London’s new private equity behemoth

One scoop to start: Brandon Lutnick, son of US commerce secretary Howard Lutnick, is nearing a roughly $4bn deal with an early bitcoin supporter to buy billions of dollars in the digital tokens using a vehicle backed by Cantor Fitzgerald.

And another thing: Securities and Exchange Commission head Paul Atkins has pushed out the chief US audit regulator, who came under fire for imposing tougher sanctions on big accounting firms during her tenure.

In today’s newsletter:

• A Great British success story

• A small hedge fund’s big rare-earths bet

• Elliott arrives at Worldpay’s new owner

The private equity firm putting Britain back on the map

It’s not often that you hear “British”, “tech” and “success” in the same sentence. But buyout firm Hg, until recent weeks little known outside the private equity world, has defied the odds.

The software investor is set to pass $100bn in assets under management later this month, meaning it will be bigger than US private equity grandees Advent and Warburg Pincus. Its fundraise will cement its position as the second-biggest British buyout group behind CVC.

The firm also delivered some much-needed good news for beleaguered Britain last month when it chose London as the venue for its blockbuster listing next year of €19bn payroll and accounting software group Visma.

Now the low-key private equity group will have to learn to withstand the scrutiny that will come with leading one of London’s biggest initial public offerings in years.

Not only that. Hg thrived in striking niche software deals in an era of cheap money and limited competition. Now that it’s attracted a deep well of capital, the question is whether it can repeat the trick on its newer, bigger funds in a period when the conditions that facilitated its rise no longer hold.

Hg was founded in 1990 as Mercury Asset Management and then absorbed into Merrill Lynch Asset Management a few years later, before later spinning out again.

When senior partner Nic Humphries took over in 2007, technology accounted for only half of the firm’s deal count. Humphries decided to specialise in software, making the same bet as Thoma Bravo and Vista Equity.

“We could have chosen to be a multisector, generalist mid-market firm,” he told the FT. But that would have left the group in 10th or 11th place in Europe. “It was a huge debate as I was proposing to turn half the firm on its head.”

While the bet has paid off fabulously, the stakes are rising.

The firm’s smaller, older funds have distributed at least two or three times investors’ cash. But Hg now has to prove its model works at scale.

Two of its larger funds that started deploying five years ago have returned half or less of investors’ cash.

Borrowing against fund assets has accounted for about half of the proceeds that Hg has sent back to investors from its 2020 large-cap fund.

The success of the Visma listing will not just be a test for IPOs in London. It will be the ultimate test for Hg.

The sage of Mountain Pass

How did a small hedge fund boss land nearly a billion dollars of investment from the Pentagon and Apple?

A decade ago, James Litinsky invested $100mn in the distressed debt of a struggling US miner at a time when many were sceptical it could survive. This month, the gamble paid off big time.

The Pentagon took a $400mn equity stake in Litinsky’s MP Materials last week and promised to buy its output for nearly 10 years at double the current market price.

Apple on Tuesday agreed to a $500mn deal to buy rare earth magnets from the business. As of market close the same day, Litinsky’s stake in the business was worth $818mn.

In Litinsky’s telling, he saw all those years ago that rare earth mining would carry national importance. Others might also point to the more than $700,000 spent in Washington last year.

In 2015 Litinsky took a punt on Molycorp, buying up the debt of the natural resources group as it fell into bankruptcy. Molycorp owned a remote mine called Mountain Pass that was once the world’s largest producer of rare earths.

Litinsky wrestled for control of the mine and in 2017, founded MP Materials to acquire it and restart operations.

The group went public in 2020 through a Spac merger backed by Fortress and serial promoter Chamath Palihapitiya. At first the deal looked like a dud, with the miner losing 70 per cent of its share price from 2021 to 2024.

But MP’s persistence and the winds of geopolitical change (not to mention several years of political spending across administrations) mean the bet appears to be working out.

The company has a lot of work to do. Demand in the US for domestically produced rare earths is only just beginning to take off.

Nonetheless this month’s investment shows the US government is willing to spend big on a sector it deems critical to national security. And big business is coming along for the ride.

Elliott knocks on Global Payments’ door

Spare a thought for Worldpay. The payments group has passed through many hands but never truly found a home.

Its latest buyer, Global Payments, took a wallop in April when it acquired Worldpay in a three-way, cash-and-stock deal with GTCR and Fidelity Information Services.

Global Payments’ shares plunged to a 10-year low, and while they’ve risen since, they’re still trading at just seven times earnings, among the lowest levels across the industry.

Wall Street’s initial jeers for the deal have yielded even bigger challenges. Elliott Management has built a sizeable stake in Global Payments, DD’s Oliver Barnes scooped.

The activist hedge fund’s demands are unclear, as is the exact size of its stake. It’s difficult to imagine that Global Payments’ cratering share price hasn’t had something to do with the move, though.

Chief executive Cameron Bready suggested the decline in the wake of the Worldpay deal was in part due to “timing”. The deal landed in the chaotic week after Donald Trump’s so-called liberation day. Not “ideal”, said Bready.

Yet the payment giant’s struggles can’t all be blamed on the president.

Global Payments has faced stiff competition from rivals such as Stripe, Adyen and Toast. On top of that, Worldpay has faced criticism for responding slowly to customer needs during the coronavirus pandemic.

As for Elliott, this isn’t the hedge fund’s first rodeo in the payments world. Elliot has previously invested in fintechs such as PayPal and FIS, as well as corporate giants such as BP and HP Enterprise.

The Worldpay buyout is expected to close by the first half of 2026. While there’s no route for Elliott to block the acquisition, DD expects this won’t be the last we hear of its stake in Global Payments.

Job moves

• Rio Tinto has appointed Simon Trott as chief executive. Trott heads Rio’s iron ore business and succeeds Jakob Stausholm.

• Renault has named finance chief Duncan Minto as interim CEO. Previous boss Luca de Meo quit to lead Kering.

• The UK’s National Wealth Fund has named Oliver Holbourn as CEO. He was previously CEO of RBS International.

• Société Générale has named Anvita Arora as global co-head of equity capital markets. She succeeds Luis Vaz Pinto, who has been named chair of ECM.

• Paul Hastings has hired Kristiina Leskinen as a partner in its global M&A team in New York. She joins from Paul Weiss.

Smart reads

Deal doldrums M&A activity in the US has collapsed this year, and bankers say merger reviews are starting to reflect partisan agendas, DD’s James Fontanella-Khan reports. “It’s a level of intrusion I have never experienced before,” said one dealmaker.

Tech playbook Meta bought Scale AI for its well-connected CEO, and now Google has bought Windsurf and nabbed its top talent. Lex explores the growing appeal of the acqui-hire.

Flipped fortunes BYD was once playing catch-up to Tesla, the FT writes. Now it’s poised to outsell its US rival.

News round-up

BlackRock inflows hit after big client withdraws $52bn (FT)

Google and Brookfield strike $3bn hydro power deal (FT)

Nvidia and Jane Street back Mira Murati’s AI start-up in latest fundraising (FT)

US banks say consumers are ‘healthy’ despite economic uncertainty (FT)

Starling Bank weighs New York listing as part of US expansion plans (FT)

Standard Chartered launches crypto trading for clients (FT)

Nissan to end production at one of Japan’s first large-scale car plants (FT)

Thames Water expresses doubt it can avoid temporary nationalisation (FT)

Catastrophe bond sales hit record as insurers offload climate risks (FT)

Banking climate alliance battles to retain big European lenders (FT)