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Why Macron’s attempt to reset French ties to Africa has hit trouble

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In a 2017 speech at the University of Ouagadougou in the African state of Burkina Faso, Emmanuel Macron declared the end of what has become known as “Françafrique”, the French strategy of exerting military, political and commercial influence over its former colonies on the continent.

“I haven’t come here to tell you what France’s Africa policy is, as others have done,” the French president, elected just six months earlier, declared, “because France no longer has an Africa policy!” He went on to announce a €1bn fund for innovative small companies and an eye-catching pledge to return looted African works of art to their original homes.

He was not the first French president to announce a new chapter in his country’s intimate and often tortured relationships with its former fiefdoms in Africa. But Mr Macron, then 39, argued passionately that he was the man to break from the murky system of the past because he was too young to have known a time when African countries were still European colonies.

Yet three years on, Mr Macron’s attempt at a reset appears to many to have run into the sand, leaving French troops bogged down in a war against Islamist terror in the Sahel and its diplomats embroiled in the fractious politics of several resource-rich former colonial territories such as Guinea and Mali. 

Emmanuel Macron with Alassane Ouattara. The French president has been accused of meddling in the politics of Ivory Coast ahead of its election on Saturday
Emmanuel Macron with Alassane Ouattara. The French president has been accused of meddling in the politics of Ivory Coast © Sia Kambou/Getty Images

Alassane Ouattara is seeking a controversial third term as president of Ivory coast
The Ivorian leader is seeking a controversial third term as president but violence has marred the build-up to Saturday’s election © Luc Gnago/Reuters

In Ivory Coast, once the jewel in the crown of France’s west African lands, Mr Macron has been accused of meddling in politics ahead of Saturday’s election in which Alassane Ouattara is seeking a controversial third term — even though French officials say the extent of their involvement has been to warn against the constitutionally dubious additional term in office and to recommend a delay in the meantime to avert the threat of violence.

With tensions running high ahead of the vote, and 20,000 French people living in the country, France is watching events in Ivory Coast nervously.

Such problems threaten to overshadow signs of progress in Mr Macron’s drive to leave behind the colonial baggage of the past: this month, the French National Assembly passed a law to return 27 works of art to Benin and Senegal from two Paris museums within a year, fulfilling part of Mr Macron’s promise on looted heritage. He and his ministers have also made progress in courting non-francophone countries outside the traditional Paris sphere of influence such as Nigeria, Kenya and Ethiopia — winning some big infrastructure contracts along the way.

Mr Macron’s change of direction has not been convincing for some African observers. “Françafrique is very much alive and this is why people think Macron has not changed anything apart from the discourse,” says Abdoulaye Bathily, a Senegalese opposition politician who dismisses Mr Ouattara and Macky Sall, the president of Senegal — which is seen as a reliable ally — as “France’s errand boys”.

“There is more resentment against the French today than before,” he adds, “because of the security issue in the Sahel.” 

Map showing Operation Barkhane: France’s security mission

Post-colonial bind

Mr Bathily’s comment points to the two daunting obstacles in the way of Mr Macron’s ambitions to modernise France’s diplomacy and trade in the region — where it competes with old rivals such as the UK and newer ones such as China, Russia and Turkey — and to improve its image among Africa’s young and fast-growing populations.

The first is the intensifying security mission in the Sahel, labelled “France’s Afghanistan” by some commentators — to the annoyance of Mr Macron’s advisers. More than 5,000 French troops are engaged in the country’s biggest conflict since the Algerian independence war during the presidency of Charles de Gaulle. 

Operation Barkhane stretches 4,000km from the Atlantic coast across Mauritania, Mali, Burkina Faso, Niger and Chad and is tasked with fighting al-Qaeda and Isis in the semi-desert south of the Sahara.

Local women and children queue for a medical aid operation during the Operation Barkhane in Ndaki, Mali. The French military operation is tasked with fighting al-Qaeda and Isis in the semi-desert south of the Sahara
Local women and children queue for a medical aid operation in Ndaki, Mali. Operation Barkhane is tasked with fighting al-Qaeda and Isis in the semi-desert regions south of the Sahara © Benoit Tessier/Reuters

Protesters confront police in Conakry, Guinea, after 82-year-old President Alpha Condé was declared the winner of this month's election
Protesters confront police in Conakry, Guinea, after 82-year-old President Alpha Condé was declared the winner of this month’s election, giving him a third term © John Wessels/Getty Images

Mr Macron insists the struggle is essential to keep Islamist terror from Europe, but the operation is hamstrung by numerous problems. French officials privately bemoan the corruption and poor governance in countries such as Burkina Faso, while in the Sahel critics of France accuse Paris of a heavy-handed, paternalistic style of leadership. Even the five governments that are part of the operation are sometimes ambivalent about the presence of French troops on African soil. Instability in Libya to the north after the western intervention that helped overthrow Muammer Gaddafi in 2011 is another factor. Most of France’s European allies are also reluctant to commit resources to the Sahel conflict.

The latest blow to Mr Macron in the region came when the Malian army overthrew President Ibrahim Boubacar Keita — a French ally, if not a greatly respected one — in a coup d’état in August. Mr Macron has called for a swift return to civilian government. In Mali alone about 4,000 people were killed last year in fighting involving ethnic militias and groups linked to al-Qaeda and Isis. Paris says Mali should not negotiate with jihadist groups, despite widespread support for the idea among Malians weary of violence. Faced with security threats and the coronavirus pandemic, Mali and the other Sahel states are so poor that the UN says 13m people now need urgent help. 

François Gaulme of Ifri, the French Institute of International Relations, says Mr Macron’s decision to send hundreds more troops to shore up Operation Barkhane underlines what he sees as a dangerous shift in Françafrique’s emphasis from the business to the military sphere.

“France is very good at sending troops to Africa, but not at sending investors,” says Mr Gaulme. “One of Macron’s themes was ‘colonialism is finished’ and ‘I was born after colonialism’. Except that he’s cornered by the postcolonial relationship.” 

Francophone Africa at its peak map 1945 (former french colonies)

Unfinished business

The determination of some of the “old elephants” ruling former colonies to remain in power whatever the cost is another problem for Mr Macron in trying to redefine Françafrique. The objections emanating from their own populations or French officials seem to be having little effect on these strongmen.

Mr Macron discreetly hosted the 78-year-old Mr Ouattara — elected and installed as Ivory Coast president a decade ago with the support of French troops who helped oust his rival, Laurent Gbagbo — for a lunch at the Elysée in September. But he failed to persuade Mr Ouattara to postpone the election.

France is home to an African diaspora of millions from the north, west and centre of the continent, while Paris remains a focal point for the francophone African elite. Guillaume Soro, a former Ivorian rebel leader and Mr Ouattara’s one-time prime minister, used the Versailles room of the luxury Le Bristol hotel near the Elysée in September to denounce his former boss and declare that the election would not be held on schedule because he had been wrongly disqualified. Mr Soro was sentenced to 20 years in absentia in April for embezzlement.

“Ivory Coast is on the edge of the abyss,” he said at the event. At least seven people have already died in election-related clashes in the country, which was run by the Francophile Félix Houphouët-Boigny from independence in 1960 until his death in 1993.

French president Emmanuel Macrontakes a selfie with Nollywood artists in Lagos. France has made progress in courting non-francophone countries outside the traditional Paris sphere of influence such as Nigeria, Kenya and Ethiopia
French president Emmanuel Macron takes a selfie with Nollywood artists in Lagos. France has made progress in courting non-francophone countries outside the traditional Paris sphere of influence such as Nigeria, Kenya and Ethiopia © Ludovic Marin/Getty Images

Ivory Coast and Mali are not the only former French colonies that have tested Mr Macron’s attempts at renewal. In Guinea, the 82-year-old President Alpha Condé was another leader who rewrote the constitution in order to run for a third term. He has been declared the winner of the election after the first round on October 18 amid allegations of fraud and violent clashes between opposition supporters and the security forces. In Togo, Faure Gnassingbé, the latest scion of a dynasty that has ruled for more than 50 years, is confronted with a rival government in exile after yet another contested election.

“For three years we’ve pushed this [new Africa policy]. It’s unfinished business but at least we are changing perceptions,” says a senior French official close to Mr Macron. “But it’s difficult when you have news about terrorism, military coups, presidents getting their third terms and dictators who don’t want to go.” 

Seen from Paris, if not towns and cities across the continent, France’s relationship with Africa has clearly moved on from the old Françafrique. After the fall of France to the Nazis in 1940, de Gaulle fled to London but Brazzaville in French Congo became the Free French capital. In the rapid decolonisation that followed the war, de Gaulle, through Jacques Foccart, who ran the “Africa cell” at the Elysée, maintained close military and political ties with France’s ex-colonies. So did his successors. Under Valéry Giscard d’Estaing, France provided funding for the lavish coronation of Jean-Bédel Bokassa as Central African emperor in 1977, only to send in its troops to overthrow him and install his cousin two years later. 

“No [French] president has wanted to let go of his reserved African domain, the veritable DNA of the presidency under the Fifth Republic,” wrote Pascal Airault and Jean-Pierre Bat in Françafrique: Secret Operations and Affairs of State.

Yet the mood has gradually changed. At a time when many young Africans are vocally opposed to any hint of neocolonialism, it is hard to imagine an African leader repeating the mantra of mutual dependency chanted by Omar Bongo of Gabon in 1996: “Africa without France is a car without a driver. France without Africa is a car without fuel.” 

Momar Nguer, a Total executive and head of Africa for the French employers’ federation Medef, says many young Africans are as likely to be annoyed about hostile European attitudes to African migrants as about a colonial period they never experienced.

“You have a French president born after independence and in Africa more and more of the heads of state were also born after independence,” Mr Nguer says. “The relationship between the two sides is now much more frank and direct. There are less legacy problems, less guilt.” 

Bar chart of Average net annual foreign direct investment position, 2017-19 (€bn, leading countries) showing French investment in sub-Saharan Africa

Finding new partners

Mr Macron can point to recent achievements. They include easing anti-colonial tensions over the region’s currency, the CFA (African Financial Community) franc. He stood next to Mr Ouattara in Abidjan a year ago and announced the end of the CFA franc used by eight west African nations.

In the end, that disengagement process has stalled, partly because of a dispute over the “eco”, the name of the proposed replacement currency, and partly because some CFA franc countries worry about instability if the link to the euro is weakened. But France did make two important symbolic changes, dropping the requirement that half of the currency’s reserves be kept in Paris and giving up its representation on the regional central bank. 

Three statues from Benin on display in Paris. The French National Assembly has passed a law to return 27 works of art to Benin and Senegal within a year
Three statues from Benin on display in Paris. The French National Assembly has passed a law to return 27 works of art to Benin and Senegal within a year © Philippe Wojaze/Alamy

Senegal's president Macky Sall, right, is presented with a sword during a ceremony in Dakar. A Senegalese opposition politician has dismissed the president as 'France’s errand boy'
Senegal’s president Macky Sall, right, is presented with a sword during a ceremony in Dakar. A Senegalese opposition politician has dismissed the president as ‘France’s errand boy’ © Seyllou/Getty Images

Mr Macron has also repaired France’s relationship with Rwanda and its influential president, Paul Kagame — although that brings its own diplomatic problems because of the Rwandan leader’s authoritarian reputation. 

Rwanda had ditched the French language for English, demolished the French cultural centre in Kigali and joined the Commonwealth, the group linking the UK with most of its former colonies. But Mr Macron has courted Mr Kagame by releasing files on France’s alleged involvement in the 1994 Rwandan genocide and championing the Rwandan Louise Mushikiwabo for the post of secretary-general of the International Organisation of Francophonie, an 88-member body linking countries where French is spoken — most of them former colonies — and akin to the Commonwealth.

Mr Macron, says Ms Mushikiwabo, “is genuinely interested in turning the page on the kind of relationship France has had with Africa”, although she adds a warning: “A president alone is not enough. I am not sure who else in the French system is around him. Some bad habits die hard.” 

The president’s drive to diversify France’s commercial interests in Africa away from its traditional and relatively small francophone markets is another initiative that appears to be bearing fruit. 

“It’s a new stage in the relationship between France and the different countries of Africa,” says Franck Riester, international trade minister. “It’s not about forgetting or denying a common history [with the francophone states] but about working with countries that are potential partners for the future, whatever their history with us.”

A report last year for the French foreign and finance ministries on relaunching the country’s economic presence in Africa pointed out that France’s market share of the continent’s trade had halved to 5.5 per cent between 2000 and 2017 — French exports more than doubled to an annual $28bn, but the market had quadrupled in the meantime — in the face of competition from China and other rivals. 

Since then, France has announced a series of deals outside its old hunting grounds, including more than €2bn of transport infrastructure contracts in Kenya and a contract for France’s Axens to help build a new oil refinery in Nigeria with a capacity of 200,000 barrels a day. Total is one of several foreign companies combining to invest up to $50bn in liquefied natural gas projects in Mozambique and has signed a security deal to help the government protect energy facilities in the former Portuguese colony.

The Francophile Félix Houphouët-Boigny, who led Ivory Coast from independence in 1960 until his death in 1993, with then French leader Charles de Gaulle in Paris in 1961
The Francophile Félix Houphouët-Boigny, who led Ivory Coast from independence in 1960 until his death in 1993, with then French leader Charles de Gaulle in Paris in 1961 © Keystone/Getty Images

Political realities

Despite these signs of diversification, Mr Macron is struggling to shake off the impression that the new Françafrique is little more than a rebranding exercise. His administration and the ones that follow are likely to face continued security threats and political disputes in France’s former colonies that, notwithstanding its best efforts, are beyond the control of the long arm of Paris.

France’s domestic crackdown on radical Islamism following the murder of a teacher in Paris has led to a boycott of French goods in some Middle East countries; Paris will be hoping African countries with sizeable Muslim populations do not go down the same route.

“France is in an impasse whatever it does.” says Caroline Roussy, an Africa researcher at Iris, the Institute of International and Strategic Relations. She says Mr Macron’s new approaches to dealing with prickly African leaders have not always succeeded and a smarter strategy will be needed.

“He comes up against his own personality and the realities he can’t manage . . . At some point we have to end this unhealthy France-Africa relationship.”

Additional reporting by David Keohane in Paris



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Analysis

BoE sees tight labour market as trigger for higher rates

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UK interest rates updates

The Bank of England was not expecting to change its coronavirus monetary policy guidance so soon.

For the past year it has said it would not even consider tightening monetary policy “until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2 per cent inflation target sustainably”.

With inflation having already burst through this target, reaching 2.5 per cent in June and the BoE now thinking it will rise to 4 per cent later this year, and signs of labour shortages across the economy, the committee decided to drop that guidance.

None of the Monetary Policy Committee was ready to raise interest rates yet from the historic low of 0.1 per cent, but the committee agreed new guidance that said if economic data followed its latest forecasts, “some modest tightening of monetary policy over the forecast period is likely to be necessary to be consistent with meeting the inflation target sustainably in the medium term”.

The change and the new guidance raised lots of legitimate questions on what the MPC meant in practice, but Andrew Bailey, BoE governor, was not in a mood to be transparent when discussing the committee’s new stance at a press conference on Thursday.

He declined to answer simple questions about the balance of opinion on the committee and the definition of “modest”, but he was a little more forthcoming in his press conference on what the trigger would be for higher interest rates.

Line chart of CPI inflation (annual % change). Actual and BoE forecasts showing The BoE now expects UK inflation to reach four per cent this year

The first two “key judgments” that the MPC would consider before changing policy were its view that much of the coming rise in inflation would reverse automatically next year and that there would be a continued recovery as the pandemic waned. On these Bailey was confident the committee’s view was right. It was a third judgment, on the labour market, that he stressed was most likely to prove the trigger for higher interest rates earlier than expected in the months to come.

The outlook for employment has already changed much faster than expected, with many employers now struggling to hire even though both unemployment and inactivity remain well above pre-pandemic levels.

“The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labour into jobs,” Bailey told the news conference, adding that the committee would closely monitor labour market developments, particularly on unemployment, wider measures of slack in the economy, and underlying wage pressures.

The BoE now thinks that unemployment, which was 4.8 per cent at the end of May, has peaked, and will fall steadily to 4.4 per cent in a year’s time and 4.2 per cent from 2023.

Underlying wage growth has already returned to near pre-pandemic levels, the bank estimates. This is much stronger than expected given the large number of workers still standing on the sidelines: there are 250,000 more unemployed than pre-pandemic, 750,000 more counted as inactive, and 2m still at least partly furloughed in late June.

But what is worse from an inflation perspective is that the BoE has found evidence of “frictions” in the labour market, especially the difficulties employers are reporting in recruitment.

For now, the MPC is taking the view that these problems are temporary and are “likely to dissipate” with the hiring crunch owing in large part to the speed at which entire sectors reopened. Another factor behind the shortages — existing employees’ apparent reluctance to look for a new job — would in any case be more likely to depress wage growth than to fuel it.

Companies report recruitment difficulties

But the MPC warned that if labour shortages proved bigger and more persistent than expected — if workers were in the wrong place, or had the wrong skills, for the jobs available, or if young people who had left the labour market to study stayed in education for some years — that was likely to make wages rise, inflation more persistent and the BoE raise interest rates.

When it does become time to tighten monetary policy, the BoE also changed its guidance on Thursday on how it will make borrowing more expensive for households, businesses and government.

Until Thursday, the BoE’s declared policy had been that it would not change the level of money created and assets purchased under its quantitative easing scheme until interest rates had reached 1.5 per cent.

In future, it said that once interest rates reached 0.5 per cent, it would no longer reinvest the proceeds of government bonds that reached maturity and were redeemed.

Bailey said this new policy of quantitative tightening was not supposed to supplant higher interest rates, but would provide a “predicable and gradual” path for reversing quantitative easing. Some £70bn of the BoE’s £875bn gilt holding are due to mature across 2022 and 2023, with another £130bn across 2023 and 2024, he added.

Once interest rates rose to 1 per cent, the MPC said it would consider active sales of the assets it owned, but only if that was warranted by economic conditions and sales “would not disrupt the functioning of financial markets”.

In both areas of policy, the BoE was adamant it was making no promises and would change policy only when that was needed to keep inflation under control. This meant the wait-and-see strategy that has been its watchword since the early days of the coronavirus crisis would continue.

But as Ruth Gregory, senior UK economist at Capital Economics, said: “Talking about the mechanics of tightening policy, that is another signal that tightening is drawing nearer”.



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Lars Windhorst tries to plot future beyond H2O crisis

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As the world retreated into lockdown, German financier Lars Windhorst criss-crossed the globe in a private jet on a mission to raise billions.

The 44-year-old needs to make good on a promise to buy back more than €1bn of bonds from H2O Asset Management, a once-feted European fund manager whose backing helped Windhorst assemble an eclectic collection of businesses that includes Italian lingerie maker La Perla and German football club Hertha Berlin.

After the extraordinary scale of H2O’s bets on the financier threatened to capsize the asset manager in 2019, Windhorst last year vowed to buy back the illiquid debt at the heart of a crisis which has drawn regulatory scrutiny. But more than 12 months later, H2O’s clients, whose money is tied up in the troublesome securities, are still waiting.

The challenge is one of the toughest yet for Windhorst. Hailed as a precocious entrepreneur by then-German chancellor Helmut Kohl when he burst on to the business world in the mid-nineties, his chequered career has included personal bankruptcy.

An initial plan to use an investment vehicle called Evergreen to buy back half the bonds last year and the rest by this June fell apart. Then last August French regulators ordered H2O to suspend several funds because of uncertainties over the valuation of the bonds.

The London-based asset manager has significantly written down the value of the securities, which in some cases Windhorst has agreed to buy back several years ahead of their maturity, and shifted them into so-called side pockets that are closed to investor redemptions.

A criminal investigation launched by the Berlin prosecutor’s office into Windhorst is a further complication. Authorities are probing whether Evergreen violated German law by allegedly engaging in banking activities without the necessary licences. Windhorst denies any wrongdoing and said he has offered his assistance to authorities.

Chart showing the scale of H2O’s Windhorst exposure at fund suspension

Armed with infectious optimism, an insatiable thirst for dealmaking and an uncanny ability to escape from near ruinous predicaments, Windhorst insists that a large chunk of the debt will be bought back this year.

“Tennor [Windhorst’s main investment company] expects to pay down a major part of the H2O debt before the end of the year,” Windhorst told the Financial Times.

Following the collapse of the Evergreen plan, Windhorst bought himself some breathing space until early next year when Tennor in May announced a restructuring of its debts with “major creditors”, the biggest of which is H2O.

Under the agreement, Tennor Group’s debt will be consolidated into a new €1.45bn bond, carrying a 4.5 per cent interest rate, which is due to be repaid in early 2022. H2O said that the agreement provided a “more stable platform” to liquidate the securities in the funds’ side pockets.

Bet on Hertha Berlin

Windhorst, who operates from a swanky office in London’s Mayfair and a new base in the pricey “Palme” office building in Zurich once occupied by Russian oligarch Viktor Vekselberg, says he tires of the scrutiny that his relationship with H2O has generated.

“It’s normal in business that things are difficult. It’s not a problem for me, I deal with it,” said Windhorst. “I get beaten up for this and we need to move on here and make money and do business.”

Obtaining a clear view of Tennor’s finances is difficult. La Perla, one of its highest-profile investments, posted a €136m loss last year. However, several subsidiaries’ accounts have not been signed off, with filings citing delays in finalising Tennor’s own audited accounts that were due to be filed by the end of March.

According to a 2019 provisional balance sheet filing, the latest that is publicly available, Tennor Holdings had €2.6bn in liabilities at the end of that year.

Windhorst has long lent on debt and short-term funding deals, including repurchase agreements, to finance his businesses. It is a pattern he says he wants to break.

The shadow cast by H2O has done little to dull Windhorst’s ambitions, however. The financier is on track to complete his €374m investment in Hertha Berlin, a German football club with a long history but largely empty trophy cabinet. The agreement to acquire a majority stake was announced just a week after the H2O scandal erupted in 2019.

In June, he took to Twitter to scotch rumours he had fallen behind on payments to the club. “Hello to all doubters who don’t believe this is my account,” Windhorst declared. “Everything is on schedule,” Björn Bäring, Hertha Berlin’s head of finance, told the FT. A final €30m instalment is due this month.

La Perla
With H20’s backing, Windhorst was able to acquire the Italian lingerie maker La Perla © Alamy

Since Windhorst took control, Hertha Berlin broke its transfer record for a player but lost a manager, the legendary German striker Jürgen Klinsmann, after just 10 weeks in February 2020.

Earlier this year a creditor obtained a judgment in a Dutch court to auction off the investment vehicle Windhorst used to buy his Hertha Berlin stake. The suit, which relates to a short-term loan, is “generally settled”, according to a lawyer for the creditor.

The investment in Hertha Berlin is one of several demands on Windhorst even as the H2O bill remains outstanding.

Shortly before H2O described the financier’s efforts in August 2020 to buy back the bonds under the Evergreen plan as “very partial”, Tennor committed €100m to medical robotics start-up AvateraMedical.

It also announced a major stake in a joint venture with New York-based luxury condo developer Extell to build what is intended to become the tallest Manhattan skyscraper. Despite sluggish progress following planning objections, Windhorst is confident that the project will be “perfectly timed” for an eventual recovery in Manhattan’s luxury residential market.

Windhorst has also expanded his shipping business. Tennor first acquired ailing shipbuilder Flensburger Schiffbau-Gesellschaft in 2019 from Norwegian businessman Kristian Siem. FSG late last year laid the keel on the first ship since it relaunched its operations after insolvency proceedings. The customer: a company owned by Windhorst.

Then last month, FSG snapped up luxury yacht shipyard Nobiskrug in Germany for an undisclosed price. Previously owned by French billionaire Iskander Safa’s Privinvest, Nobiskrug was placed into insolvency in April.

“Both shipyards combined have secured orders in excess of €1bn”, said Windhorst.

If a reliance on debt has been a feature of his business career, so have legal battles.

Earlier this year Siem filed suits at London’s High Court. Meanwhile, in June a judge in Amsterdam ordered Windhorst to “disclose his assets and to provide security” in relation to a long-running dispute over his acquisition of a 50 per cent stake worth €169m in international show jumping event Global Champions Tour from US billionaire Frank McCourt.

Windhorst is adamant that the public filings paint a misleading picture. All the suits bar one filed by entities linked to former Tennor advisory board member Manfredi Lefebvre d’Ovidio, which have made claims worth more than €120m, have been amicably settled, he says. Representatives for Siem, Lefebvre d’Ovidio and McCourt declined to comment.

Paying off

There are signs that the businessman’s frantic flight schedule is beginning to pay off. Windhorst in May sold Berlin-based ad-tech company Fyber, which he owned 90 per cent of, to Nasdaq-listed Digital Turbine at a $600m valuation. The transaction was settled for $150m in cash plus shares in Digital Turbine.

Meanwhile, Windhorst says Tennor has agreed to sell a minority stake in Avatera for €600m. A start-up in the fast-growing field of medical robotics, Avatera has long been considered a potential crown in Tennor’s investment portfolio.

H2O disclosed in a corporate filing that it was unable to dispose of a 12.5 per cent Avatera stake held by one its funds in an “orderly fashion” earlier this year, with a spokesperson saying the asset manager’s priority was to sell at the best price.

Although Avatera is likely to require considerable investments to realise its potential, Windhorst remains bullish. “Avatera has the potential to be a €10bn to €20bn business,” he said.

If that proves the case, it would mark a remarkable turnround for the financier. But four years since H2O stepped in as Windhorst’s saviour, backing his empire as he fought off aggressive creditors, including a Belize-based company linked to a former Russian energy minister, it is the asset manager’s clients who remain in need of rescuing.

Gerard Maurin, an investor, who is spearheading efforts by some to claim damages from H2O, says that communication from the asset manager on the repayment schedule has been vague.

“It motivates us even more to continue our action,” he said. “It’s not normal to have to wait [to redeem your investment].”

 



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Analysis

‘It has never been like this’: US house price spiral worries policymakers

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House prices are rising in many major economies. This FT series explores whether these increases are sustainable.

A decade ago, the average house in Ohio’s leafy state capital Columbus would sit on the market for almost 100 days before being sold. Today, a similar property sells in just 10 days.

“It has never been like this,” said Michael Jones, a real estate agent at Coldwell Banker Realty with more than 20 years’ experience in central Ohio. “It’s unprecedented.”

US policymakers are becoming increasingly concerned about the rising price of housing for both homeowners and renters, as the broadest global house price boom for at least two decades drives up living costs.

“Today, it is harder to find an affordable home in America than at any point since the 2008 financial crisis,” Marcia Fudge, US housing and urban development secretary, said at a recent congressional hearing.

Nationally, house prices in May were 16.6 per cent higher than the year before, according to the latest S&P CoreLogic Case-Shiller index update — the biggest jump in more than 30 years of data and up from 14.8 per cent in April.

“A month ago, I described April’s performance as ‘truly extraordinary’, and [now] I find myself running out of superlatives,” said Craig Lazzara, global head of index investment strategy at S&P Dow Jones Indices.

The pace of price growth and sales has been particularly fast in smaller cities, suburban enclaves and towns.

Columbus’s housing market has exploded since the start of the pandemic, as historically low interest rates, remote working, increased demand for larger homes and a relatively limited supply of houses for sale sparked a feeding frenzy among prospective homebuyers and a windfall for sellers.

Line chart of S&P CoreLogic Case-Shiller national home price index (year-on-year % change) showing US housing market booms again

Homes in Columbus sold more quickly than in any other large metropolitan US area, according to Zillow, the property website. Almost three-quarters of Columbus properties were under contract in less than a week in April. Other fast-moving areas included Denver, Colorado, and Salt Lake City, Utah.

The fierce competition means many properties are selling at a significant premium to their listing price, favouring those on higher incomes or younger first-time buyers whose parents are willing to stump up the cash required to win a bidding war.

FT Series: Global house prices — raising the roof

House prices are rising in many major economies — but is it sustainable?

Part 1: How the pandemic has triggered the broadest global house price boom in more than two decades

Part 2: Buyers flock to smaller US cities, renewing policymakers’ concerns about affordability and risk

COMING SOON:

Part 3: Netherlands grapples with the social consequences of rapidly rising house prices

Part 4: Why Berlin’s renters want to expropriate their homes from Germany’s publicly listed landlords

Part 5: Should house prices count in inflation data, and what can central banks do about the economic effects?

Columbus’s average sale price has jumped 15.8 per cent in the past year, according to Columbus Realtors, the local industry body of which Jones is president.

“People say to me, ‘Don’t you love this market?’” he said at a recent open house for an almost 6,000 square foot family home with a listing price of just under $1m in a residential neighbourhood east of downtown Columbus.

“I say, ‘Not especially, because I represent buyers and sellers alike’,” he added. “Somebody is a loser here.”

Other places have experienced even more frenetic sales. Median home prices in Austin, Texas, have risen 40 per cent year on year, according to online real estate brokerage Redfin. Buyers have also flocked to Phoenix, Arizona, where prices are almost 30 per cent higher in the same period. In Detroit, Michigan, they have risen 56 per cent.

Suburban enclaves and smaller towns have also benefited. Redfin reported last month that median home prices in “car-dependent” US areas had surged at twice the pace of those in “transit-accessible” cities since the start of the pandemic — with the former gaining 33 per cent while the latter increased 16 per cent.

Across the 30 largest metropolitan areas in the US, Columbus, along with St Louis, Missouri, and Tampa, Florida, logged some of the biggest net increases in people arriving in the area, according to an analysis of US Postal Service records of mailing address changes by commercial real estate and investment firm CBRE.

Most moves came from the “surrounding area”, defined as a few hours’ drive from the householder’s previous address, the analysis suggested.

The house price spiral is feeding into the rental market too. According to Apartment List, a listings website, national median rent has risen 11.4 per cent so far this year, more than three times the average increase in the same period in the previous three years.

“The high cost of housing keeps millions of families up every night,” Fudge warned. “They wonder if they can afford to keep a roof over their head — and still manage to keep their lights on, to pay for their prescriptions, to put food on their tables.”

Remote working boom fuels demand for suburban and rural areas

Industry experts say the pace of price growth is set to slow as supply begins to catch up with demand.

The number of existing-home sales rose 1.4 per cent month on month in June, according to the National Association of Realtors. Lawrence Yun, chief economist at the industry body, said supply had “modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales”.

Real estate experts and economists surveyed by Zillow expect price growth to peak this year and then ebb.

“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” Yun said.

Daryl Fairweather, chief economist at Redfin, said “homes that would have gotten 20 offers are now getting only two or three”.

But she added that while “we are already seeing demand start to stagnate”, prices were not coming down significantly — suggesting that policymakers’ concerns about affordability are likely to persist.

Federal Reserve chair Jay Powell recently said that today’s trend looked distinctly different to the one a decade ago that pre-empted what was at the time the worst recession since the Great Depression — but he called the problem of housing affordability “a big one”.

“Housing prices are moving up across the country at a high rate,” he told a congressional committee last month.

Although he acknowledged that it was “not being driven by the kind of reckless, irresponsible lending that led to the housing bubble that led to the last financial crisis”, he warned that it “makes it more difficult for entry-level buyers to get into the housing market, so that is a concern”.



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