The clock’s ticking on the AI boom

One scoop to start: HSBC moved a board meeting scheduled to take place in Dubai this month to London amid concerns over safety as the war in Iran continues to disrupt executive travel to the region.

And another thing: Shale oil magnate Scott Sheffield has alleged ExxonMobil collaborated with the Federal Trade Commission in a “smear campaign” to keep him off the supermajor’s board following its $60bn takeover of his company in 2024.

Welcome to Due Diligence, your briefing on dealmaking, private equity and corporate finance. This article is an on-site version of the newsletter. Premium subscribers can sign up to get the newsletter delivered every Tuesday to Friday. Standard subscribers can upgrade to Premium here, or explore all FT newsletters. Get in touch with us anytime: [email protected]

In today’s newsletter:

• The IPO bonanza in limbo
• America’s incoming banks
• The new finance chief at Diageo

The IPO bonanza in limbo

America’s incoming banks

The new finance chief at Diageo

Wall Street’s AI windfall hangs in the balance

The AI labs spending hundreds of billions of dollars in pursuit of superintelligence are racing to IPO at more-than-trillion-dollar valuations, but their plans to break stock market records keep getting postponed.

OpenAI had previously targeted this autumn for a listing, but chief executive Sam Altman said earlier this month it was unlikely to come before 2027. He’s said it would be an “ill-advised moment” to go public amid rising concerns about the existential risks posed by AI, and the group is weighing a private funding round at a $1.2tn valuation in the meantime.

Anthropic’s prospectus had been expected soon after Labor Day for an IPO at a valuation of $2tn or more. But it still hasn’t landed and now the group is reportedly aiming for a November listing, giving the company little room for error before the winter holidays arrive.

Both companies are growing at breakneck speed even by tech industry standards. The usage of their tokens, the units of data that comprise AI queries, has expanded by 250 times since the start of last year, according to OpenRouter. A growing web of tech groups and data centre developers is increasingly dependent on them for future revenues.

The heavily lossmaking OpenAI is on track for revenues of $36bn this year while Anthropic hit annualised revenue of $65bn at the end of July and has told backers it will be profitable this quarter, albeit on a heavily adjusted basis.

New risks abound, such as possible price wars as they attempt to stay ahead of cheaper and more easily customisable open-source models. Both also face the risk that AI tools become commoditised if customers don’t require the most cutting-edge models.

Even more immediate is the growing political backlash. Voters were already worried that AI would mean rising energy costs and job losses when an Anthropic researcher (and former OpenAI employee) wrote on X earlier this month that “the people building AI earnestly believe that it could kill us all by the end of the decade”.

The industry’s leaders have been forced to show they’d like to avoid an extinction event, and Altman and Elon Musk have since rallied behind a call from Anthropic’s Dario Amodei to slow AI development.

While the giants of the AI industry haven’t suggested they will abandon their IPO plans, the growing concern is hitting the infrastructure groups whose valuations are underpinned by expectations of the labs’ astronomical demand for computing power in the coming years.

Over the past week both SoftBank’s US data centre developer, SB Energy, as well as nuclear energy group Holtec International, which hopes to supply power to AI data centres, have delayed their own IPOs. Holtec’s chief executive Kris Singh said it faced a “perfect storm” of adverse “market sentiment” around AI data centres.

The storm clouds are also hanging over a data centre leased to Oracle whose $18bn of loans slid into stressed territory on Friday amid fierce local backlash and state permitting challenges.

The bet on AI has spurred the biggest investment boom ever seen on Wall Street and could bring some of the biggest IPOs in history, so DD suggests paying close attention as the AI trade starts to look more tenuous.

Revolut and Nubank chase the American dream

America’s most famous banker is envious of Europe’s most highly valued fintech.

“I’m jealous, damn it. You watch these people. They move,” said Jamie Dimon of Revolut’s European growth earlier this year.

Now Europe’s Revolut and Brazil’s Nubank are coming for Dimon’s Chase customers. The companies — worth $115bn and $67bn, respectively — are making a push in the hypercompetitive US market.

The window has never been more open. US regulators are championing fintech and crypto companies and encouraging them to apply for banking licences. They’ve already issued conditional approval for banking charters to both Nubank and Revolut.

Under previous regimes, regulators were reluctant to hand out bank licences. This left foreign fintechs having to work with partner banks or buy banks to get their licences.

This was not ideal for Revolut and Nubank, which like to build their systems from scratch and don’t rely on branches.

“If you look historically at Citigroup or other large banks, the way they expanded internationally, they were buying other banks,” Revolut chief executive Nik Storonsky recently told the FT. Already antiquated technology was further weakened by the messy amalgam of acquisitions.

Having banking licences removes one of the historically most significant hurdles.

But even as they secure that regulatory green light, it will be hard for any digital bank to find commercial success in the US, which is saturated with thousands of providers.

In Europe, Revolut succeeded by offering sleek digital payments and free cross-border payments. But unlike Europeans, American consumers are hooked on their credit cards, which come with very attractive loyalty incentives.

In Brazil, Nubank succeeded by tapping into the large underbanked population. This is a much smaller niche in the US, where consumers are spoiled with thousands of banks and credit unions.

But the rival fintechs are making high-stakes bets as their lofty valuations hinge on expectations for long-term success in the US. Revolut in particular will need to make inroads in order to continue to justify its price ahead of a planned 2028 IPO.

Slumping Diageo enters a ‘drastic’ new era

Drinks giant Diageo’s new boss “Drastic” Dave Lewis has replaced his finance chief Nik Jhangiani with a former colleague from his Tesco days, WPP CFO Joanne Wilson.

Jhangiani’s future at the Johnnie Walker maker has been a source of speculation since Lewis took the helm of Diageo in January.

Lewis’s predecessor, Debra Crew, told Diageo’s chair last year that her job had been made untenable by the board’s failure to quash speculation that Jhangiani was angling for her job. Crew stepped down last July and Jhangiani was appointed interim chief. Investors expected Jhangiani to be the board’s permanent pick for the top job, but Lewis pipped him to the post.

In a statement on Wednesday, Lewis said the two had agreed it was “the right time for a change”.

Wilson, who is expected to join Diageo next year, will have her work cut out helping Lewis turn around the struggling drinks group.

Inflation, tariffs, wars and a trend for alcohol moderation have weighed on sales and investor confidence. Lewis has pledged to cut $1bn in costs over the next three years and slash thousands of jobs.

The executive, who earned his “drastic” moniker from his tenure at Tesco, has paused all dealmaking while he focuses on fixing the business.

Job moves

• Sunil Kaushal, Standard Chartered’s former co-head of corporate and investment banking, has joined Abu Dhabi-based boutique advisory firm Elaeo Partners as vice-chair, DD is first to report. Elaeo is backed by the founders of SC Capital Partners and Revcap, and its team includes several former StanChart bankers.
• JPMorgan Chase has hired Adriaan van der Knaap as a vice-chair in private capital advisory and solutions in New York. He joins from Apollo Global Management.
• Jefferies has hired Dirk Vanschependom as head of capital structure solutions for the Middle East and north Africa. He was previously chief financial officer of NEOM.

Sunil Kaushal, Standard Chartered’s former co-head of corporate and investment banking, has joined Abu Dhabi-based boutique advisory firm Elaeo Partners as vice-chair, DD is first to report. Elaeo is backed by the founders of SC Capital Partners and Revcap, and its team includes several former StanChart bankers.

JPMorgan Chase has hired Adriaan van der Knaap as a vice-chair in private capital advisory and solutions in New York. He joins from Apollo Global Management.

Jefferies has hired Dirk Vanschependom as head of capital structure solutions for the Middle East and north Africa. He was previously chief financial officer of NEOM.

Smart reads

Corporate lawfare Billionaire investors have taken to accusing their recalcitrant creditors and shareholders of ganging up illegally, Lex writes. Hollywood super-agent Ari Emanuel is the latest to do it.

‘Slopfiling’ Companies are revealing the extent of their ChatGPT use in financial filings, where they’re citing results from the chatbot on topics such as total addressable markets and future growth prospects, FT Alphaville writes.

Credit business Private credit groups want to get in on JPMorgan’s dominant credit card business, The Wall Street Journal reports. They may have a chance to do so as the bank looks for partners to take on the credit card applicants it deems too risky.

News round-up

Barry Diller abandons $18bn takeover bid for MGM Resorts (FT)

Ryanair boss tells investors to ‘grow up’ over his €150mn share scheme (FT)

Lidl owner among suitors circling Tesco’s European business (FT)

Arnault family moves to consolidate control of LVMH (FT)

Turkey arrests founder of brokerage at centre of $18bn alleged Ponzi scheme (FT)

Swiss lawmakers back tougher bank capital rules in blow to UBS (FT)

Drone specialist Tekever’s valuation soars fivefold to $6.4bn (FT)

Morgan Stanley investment-bank list leaked in email misfire (BBG)

Due Diligence is written by Arash Massoudi, Ivan Levingston, Ortenca Aliaj, Alexandra Heal, Robert Smith and Aaron Kirchfeld in London, James Fontanella-Khan, Sujeet Indap, Eric Platt, Antoine Gara, Amelia Pollard, Kaye Wiggins, Oliver Barnes and Julia Rock in New York, George Hammond and Tabby Kinder in San Francisco and Arjun Neil Alim in Hong Kong. Please send feedback to [email protected]

Recommended newsletters for you

The AI Shift — John Burn-Murdoch and Sarah O’Connor dive into how AI is transforming the world of work. Sign up

Unhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up