Brief: Investment bankers would be willing to plunge into self isolation for two weeks under new UK quarantine rules for travel, if it meant securing a lucrative role on a big deal. With M&A bankers itching to get back on the road as deal volumes remain in the deep freeze during the coronavirus pandemic, some senior dealmakers admit privately that a two-week quarantine period would be a price worth paying to be in the mix for a large transaction, according to conversations with three senior bankers. “If there was even a 5% greater chance that we would get the deal, we’d get on a plane and take the two weeks in a hotel or at home,” said one senior M&A banker in London. “Maybe we could just travel every two weeks,” joked another senior dealmaker. The UK government imposed a 14-day self-isolating period on 8 June for any travellers or returning Britons entering the country on planes, trains or ferries — even as the country begins to unwind lockdown restrictions that have kept the majority of the population at home since March.“We would just travel and then figure out the painful logistics of working from home or a hotel room, or whatever they ask us to do,” said another senior banker.
Brief: Goldman Sachs (GS.N) is closing its easy access savings business to new customers in Britain from Wednesday after deposits surged near to regulatory limits during the coronavirus lockdown.The British arm of digital brand Marcus, which pays market-leading rates to savers starved of meaningful cash returns, has attracted about 21 billion pounds ($27 billion) from more than 500,000 savers since its launch in 2018. However, British banking rules demanding ring-fencing of retail deposits totalling more than 25 billion pounds have prompted its executives to take steps to manage its growth. “We’ve really seen our growth accelerate under lockdown as people hold off on discretionary spending and take time to reorganise their finances and get the best deal for their money,” Des McDaid, head of Marcus UK, told Reuters. Ring-fencing would require Marcus in Britain to become a separate legal entity with its own board and limit how much capital it could share with the rest of Goldman’s businesses.
Brief: Germany’s bank lobby is set to urge the government to drop some of the conditions attached to a trillion euro rescue scheme, arguing that companies are so reluctant to take the help that it threatens any recovery from the coronavirus outbreak. Martin Zielke, the head of the lobby and Commerzbank, will appeal this week to limit conditions - like pay caps and board seats - for government cash injections into companies, three people with knowledge of the matter said. Zielke argues that companies are taking on further debt, the chief means of government support, as prospects for revenue dim, and Berlin should offer capital injections with fewer strings, according to a paper outlining his position seen by Reuters. Companies will not otherwise accept help, the three people said, citing Zielke, whose Commerzbank caters to the Mittlestand companies that form the backbone of the German economy and was bailed out during the last financial crisis. The state still holds a 15% stake in Commerzbank and occupies two board seats.
Brief: Diversified property giant GPT Group has become one of the first real estate investment trusts to reveal the impact of the coronavirus with a near $500 million write-down in the value of its shopping centre portfolio. Retail landlords have been hard hit by the COVID-19 pandemic as shoppers were forced to stay home under the lockdown laws, causing foot traffic and revenue to plummet. GPT, which owns 12 malls across the country, has written down the value of seven centres in which it has part or full ownership by $476.7 million after undertaking an independent assessment of its retail assets covering the months between December 31, 2019 to May 31. It is an 8.8 per cent decline since December. The group has also withdrawn its full-year 2020 guidance and is amending its dividend payout ratio policy. Chief executive Bob Johnston said the revaluations reflect the effects COVID-19 and the subsequent social restrictions have had on the retail assets. "This has generally been reflected in lower market rental growth rates, increased vacancy and abatement allowances and some softening in investment metrics," Mr. Johnston said.
Brief: Advent International Corp. countersued Forescout Technologies Inc. in Delaware Monday, six weeks before a YouTube trial over the breakdown of their $1.9 billion take-private buyout, saying the deal’s collapse can’t be blamed on the coronavirus alone.“Because Forescout’s precarious finances would leave it insolvent upon closing of the proposed transactions, buyers cannot in good faith certify the solvency of the post-closing entity—which is a condition to close the $400 million term loan financing,” the Chancery Court filing says.Forescout’slawsuit against Advent, filed about two weeks ago, is part of awave of suitsasking courts to keep mergers on track as acquirers balking at the coronavirusscramble deals worldwide. Most of those disputes are being heard in the Chancery Court…According to Forescout’s complaint, an Advent representative told its CEO as they sought to renegotiate the transaction that “the Covid-19 outbreak caused a change of heart.”
Brief: Nearly all private equity managers expect to see a surge in distressed fund deals over the coming year, according to a new survey.The poll, commissioned by fund service firm Intertrust Group, found that 92 percent of private equity professionals across North America, Europe, and Asia believe distressed fund activity will increase in the wake of the coronavirus pandemic, which devastated businesses in the U.S. and elsewhere. Likewise, private equity managers viewed distressed funds as the biggest fundraising opportunity in the near future, with 83 percent indicating there would be more investor demand for strategies targeting distressed assets.This sentiment is already being borne out at major private equity firms. Last month, Apollo Global and KKR & Co. said they raised $1.75 billion and$4 billion, respectively, for credit funds focused on “dislocation” resulting from the Covid-19 crisis. Both funds were raised in just 8 weeks. Some respondents to the Intertrust survey also saw existing private equity funds shifting assets to target distressed opportunities. According to the report, 41 percent believed managers would reallocate unfunded commitments to “new distressed or non-traditional strategies.”