Private jets, carried interest and non-doms

One big deal to start: Siemens has agreed to buy simulation software company Altair for $10.6bn in an all-cash deal, marking one of the largest-ever acquisitions by the German industrial conglomerate.

And an auditor quits: Shares in Super Micro Computer, which enjoyed a blistering rally off the back of the hype surrounding artificial intelligence, fell more than 30 per cent on Wednesday after the server maker said EY had resigned as its auditor.

In today’s newsletter:

• Rachel Reeves unveils proposed taxes

• Carlyle chief quits fintech group’s board

• What’s up with BHP’s pursuit of Anglo?

The Budget hits rich Brits

For months Britain’s wealthiest residents have fretted about whether the new UK chancellor Rachel Reeves would push through a budget that would wreak havoc on their bank accounts.

And finally, the moment has arrived: the Labour party on Wednesday unveiled its hugely-anticipated Budget, which lays out new government expenditures and tax rules.

It’s the first budget put forward by a Labour government since 2010. And while not all of the worst fears over high taxes came true, many of them certainly did.

The big headline figure here is £40bn: that’s the grand total of tax increases, which includes higher rates on all different facets of an average British financier’s life. Private equity, second homes, private jets and private schools will all be subject to higher taxes under the plan.

Reeves took aim at offshore trusts used by rich foreigners, ignoring cries in recent weeks over a potential exodus. The government will also end the use of trusts to shelter assets from UK inheritance tax.

That’s just one piece of a broader plan to abolish the non-dom regime, which the government says will raise £12.7bn over the next five years.

One European businessman said he had “zero regrets” that he began moving his family to Switzerland earlier this year.

However, government analysis suggests that the fears of rich foreigners leaving the country are overhyped. Only 1,200 non-doms out of a total of 74,000 are likely to leave because of the changes to the regime. That’s just 1.6 per cent.

The budget also reconfigured the much-talked-about tax on carried interest — the share of profits that private equity managers get to keep when they exit investments — which DD wrote about earlier this week.

The tax on carried interest will go from 28 per cent to 32 per cent in April. And maybe even more importantly, the government proposes to reclassify it from capital gains to income starting in 2026.

Under the new reclassification, it would be taxed at a lower rate than the top income tax rate of 45 per cent, and “with bespoke rules to reflect its unique characteristics”, according to the Treasury.

Even still, advisers warned that Reeves had left the door open to further changes. One leading tax lawyer was particularly blunt: the new rules are a “ticking bomb”.

Harvey Schwartz ditches fintech board

While the Bank of London might sound like a centuries-old lender with a bounty of institutional experience, it couldn’t be farther from it.

Instead, DD readers might remember that it’s a troubled, relatively new fintech “unicorn” that ran into problems in September when UK tax authorities issued a winding-up order over unpaid debt. They later withdrew the notice, but questions over the bank’s financial health lingered.

The bank suffered its latest setback on Wednesday when Labour grandee Peter Mandelson and Harvey Schwartz, chief executive of the Carlyle Group, left the board of directors.

They’re not the first ones to depart. The bank’s founder Anthony Watson, who was previously an executive at Barclays, stepped down as CEO in September, and has also left the board. 

When the start-up descended into chaos last month, Mandelson and Schwartz’s presence on the board — by far the two most senior figures — became a bit of a mystery. Their involvement lent the start-up credibility. But what was in it for them? 

After the order from tax authorities, the Bank of London raced to raise cash. It announced last month that it had raised £42mn in fresh funding that was led by existing investor and board member Mark Tluszcz.

The group’s relatively new. Its main UK banking entity only received a full unrestricted licence from British regulators last year. It first received a licence with restrictions in 2021.

Schwartz, who previously worked at Goldman Sachs, remained completely mum on the crisis at the bank even though he served as group chair.

“[The bank] is strengthening compliance, risk management and operational frameworks to provide reliable, resilient banking solutions for its UK clients,” a spokesperson said, adding that it was “taking a measured approach” to growth.

Is the BHP-Anglo deal really over? 

Earlier this month, BHP chief executive Mike Henry fuelled a new wave of speculation that the Australian miner might resurrect its failed £39bn bid for its Johannesburg-based rival when he touched down in South Africa to meet with government officials.

BHP chair Ken MacKenzie tried to throw some cold water on those rumours on Wednesday.

During the Q&A portion of the company’s annual general shareholder meeting in Brisbane, he suggested its pursuit of Anglo American is a thing of the past. 

“We thought there was an opportunity here to create something unique and special,” MacKenzie said, in response to a question on where the offer stood now. 

“Unfortunately, Anglo-American shareholders had a different view and they thought there was more value in the plan that their management wanted to execute,” he added. “And so they moved on.”

For investors, that was all interesting and heartfelt and so on. But MacKenzie didn’t end there: “And quite frankly, so have we.”

Was BHP really dropping its pursuit once and for all? Not entirely. Shortly after those remarks, the company appeared to backtrack. 

BHP released a statement saying that the UK Takeover Panel — the mergers and acquisitions watchdog — confirmed the comments “will not be treated as a statement of intention not to make an offer in respect of Anglo American”.

Huh? There appears to be some sort of disagreement here over whether BHP is still interested in Anglo or not.

There’s helpful context to all this from the FT’s Leslie Hook. When BHP stepped away from the pursuit in May, it triggered a six-month period during which it’s not allowed to make a fresh approach.

Just a few weeks ago, Hook reported that bankers said BHP was examining how it might make a renewed offer after the standstill period comes to an end on November 29.

“The consensus view is that they are coming back, if they can figure it out,” one banker said at the time. Where things stand now, though, seems murkier.

Job moves

• Estée Lauder has picked longtime senior executive Stéphane de La Faverie as its new chief executive as the Lauder family takes a step back from day-to-day operations. He succeeds Fabrizio Freda, who is retiring.

• Akin Gump has hired Elina Alperovich as a partner for private equity transactions in New York. She previously worked at Greenberg Traurig and Apollo Global Management.

Smart reads

AI winner The British chip designer Arm, which is controlled by SoftBank, has already seen its stock soar this year, the FT reports. Its ambitions go far further.

The Mooch The FT sat down with financier Anthony Scaramucci, also former White House communications director, to talk about Long Island, Lamborghinis and Trump.

3G’s next move The private equity firm 3G Capital has made billions off Burger King, Forbes reports. Its next big bet: window blinds.

News round-up

AstraZeneca China president under investigation by Chinese authorities (FT)

Prada continues to defy luxury slowdown as Miu Miu sales boom (FT)

Super Micro Computer shares plunge after EY resigns as auditor (FT)

Wall Street giants to make $50bn bet on AI and power projects (FT)

Siemens nears deal to buy software group Altair (Bloomberg)

Microsoft’s revenue beats estimates on strong cloud demand from AI boom (FT)

FTX’s engineering chief Nishad Singh spared prison time in fraud case (FT)

Closure of UK inheritance tax ‘loophole’ to hit estates of wealthy pensioners (FT)

Ikea to pay €6mn to compensate for forced labour by ex-prisoners in East Germany (FT)