued growth in almost any market environment. 

Blackstone attracted $41bn in new assets in the quarter, with half coming in its credit and insurance business. The unit now manages more than $350bn, making it Blackstone’s single largest business line by assets.

“We are building a third-party performing credit juggernaut, and we expect our business to grow significantly from here,” Gray told analysts on a call.

Chief executive Stephen Schwarzman has earmarked credit investments as where Blackstone will uncover its next $1tn. Rivals at Apollo, KKR and Brookfield are chasing the same dollars. 

They have all identified the problem. As their buyout funds have grown beyond $20bn in size and deals have grown larger, the exit options have narrowed. It’s harder to sell a company worth 11 figures than one worth half as much. 

In turn, they have become far more reliant on the IPO market, which as Gray has said himself, is “cyclical”.

That’s not the case in credit investments, where banks have retreated and opportunity abounds. Blackstone and its rivals have been buying loan books and using their insurance investment mandates to offer financing.

The market sent Blackstone shares to a new record high on Thursday, pushing the firm’s valuation above $200bn for the first time.

Canadians push for a $47bn deal in Tokyo

Alimentation Couche-Tard made a full-court press in Tokyo on Thursday, where the CEO, CFO and billionaire founder Alain Bouchard all lined up to say they were ready to engage with Seven & i over their proposed $47bn takeover.

The message from the massed ranks of executives was clear: Seven & i’s break-up plan, announced last week, should be ignored and investors should back its bid.

“We think [our offer is] more compelling than what was proposed last week, with a great deal more certainty and much less risk,” said Alex Miller, the recently appointed chief executive and president of Couche-Tard.

The problem for Couche-Tard is that, despite flying all this way, Seven & i, which owns the well-loved Japanese convenience chain 7-Eleven, didn’t agree to a meeting.

The offer from the owner of Circle K is being evaluated by the Japanese group’s special committee and the Canadian delegation will have to wait, along with the market, for its decision.

One thing that’s working in Couche-Tard’s favour: the company is offering cold hard cash.

While Seven & i’s stock price has risen more than 30 per cent since the first offer in August, it still trades at ¥2,218 ($15) a share, which is below the latest bid of closer to $18.

“Our offer is a certainty, right, it’s cash, versus a hope that [Seven & i] can continue to execute on a plan that’s not delivered value over the last years,” added Brian Hannasch, Couche-Tard’s former chief executive and now special adviser to the group.

Couche-Tard’s top team has made one thing exceptionally clear: they’re not willing to give up easily.

The uphill battle for 23andMe

Silicon Valley celebrity Anne Wojcicki is scrambling to rescue 23andMe — the company that popularised direct-to-consumer genetic testing through “spit kits” used by more than 15mn customers, including Oprah Winfrey and Lizzo. 

23andMe made its name by giving customers a snapshot into their genealogical history and connecting long-lost family members. (Wojcicki, the company’s co-founder and chief executive, found a mystery cousin through the test.)

But the business is now under pressure, the FT reports in a deep dive. Shares in 23andMe have tumbled more than 95 per cent since it went public in 2021, and the company has in the past year been hit by mass lay-offs, investor fights and growing concerns about who can access its genetic database.

Wojcicki, the ex-wife of Google co-founder Sergey Brin, is now pushing ahead with a bid to take 23andMe private for 40 cents per share. That move helped trigger the resignation of her entire board last month.

She has been touring VCs and pitching 23andMe as a healthcare subscription business and provider of genetic data, according to people familiar with the discussions.

She has also told investors that 23andMe will no longer pursue its cost-intensive drug development programmes and will instead focus on marketing its database.

But one investor familiar with the company said that Wojcicki was facing an uphill battle to find new funding for 23andMe, and may ultimately have to draw on her personal wealth to shoulder a buyout: “I suspect Anne knows exactly how the clock is ticking.”

Job moves

• JPMorgan has elected former Intuit chief executive Brad Smith to its board of directors. Smith, who most recently was president of Marshall University in West Virginia, will join the bank’s board in January.

• White & Case has promoted 37 lawyers to partners across the globe. They’re on teams including M&A, commercial litigation and capital markets.

Smart reads

Buckle up The chip sector has become more central to everyday life since the advent of artificial intelligence, writes the FT’s Richard Waters. We should brace for more turbulence ahead.

Corporate crisis Boeing has dominated headlines for what feels like a never-ending series of troubles, the FT reports. A strike by its largest labour union is now making it burn through $1bn a month.

The EV race Over the past decade, carmakers from the US to Germany have ploughed money into building electric vehicles with big charging capacities and sleek designs, Bloomberg writes. The Chinese company BYD is still crushing the competition.

News round-up

Defence group RTX to pay $950mn to resolve US charges over Qatar bribes (FT)

Meta fires staff for abusing $25 meal credits (FT)

UK graduates face tough jobs market as AI transforms recruitment (FT)

EY slims workforce for first time in more than a decade (FT)

Netflix’s third-quarter revenue and subscriber numbers beat expectations (FT)

New York art consultant pleads guilty to stealing $6.5mn from clients (FT)

Patek Philippe squares up in battle for young buyers with Cubitus watch collection (FT)