Business

1. CoreWeave miscalculates
2. Washington’s debt clock
3. Elliott’s oilpatch fight
4. PE-linked insurer wobbles
5. ByteDance billionaire

Hi, and welcome back to Semafor Business.

BlackRock’s March 4 deal for a collection of global ports, including those on either end of the Panama Canal, was a big win for President Donald Trump, who has seen remarkable success in getting what he wants by saying it loudly. Paul Weiss, the elite New York law firm, knuckled under. So did Columbia University. UK Prime Minister Keir Starmer came to Washington last month with a promise to increase defense spending — a priority for an administration that, as Vice President JD Vance’s Signal messages show, is tired of allies not pulling their weight.

But opposition is starting to reassert itself. See this fascinating story in Bloomberg that Chinese officials have told state-owned companies not to do business with the Hong Kong firm that sold the Panama Canal ports. Trump’s bluster has revived the political fortunes of leaders in Canada, Mexico, France, and Ukraine, who are seen as standing up to him. And in one of the year’s strangest twists, European stocks are trouncing the S&P 500. (Hat’s off to the Citi analyst who called it in October.)

Other countries want to be great, too.

In today’s newsletter: A big scoop on CoreWeave’s closely watched IPO, which is not going well.

CoreWeave scales back IPO

CoreWeave will downsize its IPO and cut the share price, Semafor scooped this morning, a bad sign for a listing seen as a test of whether AI startups are ready for the public markets.

The cloud computing company will seek a valuation closer to the $23 billion valuation it had in the private market a year ago than the roughly $30 billion it originally targeted, people familiar with the matter said. It will also slash the amount it plans to raise in half, to $1.5 billion. Shares are expected to be allocated to investors tonight.

Questions have swirled about CoreWeave’s reliance on Microsoft, which buys the vast majority of its AI capacity. A tough market backdrop didn’t help: Tech stocks have lagged other sectors, and hedge funds, the usual buyers of IPOs, have been absolutely pummeled this year and are taking any whiff of concern as a reason to sit this deal out.

Silicon Valley is a true believer, but to the stock market, AI “is still kind of a head-scratcher,” Semafor’s Reed Albergotti wrote in his newsletter yesterday.

Also: Martin Shkreli is reading Semafor, but Grok is not:

This debt-ceiling fight will be different

The US risks defaulting on its debt as soon as August if it doesn’t raise the debt limit action, congressional accountants said. A 2023 suspension on the debt ceiling expired in January, and the emergency measures that the Treasury Department has used to keep issuing new bonds, like delaying contributions to postal workers’ pensions, will stop working by late summer. That means another political fight about the debt ceiling, which is both trivial (changing a comma does the trick) and existential (any threat of the US not paying its debts would tank global markets). This fight, though, will have a new backdrop: Treasury Secretary Scott Bessent and other officials are on a push to monetize national assets like gold, land, and possibly wireless spectrum. Proceeds could be set against the debt.

Elliott calls foul on Phillips 66

A boardroom fight is brewing in Texas, pitting a struggling industrial conglomerate against America’s most powerful hedge fund, Semafor’s Rohan Goswami reports.

Elliott Management is going after Phillips 66, whose shares it argues are weighted down by an aging pipeline business. On Thursday, the activist sent a letter to investors chastising CEO Mark Lashier’s comments to stock analysts that he believes his shares are fairly valued — an unusual line for a chief executive.

Phillips 66’s argument — that the company’s disparate businesses are worth more together than apart — is out of fashion in today’s business world. Industrial giants 3M, GE, and Honeywell, and media companies including Comcast and Warner Bros. Discovery have already wholly or partially dismantled themselves under (or to get ahead of) investor pressure.

An insurance red flag

US regulators put the insurance company at the center of the 777 mess into receivership this week, the first major crackdown of a life insurer tied to private equity.

State regulators in Utah said that A-CAP’s clutch of insurers and annuity providers are “insolvent” and “pose an immediate danger to their policyholders, creditors, and the public at large.” Semafor reported starting in 2023 that A-CAP had ceded billions of dollars of policyholders’ money to a Miami-based investment firm with a thin track record, 777 Partners, which used it to purchase sports teams, payday lenders, and other risky assets. 777 has sold assets and hired restructuring advisers.

Private equity has barrelled into life insurance, where policy premiums can be invested today and paid out in decades. Private-equity owned or affiliated insurers tend to own riskier assets than traditional players, and regulators have so far relied mostly on the industry to police itself.

ByteDance billionaire tops China rich list

China has a new richest person. Zhang Yiming, the founder of TikTok parent ByteDance, topped Bloomberg’s billionaire list in his country yesterday with a $57.5 billion fortune.

It’s a dubious honor, even if Zhang can hold onto it as the fate of TikTok’s valuable US operations remains unclear. Xi Jinping’s government has warmed to the private sector as its economy teeters but has a complicated past with China’s wealthiest entrepreneurs. Earlier this month, Jack Ma was seen in public for the first time since 2021 — a warning to elites who fly too close to the sun.

— Rohan Goswami

➚ BUY: Onshore. Hyundai this week announced a $5 billion steel plant in Louisiana, following Eli Lilly in moving to shorten its supply chains and sidestep tariffs.

➘ SELL: Offshore. BP wants to sell stakes in two oil projects off the Louisiana coast, Reuters reports. Less interesting than what the sales fetch is in what BP chooses to call the body of water that holds them when a deal is finally announced.

Companies & Deals

• Masa math: SoftBank is finalizing a $40 billion investment into OpenAI, Semafor confirms. The fundraise, first reported by Bloomberg, would include other investors and value OpenAI at $300 billion, including the new cash — “post-money,” in Silicon Valley’s hand-wavey math.
• Tariff Tok: Trump offered to reduce tariffs on China if ByteDance agreed to sell the US operations. Following a threat of indirect tariffs on countries that buy Venezuelan oil, it’s the president’s latest move to turn a blunt object into a surgical tool.
• What inflation? Dollar Tree will sell Family Dollar to private-equity firms for $1 billion a decade after it paid $9 billion to buy it. The merger never worked, and the squeeze of higher costs and theft spurred Dollar Tree to start looking for buyers last year.

Markets

• Something to see here: Private credit is “not a bubble, but it’s certainly been long-in-the-tooth in the cycle,” Apollo President Jim Zelter, whose firm is the industry’s 800-pound gorilla, told a finance conference today.
• Money never sleeps: Trafigura’s new chief is considering a novel approach to handling Trump’s market moving pronouncements: making his European traders work 2 pm to midnight.
• Shell game: Brazil’s “Egg King” is buying a major US egg producer for $1.1 billion, a knock on the financial theory that uncertainty stops dealmaking. “Americans love eggs,” Ricardo Faria told the FT. The US government is looking for ways to boost imports as bird flu outbreaks cull flocks, and customs officials are cracking down on illegal Tijuana egg arbitrage.

Watchdogs

• Senate showdown: Democrats hit Trump’s nominee to run the Securities and Exchange Commission at his confirmation hearing today over investments outlined in his long-awaited ethics paperwork. It’s “a who’s who of Wall Street special interests,” Sen. Elizabeth Warren told Semafor’s Eleanor Mueller. Democrats are also focused on Paul Atkins’ investments in crypto companies. Republicans likely have the votes to confirm: Sen. Thom Tillis approvingly called Atkins “a geek’s geek” and Trump’s first SEC chair, Jay Clayton, said he is “committed to investor protection, fair and orderly markets, and capital formation” and “knows these three elements need not be in tension.”
• Just in case: EU officials urged households to stockpile three days’ worth of food and supplies, as European nerves about a Russian attack sharpen.
• Shot across the bow: Federal prosecutors are probing whether Pfizer delayed the release of its COVID-19 vaccine until after Trump lost the 2020 election, The Wall Street Journal reported yesterday. A twist: Manhattan prosecutors were reportedly tipped off to the misconduct by GlaxoSmithKline, which heard about it from a Pfizer scientist whom Glaxo had poached.

Management

• Eminence grise: James Gorman, the former Morgan Stanley CEO and current board chair at Disney, joins General Atlantic, the investment firm gearing up for an IPO. Since his drama-free exit from a successful tenure at Morgan Stanley, which he took from Wall Street’s resident basket case to one of its steadiest performers, Gorman has built a second act as a boardroom elder. It’s his job to find a replacement for Bob Iger at Disney, a task that could make launching General Atlantic’s long-delayed IPO look easy.

Sen. Steve Daines spent years working in China and has traveled there on congressional business six times — but his trip this month might have been the most important.

The Montana Republican has clout with Trump and used it to bring a clear, succinct message to some of the highest-ranking officials in the Chinese government as Trump wields tariffs and weighs a trade deal.

“I went to great lengths to make sure they understood that fentanyl was not an excuse for the additional tariffs. It is the issue, nearly 100,000 Americans dying every year,” Daines told Semafor’s Burgess Everett.