Morning Coffee: The deal that started at a flower show. Hope for ex-Deutsche Bankers
Among the many bones of contention between the two great tribes of investment banking – sales and trading and their perpetual frenemies in capital markets and advisory – not the least is the perceived grandiloquence of the latter’s expenses and entertainment budget. Many times during protracted management meetings, particularly during cost cutting programs, seasoned traders will bemoan their own difficulty in getting that fourth bottle of Krug signed off, even with the best hedge fund clients, while the bankers allegedly swim in the finest food, wines and event tickets. And, it’s rhetorically asked, does any business ever really arrive as a result of these jollies?
Well apparently, one time it did, reports Reuters. One of the priciest tickets in the London social calendar is the corporate entertainment stalls at the Chelsea Flower Show. Canson Partners' Matteo Canonaco was sufficiently important to have swung the expenses, and it was at the flower show, apparently, where he introduced Joseph Baratta of Blackstone to David Craig, who at the time was running the financial and risk data operation of Thomson Reuters, operators of the Eikon terminal network.
As the champagne flowed and the various corporate nostrils were tickled were tickled with the scent of crocuses and orchids, revenue-generating business was indisputably discussed. Between them, the three men came up with the proposal to spin the data division out of Thomson Reuters, turning it into the $27bn business called Refinitiv which has just announced its acquisition by the London Stock Exchange.
This is all pretty strong evidence for the M&A view of corporate entertainment. Unlike trading clients, corporates and financial sponsors aren’t in a position where they can give you a “thank you order” the next morning, paying $10k of commission in return for $1k of gourmet food.
Separately, another situation where long-past network can pay off is when you’re looking for another job, of course. And the networks of bulge bracket banks often reach into surprising places. Even the “let go by Deutsche Bank” club, an organisation about to see rapidly expanding membership, can count some big hitters, including the UK’s new Chancellor of the Exchequer, former credit structurer Sajid Javid, reports Euromoney.
There’s also a small Deutsche credit trading alumni chapter at Softbank, where Rajeev Misra heads the Vision Fund with the help of Colin Fan and several other veterans of the German national champion. And when Misra and Fan are trying to raise money for a new fund, they can call on Cantor Fitzgerald (President: Anshu Jain), helping him to bring Cantor into new business lines to diversify from its broking history. It just goes to show that it’s a very small world, and it’s not worth getting on the wrong side of anyone, because people always show up again.
If you fancy a couple of brainteasers over a cup of coffee, here are five questions from the CFA Level 1 exam. The answers are at the bottom if you want to memorise them in order to intimidate a colleague who’s studying for it. (Financial News)
A blast from the past; Woodline Capital is a big new hedge fund (it’s targeting $2bn at launch) but it’s not a quant fund! It will be long and short equities, concentrating on the tech and healthcare sectors and run by actual human beings Karl Kroeker and Michael Rockefeller. Is this the start of the 00s revival? (Bloomberg)
If human stockpickers are coming back into fashion, it might be because they’re delivering the goods; after some terrible years, celebrity hedge fund managers like Bill Ackman and David Einhorn are turning in exceptional returns, while the top quant funds are only so-so. (Business Insider)
Despite slightly better than expected results, Barclays isn’t immune from cost-cutting pressure, and 3,000 people left the group during the second quarter, not necessarily all in the investment bank. (Financial News)
Inside Project Atlas, the initiative to speed up Goldman Sachs’s trade processing systems by a few milliseconds in order to gain market share and satisfying the most demanding quant clients on the Street. (CNBC)
A 65-year-old former bank CEO is starting a second career as a YouTuber, giving personal finance tutorials in German. (Bloomberg)
As it gradually becomes clear that Jeffrey Epstein wasn’t completely unknown on Wall Street, Apollo’s Leon Black reassures investors that he was never involved with their funds. (FT)
Try to structure your career as a series of 3 to 5 year experiences, build yourself a start-up or side hustle while working full time, but make sure you leave plenty of space for relaxation and well-being is the not necessarily very practical advice for millennials who want to succeed. (Bloomberg Businessweek)
Image credit: BethAmber