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Two scoops to start, first: Standard Chartered has sounded out UK political heavyweights Sir Charles Roxburgh and Sir Sajid Javid as potential candidates for its next chair when José Viñals steps down. More details here

And, a fun one . . . the FT’s Madison Darbyshire reveals the man who is behind the popular finance meme-focused Litquidity social media account.

Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an on-site version of the newsletter. Sign up here to get the newsletter sent to your inbox every Tuesday to Friday. Get in touch with us anytime: Due.Diligence@ft.com

In today’s newsletter:

  • Adam Neumann targets WeWork

  • Harvey Schwartz’s first year at Carlyle

  • Michael Klein navigates Saudi-US 

SoftBank and Neumann: We only part to meet again

Adam Neumann is the ex you can’t shake. 

Four years after Masayoshi Son’s SoftBank gave him a billion-dollar package to go away and took over WeWork — a company that was doomed to fail but in which it had sunk $16bn — Neumann has basically sent Son a “u up?” text.

SoftBank and Neumann have once again found themselves sitting around a table together in what must be a serious case of bad déjà vu for the Japanese conglomerate. 

Neumann wants to buy WeWork out of bankruptcy, and SoftBank, as one of the company’s largest creditors, has to entertain the idea. 

This all came to light on Tuesday morning when Neumann’s lawyer sent a letter to WeWork complaining that it wasn’t playing ball with its one-time chief executive. Alex Spiro, a partner at Quinn Emanuel and close friend of Elon Musk, is acting on behalf of the entrepreneur. 

The letter states, with no apparent irony, that WeWork’s unwillingness to engage with Neumann, who was ousted from the company in 2019 after racking up billions of dollars in losses, had “jeopardised the ability of the company to . . . maximise value for all stakeholders”.

Neumann hasn’t given up on his aim to elevate the world’s consciousness and he’s hoping a few well-heeled Wall Street executives are going to join him. The only one named in the letter is Daniel Loeb’s hedge fund, Third Point

DD’s Ortenca Aliaj and Eric Platt learned that Neumann sat down with Third Point and SoftBank in October to discuss a potential deal, but there was no agreement and WeWork was largely focused on renegotiating its leases. Sources said there had also been informal talks between Loeb and Neumann but the nature of those discussions is now in question. 

In the letter, lawyers refer to a “partnership” between Neumann, Flow (his newest real estate venture) and Third Point, which most people understood to mean that Loeb’s hedge fund had agreed to back the bid.

But the New York-based firm issued a public statement saying it had only ever had “preliminary” conversations and “has not made a commitment to participate in any transaction.” 

The real question is whether Neumann has overplayed his hand to force WeWork to engage and this leads to Third Point backing out entirely. 

It isn’t the first time Neumann has tried to get back into the company he built from a small start-up into a business that some investors valued at $47bn. He apparently attempted to arrange $1bn in financing to stabilise the company in October 2022 but former CEO Sandeep Mathrani “shut down the process”. SoftBank could take a leaf out of his book. 

Inside Harvey Schwartz’s first year at Carlyle

In December, at a party among alumni of Carlyle Group, its chief executive Harvey Schwartz made a surprise appearance.

He presented a PowerPoint containing baby pictures of the firm’s three billionaire co-founders, David Rubenstein, William Conway and Daniel D’Aniello

The gag was meant to signal to the former employees gathered that Schwartz had built a good relationship with Carlyle’s founders, unlike his predecessor, Kewsong Lee. Schwartz told the 100 or so alumni that it also showed the extent of his “forensic” due diligence into Carlyle when taking its top job last February on the belief the group is undervalued.

In a deep dive, the FT reports that Schwartz has made a big bet that Carlyle’s brand will endure a stretch of stagnation and underperformance relative to peers Blackstone, KKR and Apollo Global. But his first year as CEO came with few specific goals, while there are still concerns about the direction of the about-$400bn-in-assets investment group.

Schwartz has named lieutenants and hired confidants from his decades at Goldman Sachs, including new investor relations head Jeff Nedelman and Lindsay LoBue, who will focus on strategic initiatives.

He has prioritised growth in areas such as tapping wealthy individual investors, expanding its credit and insurance-related assets and increasing overall headcount. Schwartz has also acted on obvious changes, such as cutting costs and improving margins.

Some efforts have aggravated insiders. In the fall, Carlyle underwent its first round of lay-offs in its buyouts business since the 2008 financial crisis. 

Under Schwartz’s direction, the firm has tightened up many non-compete agreements for many of those who remain, making it more restrictive for senior employees if they chose to defect to rivals, reports the FT.

Some issues, such as performance at the group’s buyout business, are out of Schwartz’s hands. 

Carlyle is raising new buyout funds in Europe and Asia, but like its recently closed US buyout fund that struggled to raise cash after former Carlyle CEO Lee’s surprise August 2022 exit, their predecessor funds have earned poor returns. 

A lot will hinge on the forthcoming year, when investors will expect more clarity from Schwartz and clear signs of a pick-up in momentum. 

De-Klein to comment

Star dealmaker Michael Klein has found himself in an uncomfortable spot, fielding angry questions from US senators about why he is not giving them documents about his lucrative work for Saudi Arabia’s $700bn sovereign wealth fund.

The US Senate’s permanent subcommittee on investigations is looking into the Public Investment Fund’s deals in the US, including its planned investment in the PGA Tour. But it has been frustrated that Klein and the consulting firms McKinsey, BCG and Teneo are not complying with subpoenas.

That is because PIF has sued the firms in Saudi Arabia to prevent them handing over sensitive documents, and threatened the firms’ employees with imprisonment if they do so.

“As I hope the committee can understand, that is simply not a risk I can take for myself or for my employees,” Klein told the subcommittee’s hearing on Tuesday.

“The reality of being caught between two legal orders from two sovereign nations is challenging, and it’s not one that I have faced before,” he added. “But please know I sit here in front of you as a proud American. I am a New Yorker. I am someone who has built a business, attracted capital to the United States and helped create US jobs.”

His firm M Klein helped broker the legal truce between the PIF and the PGA Tour over the Saudi’s breakaway LIV Golf tournament, which is designed to include a PIF investment in the PGA Tour — a deal that angered senators and sparked the subcommittee investigation.

California Senator Laphonza Butler — after confirming that all four companies are still in business with the PIF — asked the obvious question: is it a standard practice to continue working with clients who have sued you and threatened your employees with possible imprisonment?

Read more on the hearing here.

Job moves

  • Darcy Stacom, dubbed the Queen of the Skyscrapers and one of the most powerful figures in New York City real estate, is leaving brokerage firm CBRE after 22 years to start a boutique advisory firm, Stacom CRE.

  • Barclays has appointed Na Wei as global head of leveraged finance. She previously led the firm’s Emea leveraged finance business.

  • Costco has appointed Gary Millerchip as its next chief financial officer. He joins from Kroger.

  • TPG has appointed Scott Lebovitz as a partner and head of infrastructure for its Rise Climate investing platform. He previously spent more than 25 years at Goldman Sachs as a partner and global co-head of infrastructure investing at its asset management division.

  • Jefferies has hired Morgan Stanley’s global head of gaming and lodging investment banking Michael Bluhm, Bloomberg reports.

  • Freshfields has appointed Gil Perez as global chief innovation officer. Perez joins from Deutsche Bank.

Smart reads

London Underground After Zac Brettler plummeted into the Thames his grieving parents found that he’d been posing as an oligarch’s son. Would the police help them solve the puzzle of his death? The New Yorker investigates. 

Banking on banks Banking has gone digital, but JPMorgan is building bricks-and-mortar branches, The Wall Street Journal reports. 

India rising Investors are pulling billions of dollars of cash from China and redeploying it in India. Banks such as Goldman Sachs and Morgan Stanley are leading the charge, Bloomberg writes.

News round-up

India’s business elite sounds alarm over Rolex thefts in London’s Mayfair (FT) 

Eli Lilly calls for scrutiny of rival Novo Nordisk’s $11bn deal production deal (FT)

Canary Wharf office takes 60% hit in distressed sale (FT)  

UBS deepens cost cuts as it integrates Credit Suisse (FT) 

McKinsey in soul-searching mood after Bob Sternfels’ re-election (FT) 

KDDI bets on Japan’s greying shoppers with bid for Lawson convenience stores (FT) 

Reddit IPO targets low float and low valuation (FT)

Due Diligence is written by Arash Massoudi, Ivan Levingston, William Louch and Robert Smith in London, James Fontanella-Khan, Ortenca Aliaj, Sujeet Indap, Eric Platt, Mark Vandevelde and Antoine Gara in New York, Kaye Wiggins in Hong Kong, George Hammond and Tabby Kinder in San Francisco, and Javier Espinoza in Brussels. Please send feedback to due.diligence@ft.com

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