Brief: U.S. private equity firms raised “healthy” amounts of money from investors after the pandemic began last year, particularly for technology deals, even as most firms also poured cash into struggling portfolio companies, according to PitchBook’s 2020 review of the industry. Private equity firms quickly figured out how to negotiate the extremes of 2020, cannily shifting from the frozen leveraged buyout business to buying minority stakes and putting money to work in public companies, according to the report, expected to be released Tuesday. After an initial downturn early in the year, exits also rebounded as private equity firms turned to special purpose acquisition companies (SPACs), traditional listings, and other sponsors to take holdings off their hands, reported PitchBook. “What a rollercoaster 2020 was,” said Wylie Fernyhough, lead private equity analyst at PitchBook, in an interview with Institutional Investor. “Whether it was LPs having to pause allocations, or figuring out how to do due diligence online. Private equity really showed its resilience in 2020 with all these headwinds thrown at it.”
Brief: Chris Rokos’s hedge fund racked up its best year since the billionaire investor started his own macro trading firm more than five years ago, joining a string of peers who posted record gains in 2020. His $14.5 billion macro fund soared 44% as the pandemic upended markets, according to people with knowledge of the matter who asked not to be identified because the information is private. The London-based fund’s previous best year was in 2016, when it rose 20%. Macro hedge funds, which trade across asset classes to capitalize on broad economic trends, ended last year up 7% on average, according to data compiled by Bloomberg. Rokos’s returns coincide with a structural overhaul at his firm in late 2019, which allowed for bigger bets as portfolios previously run by individual traders were merged into a single pool of money. A spokesman for London-based Rokos Capital Management, which started in 2015, declined to comment. Rokos joins a slew of macro fund managers that posted double-digit gains last year as market turbulence created opportunities for the firms. Brevan Howard Asset Management, Rokos’s former employer, made 27% in its master fund, the best year since 2003, while its U.S. Rates Opportunities Fund soared nearly 99%. EDL Capital and Glen Point Capital gained 23% and 14%, respectively.
Brief: The Google News Initiative on Tuesday launched a global open fund to fight misinformation about COVID-19 vaccines, worth up to $3 million. The “COVID-19 Vaccine Counter Misinformation Open Fund” aims to support journalistic efforts to effectively fact-check misinformation about the COVID-19 immunisation process, the initiative belonging to Alphabet’s Google said in a blog post. “While the COVID-19 infodemic has been global in nature, misinformation has also been used to target specific populations,” it added. “Some of the available research also suggests that the audiences coming across misinformation and those seeking fact checks don’t necessarily overlap.” The fund will accept projects looking to expand the audience of fact-checks, particularly to groups disproportionately hit by misinformation. Applications will be reviewed by team of 14 jurors from across the academic, media, medical and non-profit sectors, as well as representatives from the World Health Organisation. In December, the Google News Initiative pledged $1.5 million to fund a COVID-19 vaccine media hub to support fact-checking research.
Brief: San Francisco’s office market is being hit so hard by the pandemic that, by some measures, it’s worse than the global financial crisis or dot-com collapse. The city’s office-vacancy rate reached 16.7% at the end of 2020, up 11 percentage points from a year prior, according to a report from commercial real estate brokerage Cushman & Wakefield. That’s a higher level than in the aftermath of the 2008 recession. The vacancy rate is being driven by a record amount of sublease space, which has surpassed the worst of the dot-com bust two decades ago, said Robert Sammons, senior director of research at Cushman in San Francisco. In addition, new leasing has effectively been on pause and hit the lowest annual level in 2020 since at least the early 1990s. Companies have been reevaluating their office needs after months of pandemic lockdowns showed them that it was possible to function with employees working from home. That’s caused a spike in vacancies, especially in cities like New York and San Francisco, where the cost of renting space is higher. The technology companies that dominate the Bay Area, in particular, have embraced remote work. Pinterest Inc. last year paid almost $90 million to cancel a large San Francisco office lease, saying it is rethinking where employees are based.
Brief: The upheaval in global labour markets triggered by the coronavirus pandemic will transform the working lives of millions of employees for good, policymakers and business leaders told a Reuters virtual forum on Tuesday. Nearly a year after governments first imposed lockdowns to contain the virus, there is a growing consensus that more staff will in future be hired remotely, work from home and have an entirely different set of expectations of their managers. Yet such changes are also likely to be the preserve of white-collar workers, with new labour market entrants and the less well-educated set to face post-COVID-19 economies where most jobs growth is in low-wage sectors. “I think it would be a fallacy to think we will go back to where we were before,” Philippines central bank Governor Benjamin Diokno told the Reuters Next forum. “We were already geared towards the digital, contactless, industries ... That will define the new normal.” The pandemic, which according to a Reuters tally has so far infected at least 90.5 million people and killed around 1.9 million worldwide, has up-ended industries and workers across the globe.
Brief: It could have been a disastrous year for the European fund management industry, but policymakers rode to its rescue. Huge fiscal and monetary stimulus packages supported markets and continued to push investors away from cash. In the end, the industry ended the year close to where it began, but this headline figure masked considerable variation underneath. The European fund industry had €10.03trn (£9trn), excluding money market funds, as at 30 November 2020 according to Morningstar data, an organic growth rate of 3.2%. In aggregate, fixed income saw the strongest inflows, at €110bn, in spite of continued low yields. Equity funds saw inflows of €91.7bn, while allocation funds saw inflows of €34.8bn. The notable weak spot was in alternatives, which saw €35.5bn exit the sector – a combination of the weakness of the property sector and a growing disillusionment with the poor performance and high fees from hedge fund strategies. Commodities had a good year, drawing in an extra net €1.6bn of assets. However, this overall picture masked huge shifts in the popularity of different asset classes through the year as economic news and investor sentiment ebbed and flowed. In November, for example, equity funds were firmly in the ascendancy as vaccine news emerged and some stability returned to US politics.