The rise and fall of a hedge fund tycoon

One thing to start: Shein’s executive chair has insisted that neither investors nor management of the fast-fashion retailer have raised concerns with him over the company’s valuation as it pursues a blockbuster London listing in the face of trade tariffs and stiff competition.

In today’s newsletter:

• Segantii Capital Management’s founder faces possible jail

• Bankrupt opioid companies team up

• Deutsche Bank’s big earners

The Wall Street saga that begins in Blackpool

In April 2021, one of the biggest block trades in history came to market: the sale of almost $15bn in Tencent shares. There was no shortage of demand. But one hedge fund with about $5.5bn under management got an eye-watering $2.2bn chunk of it.

That hedge fund was Segantii Capital Management, and the episode showed it at the height of its power. Days earlier, it had played an important role in helping banks offload their exposure to the collapse of Archegos, the family office run by the since-imprisoned financier Bill Hwang.

In a short period, Segantii established itself as the first port of call for bankers at Goldman Sachs, Morgan Stanley and other Wall Street firms when they had blocks to sell.

Today, Segantii’s founder is facing possible imprisonment. Hong Kong authorities have charged Simon Sadler with insider dealing in a criminal case that could lead to a seven-year sentence if he is convicted. (He has pleaded not guilty.)

The case is about some relatively small trades in the retailer Esprit, which took place in 2017.

The remarkable story of how Sadler, who grew up in the working-class northern English seaside town of Blackpool, came to be standing in a criminal court on the other side of the world is set out in this FT Magazine cover feature by DD’s Kaye Wiggins, Robert Smith and Ortenca Aliaj.

This is a tale of the rise and fall of a man that a former colleague said had a “me against the world” mentality. It’s a story about a grey area of global finance and how power works within it.

It’s also a story about football, about swearing, about finance guys and their nicknames, about a boss who colleagues said could reduce staff to tears, about a Blackpool watering hole called Shenanigans and about a tangerine-coloured private boat.

We hope you enjoy it over your weekend coffee.

Former pharma M&A sensations combine in bankruptcy exit

A decade ago, Mallinckrodt Pharmaceuticals and Endo were the toast of the M&A world as they used headquarters in low-tax jurisdictions like Ireland to go on deal binges.

The two speciality drug sellers were among a handful of pharma firms, such as Allergan and Valeant, now known as Bausch Health, that used “inversions” to lower their tax bills and fund aggressive takeovers cheered on by hedge fund managers Bill Ackman and John Paulson.

Now, long after the tax-fuelled M&A pixie dust has worn off, Mallinckrodt and Endo are merging for $6.7bn in a deal that comes as the pair are emerging from bankruptcy processes linked to the US opioid crisis, reports DD’s Sujeet Indap and Oliver Barnes.

Both drugmakers had their fortunes initially sour from heavy debts they accumulated during deal sprees. Then, their fates were sealed by liabilities stemming from the sale of highly addictive generic opioid painkillers.

Both companies eventually filed for bankruptcy. Alongside Purdue Pharma, they were among the drugmakers at the centre of the US opioid epidemic.

Dublin-based Mallinckrodt paid out $700mn to victims in 2023 to settle thousands of lawsuits for manufacturing a generic version of Oxycodone.

Endo agreed in 2024 to pay $465mn to settle claims with the US government as well as $450mn to state and municipal trusts to fund opioid recovery programmes.

Endo also pleaded guilty to a misdemeanour over marketing practices for its opioid product.

A trust established in the Endo bankruptcy is suing McKinsey, accusing the consulting group of being the mastermind behind what it claims were Endo’s improper marketing practices. McKinsey is contesting the charges and denies any wrongdoing.

As part of Thursday’s merger, Mallinckrodt investors will receive a 50.1 per cent share in the combined company, while Endo shareholders will receive $80mn in cash and a 49.9 per cent shareholding.

The new entity’s enterprise value of about $6.7bn is a far cry from their combined market values exceeding $30bn a decade ago.

Lex lays out the winners and losers of a complex merger and settlements that involved many of Wall Street’s savviest credit investors and bankruptcy lawyers, who at times were pitted against small opioid claimants.

The mysterious rainmakers at Deutsche Bank

Typically, the highest-paid earners at financial firms closely correspond to how the employees rank. Higher up on the totem pole, and you can expect a bigger payout. But apparently, not always.

Deutsche Bank’s highest-paid employee for 2024 could earn nearly twice as much as chief executive Christian Sewing, after the lender rewarded its top performers following a strong year for investment banking.

One individual at the bank — whose identity remains undisclosed — was paid as much as €18mn, significantly outpacing Sewing’s preliminary €9.8mn payout.

Pay increased basically across the board, with the number of employees earning more than €1mn jumping 28 per cent to 647 in 2024.

As expected, investment bankers were the biggest beneficiaries of the group’s bumper bonus season. The division raked in a 78 per cent rise in pre-tax profits, helping to push the overall bonus pool to €2.5bn — its highest level in a decade.

Deutsche has pivoted to longer-term incentive plans for its employees, meaning executives stand to win big if the bank continues to grow. Board members, in particular, could secure a total of €25.6mn in long-term bonuses if they hit all targets. That’s from €19.8mn last year.

While there was a lot of champagne-popping, not everyone fared so well. Short-term bonuses for board members were trimmed after missing individual targets.

Chief administrative officer Stefan Simon’s payout nearly halved to €1mn following a €900mn litigation hit linked to the bank’s long-running legal battles about the takeover of Postbank.

Departing chief risk officer Olivier Vigneron also had his bonus cut more than 20 per cent. The hit came as the bank struggled with loan losses and tensions with the European Central Bank over risk management.

Job moves

• Groupe Bruxelles Lambert plans to appoint Johannes Huth as a director, and he’ll also take on the role of managing director, replacing Ian Gallienne. Huth previously worked at KKR as a partner and chair of the group’s operations in Emea. Also, the firm’s chair Paul Desmarais plans to step down, and will become vice-chair. He will be replaced by Gallienne.

• Demna Gvasalia, the Georgia-born designer, will become creative director at Gucci, taking the reins as owner Kering tries to reinvigorate its largest brand after a long period of stagnation.

• KKR has appointed Timothy Barakett to its board of directors. He is the founder and chief executive of private investment firm and family office TRB Advisors.

• Donatella Versace has stepped down as creative director of her family’s eponymous fashion house after almost three decades in the role, as its US owner Capri Holdings edges closer to selling the Italian luxury company.

Smart Reads

The peace broker Steve Witkoff started out in New York real estate because he wanted to emulate Donald Trump, Bloomberg writes. Now, like the US president, he faces questions over his ability to separate business and diplomacy.

Retaliatory tariffs Elon Musk’s electric-car maker Tesla said tariffs could make it costlier to produce vehicles in the US, the FT reported.

Epstein ties Jes Staley’s legal team complained the banker had been subjected to “public humiliation” during a London court case over his ties with Jeffrey Epstein that the ex-Barclays boss said had put his marriage at risk, the FT reports.

News round-up

BAE in early talks with Japanese groups to collaborate on drones for fighter jets (FT)

Deliveroo turns first annual profit as it plots bigger grocery push (FT)

Consultants warned Aberdeen boss against Abrdn rebrand (FT)

Intel shares soar after troubled chipmaker appoints Lip-Bu Tan as CEO (FT)

Comcast-owned NBC agrees $3bn deal to broadcast Olympic Games beyond 2032 (FT)

Judge orders immediate rehiring of fired US government workers (FT)

Trump family has held deal talks with Binance following crypto exchange’s guilty plea (WSJ)

Bernard Arnault indicates he could lead LVMH until he’s 85 (Bloomberg)