FirstFT: US security officials scrutinise Abu Dhabi’s $3bn Fortress takeover

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US national security officials are scrutinising an Abu Dhabi sovereign wealth fund’s planned $3bn takeover of New York-based Fortress Investment Group amid concerns in Washington over the UAE’s ties to China, people close to the situation told the Financial Times.

The review by the Committee on Foreign Investment in the United States, an inter-governmental agency that vets whether deals can harm national security, is in its early stages and a decision is not expected for several months, the people added.

Abu Dhabi’s Mubadala agreed to buy a majority stake in Fortress, which manages about $46bn in assets and specialises in distressed debt investing, in May from Japan’s SoftBank Group. Mubadala, which is run by chief executive Khaldoon al-Mubarak, said that it intended to close the deal in the first quarter of 2024, subject to regulatory approvals.

The Cfius action comes as the Biden administration steps up scrutiny of China-related investment and prepares to unveil an executive order that would require US companies investing in certain sensitive sectors — including semiconductors, artificial intelligence and quantum computing — to notify the federal government. It would also prohibit investment in certain areas. Read the full story.

Here’s what else I’m keeping tabs on today:

Economic data: Housing prices across 20 major US metropolitan areas are expected to have fallen again in May. Separately, the Conference Board’s consumer confidence index is forecast to rise to 111.8 for July, from a reading of 109.7 in June, which was its highest since January 2022. The IMF also updates its World Economic Outlook.
Alphabet: Investors will be listening for commentary on advertising revenue, cloud growth and artificial intelligence plans when Google’s parent reports earnings after the bell. Analysts expect $72.8bn in revenue in the June quarter, including $57.4bn in advertising sales, for earnings of $1.34 a share, according to Refinitv.
Microsoft: The tech group’s stock hit a record last week after it announced a $30 monthly premium for generative AI features in its Microsoft 365 software. Investors will be keen to learn of any further integration intentions as weakness continues in its cloud and personal computing divisions. Analysts polled by Refinitiv expect Microsoft to have earned $2.55 a share on revenue of $55.5bn in the three months to June, up from $2.23 a share on sales of $51.9bn during the same quarter of 2022.
Other earnings: Biogen, General Electric, Kimberly-Clark, LVMH, Raytheon, Snap Spotify, Unilever and Visa are among those also reporting today. See the full list in our Week Ahead newsletter.

Five more top stories

1. JPMorgan Chase reimbursed former executive Jes Staley for trips to meet Jeffrey Epstein, according to allegations in court documents. Staley, who later became chief executive of Barclays, also testified under oath that he told JPMorgan boss Jamie Dimon about the late disgraced financier’s misdeeds in 2006. Here’s more from the New York court filings.

2. The heatwaves that hit North America and Europe in July would have been “virtually impossible without climate change”, said researchers who stressed that extreme weather events would occur with greater frequency. The World Weather Attribution group, an academic collaboration, added that human-induced warming made the recent extreme heat in China “at least 50 times more likely”. Read more.

3. The US general counsel of EY has resigned after two years in the role, as the firm nears the conclusion of a probe into its failure to properly handle a staff cheating scandal. EY was forced under a settlement with US regulators to appoint an independent investigator to examine the actions of staff including “senior attorneys”. Here’s more on Ann Cook’s departure.

4. Credit Suisse has been fined $388mn by US and UK regulators over the collapse of Archegos Capital for “significant failures in risk management and governance”. The collapse caused a $5.5bn trading loss and helped bring about the Swiss lender’s demise. Rival UBS, which took over the bank, could face corrective measures from Swiss regulators.

5. GlobalFoundries has criticised subsidies that Berlin is planning to offer TSMC, the world’s biggest contract chipmaker, for a planned plant in the east German city of Dresden. The US chip company’s chief executive fears the funds to its Taiwanese rival would distort competition, he told the Financial Times.

The Big Read

The latest productivity figures show that the UK’s output per hour worked was just 0.6 per cent above its pre-pandemic 2019 average in the first quarter of this year. Why do British workers turn out less for every hour they work than their counterparts in other advanced economies such as the US, Germany and France? Low investment and skills gaps may be partly to blame.

We’re also reading . . .

Chart of the day

Saudi football club Al Hilal has approached Qatar-owned Paris Saint-Germain with a €300mn bid to sign Kylian Mbappé, a record-breaking offer for the French forward who has been locked in a contract dispute with his club. The approach from Al Hilal, which is owned by Saudi Arabia’s sovereign wealth fund, highlights Riyadh’s disruptive ambitions in sport.

Take a break from the news

Wristwatches are worn, coveted and collected by men and women alike, but the balance of power is shifting. These five female figures in the world of horology are rising to prominence in different areas, from dealing to designing.