Succession watch at LVMH

One listen to start: On the latest Behind the Money podcast, the FT’s US financial editor Brooke Masters and DD’s Antoine Gara explain why BlackRock’s Larry Fink decided to acquire GIP, and how this deal sets the agenda for Wall Street this year.

In today’s newsletter:

• New blood at a $366bn family business

• Citi’s journey into the Chinese market

• Adrian Binks’s oily media empire 

LVMH’s boardroom, a family affair

French billionaire Bernard Arnault’s family control of the LVMH empire has never been in question.

However, as the “wolf in cashmere” nears his 75th birthday in March, his moves are being closely watched for any hint of who may succeed him one day atop the world’s biggest luxury group.

He is now poised to take another step towards consolidating control of his family’s next generation over the company by nominating two more of his sons to the board.

Both Alexandre, 31, and Frédéric, 29, will be put forward as candidates for the board, according to two people familiar with the decision. LVMH declined to comment on the nominations.

Earlier this month, Frédéric was promoted to head of LVMH Watches, overseeing the Tag Heuer, Hublot and Zenith brands. Alexandre has overseen communications at US jeweller Tiffany & Co for three years. 

If voted through at the company’s annual meeting in April, four out of five of Arnault’s children will sit on the group’s board as Frédéric and Alexandre join older siblings Delphine, 48, and Antoine, 46.

Succession is one of the elder Arnault’s least favourite subjects to discuss in public. And it seems he is in no rush to pass the baton imminently: he extended the age that he could remain chief executive at the group to 80 in 2022.

Over a Lunch with the FT in 2019, he said that handing over the company to the next generation would be done “according to their will, their abilities, their skills”.

Arnault’s latest plans for the board come alongside other changes inside the company’s managerial ranks.

Delphine, the eldest, took over as chief executive of fashion house Dior — the group’s second-biggest brand after Louis Vuitton — last year and sits on LVMH’s executive committee.

Antoine recently stepped back from his role as chief executive at leather goods brand Berluti to head family holding company Christian Dior SE, in addition to being the group’s head of image and sustainability.

Given that Arnault’s family owns 48 per cent of LVMH shares and about 64 per cent of group voting rights, his children’s future leadership would appear to be all but assured.

“Succession is not a topic we think about today,” Frédéric told the FT in a January interview.

“It will come in due time. And he’s a master of timing.”

The story behind Citi’s China expansion

At Davos this month, JPMorgan Chase chief executive Jamie Dimon struck a cautious note on China. “The risk-reward calculation has changed dramatically,” he said, adding that these days China represents more of the former for his company. 

So on the surface it might seem odd that Citigroup has chosen this moment to expand in China, with plans to set up a wholly owned investment banking unit in the country. But there is more to it than meets the eye, DD’s Kaye Wiggins and the FT’s Stephen Gandel report.

Citi applied for a licence to run a mainland investment banking unit back in 2021, months after rivals Goldman Sachs, Morgan Stanley and JPMorgan took full control of their own units in the country. Late last month, China’s regulator conditionally approved it. 

It is not an easy moment to expand in China. Other global banks have reported sharp falls in the profits of their Chinese investment banking entities, citing US-China trade tensions, China’s property crisis and reduced onshore stock trading among the reasons. 

But one significant shift in Chinese corporate finance has made the mainland licence more desirable. Chinese companies are increasingly listing in Shanghai and Shenzhen instead of Hong Kong and New York — a move that made the mainland stock exchanges the world’s biggest listing destinations by value in 2022 and 2023. 

Getting the licence means Citi will be able to pitch itself as a full-service bank to its mainland clients. Mainland listings, with their low fees, are not lucrative for foreign banks. But the shift will end a situation in which Goldman Sachs and others could underwrite listings in the world’s biggest market at a time when Citi could not.

Unlikely media tycoon

After an early career at the UK energy group BP and as an oil industry analyst in London, Adrian Binks in 1984 took management control of a small newsletter business. 

The bet proved extremely lucrative.

On Monday, Binks’s company — which he developed into a global energy and commodity intelligence provider under the name Argus Media — was valued at $4.6bn including debt as part of a deal that will see him take control.

Under terms of the agreement, private equity group Hg will fully sell its stake in the company, which it acquired in 2020.

General Atlantic, which first invested in Argus in 2016 in a deal valuing the business at about £1bn including debt, will end up retaining a sizeable minority shareholding.

Argus’s origins trace back to its founding in the 1970s by Jan Nasmyth, a former Treasury official and British Army officer, as a weekly newsletter called Europe-Oil Prices covering European petroleum products. The company subsequently grew by acquiring other companies and counts Platts, part of credit rating company S&P, among its competitors.  

The company’s growth has been fuelled by a split dynamic, convincing regulators it is a media company and investors that it is a data company.

Today, Argus provides more than 11,000 customers with news and price information on energy and commodity markets.

The original deal with General Atlantic made several of the company’s 180 employee shareholders, including some of its most senior journalists, into multimillionaires from their holdings.

DD can only wait for the newsletter windfall to arrive. 

Job moves

• Scott Stuber, the producer who heads Netflix’s movie studio, is leaving the streaming group in March to launch a new film company. Bela Bajaria, Netflix’s chief content officer, will oversee the film team while the company looks for a replacement.

• Baker McKenzie has hired Eric Schwartzman as a partner in San Francisco. Schwartzman, who joins from Latham & Watkins, will be head of private equity in California.

• European VC Cherry Ventures has promoted Dinika Mahtani to be its first London-based partner.

• Astorg has named four new senior hires. Tobias Nordblom, Alexandre Dussaucy, Corinne Schreiber and Valérie Legat will be managing directors at the firm.

• Connie Chan, a leading consumer internet venture capitalist, is leaving Andreessen Horowitz, according to The Information, which added that she may raise her own new fund. Anish Acharya, a partner at the firm who focuses on enterprise and financial technology businesses, now leads the consumer team. 

Smart reads

Weight-loss glut Other drugmakers could still “win” the race in the rapidly growing obesity market dominated by Novo Nordisk and Eli Lilly, the chief executive of biotech company Zealand Pharma tells the FT.  

Mexican momentum Bankers are convinced that Mexico is having a moment as its share of Latin American deal fees grows, according to Bloomberg. 

Passive problem Research bolsters the view that passive investment strategies are undermining the efficient markets hypothesis, the FT’s Katie Martin writes.

News round-up

Abrdn to cut hundreds of jobs as part of £150mn restructuring plan (FT)

Netflix strikes $5bn deal to livestream WWE’s Raw show (FT)

Lufthansa’s bid for ITA Airways stake faces EU scrutiny (FT)

Adler’s restructuring plan dealt blow by London court (FT)