FirstFT: Buyout titans circle SVB

Good morning.

The world’s largest private investment firms are exploring buying loans from the remains of Silicon Valley Bank. Premium subscribers can sign up for our Due Diligence newsletter for a deeper dive on the failed bank and the resulting fallout.

Below, we have details on OpenAI’s new model, which has shown “human-level performance” on the US bar exam, advanced placement tests and the SAT school exams.

Here’s what else to keep tabs on today:

• China economic figures: February industrial output and retail sales figures are set to be released today.

• UK Budget day: Power, or rather the cost of it, will be a key focus for the UK chancellor Jeremy Hunt’s Budget day speech today.

• Earnings: Foxconn is set to report fourth-quarter earnings today and expand on its first-quarter outlook after a fall in February sales. (Reuters)

Today’s top news

1. Five of the world’s largest private investment firms are among the buyout groups examining SVB’s $74bn loan book for pieces that might fit into their credit portfolios, according to people familiar with the matter. The interest from Blackstone Group, Apollo Global Management, KKR, Ares Management and Carlyle Group comes as the firms crowd into lending businesses traditionally dominated by banks.

2. US prosecutors are investigating the collapse of Silicon Valley Bank after a dramatic outflow of customer deposits from the Californian tech lender, according to a person familiar with the matter. The Securities and Exchange Commission has also launched an investigation into the lender’s collapse, according to media reports. Here’s what we know about the investigations.

3. A Russian aircraft has struck an unmanned US drone over the Black Sea, American officials have claimed, in an incident they described as a “reckless” action by Vladimir Putin’s military. While it is “not uncommon” for foreign actors to fly close to US aircraft over the Black Sea, according to the White House National Security Council spokesperson, the incident was uniquely “unsafe” and “unprofessional”.

4. Brussels is exploring new controls to limit China from acquiring high-tech, following similar US moves. The EU trade commissioner told the Financial Times that new restrictions were needed to prevent companies circumventing export bans on sensitive technology by manufacturing it elsewhere. Read the full story.

5. OpenAI has released GPT-4, its latest artificial intelligence model that it claims exhibits “human-level performance” on several academic and professional benchmarks such as the US bar exam, advanced placement tests and the SAT school exams. Its new software will be used in a variety of apps ranging from Duolingo to Morgan Stanley Wealth Management.

News In-depth

While the Aukus defence pact negotiations centred on how to share some of America’s most guarded military technologies, the political pay-off has come in a deal that will create tens of thousands of jobs over decades of work. The industrial bonanza comes as good news, but the deal is still fraught with potential delays and risk.

We’re also reading . . . 

• Fail: The failure of SVB shows there are holes in the US regulatory dike. That is no accident. It is what lobbyists called for, writes Martin Wolf.

• Peacemaker: Xi Jinping’s ability to convince Tehran and Riyadh to restart diplomatic relations was a shift that caught many by surprise; it bolsters expectations of what Beijing can deliver.

• Wirecard: A hard-partying Englishman alleged to be central to the Wirecard fraud is about to be forced into the limelight by a criminal case in Singapore.

Graphic of the day

As China seeks to exert more control over the infrastructure transmitting the world’s data, Beijing has imposed strict permit requirements for access to underwater data infrastructure. Several industry sources said China’s policing of its waters — including within maritime areas marked on maps by a disputed “nine-dash line” seen below — is a response to fears that companies could use cables as a front for espionage.

Take a break from the news

Don’t miss our guide to the best Indian restaurants in Hong Kong. Ravi Mattu highlights the city’s top spots, from south Indian thali to fine Punjabi cuisine via a tandoor-focused menu.

Additional contributions by Gordon Smith and Tee Zhuo