Hello! I'm Jeffrey Cane, filling in for Aaron Weinman, who is away for a week. First, a reminder that there will be no
While you may see fireworks this weekend, on Wall Street, little has been popping. The second quarter ended on Thursday with a whimper: deal-making is on hiatus, markets are in a slump, and IPOs are all but nonexistent.
And as if they didn't have enough to worry about, some bank employees are concerned over their employers' attempts to monitor their messaging. More on that below. We will try to end on a more positive note, with our latest edition of Banker of the Week.
First, here's where
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1. Dealmaking is down. M&A broke records last year, but the current trend is not Wall Street's friend.
Merger activity worldwide tumbled 21% in the first half of 2022 — to $2.1 trillion — from a year ago, according to Refinitiv data. Mergers worth more than $1 billion fell 30% worldwide. That includes some of the biggest that still need to clear a few hurdles, like Broadcom's acquisition of VMware, which faces an antitrust review in Europe, and Elon Musk's proposed buyout of Twitter, which has, well, Elon Musk. (Elon, by the way, has not tweeted since June 21 – a positive sign for the deal?)
The market for initial public offerings had the slowest second quarter since 2009, says Renaissance Capital: just 21 IPOs raising $2.1 billion. With the stock market off to its weakest first-half start since 1970, expect more
The slowdown spells lower fee revenue for banks – and the prospect of hiring freezes and layoffs. "Right now, everybody's worried about a recession," Brennan Hawken, a UBS equity analyst who covers the big banks, told Insider.
Still, there are bragging rights. Leading the 2022 league table for global M&A advising are the usual suspects: Goldman Sachs, JPMorgan, and Morgan Stanley. Allen & Co. is at No. 10, thanks to advising Activision Blizzard on its sale to Microsoft. Speaking of Allen, the firm's annual summer camp for media moguls and deal makers kicks off next week in Sun Valley, Idaho. (Think "Succession.") The thin mountain air there could breathe new life into the merger market yet.
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In other news:
2. The Wall Street tracking app that's now in demand is Movius. Bankers and traders – and their clients – love using messaging platforms like WhatsApp, but regulators insist that the banks monitor all work-related communications. So more banks are asking employees to install the Movius tracking software on their personal phones – leading to outcries over privacy. Insider spoke to the CEO of Movius, who explained how it works and whether employees should be concerned.
3. Big bank as Big Brother? A recently departed employee of JPMorgan Chase gave a first-person account of working under the bank's new tracking system. "I feel betrayed by a company I put my whole heart into," the former employee told Insider. "I won't buy into a system of fear."
4. Leon Black's lawsuit accusing a fellow co-founder of Apollo Global Management and others of conspiring to "destroy" and "cancel" him has been tossed out by a federal judge in Manhattan. The judge did not sanction Black's lawyers, as one of the defendants had requested. Black is also battling separately in New York state court over allegations of sexual assault made by his former lover. Insider recently profiled the #MeToo-supporting lawyer who is defending Black in that litigation.
5. OppZo works to get loans to small firms that have won government contracts and need to ramp up fast. Insider has the 12-page pitch deck the fintech used to raise $260 million.
6. UBS agreed to pay $250 million to settle SEC allegations that it failed to fully disclose the risk in a complex options trading strategy known as YES and did not adequately train its financial advisors who sold it. "YES had the potential to generate modest returns during periods of low market volatility; however, the strategy could — and eventually did — suffer losses during periods of high market volatility," the SEC order says.
7. DE Shaw and four senior executives must pay $52.1 million to an ex-money manager who accused the hedge fund of defamation. Dan Michalow was terminated by DE Shaw in 2018 amid sexual misconduct allegations. But a filing Thursday shows an arbitration panel ruled that DE Shaw and its executives defamed Michalow. The award is believed to be the largest in a defamation case overseen by FINRA.
8. Buy-now, pay-later startups have hit a rocky patch, but Zilch of the UK has just snagged $50 million in fresh funding. The company's CEO tells Insider why its direct-to-consumer business model sets it apart from its BNPL rivals.
9. If you are headed to the Hamptons this weekend, pray that you will not be stuck in traffic when nature is calling. Going forward this summer, you have two options: You can join the uber-rich in taking a helicopter to the Long Island enclave or you can have a medical procedure that reduces the urge to urinate. "Race to the Hamptons, not to the bathroom," is the pitch of the New York doctor who offers the procedure.
10. And let's not forget our Friday "Banker of the Week."
Meet Pete Stavros, the co-head of US private equity for KKR. He just closed on a deal to sell C.H.I. Overhead Doors to steel-maker Nucor for $3 billion. KKR will make 10 times the money it put into the door manufacturer in 2015.
While such returns are to be expected for the biggest and best in private equity, what's surprising here is that there is also a significant payout to the truck drivers and factory staff who effectively held equity in C.H.I. Overhead Doors.
Here's how KKR and Stavros came to offer an equity-linked initiative to the workers.
If you know of any bankers we should feature in our Banker of the Week series, please let Aaron know at aweinman@insider.com.
Done deals:
- Spanish soccer powerhouse FC Barcelona has reached a deal to sell 10% of its league television rights for the next 25 years to US investment firm Sixth Street for 207.5 million euros.
- WPP has agreed to acquire the business of Bower House, an Australian marketing tech services firm with some 80 employees.
- Universal Music Group is acquiring the estate of the musician Frank Zappa.
Curated by Jeffrey Cane in New York. Tips? Email jcane@insider.com or tweet @jeffrey cane. Edited by Hallam Bullock (tweet @hallam_bullock) in London.