One scoop to start: Prosecutors in Berlin have launched a criminal investigation into Lars Windhorst, the financier whose bonds were at the heart of the crisis at H2O Asset Management. Read the full story by the FT’s Cynthia O’Murchu and team.

When UK grocer Morrisons agreed to be acquired for £9.5bn by a group of investors led by SoftBank-owned private equity firm Fortress over the weekend, it was the latest sign of private equity’s British dealmaking frenzy. The industry has announced bids for UK-listed companies at the fastest pace in more than two decades.

A quick recap: Morrisons’ shares closed at 267.5p on Monday, well above the 252p offer that the board accepted at the weekend, a sign shareholders expect a takeover battle — especially after Apollo Global Management said it was evaluating a possible bid.

“We can see this going to £3,” a top-30 Morrisons shareholder said.

But the deal has also prompted more questions about private equity’s role in the economy, which had already begun to surface this year.

Buyout groups’ returns “should not come from buying its property portfolio too cheaply, levering the company up with debt, and potentially reducing the tax paid to the Exchequer”, said Andrew Koch, a senior fund manager at top-10 Morrisons shareholder Legal & General Investment Management.

A few stories from the past few days illustrate just how fast private equity activity is increasing — and how heightened scrutiny goes alongside it.

Some of its executives are beginning to accept that an industry built on staying out of the limelight is now a subject of public debate.

“It’s only right to ask questions,” KKR’s Freise said. As post-Brexit Britain faces “greater uncertainty in terms of safe jobs [and] the role of the City, [there] comes greater scrutiny.”

All eyes are on the New York Stock Exchange on Tuesday, where shares in Chinese ride-hailing group Didi Chuxing are set to begin trading for the first time since China’s internet regulator announced further restrictions against tech groups that have recently listed on Wall Street.

Last Friday China’s cyber security regulator ordered the ride-hailing group to be removed from domestic app stores, days after it raised $4.4bn in the biggest Chinese listing in the US since Alibaba in 2014.

It followed up on Monday with a similar ban on two more US-listed groups’ apps — freight transport group Full Truck Alliance and headhunter Boss Zhipin.

The blowback has been swift for shares in the likes of Alibaba and Tencent, which have Asia listings.

SoftBank, whose Vision Fund is a large Didi investor, fell 5.4 per cent on Monday. Its shares have dropped 30 per cent from their year-to-date high amid challenges with its Chinese investments.

Line chart of Yen per share (

The regulatory action casts a big shadow over the future of Didi, previously hailed as China’s answer to Uber.

It also raises the question whether China is taking retaliatory measures for Didi’s decision to list on the US market, thus tainting the prospects for the multibillion-dollar pipeline of Chinese companies awaiting their turn to ring the bell in New York, as the FT’s Hudson Lockett, Tabby Kinder and Yuan Yang detail.

“It seems targeted,” one fund manager in Hong Kong told the FT. “People are asking if this is Beijing angry at big tech for going abroad”.

It also raises serious questions about how much the company and its lead bankers on the IPO — Goldman Sachs, Morgan Stanley and JPMorgan — knew of the regulatory issues unfolding behind the scenes.

Didi has maintained that it wasn’t aware of potential regulatory hurdles ahead of its listing. DD is struggling to find anyone who believes that.

The scrutiny goes both ways: US regulators have cast a closer eye on Chinese companies listing in the country after Luckin Coffee fabricated hundreds of millions of dollars in sales.

Chinese companies trading on American exchanges also face the threat of delisting unless they give US authorities access to audit accounts, which is banned by Beijing.

Meanwhile, another force threatens to exacerbate trade tensions: China’s swelling household wealth — which could reach upwards of Rmb300tn ($46.3tn) of investable assets by 2025, HSBC estimates.

Households in China total vs net assets

The vast pool of assets, strategically ringfenced within the country’s borders by the ruling Communist party, has begun to trickle into western markets, as Tabby and the FT’s Thomas Hale explain in this Big Read.

But, as Beijing has shown with its tightening grip on tech, it’s unlikely to open the floodgates so easily.

The worlds of Vatican palace intrigue and high finance rarely meet. But DD readers may remember Cardinal Giovanni Angelo Becciu, a top Holy See official who oversaw a €500m investment portfolio of charitable donations.

Some of that money ended up in a large luxury property development in Chelsea, some helped finance the Elton John biopic Rocketman, and some even ended up in structured notes betting on Hertz credit default swaps.

Now Cardinal Becciu, who was stripped of his rights as a cardinal last year by Pope Francis, has been put on trial along with nine other officials and external advisers relating to allegations of mismanaging that money, the FT’s Miles Johnson reports.

Becciu, who up until last year was in charge of the Vatican’s office for deciding who becomes a Catholic saint, had fiercely denied any wrongdoing.

“I am the victim of a plot hatched against me and I have been waiting for a long time to know any accusations against me, to allow myself to promptly deny them and prove to the world my absolute innocence,” he said after the Vatican announced the charges against him on Saturday.

False advertising Arif Naqvi promised billionaire investors that he would fix the world’s problems when politicians couldn’t. Now he and his bankrupt private equity firm Abraaj Group are accused of pocketing their millions to fund their extravagant lifestyle. (WSJ)

Off to the races Jockeys Jorge “The Juice Man” Navarro and Jason Servis were winning big with their impossibly fast, older horses. That is until they and 27 others were indicted by the FBI for a doping scheme that cost bettors millions. (BBG)

Plaid predicament The surprise exit of Burberry chief Marco Gobbetti poses questions for the British megabrand, which had just begun to solidify its status as fashion’s comeback kid after one too many fashion faux pas. (FT)

Sydney Airport gets $17bn buyout offer in travel recovery wager (FT)

Greensill used taxpayer loans to cut exposure to Sanjeev Gupta (FT)

Carlos Brito brews up second act after 30 years at AB InBev (FT)

Top Canadian pension fund plans C$70bn push into private markets (FT)

Warburg Pincus launches distressed asset venture in China (FT)

Inside Lazard’s ‘commando’ dealmaker team and expansion plans: ‘We’re aggressively hiring’ (Financial News)

UK hospital group Spire accepts new £1.4bn offer from rival Ramsay (FT)

European infrastructure investor Antin considers IPO (BBG)

Brookfield to buy US car parts maker DexKo Global for $3.4 billion (Reuters)