Can the City’s most hated tax survive?

One big Izzy scoop to start: Millennium Management, one of the world’s largest hedge funds, is in talks about selling a minority stake to external investors at a $14bn valuation, as it presses ahead with plans to open up its ownership for the first time.

Another scoop: Sabadell is exploring a sale of its British bank TSB, as the Spanish lender seeks to fend off an €11bn hostile approach from its domestic rival BBVA.

And a final one: Spotify founder Daniel Ek is leading a €600mn investment in Helsing, valuing the German defence tech group at €12bn and making it one of Europe’s most valuable start-ups.

In today’s newsletter: 

The UK’s potential U-turn on non-dom taxes

“Backtracking without backtracking.”

Those are the words of a senior financier in frequent contact with Rachel Reeves, describing a strategy under consideration to tweak the non-dom inheritance tax. 

After a torrent of lobbying efforts from rich non-doms, the chancellor is now deliberating a move to roll back the inheritance tax on the offshore assets of non-domestic residents, the FT’s Harriet Agnew and George Parker scooped.

That 40 per cent tax has led to some of London’s wealthiest individuals departing, including steel tycoon Lakshmi Mittal and Nassef Sawiris, Egypt’s richest man and co-owner of English football club Aston Villa. (Sawiris moved his UK residency to Italy and Abu Dhabi.)

Closing the loophole that allowed offshore trusts to skirt inheritance taxes came into full effect in April. Officials have said they’d reconsider the decision, if it would help give a boost to the country’s competitiveness.

One person pushing for the rollback is Alastair King, the Lord Mayor of the City of London. He’s raised concerns not only about the non-dom inheritance tax but also the removal of VAT exemption on private school fees.

“There will most likely be some tweaks to inheritance tax to stop the non-dom exodus,” said one senior City figure. 

The UK’s wealthiest have found creative ways to navigate the country’s byzantine landscape of tax laws, jumping through complicated logistics to avoid paying the full tax rate.

The UK’s new tax regime means that the offshore assets of individuals who have been non-residents for 10 years are exempt from UK taxation for four years, and nine years for death duties.

The rule has caused the UK’s richest to explore a “10 years out, nine years in” strategy, with some rather morbid calculations on when they might die, and where they should live in their final years.

When and if this reversal does come to fruition, it is expected to be implemented at the time of the autumn budget.

If you live in the UK, we want to hear from you: should the government reverse course on its non-dom regime? Write to us at due.diligence@ft.com.

Adnoc’s buying blitz

As some of the Middle East’s energy giants have reined in their spending, little has stopped Abu Dhabi’s state-owned oil titan from an international buying spree.

XRG, the investment arm of the Abu Dhabi National Oil Company, has made a cash offer to buy one of Australia’s largest energy giants, Santos, at a 28 per cent premium.

If the bid goes through for the natural gas company, it will be the largest-ever cash takeover of an Australian company, with a deal value of $22bn including debt.

For some context: that’s bigger than some recent blockbuster deals, including the sale of Sydney Airport, Blackstone’s buyout of AirTrunk, and Woodside’s merger with BHP’s oil and gas portfolio.

XRG steers Adnoc’s global energy strategy with a $80bn portfolio. Last year, the company’s chief executive Sultan Al Jaber said the arm hoped to double assets over the next decade.

In 2024, Adnoc also bought out Covestro, the German chemicals group, in the first major takeover of a Dax 40 company by a Gulf state.

Meanwhile, there’s another unlikely bidder for Santos: Carlyle, the private equity fund, is also part of the XRG group.

While private equity giants such as Blackstone and Apollo retreated from investing directly in fossil fuels in recent years as climate concerns became top of mind for many institutions, Carlyle’s London-based energy investment team never pulled out of oil and gas.

Carlyle has been buying up oil and gas projects around the world and announced their 15th investment last year: a $945mn deal for a portfolio spread across Italy, Egypt and Croatia.

Even while Adnoc has steadily splashed out on buying up companies, most other investment firms have stayed on the sidelines this year amid broader macroeconomic worries.

Yet, with so much of the investment firm’s spending fuel coming from oil production, the recent violence between Iran and Israel could shift its spending habits. Adding gas assets also would play into surging power demand from artificial intelligence.

Take the money and run?

A takeover battle for a UK-listed healthcare property company Assura has turned into a metaphor for the challenges facing London.

The FTSE 250 group is a big landlord for the NHS, but its shares have been on a general downward slide in recent years.

Earlier this year, the US private equity giant KKR emerged as a suitor for the company, ultimately agreeing last week on a £1.7bn takeover deal alongside infrastructure investor Stonepeak.

However, KKR has faced competition from UK-listed rival Primary Health Properties, which has tabled its own cash-and-shares offer, saying it comes at a slight premium.

While KKR’s deal still has the board’s backing as Assura reviews PHP’s latest proposal, large shareholders are starting to voice opposition to the private equity group’s proposal.

Together, the groups that told the FT they were backing PHP hold at least 12 per cent of the shares in Assura.

Investors, including top 10 shareholders Quilter Cheviot and Schroders, told the FT’s Emma Dunkley and DD’s Ivan Levingston that they favour PHP’s offer as it would keep Assura’s assets listed in London.

The struggle for Assura comes against a backdrop of a number of other private equity takeovers of UK-listed firms. Advent is also closing in on a £4.4bn acquisition of the London-listed industrial group Spectris.

And while public companies are getting targeted for takeovers or switching their listings abroad, there are hardly any IPOs to refill the hopper.

That has raised the stakes for the UK’s public equity investors, who are probably beginning to worry that they could soon run out of stocks to back.

Job moves

• UBS has appointed Jacob Spens as vice-chair for global banking in the Nordic region. He will be based in Stockholm, and joins from BNP Paribas. 

• Kering has named Luca de Meo as its chief executive to steer the French luxury group’s turnaround. He joins the group after stepping down from Renault.

• Blackstone has hired Joseph Cassanelli as a senior managing director for its tactical opportunities unit, where he’ll focus on financial services sector investors. He previously worked for Lazard. 

• Sullivan & Cromwell has hired Barnabas Reynolds as a partner in its London office to advise on cross-border deals. He joins from A&O Shearman. 

Smart reads

‘Golden share’ After more than a year of meddling in the deal, the White House has approved Nippon Steel’s $14.9bn bid for its US rival, but with a conditionality: a “golden share” for the Trump administration, FT’s Lex writes.

Renaissance investor The hit podcaster and activist investor Scott Galloway sat down for an interview with the FT to talk about his take on American aggressiveness, the UK’s “butler economy” and ketamine.

Billionaire’s accidental adventure The FT’s Harriet Agnew visits Tanera Mòr to see how hedge fund manager Ian Wace is transforming an abandoned Scottish island.

News round-up

Eli Lilly close to buying gene-editing biotech Verve Therapeutics (FT)

Warner Bros Discovery debt deal approved in rare win for CEO David Zaslav (FT)

Meta introduces advertising to WhatsApp in push for new revenues (FT)

Metro’s ex-senior managers were responsible for accounting error, tribunal says (FT)

Trump Organization to launch mobile phone service and $499 golden handset (FT)

Australia probes stock exchange over ‘serious failures’ (FT)

OpenAI and Microsoft tensions are reaching a boiling point (WSJ)