Brief : Vaccine optimism and hopes of an end to coronavirus quarantines and lockdowns are spurring growth among emerging markets-focused hedge fund managers, new industry analysis shows. Hedge Fund Research said on Friday that an upsurge in both performance and capital over the past year have positioned emerging markets managers – and, in particular, those focused on China – for a “strong continuation” of gains in 2021. EM hedge funds – as measured by HFR’s Emerging Markets (Total) Index – gained 12.7 per cent in 2020. China-focused strategies powered the advance, with the Emerging Markets China Index soaring more than 26.3 percent in the 12-month period between January and December.
Brief: CQS is shutting one of its best-performing strategies because the fund’s chief investment officer is leaving to join Citadel, adding to a string of departures from Michael Hintze’s hedge-fund firm. Prakash Narayanan, who ran CQS Global Relative Value, is exiting after more than three years, according to people with knowledge of the matter. He is joining Citadel’s Global Credit business as a portfolio manager to run a strategy similar to the one at CQS, a spokesman for Citadel confirmed. Narayanan’s was one of the senior partners that Hintze recently included in a succession plan. His strategy was a rare bright spot for CQS last year when the firm’s hedge funds tumbled, with the Global Relative Value fund surging 30% while Hintze’s flagship money pool slumped by a record 35% as his structured credit bets imploded, according to an investor document.
Brief: The growing footprint in New York of major tech companies like Amazon.com Inc, Facebook Inc and Alphabet Inc’s Google has given property owners and brokers hope that once the coronavirus has been conquered demand for office space will quickly return to pre-pandemic levels. But the popularity of working from home and the exodus of people from expensive coastal cities will likely weigh on demand and change workspace requirements, leaving office buildings that do not adjust less valuable. Big Tech’s expanding real estate clout already hides declining values for lower-quality properties. Prices for premier workspace in U.S. gateway cities have held or even risen during the pandemic in a flight to quality. But leasing volumes and number of buildings sold have plummeted, with valuations at the lower end falling, data shows.
Brief: The U.K. government has taken stakes in 37 startup companies after state loans to help them grow during the pandemic were converted into equity. The figure was revealed Friday in response to a freedom-of-information request by Bloomberg to the British Business Bank, which administers the so-called Future Fund program. While the government is usually averse to taking stakes in private companies, the bank said 30.4 million pounds ($42.4 million) of loans had been converted. The Future Fund was announced in April to ensure “high-growth” startups got funding to continue operations as the coronavirus triggered the worst recession in more than 300 years. Billed as a 500-million pound program, it’s issued 1,140 loans worth 1.1 billion pounds. The bank declined to provide details of the companies in which the government now owns stakes, or the size of the state’s holdings. “The Convertible Loan Agreement in place with each investee company is confidential in nature,” it said.
Brief: Despite COVID, venture capital activity across the globe remained robust throughout 2020 and deal activity, thus far in 2021, suggests venture capital will continue to fly high this year. Below we outline Covid winners, challenges and opportunities in ESG within the VC space and discuss what managers can do to thrive in this new financial environment. The winners. Healthcare and life sciences. Unsurprisingly, healthcare and life sciences have done particularly well. According to Rock Health, 2020 has seen more digital health funding than any other year with USD2.4 billion invested each quarter — significantly outperforming the last 2 years’ quarterly average of USD2.1 billion. The US was particularly strong in this sector. Q3’20 hit USD36.5 billion, a 7-quarter high for VC companies and is an increase of 30 percent from Q2 2020.
Brief: Private equity buyouts have historically performed better in the periods immediately following market collapses like the dot-com bubble or the 2008 financial crisis. But the best performance belongs to co-investment deals, according to a new report from private markets firm Capital Dynamics. In a study of 435 co-investment buyout transactions made between 1998 and 2017, the multi-manager firm found that co-investments delivered higher internal rates of returns than the overall buyout market in the three-year periods following the last major crises before the pandemic. Report authors Andrew Beaton, David Smith, and Kairat Perembetov found that the co-investment deals performed better on the median, as well as delivering higher upper- and lower-quartile returns — and that was on a gross basis, before the more favorable fees associated with co-investments were taken into account.