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Investments
 12 Months Ended
Nov. 30, 2022
Equity Method Investments and Joint Ventures [Abstract]  
Investments Investments
Investments for which we exercise significant influence over the investee are accounted for under the equity method of accounting with our shares of the investees’ earnings recognized in Other revenues in our Consolidated Statements of Earnings. Equity method investments, including any loans to the investees, are reported within Investments in and loans to related parties in our Consolidated Statements of Financial Condition are summarized as follows (in millions).
November 30,
20222021
Total Investments in and loans to related parties$1,426.8 $1,587.4 
Year Ended November 30,
202220212020
Total equity method pickup income recognized in Other revenues in our Consolidated Statements of Earnings $(36.3)$149.9 $(75.2)
The following presents summarized financial information about our significant equity method investees. For certain investees, we receive financial information at a lag and the summarized information provided for these investees is based on the latest financial information available as of November 30, 2022, 2021 and 2020, respectively.
Jefferies Finance
Jefferies Finance, our 50/50 joint venture entity pursuant to an agreement with Massachusetts Mutual Life Insurance Company (“MassMutual”), is a commercial finance company that structures, underwrites and syndicates primarily senior secured loans to corporate borrowers; and manages proprietary and third-party investments for both broadly syndicated and direct lending loans. Jefferies Finance conducts its operations primarily through two business lines, Leveraged Finance Arrangement and Asset Management. Loans are originated primarily through our investment banking efforts and Jefferies Finance typically syndicates to third-party investors substantially all of its arranged volume through us. Jefferies Finance may also underwrite and arrange other debt products such as second lien term, bridge and mezzanine loans, as well as related equity co-investments. The Asset Management business, collectively referred to as Jefferies Credit Partners, LLC, (formerly known as JFIN Asset Management LLC) manages a broad portfolio of assets under management composed of portions of loans it has arranged, as well as loan positions that it has purchased in the primary and secondary markets. Jefferies Credit Partners composed of three registered Investment Advisors: Jefferies Finance, Apex Credit Partners LLC and Jefferies Credit Partners LLC, which serve as a private credit platform managing proprietary and third-party capital across commingled funds, separately managed accounts and CLOs.
At November 30, 2022, we and MassMutual each had equity commitments to Jefferies Finance of $750.0 million, for a combined total commitment of $1.5 billion. The equity commitment is reduced quarterly based on our share of any undistributed earnings from Jefferies Finance and the commitment is increased only to the extent the share of such earnings are distributed. At November 30, 2022, our remaining commitment to Jefferies Finance was $15.4 million. The investment commitment is scheduled to expire on March 1, 2023 with automatic one year extensions absent a 60 days termination notice by either party.
Jefferies Finance has executed a Secured Revolving Credit Facility with us and MassMutual, to be funded equally, to support loan underwritings by Jefferies Finance, which bears interest based on the interest rates of the related Jefferies Finance underwritten loans and is secured by the underlying loans funded by the proceeds of the facility. The total Secured Revolving Credit Facility is a committed amount of $500.0 million at November 30, 2022. Advances are shared equally between us and MassMutual. The facility is scheduled to mature on March 1, 2023 with automatic one year extensions absent a 60 days termination notice by either party. At November 30, 2022, we had funded $0.0 million of our $250.0 million commitment. The following summarizes the activity included in our Consolidated Statements of Earnings related to the facility (in millions):
Year Ended November 30,
202220212020
Interest income$0.4 $1.5 $2.4 
Unfunded commitment fees1.2 1.2 1.1 
The following is a summary of selected financial information for Jefferies Finance (in millions):
November 30,
20222021
Total assets
$6,763.0 $8,258.7 
Total liabilities
5,490.1 6,843.9 
November 30,
20222021
Our total equity balance
$636.4 $707.4 
Year Ended November 30,
202220212020
Net earnings (loss)$(129.4)$205.7 $(74.9)
The following summarizes activity related to our other transactions with Jefferies Finance (in millions):
Year Ended November 30,
202220212020
Origination and syndication fee revenues (1)$194.7 $410.5 $198.1 
Origination fee expenses (1)39.7 66.8 27.3 
CLO placement fee revenues (2)4.6 5.7 1.7 
Underwriting fees (3)— 2.5 1.7 
Service fees (4)94.7 85.1 65.1 
(1)We engage in the origination and syndication of loans underwritten by Jefferies Finance. In connection with such services, we earned fees, which are recognized in Investment banking revenues in our Consolidated Statements of Earnings. In addition, we paid fees to Jefferies Finance in respect of certain loans originated by Jefferies Finance, which are recognized as Business development expenses in our Consolidated Statements of Earnings.
(2)We act as a placement agent for CLOs managed by Jefferies Finance, for which we recognized fees, which are included in Investment banking revenues in our Consolidated Statements of Earnings. At November 30, 2022 and 2021, we held securities issued by CLOs managed by Jefferies Finance, which are included in Financial instruments owned, at fair value in our Consolidated Statements of Condition.
(3)We acted as underwriter in connection with term loans issued by Jefferies Finance.
(4)Under a service agreement, we charge Jefferies Finance for services provided.
In connection with non-U.S. dollar loans originated by Jefferies Finance to borrowers who are investment banking clients of ours, we have entered into an agreement to indemnify Jefferies Finance with respect to any foreign currency exposure.
Receivables from Jefferies Finance, included in Other assets in our Consolidated Statements of Financial Condition, were $1.2 million and $26.2 million at November 30, 2022 and 2021, respectively. At November 30, 2022 and 2021, payables to Jefferies Finance related to cash deposited with us and included in Payables to customers in our Consolidated Statements of Financial Condition, were $0.5 million and $8.5 million, respectively.
Berkadia
Berkadia is a commercial mortgage banking, servicing and finance joint venture that was formed by us and Berkshire Hathaway Inc. We are entitled to receive 45% of the profits of Berkadia. Berkadia originates commercial/multifamily real estate loans that are sold to U.S. government agencies or other investors. Berkadia also is an investment sales advisor focused on the multifamily industry. Berkadia is a servicer of commercial real estate loans in the U.S., performing primary, master and special servicing functions for U.S. government agency programs, commercial mortgage-backed securities transactions, banks, insurance companies and other financial institutions.
Commercial paper issued by Berkadia is supported by a $1.50 billion surety policy issued by a Berkshire Hathaway insurance subsidiary and corporate guaranty, and we have agreed to reimburse Berkshire Hathaway for one-half of any losses incurred thereunder. At November 30, 2022, the aggregate amount of commercial paper outstanding was $1.47 billion.
The following is a summary of selected financial information for Berkadia (in millions):
November 30,
20222021
Total assets$4,436.0 $4,630.7 
Total liabilities2,801.7 3,377.0 
Total noncontrolling interest690.1 425.8 
November 30,
20222021
Our total equity balance
$425.9 $373.4 
Year Ended November 30,
202220212020
Gross revenues$1,361.2 $1,262.4 $1,000.4 
Net earnings276.5 290.3 153.1 
Our share of net earnings124.4 130.6 68.9 
We received distributions from Berkadia on our equity interest as follows (in millions):
Year Ended November 30,
202220212020
Distributions$69.8 $58.0 $37.1 
At November 30, 2022 and 2021, we had commitments to purchase $237.4 million and $425.6 million, respectively, of agency CMBS from Berkadia.
OpNet
We own approximately 42% of the common shares and 48% of the voting rights of OpNet (formerly known as Linkem). In addition to common stock, we own convertible preferred stock, which is automatically convertible to common shares in 2026, and common stock warrants, which are exercisable by June 2024 and June 2027. If our convertible preferred stock and warrants were all converted or exercised, our ownership would increase to approximately 63% of OpNet’s common equity and voting rights. The convertible preferred stock is reported in Other assets in our Consolidated Statements of Financial Condition and had a carrying value of $0 million and $17.4 million at November 30, 2022 and 2021, respectively. The common stock warrants are reported in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition and had a fair value of $54.2 million and $27.8 million at November 30, 2022 and 2021, respectively.
We also own redeemable preferred stock and subordinated bonds issued by OpNet. The redeemable preferred stock is reported in Other assets in our Consolidated Statements of Financial Condition and had a carrying value of $24.5 million and $89.1 million at November 30, 2022 and 2021, respectively. During the year ended November 30, 2022, we reported the subordinated bonds in Financial instruments owned, at fair value in our Consolidated Statements of Condition with a fair value of $48.6 million. Additionally, during the year ended November 30, 2022 we have made shareholder loans to OpNet with a carrying value of $19.3 million at November 30, 2022.
In November 2022, we made a subscription advance of $12.5 million, and subsequent to year end we have made additional subscription advances of $20.8 million to participate in a new convertible preferred stock offering, which were partially issued in January 2023. We also received warrants for the new convertible preferred stock in January 2023, which are exercisable by December 23, 2027.
We, along with another significant shareholder in OpNet, have agreed to provide additional financial support, if necessary, to meet certain funding needs of OpNet until June 2023.
The following is a summary of selected financial information for OpNet (in millions):
November 30,
20222021
Total assets$1,050.8 $782.0 
Total liabilities935.2 734.0 
November 30,
20222021
Our total equity balance
$— $— 
Year Ended November 30,
202220212020
Net loss$(88.6)$(90.5)$(78.8)
FXCM
We have a 50% voting interest in FXCM, a provider of online foreign exchange trading services and have the ability to significantly influence FXCM through our seats on the board of directors. We also have a senior secured term loan to FXCM, which is reported within Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition and had a fair value of $35.1 million and $50.5 million as of November 30 2022, and 2021 respectively. We are amortizing our basis difference between the estimated fair value and the underlying book value of FXCM customer relationships, technology and trade name over their respective useful lives (weighted average life of 11 years). FXCM is considered a VIE and our term loan and equity interest are variable interests. During the year ended November 30, 2022, we recognized an other-than-temporary impairment charge of $25.3 million within Other revenues on the Consolidated Statement of Earnings on our investment. The following is a summary of selected financial information for FXCM (in millions):
November 30,
20222021
Total assets$389.6 $387.9 
Total liabilities341.4 382.2 
November 30,
20222021
Our total equity balance
$59.7 $49.0 
Year Ended November 30,
202220212020
Net earnings (loss)$39.0 $(21.5)$6.5 
In connection with foreign exchange contracts entered into with FXCM, we have $0.5 million and $0.7 million at November 30, 2022 and 2021, respectively, included in Payables—brokers, dealers and clearing organizations in our Consolidated Statements of Financial Condition.
Golden Queen Mining Company LLC
We have a 50% ownership interest in Golden Queen Mining Company, LLC (“Golden Queen”), which owns and operates a gold and silver mine project located in California. We also own warrants to purchase shares with a fair value of $0.6 million and $3.1 million at November 30, 2022 and 2021, which if exercised, would increase our ownership to approximately 51.9% of Golden Queen’s common equity. We also have a shareholder loan to Golden Queen with a carrying value of $14.0 million and $13.9 million at November 30, 2022 and 2021 respectively. The following is a summary of selected financial information for Golden Queen (in millions):
November 30,
20222021
Total assets$209.8 $224.5 
Total liabilities102.1 101.6 
November 30,
20222021
Our total equity balance
$46.5 $55.1 
Year Ended November 30,
202220212020
Net loss$(15.2)$(14.7)$(9.6)
Real Estate Investments
Our real estate equity method investments primarily consist of equity interests in Brooklyn Renaissance Plaza and Hotel and 54 Madison.
Brooklyn Renaissance Plaza is composed of a hotel, office building complex and parking garage located in Brooklyn, New York. We have a 25.4% equity interest in the hotel and a 61.3% equity interest in the office building and garage. Although we have a majority interest in the office building and garage, we do not have control, but only have the ability to exercise significant influence on this investment. We are amortizing our basis difference between the estimated fair value and the underlying book value of Brooklyn Renaissance office building and garage over the respective useful lives (weighted average life of 39 years). An impairment charge of $6.9 million was recognized during the year ended November 30, 2020, which represented all of the carrying value in the Brooklyn Renaissance Plaza hotel.
We own approximately 48.1% equity interest in 54 Madison, a fund that owns an interest in one real estate project and is in the process of being liquidated. We received cash distributions of $18.4 million and $39.4 million from 54 Madison during years ended November 30, 2022 and 2021, respectively. The following is a summary of selected financial information for our significant Real Estate Investments (in millions):
November 30,
20222021
Total assets$350.4 $434.5 
Total liabilities487.5 506.1 
November 30,
20222021
Our total equity balance
$107.3 $115.2 
Year Ended November 30,
202220212020
Net earnings (loss)$17.7 $(27.0)$(12.3)
JCP Fund V
We have limited partnership interests of 11% and 50% in Jefferies Capital Partners V L.P. and the Jefferies SBI USA Fund L.P. (together, “JCP Fund V”), respectively, which are private equity funds managed by a team led by our President. The amount of our investments in JCP Fund V included in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition was $23.9 million and $25.4 million at November 30, 2022 and 2021, respectively. We account for these investments at fair value based on the NAV of the funds provided by the fund managers (see Note 2, Summary of Significant Accounting Policies, herein). The following summarizes the results from these investments which are included in Principal transactions revenues in our Consolidated Statements of Earnings (in millions):
Year Ended November 30,
202220212020
Net gains (losses) from our investments in JCP Fund V$0.1 $7.7 $(3.0)
At both November 30, 2022 and 2021, we were committed to invest equity of up to $85.0 million in JCP Fund V. At both November 30, 2022 and 2021, our unfunded commitment relating to JCP Fund V was $8.7 million.
The following is a summary of selected financial information for 100.0% of JCP Fund V, in which we owned effectively 35.2% of the combined equity interests (in millions):
September 30,
2022 (1)2021 (1)
Total assets
$68 $72 
Total liabilities
— — 
Total partners’ capital
68 72 
Nine Months Ended September 30, 2022 (1)Three Months Ended December 31, 2021 (1)Nine Months Ended September 30, 2021 (1)Three Months Ended December 31, 2020 (1)Nine Months Ended September 30, 2020 (1)Three Months Ended December 31, 2019 (1)
Net increase (decrease) in net assets resulting from operations
$(1.3)$(3.2)$23.8 $(1.0)$(12.5)$(1.4)
(1)Financial information for JCP Fund V in financial position and results of operations at November 30, 2022 and 2021 and for the years ended November 30, 2022, 2021 and 2020 is included based on the presented periods.
Other Asset Management Investments
We have investments in asset management entities with an aggregate carrying amount of $18.6 million and $25.0 million at November 30, 2022 and 2021, respectively, which consist of our shares in Monashee, an investment management company, registered investment advisor and general partner of various investment management funds and provide us with a 50% voting rights interest and the rights to distributions of 47.5% of the annual net profits of Monashee’s operations if certain thresholds are met. A portion of the carrying amount of the investment in Monashee relates to contract and customer relationship and client relationship intangible assets and goodwill. The intangible assets are amortized over their useful life and the goodwill is not amortized.
We also have an investment management agreement whereby Monashee provides asset management services to us for certain separately managed accounts. Our net investment balance in the separately managed accounts was $17.7 million and $13.6 million at November 30, 2022 and 2021, respectively. The following table presents the activity included in our Consolidated Statements of Earnings related to these separately managed accounts (in millions):
Year Ended November 30,
202220212020
Investment losses (1)$(3.2)$(0.8)$— 
Management fees (2)0.7 — — 
(1)Included in Principal transactions revenues in our Consolidated Statements of Earnings.
(2)Included in Floor brokerage and clearing fees in our Consolidated Statements of Earnings.
At November 30, 2021 our equity method investments also consist of membership interests and limited partnership interests of approximately 15% in the Oak Hill investment management company and registered investment adviser and the Oak Hill general partner entity, which is entitled to a carried interest from certain Oak Hill managed funds (collectively “the Oak Hill interests”). On September 30, 2022, we sold the Oak Hill interests with a carrying value of $167.7 million and recognized $175.1 million within Other revenues in our Consolidated Statement of Earnings as a result of the sale.
ApiJect
We owned shares which represent a 38% economic interest in ApiJect at November 30, 2022. Our investment in ApiJect is accounted for at fair value by electing the fair value option available under U.S. GAAP and is included within corporate equity securities in Financial instruments owned, at fair value in our Consolidated Statements of Financial Condition. At November 30, 2022, we purchased additional common shares of ApiJect and obtained a right to 1.125% of ApiJect’s future revenues for cash consideration of $25.0 million. In addition, we converted our $25.0 million term loan agreement into additional common shares. At November 30, 2022, the change in fair value of our equity investments in ApiJect was a mark-to-market gain of $37.3 million and the total fair value of our equity investment in common shares of ApiJect is $100.1 million, which is included within Level 3 of the fair value hierarchy. Additionally, we owned warrants to purchase up to 950,000 shares of common stock at any time or from time to time on or before April 15, 2032.
We also have a term loan agreement with a principal of ApiJect for $28.7 million, maturing on February 28, 2023. The loan is accounted for at cost plus accrued interest and is reported within Other assets in our Consolidated Statements of Financial Condition. Interest income on the term loan of $2.3 million and $1.6 million was recognized in Interest revenues in our Consolidated Statements of Earnings for the year ended November 30, 2022 and 2021, respectively. The loan has a fair value of $28.9 million and $26.6 million at November 30, 2022 and 2021, which is classified as Level 3 in the fair value hierarchy.