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Coronavirus Diligence Briefing

Our briefing for Thursday March 11, 2021:

Mar 11, 2021 4:21:41 PM

  • In the United States, President Joe Biden changed his mind on Thursday and decided to sign the COVID-19 stimulus bill into law. The bill arrived at the White House last night and according to an official, President Biden wanted to sign it into law ASAP. Media reports had President Biden signing the bill into law on Friday originally. It also likely helps that the president will make a prime-time address to the nation Thursday evening to commemorate the grim milestone of one year since COVID-19 shut down much of the United States, and likely wants to try and lift the spirts of the American public.

  • Speaking in the House of Commons on Thursday, Canadian Prime Minister Justin Trudeau said March 11th, 2020 will be remembered as the day when life in Canada changed. Thursday marks the one-year anniversary of the World Health Organization (WHO) declaring the novel coronavirus a pandemic. “Every Canadian we lost to the virus will be remembered. Every shift done by a frontline nurse, every mask made by a Canadian worker will not be forgotten. We are stronger together, today, tomorrow and always,” said Prime Minister Trudeau. Elsewhere in the country, one-year into the pandemic there are still signs it is far from over. CTV News is reporting a new status report by Ontario’s COVID-19 Science Advisory Table has found that 42% of the province’s coronavirus cases are variants of concern. 

  • In the United Kingdom, the leader of the Tory’s backbench MPs warned Prime Minister Boris Johnson that lockdown rules will look “silly” if COVID-19 cases continue to decline. Sir Graham Brady, chairman of the 1922 committee of backbench Tory MPs, also criticized the government’s five-week gaps between each stage of the roadmap out of lockdown. Brady’s words are in direct contrast to England’s Chief Medical Officer Chris Whitty who warned earlier in the week that easing of restrictions would significantly increase the risk of a large surge in COVID-19 cases and more deaths.

  • Bloomberg is reporting Spain’s government plans to dedicate around two-thirds of the €11 billion fiscal package on direct aid to struggling firms. Prime Minister Pedro Sanchez’s socialist government plans to channel €7 billion in transfer payments directly to companies with about €3 billion towards a restructuring of state-backed loan guarantees and €1 billion for a separate restructuring fund. Prime Minister Sanchez announced the package last month but didn’t provide details on how the funds would be distributed.

  • According to Reuters, the European Union (EU) is about to suffer yet another setback in COVID-19 vaccine supplies after the United States told the EU they should not expect to receive AstraZeneca COVID-19 vaccines manufactured in America anytime soon. The EU has been an ongoing battle with AstraZeneca and its COVID-19 vaccine supply since the beginning of the year. The drugmaker had previously told the 27-nation bloc that they would be receiving 90 million doses in the second quarter – which is about half of what was expected. Lately, AstraZeneca offered to partly plug the gap with vaccines produced outside Europe, including the United States, but Thursday’s news throws a wrench into that plan.

  • Australia’s government has unveiled a $1.2 billion AUD package aimed at the country’s struggling tourism sector due to the coronavirus pandemic. The stimulus will be aimed at boosting local travel while international routes remain closed due to the pandemic. The government will subsidise 800,000 tickets on domestic flights to 13 destinations around Australia that mostly rely on international tourists and offer cheap loans to small tourism operators. “Our tourism businesses don’t want to rely on government support forever, they want their tourists back. This package, combined with our vaccine roll-out… is the bridge that will help get them back to normal trading,” said Prime Minister Scott Morrison.

Covid-19 – Due Diligence And Asset Management

KKR Seeks $12 Billion for Flagship Infrastructure Fund

Brief : Buyout firm KKR & Co Inc is seeking to raise $12 billion for its flagship global fund that will invest in infrastructure assets such as oil and gas pipelines and renewable energy projects, according to people familiar with the matter. The fundraising comes as President Joe Biden has been pushing U.S. lawmakers to back a plan for trillions of dollars in new spending on projects to restore America’s crumbling infrastructure. KKR began raising the fund, KKR Global Infrastructure Investors IV, late last year alongside its other flagship funds, including the North America private equity fund, which is aiming to attract more than $15 billion. A KKR spokeswoman declined to comment. Private equity firms tend to raise successor funds that are 10% to 20% larger than their predecessors. But KKR’s latest global infrastructure fund would be significantly bigger than KKR Global Infrastructure Investors III, which amassed $7.4 billion from investors in 2018.

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ECB Doesn’t Intend Faster Bond-Buying to Mean More Stimulus

Brief: Most European Central Bank policy makers have no intention of expanding their 1.85 trillion-euro ($2.2 trillion) emergency stimulus program despite their pledge on Thursday to step up the pace of bond buying to keep yields in check, according to officials familiar with the matter. The Governing Council’s decision to make purchases at a “significantly higher pace” over the next three months means buying debt at a faster rate than the program’s timeline suggests, the officials said, asking not to be identified. Buying would then be slowed if the economic outlook allows. The pandemic purchase program is due to run until at least the end of March 2022, and has almost 1 trillion euros of firepower left. The ECB says it can be “recalibrated” -- ie increased -- if needed.

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U.K. Banks Lost about 10,000 Women Last Year in Diversity Blow

Brief: More women than men have left British banks during the pandemic, undermining the sector’s pledges to become more diverse. The number of women at the U.K.’s five biggest lenders shrank by 3% during 2020, according to data compiled by Bloomberg News, while men saw a decline of about 2.1% as the banks pushed ahead with long-planned cost cuts and adapted to Covid-19. At NatWest Group Plc, roles filled by women dropped by 9% compared to a 5.2% fall for men. Standard Chartered Plc kept roughly the same number of men but its female staff declined by 2.2%. The banks -- along with Barclays Plc, Lloyds Banking Group Plc and HSBC Holdings Plc -- employ about half a million people globally, broadly even between genders. The stark split has a variety of causes. British lenders have spent years closing branches -- which are staffed more by women -- as they see customers shifting to online banking. This trend accelerated during lockdown. Some women are also withdrawing from the workforce, rather than being cut. At Standard Chartered, the gap between male and female job losses “probably relates to the fact that children were home being home-schooled and that burden within the family fell disproportionately to women,” Chief Executive Officer Bill Winters said on a call with reporters after recent earnings.

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Equity Investment into Smaller Private Companies Hit New Heights in 2020

Brief: Equity investment into private smaller companies reached new heights in 2020, rising by 9 per cent on 2019 levels to GBP8.8 billion, according to the British Business Bank’s Small Business Finance Markets Report. Average deal size continues to increase, primarily driven by a small number of very large deals. Equity deal sizes increased by 3 per cent in 2020 and the number of deals greater than GBP10 million increased from 173 in 2019 to 176 in 2020. The time taken for some companies to achieve unicorn status reduced in 2020. Beauhurst estimates the average age of all companies gaining unicorn status was seven years, but Hopin gained unicorn status only after one year and Cazoo after two years. Of the six UK companies to achieve unicorn status in 2019, five were backed by venture capital. Judith Hartley, CEO of British Patient Capital, says: "The British Business Bank’s Small Business Finance Markets report was published today and it reveals that, despite the global pandemic, equity investors continue to find smaller private UK companies highly attractive.

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Why Investors Will Keep Up a ‘Dash for Trash’

Brief: Investors will keep reaching for riskier assets to get returns in a U.S. economy poised for growth this year, according to Natixis Investment Managers. The “dash for trash” will continue, Jack Janasiewicz, portfolio manager and strategist at Natixis Investment Managers, predicted Tuesday during the firm’s web event discussing markets amid the easing Covid-19 crisis. Financial conditions are “highly accommodative,” he said, adding that “it’s tough to see anything but a continued stretch for risk assets.” At the same time, some investors worry that massive fiscal stimulus and easy monetary policy could stoke high inflation, according to Janasiewicz. The Natixis portfolio manager said the concern often comes up in client conversations, particularly with the recent jump in Treasury yields, but that he isn’t expecting a meaningful rise anytime soon.

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PLSA Strengthens Stewardship and Voting Guidelines to Reflect Pandemic and New Climate Regulations

Brief: Pension fund investors must be watchful this AGM season as to how company responses to the pandemic have impacted governance and workforce practices, the Pensions and Lifetime Savings Association (PLSA) has warned in its updated annual Stewardship and Voting Guidelines. Published to coincide with the PLSA’s annual Investment Conference, the Stewardship and Voting Guidelines 2021 are an important resource for pension trustees, providing practical guidance for schemes considering how to exercise their vote at annual general meetings. Having undertaken a substantial review of the guidelines in 2020, the PLSA has this year focused on ensuring they remain relevant amid the challenges posed by Covid-19 and a fast moving regulatory environment. Since the UK entered the first period of lockdown in March 2020, virtual AGMs have become the "new normal", enabled in law by the Corporate Insolvency and Governance Act on 26 June. The PLSA supports the provisions introduced by the Government and companies to ensure that AGMs can happen virtually during these unprecedented times.

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Topics:Coronaviruscovid-19