Why GIC ditched Vista | Financial Times

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One scoop to start: Linda Yaccarino is next week planning to meet the seven banks that helped bankroll Elon Musk’s takeover of X, formerly Twitter, to lay out her plans to revive the struggling social media company, said people briefed on the matter.

And one invitation: DD Live is just three weeks away. Join us on October 17 at the Biltmore Mayfair in London as we gather the biggest names in M&A, private equity and corporate finance, including a deep-dive with FT journalists into short seller Hindenburg Research’s face-off against Indian tycoon Gautam Adani. DD subscribers get a special discount.

In today’s newsletter:

Robert Smith’s tax scandal caused a sovereign fund to flee

Singaporean sovereign wealth fund GIC, one of the world’s most influential investors, sold its investment in Vista Equity Partners after the software- focused buyout firm’s billionaire founder Robert Smith was embroiled in a tax scandal, according to people familiar with the matter.

GIC disposed of its roughly $300mn holding at a discount, leaving the Singaporean fund with a loss on its investment, according to people familiar with the matter.

It’s rare for an investor to sell a stake in a buyout fund for reputational reasons, underlining the challenge facing Vista as it tries to draw a line under a scandal that saw Smith agree a $140mn settlement in late 2020 with US authorities to resolve a criminal tax investigation.

Based in Austin, Texas, Vista is now trying to raise $20bn for its first flagship buyout fund since the firm was shaken by the scandal. It has until October to raise the money or the firm will have to ask its investors for an extension to the deadline, people familiar with the matter said.

The buyout industry is confronting its toughest conditions in years as higher interest rates drive up the cost of buying companies and a sluggish market for initial public offerings and a slump in takeovers make selling them harder. It has caused many investors to commit less to new funds.

The reputational risk generated by Smith’s tax scandal has also weighed on the fundraising, with some investors telling the FT that they chose not to participate.

Since GIC ditched its holdings in Vista, the sovereign wealth fund has co-invested with other private equity firms in deals in which Vista also participated, a person familiar with the matter said.

Vista and GIC declined to comment.

In a recent letter to investors, Smith noted that the new flagship fund is on track to be the “largest pool of capital” it has ever raised. Its previous flagship fund raised $16bn in 2018.

During its fundraising push, Vista has sold off assets to generate profits for investors, monetising more than $14bn in investments since November 2021.

Vista has also adopted several tactics to accelerate the pace at which it returns money to investors. These include so-called net asset value financing, which involves a buyout firm borrowing against a portfolio of assets.

Earlier this year, Vista borrowed $1.5bn secured against its portfolio companies, the FT previously reported. Some of the money was used to pay investors.

It also borrowed against its management company two years ago to raise $930mn, most of which was to invest in future funds, the FT previously reported.

The four-partner firm auditing Adani’s British books

In the wake of Hindenburg Research’s scathing short seller report that wiped tens of billions of dollars off the market value of Adani Group in January, the Indian industrial conglomerate was at pains to stress that its companies “follow a stated policy of having global big 6 or regional leaders as statutory auditors”.

The policy doesn’t appear to extend to its UK subsidiaries, however, which are now audited by a London-based accountancy firm with a grand total of four partners.

Adani Energy Holdings Limited and its subsidiaries filed annual accounts with UK’s Companies House last month that were audited by Ferguson Maidment & Co, a small chartered accountant based on Fleet Street.

While we imagine many DD readers will not be familiar with the firm, Vivek Kapoor — one of those four partners — told the FT that “Ferguson Maidment & Co can trace its history to over 130 years and the firm has always had high-profile clients”.

Ferguson Maidment’s website has glowing testimonials from some of those clients, although unfortunately they are anonymised to generic descriptors like “Family-owned Business Owner”. Its webpage also handily documents that 130-year history, which involves the first British chartered accountant to set up shop in India.

More consequentially for billionaire tycoon Gautam Adani’s eponymous group, however: its high-profile backer International Holding Company announced on Thursday that it will sell its stake in two of Adani’s companies.

The Abu Dhabi conglomerate later posted on X reaffirming its “partnership with Adani”, despite the stock sale.

However, while DD imagines that the revelation of yet another small audit firm in the mix at Adani was unlikely to have bothered IHC’s chair Sheikh Tahnoon bin Zayed al-Nahyan, the steady drip of allegations against the conglomerate may have still dampened the powerful Emirati spy chief‘s enthusiasm for its stock.

The ‘Rigatoni’ trader served with insider trading charges

US federal prosecutors have charged Anthony Viggiano, a former employee of Blackstone and Goldman Sachs, with allegedly tipping off his buddies about a series of large deals, including a $2.2bn investment by the private equity group into insurer AIG.

Viggiano, 26, had passed on material non-public information to co-defendant Stephen Forlano, according to an indictment unsealed on Thursday.

Viggiano also allegedly tipped off Christopher Salamone, who grew up on the same block as him, agreeing to “split the profits from their illegal trading, which yielded total illegal profits of over approximately $300,000”, according to court filings.

To avoid detection, Viggiano and his co-defendants allegedly used encrypted messaging apps, such as Signal and the Xbox 360 communication platform. Forlano also used the disappearing messages feature on Instagram, according to the indictment.

According to court filings, Salamone — who pleaded guilty last week and is co-operating with the government — had begun to record some of their conversations. Including this one:

Forlano is said to have tipped off his friend Nathan Bleckley via text, who, according to the filing, messaged back to say he hadn’t bought in “Bc my funds are low”.

In another reported exchange, Forlano replied that “Rigatoni”, a nickname for Viggiano, “literally works for” Blackstone, and Bleckley responded, “F[**]k u should’ve told me f[**]k the feds.” A lawyer for Bleckley said his client was “a dedicated member of the armed forces” who “places a high priority on doing what’s right”.

Forlano then allegedly sent a text message saying: “next one i got you’ll be the first to know”.

A lawyer for Viggiano said he would “vigorously defend” his client against the charges, while a lawyer for Forlano said his client “denies trading on insider information and will vigorously contest these allegations in the appropriate forum — court”. 

Job moves

• GameStop has appointed activist investor Ryan Cohen, who is already chair, as chief executive officer three months after firing its previous top boss Matt Furlong.

• City veteran Gerry Grimstone, who stepped down as the UK’s investment minister last year, has joined Bain & Co as an adviser on a project advising Saudi Arabia’s investment ministry.

• Public relations firm Teneo has acquired debt and restructuring advisory Herter & Co, resulting in the Frankfurt-based firm’s team — led by Marcel Herter — joining Teneo’s financial advisory business.

Smart reads

Blurred lines Two of Abu Dhabi’s biggest banks have reported billions of dollars in loans in recent years tied to their boards that include high-profile royal family members, The Wall Street Journal reports.

Inside Huawei’s lobbying campaign A New York Times investigation delves into efforts by the Chinese tech giant to win over Greek officials and fight a US campaign against its technology.

The AI derby Tech companies are in a desperate race to come up with the next “iPhone moment” and deliver artificial intelligence to the masses, the FT’s Richard Waters writes.

News round-up

Evergrande chair placed under ‘mandatory measures’ on suspicion of crimes (FT)

OpenAI and Jony Ive in talks to raise $1bn from SoftBank for AI device venture (FT)

Moody’s warns of ‘systemic risk’ from leveraged lending market (FT)

US private equity firm takes stake in Liverpool Football Club (FT)

Fed weighed removing SVB CEO from supervisor’s board before collapse (FT)

Odey joked about accusers, blamed woke brigade for downfall (Bloomberg)