Brief : Private equity firms are ramping up their investments in the U.K.’s student accommodation market, pumping hundreds of millions of pounds into a resilient sector with an eye on high rental returns in post-Brexit, post-Covid Britain. More than one-third of deals for student property in 2021 so far have been financed by private equity, compared to about 15% in total between 2016 and 2019, according to data compiled by real estate advisers Jones Lang Lasalle Inc. With student application numbers projected to rise by 8.5% this year and purpose-built accommodation oversubscribed, property remains attractive for private equity firms. They are sitting on more than $300 billion for property investments alone and want to broaden their assets beyond offices, retail and hotels -- all badly hit by Covid-19. Major deals this year include Los Angeles-based Ares Management Corp.’s first U.K. student property investment. The $197 billion alternative asset manager spent 158 million pounds ($217 million) for two newly built housing units in February, and hopes to build a U.K. portfolio worth 400-500 million pounds, co-head of European real estate Wilson Lamont said in an interview. Ares isn’t alone. A recently launched Sunway Bhd and MBU Capital Group Ltd. fund already stands at 110 million pounds and is targeting almost double that.
Brief: The number of new hedge funds being launched has reached its highest level in three years, as managers look to capitalise on the nascent economic recovery, idiosyncratic and volatility-based opportunities, and a shifting macro environment. New hedge fund launches increased to around 175 in the fourth quarter of 2020, with the number of new funds unveiled exceeding the estimated quarterly liquidations for the second successive quarter, new industry analysis by Hedge Fund Research shows. The number of Q4 launches was up on the previous quarter’s total of 151, bringing the estimated number of new hedge funds launched in 2020 to 539, a period which included a record low in Q1 at the start of the coronavirus pandemic, HFR said this week. “New hedge fund launches continued to rise as industry expansion accelerated into 2021, driven by the strongest performance gains since 2000, as both managers and investors positioned for strong growth throughout 2021,” said Kenneth Heinz, HFR president.
Brief: The average bonus paid to employees in New York City’s securities industry in 2020 rose by 10% to $184,000, a top New York state financial regulator said in a statement on Friday. “Wall Street’s near-record year shattered all expectations,” New York State Comptroller Thomas DiNapoli said. “The early forecast of a disastrous year for financial markets was sharply reversed by a boom in underwriting activity, historically low interest rates, and surges in trading spurred by volatile markets,” he added. The 2020 bonus pool increased by 6.8% to $31.7 billion, during the traditional December-March bonus season, from $29.7 billion in 2019, according to the report, which called the growth figure “unique after a recessionary event”. Bonuses fell by 33% in 2001 after 9/11 attack and by 47% percent in 2008, the report said. Compensation firm Johnson Associates Inc in November said it expected year-end bonuses for most Wall Street workers to decline in 2020 compared with 2019 due to the impact of the COVID-19 impact on the U.S. economy.
Brief: In 2020, as the world convulsed under COVID-19 and the global economy faced its worst recession since World War II, billionaires saw their riches reach new heights. Now some are talking to their wealth managers about how to keep a hold of and consolidate their fortunes amid the global debris of the pandemic. Others are discussing how to preempt and navigate demands from governments, and the wider public, to pick up their share of the recovery costs. “The stock market crashed a year ago, by July or so my portfolio was back where it was before, at the beginning of the year, and now it’s far higher,” said Morris Pearl, a former managing director at BlackRock who chairs Patriotic Millionaires, a group that believes the high net worth should do more to close the wealth gap. “The fundamental problem is this gross inequality that’s getting worse.” The plans being discussed by the ultra-rich range from philanthropy, to shifting money and businesses into trust funds, and relocating to other countries or states with favourable tax regimes, according to Reuters interviews with seven millionaires and billionaires and more than 20 advisers to the wealthy.
Brief: Private equity’s control of health-care companies requires greater scrutiny to better assess the impact on the industry, several U.S. lawmakers said Thursday. Independent industry experts fielded questions from lawmakers at a House Ways & Means subcommittee hearing about private equity’s growing influence and recommended requiring health-care companies to disclose more financial and ownership data. “Private equity’s influence stretches like an octopus,” said Representative Bill Pascrell, a Democrat of New Jersey, who led the hearing. The industry has made a push to expand into every corner of the health system, from nursing homes to home health to doctors practices. Private equity deals in the sector increased 21% from the year earlier, according to Bain & Co. Sabrina Howell, an assistant professor of finance at the NYU Stern School of Business, said all companies that accept government money should disclose who their owners are. Howell co-authored a study that found private equity ownership of nursing homes increased the short-term probability of death by 10%. “The private equity industry is having an overwhelmingly positive impact on health care across America” by lowering costs, improving access, funding cures and delivering more effective treatments, Drew Maloney, president of the American Investment Council, said in a statement Thursday.
Brief: In the early days of the pandemic, Ken Griffin talked with President Donald Trump and Vice President Mike Pence about stimulus and fast-tracking Covid therapies. Now, he sees an opening to work with the Biden administration to address a year of lost learning. “The political party doesn’t matter to me,” said Griffin, 52, who contributed $66 million to Republicans in the last election. “What matters is the receptivity to solving the problem.” The past 15 months have been busy for the billionaire founder of hedge fund Citadel and market-maker Citadel Securities, as both parts of his business successfully navigated the pandemic-fueled volatility. Griffin was acutely aware of the “existential and economic threat” posed by the pandemic early on after hearing from employees in China, Citadel Securities’ chief executive officer, Peng Zhao, and an employee who had family in Wuhan. To combat the work from home challenge, Citadel Securities created a trading outpost in a high-end Palm Beach resort. The firm later profited from the huge influx of retail traders using apps such as Robinhood.