Can Slaughter and May fend off the Americans?
One scoop to start: The sale of the Telegraph faces further delays after RedBird IMI gave the preferred bidder until at least Christmas to raise the money to acquire a national newspaper that has been without a permanent owner for about 18 months.
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In today’s newsletter:
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‘Magic circle’ firm tries to fend off the Americans
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Hong Kong plans new crypto tax break
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Goldman switches to offence in Direct Line takeover
Slaughter and May tries to survive the US invasion
Every autumn, partners at elite British law firm Slaughter and May are invited for “paterfamilias” — a chat with the senior partner or “father of the family” — about their performance.
It’s a decades-long ritual, which has long been ensconced in an air of rarefied mystique. But this year they’ve changed the name: it’s now just an “annual discussion”, no different than the thousands that take place in corporate settings around the world.
Why the change? “Everything has its time,” said Roland Turnill, Slaughters’ senior partner, in his first interview since taking up the helm in May. To younger partners the Latin name “could appear anachronistic”.
But it could also be a sign of the profound influence US law firms are starting to have in London, where they’re determined to take market share from the long-standing, elite “magic circle” cohort. The likes of Slaughters, Linklaters and Freshfields are fighting to keep up.
The trend’s been sparked in large part by private equity investment in Britain. American lawyers followed deep-pocketed PE firms, pushing some UK law firms to overhaul pay models as the war for talent reached new extremes.
Even Slaughters — which has largely avoided the hiring frenzy — has increased salaries 20 per cent for its most junior lawyers this year.
The numbers are bleak. Linklaters has had 21 London partners leave for US firms over the past two years. It’s not nearly that bad for Slaughters, partly because it doesn’t have a big private equity practice.
The firm’s doubling down on its own playbook: cultivating its stable of blue-chip clients including GSK, Diageo and Rolls-Royce. Over the past year, it’s also advised companies such as Vodafone, Google and BHP.
Slaughters sets itself apart in other ways. Instead of running as an LLP, it remains a general partnership, which means it doesn’t have to disclose revenues or partner pay. And rather than poaching talent, it bets everything on homegrown legal stars.
It also holds on to traditions, such as partners having their own pigeon holes and bespoke napkin rings inside the partner dining room. Slaughters is “innately British”, said one partner at a US firm in London. And maybe that’s the secret for fending off Americans on their home turf.
Hong Kong wants your Bitcoin
At an upscale Hong Kong hotel on Friday, crypto entrepreneur Justin Sun is planning to eat a banana.
It is his way of marking his purchase of the now-viral art piece by Maurizio Cattelan, who stuck a different banana to a wall with duct tape. Sun winning the auction for the piece, with a $6.2mn bid, is the latest sign that the crypto craze is back, just as Hong Kong is keen to become both a digital assets hub and an offshore finance centre.
Hong Kong is seizing the moment. The city is planning to exempt private equity funds, hedge funds and the investment vehicles of the super-rich from paying tax on gains from cryptocurrencies, along with other assets.
In a 20-page proposal that was circulated this week and seen by the FT’s Chan Ho-him and DD’s Kaye Wiggins, the Chinese territory’s government said taxation is “one of the key considerations” for asset managers when deciding where to base their operations.
The city wants to make sure there’s a “conducive environment” for them.
There’s already a system in place for investors to shelter their capital in vehicles that can get tax-free treatment. They can use a fund structure called OFCs — or open-ended fund companies — to be eligible for certain exemptions. But the new plan would expand the range of assets eligible for the funds.
Crypto globally is experiencing a revival. Bitcoin has surged since Donald Trump won the US presidential election, and investors are betting the Republican’s return to the White House will help fuel the crypto industry.
If implemented, Hong Kong’s proposals would provide “certainty” to family offices and investors, said Patrick Yip, vice-chair and international tax partner at Deloitte China who specialises in family offices.
“This is an important step in boosting Hong Kong’s status as a financial and crypto trading hub,” Yip said. Some family offices in the city allocate up to about 20 per cent of their portfolio to digital assets, which is “not insignificant”, he added.
Goldman goes on offence in UK takeover
Earlier this year Goldman Sachs was among the advisers called in to help the UK insurer Direct Line defend itself from an attempted takeover by Belgium’s Ageas.
So eyebrows were raised in London late on Wednesday when the bank’s name showed up on the other side of the ledger to help Aviva in its attempted takeover of Direct Line.
Aviva on Wednesday confirmed its proposal for a £3.3bn takeover of Direct Line had been rejected after Bloomberg reported the company’s interest in a deal.
Direct Line, which has been among the UK’s most widely speculated takeover candidates, called Aviva’s stock-and-cash offer “highly opportunistic” and “substantially” undervaluing the business.
But more intriguing for City dealmakers was the adviser line-up.
While Goldman advised Direct Line in its defence against the approaches from Ageas, there have since been management changes at Direct Line.
Furthermore, Goldman is also a corporate broker to Aviva — a role in the UK that essentially acts as an in-house adviser.
While the deal team involved for Goldman is different this time around and a so-called “clean team”, still Goldman “should know exactly where the killing zone is (or at least was) in March for shareholders”, according to a note from MKP Advisors.
A Goldman representative said: “We mutually agreed to end our engagement with Direct Line in the summer and have had no active investment banking roles with the company since then.”
Aviva has a December 25 deadline to make a firm offer or walk away under UK takeover rules.
Aviva has contacted shareholders in Direct Line in a move that could pave the way for a hostile takeover bid for its smaller rival, showing no signs of backing down and setting up the potential of a busy Christmas morning for the deal teams.
Job moves
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UBS has hired Michael Heuberger as head of unified global banking for Emea, where he’ll report to Jason Hutchings, according to an internal memo seen by DD. Heuberger joins from Westend Partners.
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Knight Frank has appointed Shishir Baijal as non-executive chair of the firm’s Asia-Pacific region beginning in April. He’s currently chair and managing director of its India business.
Smart reads
High IQ Silicon Valley billionaires are still in thrall to the cult of the geek, Lex writes. But are IQ hierarchies a dangerous myth?
TikTok whisperer Tony Sayegh, the head of public affairs for Susquehanna International Group, has led the effort to win Donald Trump’s support for TikTok, the Wall Street Journal reports. He’s already changed minds in Washington.
Maha divides The radical former Democrat Robert F Kennedy Jr wants to take on Big Pharma, the FT reports. His team is already arguing.
News round-up
Venture Global launches new LNG plant ahead of IPO (FT)
Flurry of takeover activity sweeps UK market (FT)
Australia raises pressure on multinationals with strict tax disclosure law (FT)
Pensions savings confidence hits seven-year low, says BlackRock (FT)
FCA to raise bar for when it ‘names and shames’ companies (FT)
Labour’s hedge fund donors took low-tax option of £160mn loans (FT)
Spain approves Saudi Arabia’s stakebuilding in Telefónica (FT)
Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, and Robert Smith in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard and Maria Heeter in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco, and Javier Espinoza in Brussels. Please send feedback to [email protected]
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