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Our briefing for Tuesday March 23, 2021:
Mar 23, 2021 4:05:19 PM
- In the United States, AstraZeneca’s COVID-19 vaccine has hit yet another stumbling block. Multiple media outlets are reporting the drugmaker will publish up-to-date results from its latest COVID-19 vaccine trial within 48 hours after American health officials questioned the shot’s efficacy rating as it may have not been based on all the available data. Dr. Anthony Fauci, the head for the U.S. National Institute for Allergy and Infectious Diseases (NIAID) said the whole issue was an unfortunate unforced error. “This is very likely a very good vaccine and this kind of thing does… nothing but really cast some doubt about the vaccines and may contribute to the hesitancy,” said Dr. Fauci. The public rebuke by the NIADI is the latest setback for the AstraZeneca vaccine that has been hit by questions over its effectiveness and possible side effects ever since it started getting use throughout the world a few months ago.
- In Canada, the federal Conservatives are calling on the leading Liberals to unveil a national plan to reopen the country. “The president of the United States and the prime minister of the United Kingdom have both released public plans for reopening. But [Prime Minister Justin] Trudeau refuses to give Canadians clarity on whether and when regular social life will be able to resume, and under what circumstances and conditions,” said Leader of the Opposition, Erin O’Toole on Tuesday. O’Toole cited national business organizations and one of Canada’s largest unions, agreeing with them that it is “unsustainable” to rely on lockdowns while waiting for COVID-19 vaccines to be widely administered.
- In the United Kingdom, media has seen a government document that plans to have nursing home workers in England legally required to have a COVID-19 vaccination. According to details of a paper submitted to the COVID-19 operations cabinet subcommittee last week and leaked to the Telegraph, Prime Minister Boris Johnson and Health Secretary Matt Hancock have agreed to the proposal. Upon getting wind of the leak, a government spokesperson insisted “no final decisions have been made”. If the change is approved, it would affect most of the 1.5 million workers in England adult social care sector and likely cause some workers to either quit and/or file lawsuits on human rights grounds.
- Reuters is reporting the European Union (EU) will extend powers to potentially block COVID-19 vaccine exports to the UK and other countries. The move is expected to be made on Wednesday by the European Commission and will focus on countries with much higher vaccination rates, and to cover instances of companies backloading contracted supplies. An EU official said all vaccine makers could be affected if they don’t comply with delivery timetables. Shipments could also be withheld if vaccine-producing countries such as the United States and the UK don’t allow exports of vaccines to the EU.
- Germany has doubled down on their coronavirus restrictions with Chancellor Angela Merkel and state leaders agreeing to a hard lockdown over Easter. As noted in Castle Hall’s COVID-19 Diligence Briefing on Monday, Chancellor Merkel and Germany’s 16 regional leaders agreed to extend current lockdown restrictions until April 18th as per media reports. In the hard Easter lockdown, all stores will be shutdown as of April 1st for five days, expect for food stores, which will reopen on April 3rd. Germans will be encouraged to remain at home, private gatherings limited to one other household and a maximum of five people with public meetings banned. Chancellor Merkel said in a news conference after a 11-hour meeting of tense talks with her regional leaders that the Easter lockdown is necessary to try and defuse a third wave of COVID-19.
- India’s health experts are concerned after seeing a spike in coronavirus cases in recent weeks. The country of close to 1.4 billion people, recorded 260,000 new coronavirus cases last week – one of the worst weekly increases since the pandemic began early last year. The western state of Maharashtra – home to the country’s financial capital – Mumbai – has accounted for nearly 70% of the national caseload. India’s health experts blame poor adherence to safety protocols and potentially circulating variants as reasons for the current spike. “People had falsely assumed that India had reached the threshold of herd immunity but that is not the case,” said Dr. A. Fathahudeen, a critical care expert, who has treated thousands of COVID-19 patients, according to the BBC. More than 40 million people in India have received at least one of dose of a coronavirus vaccine so far, but that’s less than 4% of the country’s population.
Covid-19 – Due Diligence And Asset Management
Dimon, Solomon Join CEOs Urging New York to Reject Tax Hikes
Brief : Jamie Dimon, David Solomon and scores of other New York business leaders warned Governor Andrew Cuomo that proposed tax hikes would risk the state’s economic recovery and worsen the exodus of residents to lower-tax locations. The chief executive officers of JPMorgan Chase & Co. and Goldman Sachs Group Inc. added their names to a list of roughly 250 others who argued in a letter sent Tuesday that higher taxes aren’t needed, given federal stimulus programs approved by Congress and higher-than-expected tax receipts in 2020. The CEOs said they were compelled “to express alarm at plans to enact the largest spending and tax increases in the state’s history,” adding that the proposals “will jeopardize New York’s recovery from the economic crisis inflicted by Covid-19.” Cuomo has long-resisted taxes on the wealthy, favored by the growing progressive wing of his party, but the three-term governor has recently become more amenable to them. Multiple scandals, including claims of sexual harassment and accusations his administration covered up Covid-19 nursing-home deaths, have prompted calls by dozens of lawmakers for him to resign, saying his ability to govern is in question. Cuomo has denied the claims and said he won’t step down.
Zoom to Zen – Citi Unveils Zoom-Free Fridays to Beat Remote Working Stress
Brief: In a move to combat fatigue triggered by remote working during the COVID-19 pandemic, Citigroup Inc has declared “Zoom-Free Fridays” and encouraged employees to limit calls outside work hours. While Wall Street is known for its tough work culture, the remote working during the pandemic has been particularly gruelling for most employees, taking enormous toll on their health and mental wellbeing. “I know from your feedback and my own experience, the blurring of lines between home and work and the relentlessness of the pandemic workday have taken a toll on our well-being,” Chief Executive Officer Jane Fraser said in a memo seen by Reuters on Tuesday. “It’s simply not sustainable.” Any internal meetings on Fridays would happen as audio-only calls, according to the memo. The CEO also encouraged employees to take their vacations, while the company announced a firm-wide holiday on May 28. Citigroup also said that post-pandemic, a majority of the roles at the bank would be designated as “Hybrid”, allowing employees to work from the office at least three days a week and from home for up to two days a week.
Private Equity Firm Thoma Bravo to Acquire Software Firm Calabrio from KKR
Brief: Private equity firm Thoma Bravo LP said on Tuesday it has agreed to acquire workplace software firm Calabrio Inc from KKR & Co Inc. Terms of the deal were not disclosed but people familiar with the matter said the deal values Calabrio at more than $1 billion, including debt. KKR paid $200 million to acquire Calabrio in 2016. Minneapolis, Minnesota-based Calabrio provides a cloud-based software that allows companies like Netflix Inc and Shopify Inc track and analyze customer service data generated from their contact centers. Calabrio grew its recurring revenue to nearly 80% of total revenue, up from just 30% about four years ago when it was acquired by KKR, Thomas Goodmanson, its chief executive officer said in an interview. The increase has in part been driven by the shift to remote work due to the COVID-19 pandemic. “The pandemic has really shifted a focus to the cloud, in our industry where we help companies take care of their customers, they had to send their contact center agents home and our software was in a perfect place to help them,” Goodmanson said.
IMF Considers Creating $650 Billion in Reserves After Yellen Nod
Brief: The International Monetary Fund is considering a plan to create as much as $650 billion in additional reserve assets to help developing economies cope with the pandemic, with an eye on finalizing a decision next month, according to two people familiar with the plan. The institution’s executive board is discussing the staff proposal informally on Tuesday, and one of the priorities will be to consider how much to issue in the units known as special drawing rights, according to the people, who spoke on condition of anonymity because the talks are private. Attention is now focused on a $650 billion issuance, according to the people, after previous talk of $500 billion. The IMF press office declined to comment. IMF Managing Director Kristalina Georgieva is expected to release a statement after the meeting, one of the people said. Momentum has been building for the injection of funds after U.S. Treasury Secretary Janet Yellen leaned toward supporting the action, reversing opposition last year under President Donald Trump. Her predecessor, Steven Mnuchin, blocked the move in 2020, saying that because reserves are allocated to all 190 members of the IMF in proportion to their quota, some 70% would go to the Group of 20, with just 3% for the poorest developing nations.
DunPort Launches EUR50m Fund to Support Covid-19 Impacted SMEs
Brief: DunPort Capital Management (DunPort) has launched a EUR50 million fund to provide tailored and flexible capital solutions to Irish small and medium sized enterprises whose businesses have been directly impacted by the Covid-19 pandemic. The fund, backed by a EUR50 million commitment from the Ireland Strategic Investment Fund (ISIF), will seek to support well-established, historically profitable Irish SMEs with annual turnovers of between EUR5 million and EUR50 million and funding requirements of between EUR3 million and EUR15 million. Capital from the fund may be used to address Covid-19 related challenges while allowing investee companies to retain existing financing relationships and avoid material shareholder dilution. “The significant impact of Covid-19 on businesses of all sizes in Ireland will be long lasting,” says Pat Walsh, Executive Director of DunPort. “To ensure that Irish businesses can exit this challenging period with financial stability and poised for recovery and growth, company balance sheets will require restructuring to transition the build-up of unsustainable short term liability balances into manageable longer-term obligations. DunPort is therefore very pleased to offer, with the backing of ISIF, a suitably structured, patient capital solution to businesses in Ireland that most need it.”
One Year On: How Covid-19 Has Impacted Private Equity
Brief: Over the past year or so, we’ve all become familiar with a whole host of terms we knew nothing about at the start of 2020. “Lockdown”, “rate of transmission”, and “social distancing” all entered our collective vocabularies. At the same time, we had to get used to new ways of working and doing business. That’s as true for private equity (PE) as it is for any other sphere of business. And, initially, it looked like the economic devastation wrought by Covid-19 would hit global private equity markets incredibly hard. But after falling off a cliff in April and May, deal and exit value snapped back vigorously in the third quarter. Even as the mass rollout of vaccines around the globe brings a glimmer of hope that life may return to some semblance of normal, it’s likely that the conditions of 2020 will be with us for some time to come. It’s therefore imperative that private equity firms, their investors, and the firms they fund use the lessons of 2020 to inform their approach going forward.
