The rugby lawyer turned corporate raider

The former rugby lawyer shaking up the world of private credit

Paul Weightman is no stranger to high-profile corporate scraps. The 62-year-old Australian, whose audacious poaching of more than 20 senior executives from asset manager Barings last month has already sparked litigation, spent 20 years running a property business that was involved in its fair share of takeover battles. 

But, as Robert Smith and Will Louch explore in this profile, it was his early career as a lawyer in Australian rugby league that provided the blueprint for the Barings raid, which has given Weightman a whole team of private credit experts for his nascent investment business Corinthia Global Management.

In the 1990s, he helped poach disaffected sports stars as part of the “Super League war” that upended Australian rugby league when Rupert Murdoch funded a new breakaway contest. 

In an interview with the Financial Times, Weightman noted “similarities” between the sales pitch that was used then and Corinthia’s success in attracting an entire team of senior executives from Barings, which is owned by MassMutual, one of America’s biggest life insurers. 

“Obviously they’re different industries, but if you’re going to recruit people to a new platform, it’s helpful to have a team excited by a bold new opportunity,” he said. “It’s a similar road map.” 

Evidence Barings has submitted as part of the lawsuit provides insight into Weightman’s hiring methods. As early as August 2023 — some eight months before the exodus and a month before he even announced he was founding Corinthia — the Australian sent LinkedIn invitations and messages to key Barings executives who later defected, including the co-head of Barings’ private finance group, Adam Wheeler.

Weightman said he was untroubled by the fact that his direct approach meant Barings had evidence of how he had poached their staff. “I thought it was better to talk to people directly than through headhunters,” he said. “I’m a front door sorta guy. I think it was effective and I’d do it again.”

Private equity stakes unloaded at a discount as investors seek exits

Pension funds may be starting to find that their private equity gold rush has some strings attached.

US institutional investors are selling more of their private equity holdings at a discount as they cut exposure to the illiquid asset class, reports Sun Yu in New York.

Led by pension funds and endowments, big investors sold 99 per cent of their private equity holdings at or below their net asset value on the secondary market last year, according to Jefferies, the most since the investment bank began tracking the figure in 2017. The figures were 95 per cent in 2022 and 73 per cent in 2021. 

Investors have been forced to increase their use of the secondary market as stock listings and mergers and acquisitions — traditional avenues for private equity investors to exit businesses — have recently been subdued. Many pension plans are also obliged to make payouts to their beneficiaries, forcing them to resort to the secondary market to raise cash more quickly. 

“Public pension funds have for many years poured money into private equity on the premise that it was high-return and low-risk while illiquidity was deemed not to be an issue,” said Richard Ennis, co-founder of EnnisKnupp, a consultancy that works with pension plans. “They are now discovering that PE is no magic bullet and liquidity does matter for investors with a sizeable payout requirement.”

Chart of the week

Investment trusts are a cornerstone of the UK equity markets, dating back to the Victorian era, when they were created to widen access for individual investors to investments across the British empire (think far-flung rubber plantations and the like). 

Now the UK’s £200bn investment trust sector is facing an assault on all fronts, as Sally Hickey and Costas Mourselas explore in this article. A gap has opened up between their share prices and the value of the assets they hold, they’re battling the worst year for raising capital in a decade, and they’re being targeted by hedge funds including Paul Singer’s Elliott Management and Boaz Weinstein’s Saba Capital.

Investment trusts make up 27 per cent of the companies in the FTSE 350 index. They include Baillie Gifford’s flagship Scottish Mortgage Investment Trust, Bill Ackman’s £7.4bn Pershing Square Holdings, and the £2.5bn RIT Capital Partners trust. 

In recent years the trusts, which act as closed-ended investment funds, have become less popular as higher interest rates lured investors into government bonds. That pushed the discount rate as high as 17 per cent, its widest since the financial crisis. The proliferation of alternative vehicles allowing easy access to a range of global assets — such as exchange-traded funds — has also hurt the sector. 

“Investment trusts used to be a uniquely British success story and a vibrant part of the market,” said James de Bunsen, a portfolio manager at Janus Henderson Investors’ multi-asset team. “That has totally gone.”

Have investment trusts reached the end of the road? Email me: harriet.agnew@ft.com

While you were away . . . 

Inside the unstoppable rise of Fortnox. Tommy Eklund turned a niche supplier of accounting software that only operates in Sweden into a stock market sensation whose share price has risen fivefold on his watch. But now analysts are questioning how much further the $4.6bn niche business can expand — and short sellers are circling the Swedish software group.

Blackstone’s flagship property fund failed to generate enough cash to cover its dividend last year, putting strain on a vehicle the private capital group views as a beachhead in the retail investor marketplace. The $60bn Blackstone Real Estate Income Trust generated $2.7bn in cash flows in 2023, mostly in rents, and paid out a distribution of more than $2.8bn, resulting in the first annual shortfall of cash from operations to cover payouts to shareholders. 

The California Public Employees’ Retirement System has named Stephen Gilmore, the former chief investment officer of the NZ$73bn (US$43.5bn) New Zealand Superannuation Fund, as its chief investment officer, following the abrupt departure of two of his predecessors. Gilmore starts at the largest US public pension plan in July, ending a seven-month vacancy in the top position at the $494bn pension fund. The worst job in investing has finally been filled (for now), writes FT Alphaville.

Shareholders don’t want Nelson Peltz to restore Disney’s magic. The US entertainment giant has defeated a challenge to its board from activist investor Peltz, handing a definitive victory to chief executive Bob Iger and ending one of the most expensive and closely watched boardroom battles in history. Investors, including Vanguard and BlackRock, voted in favour of Disney’s 12 nominees “by a substantial margin”, in a blow to Peltz’s Trian Partners.

The world faces a looming “retirement crisis” that requires a rethink of pensions and working patterns as medical breakthroughs boost longevity, Larry Fink said in his annual letter. BlackRock’s chief executive not only drew attention to a long-rumbling societal problem but also highlighted a business opportunity that his money manager, and rivals including Franklin Templeton, T Rowe Price, State Street and JPMorgan Chase, are all hoping to cultivate. Meanwhile, Fink faces a proxy challenge to his dual role as chair and chief executive of BlackRock from UK activist investor Bluebell Capital Partners. 

Goldman Sachs’ Petershill Partners, which owns minority stakes in alternative asset companies, has bought a stake of more than 20 per cent in private credit specialist Kennedy Lewis Investment Management from Italian asset manager Azimut, valuing the target at more than $1bn. Elsewhere, Goldman’s gender pay gap in its UK operations widened in 2023, underscoring how the Wall Street bank has struggled to promote more women into top positions.

Abrdn’s shareholders have been urged by influential adviser Glass Lewis to vote against the asset manager’s pay report because of the incoming chief financial officer Jason Windsor’s “significant” base salary. The proxy firm’s analysis paves the way for a potential investor backlash at the FTSE 250 asset manager’s annual meeting on April 24 and follows a difficult period in which its share price has fallen sharply, leading to its ejection from the FTSE 100 twice in recent years.  

A group of 3,000 UK private equity dealmakers shared £5bn in carried interest in the 2022 tax year, highlighting the large sums at stake in the debate over how such payouts should be taxed. The figure, disclosed in a Treasury analysis of Labour party policy, shows the gains made during what was a lucrative year for the private equity industry, thanks in part to buoyant stock markets.

Hunterbrook Capital has raised $100mn to make trades based on articles by its affiliated newsroom, Hunterbrook Media, launching a novel experiment in funding investigative reporting as the media industry suffers a fresh round of lay-offs. The business is an effort to pair the sort of investigative journalism typically done by newsrooms with a long-short hedge fund. The fund places trades based on scoops uncovered by reporters at the newsroom. 

Tiger Global, one of the most prolific investors in private technology start-ups during a venture boom that peaked in 2021, has raised $2.2bn for its latest venture capital fund, roughly a third of the $6bn target it touted to investors when it first announced the fund in 2022. Venture capitalists globally are struggling to raise money, signalling the end of an era of “megafunds” and a slowdown in start-up dealmaking over the coming years.

And finally

“White magic, black magic” was how historian of cubism John Golding characterised the twin founders of Modernist art, Constantin Brâncuşi and Pablo Picasso. From first to last, white magic suffuses the Centre Pompidou’s exquisite, enchanted, transfixing retrospective, writes the FT’s chief art critic Jackie Wullschläger.