☕️Frothy Factoring

Good morning.

US investment bank, Jefferies, disclosed that its Leucadia Asset Management fund holds about USD715 million ($1.08 billion) in receivables linked to bankrupt auto-parts maker First Brands Group. Earlier this month, court documents revealed that funds under UBS Group also face over USD500 million of exposure to the collapsed auto supplier.

Neither firm has indicated any significant direct exposure as yet, and analysts at Morgan Stanley calculated Jefferies’ possible total exposure, as an investor in the funds, at USD44 million. 

Even if the loss can be shrugged off, the bankruptcy is intensifying concerns that corporate credit markets have gotten too frothy and don’t adequately reflect risks to borrowers.

The auto-parts supplier relied heavily on factoring, making it the biggest trade finance bust since 2021, when Greensill went belly up, eventually culminating in the collapse of Credit Suisse.

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Market movers

Shares in building materials group James Hardie jumped on Wednesday after preliminary second-quarter results exceeded guidance on margins and earnings, driven by stronger siding and trim performance and lower tax. Its New York-listed stock had risen 8.1% on Tuesday and held up gains rising 0.85% overnight.

The quick sync

• IREN expects AI contracts to drive annualised revenue from USD2.4m to over USD500m as it seeks up to USD1.5b to fund its GPU and data centre buildout. (Capital Brief)

• Sandon Capital in push to remove the Southern Cross board and change its constitution at the AGM in protest against its nil-premium merger with Seven. (Capital Brief)

• News Corp’s Michael Miller calls on Labor to reject copyright changes that would allow AI companies to use news content without payment. (Capital Brief)

• Optus’ misdirected triple zero outage alert has triggered fresh fallout and sharpened calls for executive accountability. (Capital Brief)

Trading floor

M&A

• Pro Medicus lands $10m contract to supply Visage 7 to University Hospital Heidelberg and German Cancer Research Institute. (Capital Brief)

• Igneo’s 15.1% Adelaide Airport stake to be bought by existing investors, with IFM set to lift its holding to 30%. (AFR)

• Victoria’s O’Connor Beef is on the market for about $100m, with potential buyers including JBS and Brazil’s Minerva. (The Australian)

• MA Financial and Keppel REIT buy Top Ryde City Shopping Centre for $525m; MA Financial to manage the asset. (Capital Brief)

• Airtasker inks $5.1m media-for-equity deal with Channel 4 to accelerate UK expansion. (Startup Daily)

• Singapore’s Sembcorp is progressing merger talks with Alinta Energy, following high-level discussions on energy cooperation between both nations’ leaders. (AFR)

• Bain Capital is working with Barrenjoey on a potential $1b+ sale or float of aged-care group Estia next year, amid renewed investor interest in the sector. (The Australian)

• Johns Lyng shareholders greenlight $1.1b Pacific Equity Partners buyout; ASX trading to halt 14 Oct. (Capital Brief)

• OpenAI won a $50,000 Treasury contract for a 12-month software trial, granted without tender under federal procurement rules. (AFR)

• South32 is working with Macquarie Capital on a possible $1b sale of its Cannington silver mine. (The Australian)

• SoftBank to buy ABB’s $8.2b robotics unit, boosting its AI and automation push. (Capital Brief)

• Global funds GIC, John Laing, and APG are bidding for Ontario Teachers’ stake in the Sydney desalination plant. (The Australian)

Capital Markets

• Nakatomi raises $3.5m to expand its startup venture-building platform. (Capital Brief)

• Toubani Resources seeks $390m to fund Kobada gold project targeting 162,000oz yearly output. (AFR)

• Catalyst Metals’ gold output dips on maintenance delays but full-year targets unchanged. (Capital Brief)

• Magellan Financial Group’s assets under management rises $600m in Q3, with institutional growth offsetting retail declines. (Capital Brief)

• Lifestyle Communities Q1 sales flat at 50; inventory and debt fall, marketing lifts customer interest. (Capital Brief)

• NRW upgrades FY26 guidance following $200m Fredon buyout; revenue now seen above $4b. (Capital Brief)

• Aura Group launches $30m pre-IPO ahead of $150m ASX float in 2026. (AFR)

• DroneShield slips on Q4 AI software upgrade for its drone detection and disruption systems. (Capital Brief)

• Mesoblast jumps on strong Ryoncil sales; Bell Potter lifts valuation to $4. (Capital Brief)

• Qantas faces possible data leak after Salesforce rejects ransom demands from hacker group Scattered Lapsus$ Hunters. (AFR)

• Idemitsu-backed Graphinex raises fresh funds, valuing the graphite player at over $200m. (AFR)

• Nvidia backs Musk’s xAI, pushing its funding round to USD20b, linked to GPU use in Colossus 2. (Capital Brief)

• RBNZ cuts OCR 50bps to 2.5%, larger than expected, aiming to reduce inflation toward 2%. (Capital Brief)

• Gold tops USD4,000/oz for first time amid US turmoil; ASX miners drop on profit taking. (Capital Brief)

• EU unveils EUR1b plan to boost AI use and research across key industries. (Capital Brief)

• US pressures EU to ease green rules, calling them unfair to American firms and threatening trade deal progress. (Capital Brief) (FT)

• IREN’s AI deals boost annual revenue by $225m as it launches up to $1.5b capital raise. (Capital Brief)

• Fed minutes show support for more rate cuts, though inflation concerns linger. (Capital Brief)

• After Deloitte’s AI blunder, EY, KPMG, PwC and BCG tout safeguards as pressure mounts for AI disclosure on federal work. (AFR)

• Trouble-prone ASX blunders again, letting TrivarX trade before revealing key clinical trial and deal news. (AFR)

• BlackRock moves to withdraw from a Jefferies fund after payments stopped on USD715m in First Brands receivables before it filed for bankruptcy. (Bloomberg)

• Diversa awarded its CEO a $777,000 bonus while overseeing $250m in consumer investments into First Guardian. (AFR)

• Japan’s second biggest IPO this year priced at top of range. (Bloomberg)

• JPMorgan is creating a multi-block Midtown base around its new 60-storey NY tower, backed by nearly USD5b in property moves. (Bloomberg)

• Polymarket founder is youngest self-made billionaire after deal with NYSE owner. (Bloomberg)

VC 

• New Energy Transport completes zero-emission freight trial with Who Gives A Crap and Volvo, proving electric heavy transport can rival diesel on cost. (Startup Daily)

• Maxine Minter says if women want to lead in Australian VC, starting funds is one clear path. (Capital Brief)

• David AI raises USD50m to bring audio data to AI models. (Bloomberg)

• Base Power raised USD1b led by Addition to expand residential battery production and build a manufacturing plant. (Bloomberg)

  
  

People moves

• Healius names BIS’s Andrew Thomson as new CFO, adds Eric Swayn to head lab operations. (Capital Brief)

• Kic appoints Jane Martino as CEO to steer expansion into broader wellness offerings. (AFR)

• Betr adds CEO Andrew Menz and ex-Nine exec Alexi Baker to board after Tim Hughes’ exit. (Capital Brief)

• UBS real estate head Tom Bodor departs for rival Jarden. (AFR)

• Alliance founder Scott McMillan to step down as MD in November, staying on until July 2026. (Capital Brief)

• CVC hires Rest Super deputy CIO Simon Esposito after Australian Venue Co deal. (AFR)

• State Super’s investment team moves to Frontier Advisors, offering independent CIO services; State Super becomes a Frontier owner. (Capital Brief)

• Sandon Capital vows to push for a board spill at Southern Cross, calling its planned Seven merger a “nil-premium reverse takeover.” (Capital Brief)

• Elon Musk and X settle USD128m lawsuit brought by former Twitter CEO Parag Agrawal and three senior executives over unpaid severance. (Bloomberg)

• Goldman Sachs’ co-head of Spain and Portugal steps down after executives moved to end his role over critical op-eds he wrote about Donald Trump. (Bloomberg)

The watercooler