Brief: Blackstone Group Inc. plans to raise one of the biggest funds to capitalize on the turmoil in debt markets. The investment firm is looking to raise $7 billion for its fourth GSO credit opportunities fund, according to people with knowledge of the matter. Blackstone’s new fund will aim to provide capital to performing companies, said the people, who asked not to be identified because the information isn’t public… GSO, Blackstone’s credit arm, which has about $129 billion of assets under management, closed its third-capital opportunities fund in 2016 at $6.5 billion. In the first quarter, the unit posted one of its worst-ever declines for its distressed strategies. The new fund targets companies in better financial condition.
Brief: BlackRock Inc. Chief Executive Officer Larry Fink said the work-from-home revolution will have lasting effects, including pushing down demand for commercial real estate. Fink said that after businesses were forced to run from mostly remote setups during the coronavirus crisis, many companies will choose not to bring all their workers back to the office even when it is safe to do so “I don’t think any company’s going to go back to 100% of the workforce in the office,” Fink said Thursday at a virtual event from Saudi Arabia’s Future Investment Initiative Institute. “That means less congestion in cities. It means, more importantly, less need for commercial real estate. So to me that’s one of the great outcomes of this.”
Brief: Private equity’s decade-long debt binge is coming back to haunt it when it comes to obtaining the U.S. government’s coronavirus aid. Already largely shut out of the popular small business rescue loan program, the industry is now realizing that it’s likely to be excluded from the Federal Reserve’s $600 billion lending initiative because it bars companies that have loaded up on borrowed money. The prohibition strikes at the heart of the buyout-shop business model, where firms saddle the companies they purchase with debt in order to mint bigger profits on their investments. Though the Fed’s “Main Street” lending facility for mid-size businesses doesn’t specifically preclude private equity-owned companies, executives say they’ve concluded that the tough terms will prevent many of their firms from qualifying. Some politicians and investors say that may not be a bad thing, especially because taxpayer dollars are on the line.
Brief: Europe domiciled long-term funds suffered record outflows throughout March – a month defined by Covid-19 caused market volatility. Net redemptions reached €246 billion – “a staggering number that dwarfs even the darkest month of the 2007-09 financial crisis”, said Morningstar, which published the data. The worst month of the previous financial crisis was October, when investors withdrew €108 billion from long-term funds. This time round, as the Covid-19 death toll continued to rise worldwide, bond funds shed an “unprecedented” €140 billion, whilst equities suffered redemptions of €56 billion.
Brief: AMP says coronavirus-fuelled market volatility has wiped about $20 billion from its beleaguered wealth portfolio, while its global investment fund has also copped a whack. The finance giant told the ASX on Thursday its Australian wealth funds under management declined 13.5 per cent to $116.3 billion in the three months to March 31, a drop of $18.2 billion from $134.5 billion at the end of 2019. The company's New Zealand wealth business lost $1.2 billion, or 9.8 per cent in total AUM. Total assets under management at fund manager AMP Capital fell 5.3 per cent to $192.4 billion, down $10.7 billion from $203.1 billion in the fourth quarter of FY19. AMP chief executive Francesco De Ferrari said his firm had witnessed some recovery since the end of the quarter but expected volatility across equities, commodities and fixed income to continue as the coronavirus crisis rolls on.
Brief: The hedge fund industry gets its name from the premise it can generate gains even when markets fall. That didn’t happen in Canada during the first quarter, one of the most volatile trading periods in history. Only five of 61 hedge funds, or about 8%, posted gains during the first three months of the year, according to Venator Capital Management Ltd., a Toronto-based investment firm that tracks the industry. The top performer was CC&L Market Neutral Fund, with a 9.8% gain; the worst was Lawrence Park Enhanced Preferred with a 38.5% loss. Canada’s stock market reached a record in February before tumbling in March amid the coronavirus pandemic and then rebounding again, with days featuring both the biggest drop and surge on record. Corporate bonds also plunged, while government yields hit new lows.