The tech billionaire behind a coal board coup

One thing to start: A Goldman Sachs partner accused several executives including chief executive David Solomon of making misogynistic comments in a complaint that resulted in the bank paying her a settlement totalling more than $12mn.

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Infrastructure investors hunt for renewable gold

Mike Cannon-Brookes became Australia’s fifth-richest person by inventing productivity software used in IT departments all over the world. Now, the bearded tech billionaire is making a splash by taking on what once was the lifeblood of the Australian economy: coal.

Cannon-Brookes on Tuesday won a boardroom victory over Australia’s biggest polluter: coal company AGL.

A co-founder of Australian software company Atlassian, Cannon-Brookes owns more than 11 per cent of AGL’s shares. He successfully installed four of his nominees to its board in a campaign to steer it towards renewable energy.

The new board members — including former Tesla Energy director Mark Twidell — mark the latest twist in a long-running feud between AGL and Cannon-Brookes.

In February, Cannon-Brookes joined forces with private equity group Brookfield Asset Management in an attempt to take over the energy group. That bid failed, but he bought a minority stake in AGL and successfully derailed a long-planned demerger of its coal-fired plants after shareholders backed his opposition to the plan in May.

The board coup was a “scathing indictment on those who spent years destroying shareholder value by delaying the inevitable in the face of an escalating energy transition”, said Brynn O’Brien, executive director of the Australasian Centre for Corporate Responsibility.

For infrastructure investors like Brookfield, the transition to cleaner power sources is a huge opportunity for M&A.

Just last week, the Canadian alternative investment manager’s Global Transition Fund, which is co-led by former Bank of England governor Mark Carney, teamed up with EIG Global Energy Partners for a $12bn break-up bid for Origin Energy, another Australian energy company.

The A$18.4bn ($11.8bn) offer would be one of the biggest private equity-backed buyouts of an Australian company, and open the door to more private equity opportunities in the country. Stewart Upson, Brookfield’s managing partner of infrastructure, said the group planned A$20bn in additional investment in Origin’s renewable capacity by 2030.

Legacy cash flows can finance some of the investment, but the size of investments also gives alternative firms like Brookfield the chance to deploy capital in more uncertain markets.

Carney estimated that $150tn must be invested globally by 2050 to drive decarbonisation. Brookfield and firms like KKR, Global Infrastructure Partners and EQT are well positioned to find opportunities as economies in south-east Asia and western Europe cut their dependence on coal.

Cannon-Brookes has won this activist battle, and he won’t have to worry about fending off shareholder unrest at Atlassian, which has fallen by two-thirds over the past year.

He and co-founder Scott Farquhar still control 88 per cent of Atlassian’s voting power.

Chris Hohn has a few gripes with Google

As Twitter, Meta, and Amazon have been culling their ranks over the past month to defend against an economic slowdown, Google staff had a big reason to be worried.

But the tech giant has held steady on headcount. That could be about to change.

Activist investor Chris Hohn, whose firm TCI owns an approximately $6bn stake in parent company Alphabet, has called for “aggressive action” including a dramatic cut in Google’s long-running investment in driverless cars and a big increase in share buybacks.

“All of Silicon Valley has seen similar problems of having over-hired and overcompensated people and they are taking action,” Hohn told the FT’s Richard Waters and Tabby Kinder. “This is a broad theme across the major tech companies that need to attack costs. But Alphabet is doing the opposite.” 

On top of cutting employee pay by reducing stock remuneration and other bonuses, Hohn called on Alphabet to dramatically cut spending on its so-called moonshot projects. That includes Waymo, the driverless car unit he says is the culprit for significant losses.

“It’s been a failure. There’s no revenue model,” he said of the project.

Hohn is limited in how far he can take his campaign. Google founders Sergey Brin and Larry Page control 51 per cent of the votes in Alphabet through a special class of voting shares, protecting them from potential proxy fights.

Google chief executive Sundar Pichai may opt to engage with Hohn, however, since he’s just saying what’s on many minds.

A hiring spree at Google’s internet business, which accounts for more than 99 per cent of Alphabet’s revenue, has long been a source of discontent on Wall Street — even more so this year as growth has slowed and recruiting has picked up.

The smart money was conservative in the third quarter

Analysts (and investor relations professionals) are still combing through this week’s deluge of filings with the Securities and Exchange Commission for disclosures that will show which stocks big money managers are betting on.

But the early read, after a relatively tortuous year that’s seen long-short equity hedge fund managers down 13.3 per cent, showed many remained disciplined. The lack of conviction in the market’s direction — as interest rates surge and expectations of a recession intensify — has kept a number of high-profile managers on the sidelines.

After a brutal year for tech shares, a number of funds slashed their positions in Facebook owner Meta. David Tepper’s Appaloosa; Philippe Laffont’s Coatue Management; and Renaissance Technologies all reduced their stakes in the social media company, while Glenview Capital Management exited altogether.

Coatue also cut its position in Tesla, ditto Dan Sundheim’s D1 Capital Partners.

Instead, hedge funds turned to one popular stock: Amazon. Data from Bloomberg estimated that it was the biggest increase to a single position by the fast-money crowd, with Renaissance buying more than 3mn shares.

The downbeat positioning and sentiment among investors, who have been running relatively light on leverage this year as they’ve cut positions in the sell-off, might remain the case until there’s substantial progress in the fight against inflation and the Federal Reserve ultimately pivots. It is part of the reason JPMorgan Chase’s top strategist recently dialled back his optimistic bet on the US stock market.

Job moves

• Nelson Peltz, the billionaire founder of Trian Fund Management, has resigned from the board of asset manager Janus Henderson, where he and Trian co-founder Ed Garden took seats earlier this year as part of an activist campaign. Trian partner Brian Baldwin will replace Peltz.

• HSBC’s global head of strategy, Chirantan Barua, is leaving the bank less than three years after joining, to become chief executive of Lloyds Banking Group’s Scottish Widows business.

• News Corp executives in London have told associates they expect Emma Tucker, the editor of The Sunday Times, to replace The Wall Street Journal’s editor-in-chief Matt Murray, according to Semafor.

• Hogan Lovells UK M&A co-head Ben Higson is leaving to join US energy law firm Vinson & Elkins, based in London.

Smart reads 

Better than nothing Credit Suisse has provided limited financial details on its plan to sell billions in securitised products to Apollo Global Management. A fuzzy deal will have to suffice for now, Reuters’ Breakingviews writes, as shareholders in the Swiss lender hope to de-risk its investment bank as quickly as possible.

Swing and a miss As FTX was sliding towards bankruptcy, the crypto exchange sought to raise up to $10bn in emergency funding. Alphaville has reproduced the “unique” term sheet that SBF sent to potential investors.

Hot commodities Holding companies connected to Ron Perelman claim that some of the works in the New York financier’s art collection were damaged in a 2018 fire. His insurers say the fire never touched the paintings.

News round-up

Global investigators pounce as FTX collapse leaves potentially 1mn creditors (FT)

FTX bankruptcy case stalls as lawyers confront crypto chaos (FT)

Steel magnate Sanjeev Gupta nears deal with creditors led by Credit Suisse (FT)

HMRC sues EY over alleged misrepresentations in Ritblat tax case (FT)

Axa seeks better Monte dei Paschi deal after leading capital raise (FT)

Billionaire-run Kotak bank rules out CEO’s son as boss (Bloomberg)

Fixed income trader bonuses to rise 25% as dealmaker pay tumbles (Financial News)

TSMC/Warren Buffett: Taiwan chipmaker merits a ‘forever’ trade (Lex)