.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line).png "CH Diligence (thicker line).png")
Our briefing for Friday May 15, 2020:
May 15, 2020 4:05:31 PM
- United States President Donald Trump announced his government’s new plan of creating a vaccine dubbed “Operation Warp Speed”. During the news briefing on Friday, President Trump would love to see this team develop a vaccine by year’s end, which outpaces the outlook given by most health officials. Moncef Slaoui, the ex-head of GlaxoSmithKline’s vaccines division and four-star Army General Gustave Perna will lead the effort. President Trump also stated the White House will likely make an announcement related to the World Health Organization (WHO) next week. The American administration had halted funding to the WHO last month after saying a review was needed in how they handled the coronavirus outbreak, especially in regards to China.
- During a news briefing on Friday, Canadian Prime Minister Justin Trudeau announced his Liberal government would extend the emergency wage-subsidy program to the end of August. The program that covers 75% of an eligible company’s payroll to a maximum of $847 per week per employee was set to expire May 31st. The original program was set to cost $73 billion. The federal government’s finance minister did not make clear how much the expanded program will cost.
- According to a Financial Times article, the financial hub of the United Kingdom is drawing up detailed plans for when its workers return. Canary Wharf will be introducing one-way routes, daily deep cleaning, limiting elevator capacity and eliminating soft furnishings. Canary Wharf is home to the European headquarters of Barclays, Citigroup and HSBC and many other businesses.
- Europe’s largest economy is now officially in a recession. Germany’s economy shrank by 2.2% in the first three months of the year, its largest quarterly drop since the 2009 global financial crisis. The numbers were released just as the country tries to return a new state of normalcy. Most German states will be reopening bars and restaurants this weekend, and the country’s soccer league – the Bundesliga will be returning as well, although without any fans in the stands.
- Restaurants, bars and cafes were allowed to reopen in Australia’s most populous state on Friday. The easing of restrictions in New South Wales, which includes Sydney, was welcome news as the country learned earlier in the week of its unemployment numbers. Close to 600,000 jobs were lost last month due to the coronavirus. The Australian Bureau of Statistics said 2.7 million Australians either lost their job, had their hours reduced, or left the labour force in April.
- Brazil’s health minister Nelson Teich handed in his resignation on Friday after less than a month on the job. Teich is another name added to the list of those who disagreed with President Jair Bolsonaro’s handling of the coronavirus pandemic. President Bolsonaro has been pushing in recent days for wider use of hydroxychloroquine as a treatment for COVID-19, the same drug United States President Donald Trump pushed earlier. Teich resisted this and also disagreed on the pace of reopening the country, saying he wasn’t consulted before Bolsonaro issued a decree allowing gyms, beauty parlours and hairdressers open for business. The next health minister hired will be Brazil’s third during the coronavirus outbreak in the country.
Covid-19 – Due Diligence And Asset Management
BlackRock CEO Fink told Trump U.S. Needs Infrastructure Spending
Brief: BlackRock Inc. Chief Executive Officer Larry Fink said he told President Donald Trump the U.S. needs to spend on infrastructure to generate jobs, as the country navigates the next steps to rescue a coronavirus-addled economy. “I’ve told the U.S. president, and I’ve told this to many other politicians now, that an infrastructure build is really important,” Fink said Thursday in a live-streamed interview with Sergio Rial, CEO of Banco Santander SA’s Brazil unit. The U.S. government has rolled out unprecedented spending to shore up the economy, but business leaders and politicians are already focusing on what new revival efforts should look like. Trump tweeted in March that a $2 trillion infrastructure bill would be a good way to create jobs. Fink also said in the interview that BlackRock, the world’s largest asset manager, has been talking with central banks in the midst of the dual public health and financial crisis.
Bain Capital to Target $9 Billion for New Buyout Fund
Brief: Bain Capital is planning to raise about $9 billion for its next flagship global buyout fund, as the U.S. alternative asset manager seeks to tap demand from yield-hungry investors, people familiar with the matter said. The Boston-based firm has started discussions with new and existing investors about the fund, which it aims to close later this year, according to the people, who asked not to be identified because the information is private. Bain’s last flagship fund closed in 2017 at $9.4 billion, which included $8 billion from investors and another $1.4 billion from the firm’s own partners. Similar internal commitments could increase the eventual size of the new fund by a further 10% to 15%, the people said. Buyout firms have been on a fundraising spree as institutional investors reach for better returns in an environment of low interest rates and poor performance from stock-picking fund managers.
European Hedge Fund and Trading Groups Call for Short Selling Ban to be Lifted
Brief: Europe’s trading and hedge fund firms are calling for a removal of the temporary short selling bans issued in several countries from March, in response to the market volatility triggered by the coronavirus pandemic. The trade bodies calling for the repeal represent hundreds of top firms — including the likes of Citco, Man Group, State Street, Guotai Junan Securities, Citadel Securities Europe, Bridgewater Associates and Marshall Wace — who say a removal of the ban is crucial to improving market efficiency and preventing further damage to investor portfolios as a result of the pandemic Their plea comes after the European Securities and Markets Authority said on 15 April that the short-selling ban would remain across Austria, Belgium, France, Greece and Spain until 18 May, with the possibility of a further extension.
Coronavirus Crisis Herald Major Changes to the Hedge Fund/Prime Broker Dynamic
Brief: With the broader hedge fund industry facing multiple challenges around rising costs, squeezed profits, and a shifting regulatory backdrop, the prime brokerage sector will need to juggle future disruptions and sweeping changes in client activity as a result of the coronavirus pandemic. In a new market commentary, Anthony Bennett, head of prime brokerage at Capco, a global technology and management consultancy dedicated to the financial services industry, examined the potentially far-reaching fallout of the Covid-19 crisis on the hedge funds/PB relationship, with future success possibly hinging on the degree of diversification within a PB’s business. Gauging perspectives through recent conversations with leading prime brokers, Bennett suggested primes have largely weathered Q1’s historic volatility and de-risking and “passed the initial tests” of the recent crisis.
Coronavirus: US Hedge Fund Davidson Kempner Eyes Virgin Atlantic Deal
Brief: A prominent American hedge fund has emerged among a pack of suitors eyeing a deal to prop up Virgin Atlantic Airways as it races to secure the funds it needs to survive the COVID-19 crisis. Sky News has learnt that New York-based Davidson Kempner Capital Management is one of the prospective investors which held talks with Virgin Atlantic bosses this week. The airline, which is seeking more than £500m in debt and equity funding following a collapse in revenue, wants to stitch together a deal this month. Sources said that Davidson Kempner was on a list of financial investors in discussions with Virgin Atlantic which also includes Apollo Global Management, Cerberus Capital Management and Greybull Capital, the former owner of Monarch Airlines. Davidson Kempner, which manages well over $30bn in assets, is among the hedge funds negotiating a financial restructuring of the US department store chain Neiman Marcus.
A 3.5 Billion Hedge Fund Lures Clients with Rare Fee Discount
Brief: Selwood Asset Management, one of the fastest growing hedge fund firms in London, is enticing new clients with a type of fee structure that hasn’t been seen in the industry since the last financial crisis. The firm will waive its cut of some new clients’ profits until assets in its flagship fund reach their previous peak, a threshold known as the high-water mark, according to people with knowledge of the matter. That means Selwood won’t collect a performance fee until the fund has gained 8%, said the people, who asked not to be identified because the information is private. Selwood typically charges performance fees ranging from 13.5% to 30% for its main fund. Discounts like this are rare even for existing clients in an industry that’s notorious for charging high fees. Selwood, whose assets have grown to about $3.5 billion from $85 million at its launch in late 2015, is trying to raise as much as $250 million to take advantage of trading opportunities created by the coronavirus sell-off, the people said. New investors will have to lock their money up in the fund for as long as 12 months. A representative of Selwood declined to comment.
