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Brief : Health-care companies are taking on more debt to pay dividends to their private equity owners, just a year after the start of a pandemic that plunged the industry into crisis. At least five U.S. health-care firms have borrowed heavily in part to fund hundreds of millions of dollars of such payouts in the first quarter, according to a report to be released Wednesday by the nonprofit Private Equity Stakeholder Project. The practice, known as dividend recapitalization, is gaining steam as investors hunt for yield with interest rates near historic lows. Meanwhile, health-care companies are on a stronger footing, with patient visits rebounding and the government unleashing unprecedented economic stimulus. Health-care firms have already borrowed about $3.7 billion in 2021, partly to fund payments to private equity owners, more than double the amount issued all of last year, according to data from S&P Global Market Intelligence. At the current pace, it would be the industry’s most active year for borrowing since 2015.
Brief: Blackstone Group Inc. is leading a $100 million funding round in on-demand mental-health company Ginger, accelerating a push into fast-growing technology startups. The funds will come out of the investment firm’s growth equity arm, Blackstone and Ginger said Wednesday. The stake values the San Francisco-based service at about $1 billion, vaulting it to unicorn status. Demand for resources provided by Ginger, which connects users to behavioral health experts and services such as coaching via a mobile app, is surging in the Covid-19 pandemic. The company’s revenue has tripled in the past year. “There’s a widespread prevalence of mental health issues in this country,” said Ram Jagannath, who heads health-care investing for Blackstone Growth Equity. “Like other sectors of health care, the pandemic exacerbated the underlying trends and accelerated people’s adoption of digital platforms.”
Brief: Goldman Sachs told all but critical staff at its operation in Indian IT capital Bengaluru to return to working from home on Wednesday, reversing moves to get staff back to one of its biggest global offices as coronavirus infections in the city grew. India earlier reported a new variant of the coronavirus as new infections and deaths nationwide hit the highest this year, prompting the imposition of new restrictions in some states. Bengaluru reported 1,280 new infections on Tuesday, according to city data, and several sources at Goldman told Reuters that teams had been told to return to working from home ahead of an all-office townhall call at 2 p.m. local time on Thursday. In March so far, nearly 14,000 new cases have been reported, more than twice the number recorded in February.
Brief: The world’s biggest banks cut lending to fossil fuel firms by 9% in 2020 as a result of the pandemic, although funding has still risen over the past five years, a report showed on Wednesday. The 60 largest banks lent more than $750 billion to 2,300 fossil fuel companies in 2020, down from $824 billion in 2019, according to a report by Rainforest Action Network, Reclaim Finance, Oil Change International and other non-governmental organisations (NGOs). But the report said the fall, driven by record low levels of industry investment in the second half of 2020 as the pandemic hammered fuel demand, followed annual rises of 4.4%-5.5% since 2016, the year after the Paris climate accord was signed. It also followed a surge in demand from fossil fuel companies raising cheap financing in the first half of 2020, the report said after assessing the roles of banks in lending and underwriting debt and equity issues.
Brief: Prospects for the recovery of business travel by air are highly uncertain, but it is expected to grow more quickly in developing regions than in advanced economies, said Moody’s Investors Service. “This will continue the trends seen since the global financial crisis, when growth in business travel in advanced economies lagged the overall market, with demand for leisure flying leading. “An increased focus on near-shoring of supply chains after the pandemic is likely to increase intra-regional or short-haul international business travel at the expense of long-haul trips,” the rating agency said in a note today. Moody’s said the recovery in business travel would be driven by the gradual reopening of workplaces and a latent demand to make business trips, although companies’ duty of care to employees to safeguard against Covid-19 infections before vaccinations becoming widespread would partially restrict business travel.
Brief: Dan Zwirn thought markets were frothy for at least five years before the pandemic. His credit shop, Arena Investors, underwrote investments as if a crisis was on its way and diversified so any one deal wouldn’t have an outsize impact on the portfolio. “Frankly a lot of stuff that got hurt was very overdone going into Covid. But people didn’t let us into those clubs in the first place,” Zwirn said in an interview. “There were no 18 percent office loans available, so we were not exposed. That gave a lot of people comfort that this is what the downside looks like.” So far, his approach has worked out, according to the Arena CEO and chief investment officer’s latest letter to clients. “Covid was a great stress-test of our approach, and we were left in a position to quickly shift to playing offense once we had taken stock, battened down the hatches, and appropriately assessed the small impact to our book,” Zwirn wrote in the investor letter.
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.
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.
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.
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.
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.”
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.
Brief : Leon Black, the Wall Street billionaire who appeared to be a main client of disgraced financier Jeffrey Epstein, is stepping down as chief executive officer of Apollo Global Management Inc. months ahead of schedule. Black’s departure from that role had been announced in January, though the firm said at the time that he would leave by July 1. A statement Monday confirmed his immediate exit from the position as well as the chairmanship he’d been expected to keep. Co-founder Marc Rowan has taken over as CEO, Jay Clayton was named non-executive chairman, and Apollo added two more independent directors to its board, according to the statement. It’s an abrupt turn for Black, 69, a Wall Street legend who built Apollo into one of the most fearsome -- and profitable -- names in American finance. He cited unspecified health issues for himself and his wife in announcing his exit. “Marc has seamlessly transitioned into the CEO role and I am confident Apollo will soar to new heights under his leadership,” Black said in the statement. Black and Apollo have been dealing with the fallout from his extensive links with convicted sex offender Epstein, which brought unprecedented scrutiny and unsettled clients and shareholders.
Brief: No one really likes a look back, especially when talking about the stock market. The past is done, it happened, and there’s no money to be made there. The juice to squeeze is the potential, the future, the edge, the unknown. But even though we know how the dice rolled, taking a moment to see whether we’ve learned anything is fair — and may sharpen our abilities for the future. While the future has no obligation to behave like the past, that doesn’t mean it doesn’t have anything to teach. Plus, it’s been a wild 12 months, with a tiny recession, massive government response, and the craziest roller coaster of a chart the S&P 500 has ever seen. DataTrek’s Nicholas Colas, former hedge fund manager, has spent the year writing about the “2009 playbook,” a way of viewing the parallels between 2020-2021 and 2008-2009. For him, the biggest lesson learned was that “every crisis is the same.” “Markets implode, sending a signal to policy makers. Policy makers respond. The size of the response informs the size of the market bounce-back,” Colas said.
Brief: Global equities stalled and safe haven assets such as U.S. Treasuries rallied Monday as investors weighed rising coronavirus cases in Europe against a break in the recent run-up of bond yields sparked by concerns of higher global inflation. An unsettled day on global markets saw risk assets such as oil and emerging market stocks rally alongside safe havens such as Treasuries, while Turkish assets took a beating after a shock weekend decision to replace the country’s hawkish central bank governor. A third wave of COVID-19 across Europe due to highly contagious coronavirus variants is increasing concerns of another round of economic restrictions, with Paris going into a four-week lockdown late last week. “The number of new COVID-19 cases is rising rapidly, and an extension of the lockdown inevitable for many European countries. No one will be surprised by such a decision,” said Milan Cutkovic, market analyst at Axi.
Brief: Commonfund, a prominent investment manager for nonprofit institutions, has released the results of its survey of nearly 300 sophisticated institutional investors from endowments, foundations, healthcare organisations, family offices and public pensions in attendance at the recent 23rd Annual Commonfund Forum. Investors attending the conference represented USD1.1 trillion in total assets. The survey results underscore the themes that drove discussion at the event, including the dual-track economic recovery, ESG and environmentally sustainable investments, and the evolving opportunity set in private capital. When asked about their expectations for US stock market returns in 2021 versus the 10-year average annual return of 13.6 per cent for the S&P 500 Index, the majority (58 per cent) believe this year’s returns will be lower than average, while just 10 per cent expect that they will be higher. These investors are similarly apprehensive about the US economic recovery, with 76 per cent of respondents ranking the prolonged impact of Covid-19 among their top three concerns for 2021, followed by bubbles/narrowness of stock market valuations (60 per cent) and the expanding US deficit (5 per cent).
Brief: The number of U.S. air passengers screened topped 1.5 million Sunday for the first time since March 2020, as air travel continues to rebound from a pandemic-related drop, the U.S. Transportation Security Administration (TSA) said Monday. COVID-19 devastated air travel demand, with U.S. airline passengers down 60% in 2020. But with a growing number of Americans getting vaccinated, demand and advanced bookings have started to rise in recent weeks. TSA said it screened 1.54 million people Sunday, the highest single day since March 13, 2020 and the 11th consecutive day screening volume exceeding 1 million per day. Screening refers to security checks on passengers entering airports. Still, U.S. air travel demand was down Sunday about 30% versus pre-COVID 19 levels. International and business travel demand both still remain weak. For the last week, trade group Airlines for America said passenger demand was down 47% over pre-pandemic levels, while international travel demand was down 68%. The United States bars most non-U.S. citizens from travel who have been in Brazil, South Africa, China and most of Europe and many countries still restrict entry by Americans.
Brief: The global pandemic has placed health and wellbeing at the forefront of everyone’s minds, leading to a near-explosion in demand for healthcare property assets as investors and developers scramble to get a foothold in the sector. The search for yield is also driving infrastructure investors to expand beyond typical core assets into capital-heavy healthcare assets such as hospitals and diagnostic imaging. Healthcare assets share many characteristics with core infrastructure assets, particularly if investors think outside the box in relation to barriers to entry. Major listed players in the sector include Dexus, Centuria, HomeCo, Elanor Investments and Charter Hall, while QIC has teamed up with Nexus and the Singaporean sovereign fund GIC has joined forces with NorthWest Healthcare Properties. Andrew Hemming, managing director of the $1 billion Centuria Healthcare fund, said the scalable and quality assets now available to seed the funds and high-quality developments had underpinned the demand for the sector. Mr Hemming said the arrival of COVID-19, the vaccine rollout and the need for preventative medical care were also catalysts to investment in the sector.
Brief : UK borrowers who have seen their income fall due to the COVID-19 crisis may soon be paying thousands of pounds more in monthly repayments as one in three (32%) borrowers consider staying on their lender’s Standard Variable Rate (SVR) once their existing mortgage product expires, according to new research from Legal & General Mortgage Club. 32% of borrowers who have been negatively financially impacted by the pandemic say they are likely to move onto their lender’s Standard Variable Rate (SVR) rather than remortgage. These buyers could face a £2,500 annual increase in their repayments if they don’t consider their remortgage options, impacting their finances which may already be stretched. One in two (50%) homeowners are also concerned that their decision to take a payment ‘holiday’ will affect their future ability to borrow. For homeowners whose finances have been adversely impacted by the pandemic, exploring their mortgage options is essential to understanding where better alternatives are available, but the research suggests that the impact of COVID-19 is deterring thousands of borrowers with maturing loans from remortgaging. This could impact over 700,000 borrowers who will reach the end of their two- and five-year residential fixed-rate mortgages in 2021.
Brief: The pandemic has had a dramatic impact on the entire economy, and the insurance business is no exception. The socially distanced environment has forced many insurers to focus on technology that can help customers purchase insurance, interact with their policies and file claims online, according to Deloitte. In addition, companies are focusing more on providing more comprehensive offerings instead of point solutions. The Insurtech Numbers: The good news for the insurtech industry is that the pandemic didn’t appear to negatively impact overall investment. In 2020, insurtech funding hit a record $7.1 billion, according to WillisTowersWatson. Total funding was up 12% and the total number of funding deals were up 20%. In the fourth quarter of 2020, property & casualty (P&C) insurtechs accounted for 67% of the $2.1 billion in funding raised.
Brief: Juggling homework, friends and his personal YouTube channel, 12-year-old Kwon Joon is often too busy to check on his investments – not that the South Korean schoolboy is too concerned. With impressive returns of 42% since he began dabbling in the stock market last year, Kwon believes online trading can safeguard his financial future, in a world made increasingly insecure by the economic fallout from COVID-19. “To be honest, I sometimes forget to check my stock account because of my school work or when I’m playing with my friends,” said Kwon, who has made 14 million won ($12,364) in profits since he invested 25 million won in seed money last April. “I’m going to take the shares with me until I become an adult. I think this is the benefit of investing in stocks as a young person because you can invest in it for the long term,” he told the Thomson Reuters Foundation from southern Jeju Island. From South Korea to the United States, a growing number of teens and young adults born after 1996 – dubbed Generation Z – are turning to online investment platforms that offer the chance to make a living with a swipe, but often pose unforeseen risks.
Brief: Investors are turning their attention to prospects that higher taxes could threaten the rally in U.S. stocks as President Joe Biden's administration moves forward with its agenda and seeks ways to pay for its spending plans. In recent days, investors have focused on a rise in bond yields that has pressured share prices, though indexes remain close to their record highs. Nevertheless, some worry that at least a partial rollback of the corporate tax cuts that fueled stock gains during the Trump era could eventually drag on equities, whose valuations have already grown rich by some measures. "It is an issue," said Quincy Krosby, chief market strategist at Prudential Financial. "It's going to be talked about as it becomes a reality. But the market's focus right now is clearly on getting to the other side of this pandemic." The S&P 500 has gained more than 4% this year, with Biden's newly passed $1.9 trillion coronavirus relief plan providing the latest fuel for the economy and the stock market. The pace of the economic recovery and COVID-19 vaccinations will remain in investors' focus next week, along with the rise in U.S. bond yields that has pressured tech and growth shares and further supported bank and other value stocks.
Brief: A rebound in the technology sector pushed U.S. stocks into the green and Treasury yields retreated from the highest levels of the day as investors weighed the risk of inflation with economic growth accelerating. The yield on the benchmark 10-year Treasury had spiked earlier after the Federal Reserve let a capital break for big banks expire. Crude oil rebounded after tumbling Thursday. The S&P 500 edged higher, led by the energy and communication services sectors. JPMorgan Chase & Co. and other banks weighed on the Dow Jones Industrial Average in the wake of the Fed ruling. Facebook Inc. helped the tech-heavy Nasdaq 100 rebounded from Thursday’s 3.1% slump. Traders are bracing for quadruple witching Friday, a major expiration of options and futures contracts that can exacerbate swings in asset prices. “What we have to watch out for is a persistent rise in inflationary expectations and that’s how the rise in the 10-year Treasury could potentially get out of control,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “That’s today probably the biggest risk for the stock market.”
Brief: Last year, it was tough to find an asset class that was underperforming. U.S. stock benchmarks rose in 2020, after plunging at the onset of the coronavirus pandemic. Government and corporate bond prices rose as yields contracted. Bitcoin quadrupled. Gold rose 24%. That uniform outperformance has been a lot harder to come by thus far in 2021. All three major stock averages have hit highs on multiple occasions, but the Nasdaq (^IXIC) has fallen about 7% since its most recent record on Feb. 12. Bitcoin (BTC-USD) has suffered a couple of double-digit percentage pullbacks, although it remains higher year-to-date. Many of the declines in risk assets have been triggered by rapid increases in Treasury yields, reflecting markets digesting the potential for inflation and the Federal Reserve's willingness to let the economy run hot. Now one of the best-known macro strategists, Mohamed El-Erian, is saying that because of the Fed's current policy, investors should get more active. "It's going to be an environment for very active management, building portfolios from a bottom-up perspective," El-Erian tells Yahoo Finance Live.
Brief : Spear Capital’s Bryan Turner reflects on the last year and analyses the impact of the pandemic on private equity. 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.
Brief: Since its inception and unstoppable spread of Coronavirus across the globe, the investors feared it as a “tail risk”, but not anymore! The latest survey of global Fund Managers by Bank of America (BofA) shows that the global pandemic Covid-19 is not the major cause of worry for the fund managers, instead the inflation and the “Taper Tantrum”. In the survey for March by Bank of America (BofA), Fund managers view higher-than-expected inflation (37% of the total investors) and a tantrum (35% of the total investors) in the bond market can pose a danger to the market, making the market less attractive and worrisome to investors. 220 investors with $630 billion in assets under management were polled between March 5 and 11, showing the mean cash balance increasing to 4.0% from 3.8%, hedge funds’ net exposure to equities ticks highest since June 2020, and hedge fund allocation to commodities is an all-time high. The survey says, 48% of the fund managers expect the economy of the world, which includes Indian economy, to deliver a V-shaped recovery, as compared to only 10% in the May 2020 survey.
Brief: Private equity firms are paying more for leveraged buyouts to keep pace with soaring valuations of acquisition targets, making some investors leery of whether the industry can keep delivering on promises of lucrative returns. The booming stock market and cheap debt financing have helped push leveraged buyout prices to a record high, driven by sectors that have grown as people work and stay at home during the COVID-19 pandemic, such as technology and business services. Private equity firms paid an average 13.2 times a company's annual earnings before interest, tax, depreciation, and amortization (EBITDA) for U.S. leveraged buyouts in 2020, an all-time high, up from 12.9 times in 2019, according to financial data provider Refinitiv. Some investors are growing concerned about whether buyout firms can deliver the 15% to 20% annual returns they target when they raise new funds. "We can tilt towards better valuations and opportunities," said David Holmgren, who oversees $3.5 billion in endowment and pension assets at Connecticut-based hospital system Hartford HealthCare. He said he has been shifting his portfolio away from private equity funds that invest in pricey buyouts to those that specialize in middle-market deals and emerging markets.
Brief: Hedge fund clients of Centaur Fund Services performed strongly in 2020, according to data released by the independent fund administrator. The company says that increased market volatility caused by the Covid-19 pandemic, optimism over vaccines, US elections and huge government stimulus programmes created a set of opportunities for hedge funds to prove their worth, and on the whole, they responded well. Almost 10 per cent of Centaur's clients generated returns in excess of 50 per cent, with nearly 25 per cent of our clients posting gains of over 20 per cent. In addition, more than 35 per cent of our client portfolios grew between 10-20 per cent. While most strategies produced positive returns, the stand out performers tended to focus on equity long/short based strategies with strong gains in a number of sectors including technology, emerging markets and healthcare. Centaur's data set is broadly in line with published industry data.
Brief: Tech venture capital investment in the UK hit a record high of $15bn (£10.8bn) in 2020 despite the economic fallout of the coronavirus pandemic and complications of Brexit, a new study revealed. According to Tech Nation's latest report, health and wellness companies raised $38bn in 2020, an increase from $28bn in 2019. The report quoted UK prime minister Boris Johnson as stating that: "In North West England we saw an increase in health tech investment of over 200%, while across the UK our digital sector continues to make an enormous contribution to fighting the pandemic: from connecting locked-down patients with their GPs to offering NHS staff free access to workplace mental health platforms." He added that 2020 was "a year in which the brutal necessity of restricting human contact has escalated the importance of tech of all kinds, from the NHS app to Zoom calls." Augmented reality, e-sports and gaming accounted for over $2.4bn of total venture capitalist investment to companies including US-based Caffeine, which raised $126m for their gaming, entertainment and creative arts broadcasting platform.
Brief: One year into the pandemic, research suggests that for the majority of Canadian venture capital (VC) firms deal activity has increased or remained relatively consistent, according to a recent survey conducted by OMERS Ventures. In January, OMERS Ventures, the tech-focused investment arm of OMERS, one of Canada’s largest pension funds, surveyed 99 VC firms across North America and Europe, 24 percent of which were Canadian. Given that the pandemic is likely going to have a lasting impact on the way that VCs evaluate companies for investment, OMERS said it decided to share its findings to help the community adapt. The new report, which was released today, follows OMERS’ July 2020 survey and aims to illustrate how VC behaviour and activity have changed due to COVID-19. “We felt now was a good time to conduct our study once again, to capture current sentiment around how VCs are approaching investing today, and any lasting changes we should expect to see in the deal process in a post-COVID world,” wrote Alyssa Spagnolo, associate at OMERS Ventures. Of the Canadian VC firms OMERS spoke to, 46 percent have seen the same amount of deals compared to before COVID-19, while 25 percent have seen more deals than normal. On the flip side, 21 percent have seen deals decline by at least a quarter, while eight percent have seen deals decline by at least half.
Brief : Most financial firms and institutions signed up to a UK finance ministry backed charter met their 2020 targets for women in senior management as those who fell behind blamed hiring freezes due to COVID-19, a review said on Wednesday. The fourth annual review from think tank New Financial for Britain’s finance ministry, said the Women in Finance Charter faced its biggest test yet after the COVID-19 pandemic struck in 2020. Over 70& of the 209 signatories, including the finance ministry, have met their self-imposed targets, or were on track to meet future targets, the review said. Just over 60% of the signatories have set a target of at least 33% of female representation in senior management. A group of 81 firms were due to hit their target by the end of 2020, but 44 of them failed to do so, citing deliberately ambitious targets, and recruitment or promotion freezes due to COVID, the review said.
Brief: New York City is reopening, vaccinations are accelerating and spring brings with it an air of optimism. For Wall Street’s banks, that means a return to offices may finally be in sight. At JPMorgan Chase & Co., hundreds of interns are set to work in the lender’s New York and London offices in the coming months. Citigroup Inc. is providing workers with rapid COVID tests as it sketches out its plans to safely return people to its buildings. Goldman Sachs Group Inc. has said it hopes to have more employees back by summer. One year after Wall Street sent employees home in droves to stop the spread of the coronavirus, the prospects of a broad return are starting to get clearer -- and not a moment too soon for some companies in the industry. From Zoom fatigue to the exhaustion of jobs colliding with home life, many bankers say the strains of long-term remote work are growing for bosses and underlings alike. There are exceptions, and signs of growing flexibility as companies such as Apollo Global Management Inc. consider hybrid models. But as other industries look at dramatically reshaping work in a post-COVID world, the stance of New York’s financial giants is clear: Employees should be at offices. It’s just a matter of how quickly -- and safely -- their leaders can get them there.
Brief: Travel spending by Americans plunged by 42%, or $492 billion, in 2020, according to a report by an industry group, amid social, travel and business restrictions aimed at curbing the spread of COVID-19. The U.S. Travel Association said the industry shed 5.6 million direct and indirect jobs last year, and the decline in travel dragged down total economic output to $1.5 trillion, from 2019’s $2.6 trillion. U.S. tax revenue collected from travel plummeted by $57 billion in 2020. “While the gradual progress of vaccinations has provided hope that a turnaround may be on the horizon, it is still unclear when travel demand will be able to fully rebound on its own,” said U.S. Travel Association President and CEO Roger Dow. As millions of Americans get vaccinated and travel destinations begin to reopen, the industry is optimistic that demand will return this spring. Disney said Wednesday its California theme parks will reopen April 30.
Brief: Consumers have $1.8 trillion in extra cash to spend. That increase in disposable income since the beginning of the pandemic — combined with the Federal Reserve’s promise to keep interest rates low — is why Howard Marks, co-founder of Oaktree Capital Management, is feeling pretty optimistic about the economy. “A related positive to consider is that market tops usually occur with the economy several years into the up-leg of the cycle and vulnerable to recession,” Marks wrote in a new investor letter. “This time, however, we have strong markets at the beginning of what may prove to be a long economic recovery.” In this latest memo, Marks focused on how the markets behaved in 2020 and what investors should do this year. This included addressing the disappointingly brief window in 2020 to buy assets at huge discounts, investors’ fears of missing out, and re-energized buying after the initial market downturn in March. All that led to the market hitting new highs later in the year, he said.
Brief: Investors trapped in suspended open-ended property funds have paid out more than £40m in management fees over the course of 2020, with some still paying fees in 2021 as £2.8bn of investor capital remains locked away across three funds. According to Investment Week calculations utilising fee and fund size data from Morningstar Direct and share class classifications from FE fundinfo, investors have shelled out approximately £40m in management fees across nine suspended property funds over the course of 2020, with the total figure likely larger than this, as data for St James's Place, Aviva Investors and Canlife's property funds were unavailable. The costs calculated only apply to the management fees of the fund, with various other fees such as property, transaction and dealing costs that comprise the total ongoing charge not included. From Morningstar Direct, the fees were taken from the firm's MiFID files and total fund size was based on "surveyed figures obtained from the firm" on a month-to-month basis. Main share classes have been selected according to the methodology employed by FE fundinfo.
Brief: HSBC Holdings Plc’s main Hong Kong office was closed until further notice after three people working in the building tested positive for COVID-19 amid a renewed wave of infections among the city’s business and expatriate community. The Center for Health Protection has published a formal notice requiring visitors who stayed at the building for more than two hours between March 3 and 16 to undergo a mandatory test at a government-approved center by March 19, according to an internal memo. The move means staff and customers will have no access to the lender’s biggest branch in the city. “It is our understanding that HMB can return to normal business when virus testing of colleagues and deep cleaning of the facility are complete,” HSBC wrote in the memo distributed on Wednesday. “The exact timing is yet to be confirmed.” In a statement, a spokeswoman for HSBC said the bank is following the guidelines from the authorities and taking all necessary measures to reopen as soon as practicable. “For banking services, we have well-developed contingency measures that ensure our services and critical processes continue to be maintained,” she said.
Brief : Private equity firms are paying more for leveraged buyouts to keep pace with soaring valuations of acquisition targets, making some investors leery of whether the industry can keep delivering on promises of lucrative returns. The booming stock market and cheap debt financing have helped push leveraged buyout prices to a record high, driven by sectors that have grown as people work and stay at home during the COVID-19 pandemic, such as technology and business services. Private equity firms paid an average 13.2 times a company’s annual earnings before interest, tax, depreciation, and amortization (EBITDA) for U.S. leveraged buyouts in 2020, an all-time high, up from 12.9 times in 2019, according to financial data provider Refinitiv. Some investors are growing concerned about whether buyout firms can deliver the 15% to 20% annual returns they target when they raise new funds.
Brief: Private equity is expanding in health care, becoming a larger source of industry capital across buyout, growth, and venture strategies, according to UBS Group’s chief investment office. Health care represented 14 percent of deal activity in private equity last year, up from 9 percent in 2007, UBS said in a note this week. Digital health companies are turning to private equity firms as their main source of capital, receiving $35 billion of investments in 2020, according to the report. Although health care accounts for 5 percent of the world’s data, UBS said the industry remains one of the least digitalized. The investing opportunity for private equity is vast in the sector, with a total 146,000 private companies dwarfing the 2,700 publicly-traded health-care companies globally, according to the report. “The universe of potential investable companies for private equity is larger,” UBS said. “Private equity is a primary source of capital for innovation, especially for early-stage drug discovery where corporate funding is often scarce.”
Brief: Apollo Global Management Inc. will test giving employees the option of working remotely two days a week through the end of the year, according to a person familiar with the matter. The exact start of the experiment will depend on when Covid-19 vaccines become more broadly available, the person said. Employees will be given at least 30 days’ notice. Firms across Wall Street have been struggling with how -- and when -- to get employees back at their desks. Many are treading lightly or delaying the effort, given looming virus variants and the difficulties in obtaining vaccines. Apollo’s decision, made in response to employee feedback over the past year, is also an attempt to attract top talent, the person said. The plans were announced Thursday at a town hall meeting led by incoming Chief Executive Officer Marc Rowan and co-Presidents Jim Zelter and Scott Kleinman, the person said. “Our teams have proven to be highly productive in remote and hybrid settings,” a company spokesperson said Tuesday in a statement. “As vaccines soon allow us to welcome back more of our workforce, we will be testing a hybrid approach designed to uphold our apprenticeship model and team camaraderie, while offering our colleagues, and future colleagues, greater flexibility to do their best work.”
Brief: The world is on the verge of a new inflationary wave that could force the Federal Reserve to raise rates earlier than planned, according to the co-chief investment officer of the world’s largest hedge fund. The Biden administration’s “extreme” approach to fiscal stimulus looks set to turbocharge consumer prices while threatening the post-crisis bond and stock rally, Greg Jensen at Bridgewater Associates said in an interview. “The pricing-in of inflation in markets is actually the beginning of a major secular change, not an overreaction to what’s going on,” Jensen said. “Economic conditions and inflation will adjust faster than either markets or the Fed are expecting.” While market-derived inflation expectations have surged near a 12-year high, the Fed has signaled patience with a heating economy and projected no rate hike for the coming two years. It’s a stance policy makers are expected to reiterate at the end of their meeting Wednesday. Between the upcoming $1.9 trillion stimulus program and the ending of lockdowns, traders are betting the economic revival will force the Fed’s hand sooner. Eurodollar contracts suggest a roughly 75% chance of tighter policy by December 2022.
Brief: Actively managed funds aren’t positioned for rising inflation — which is coming, according to Bank of America Corp. “They remain persistently overweight mega caps but underweight small caps,” Bank of America’s equity and quant strategists said in a research report Monday. That’s despite small-cap stocks being better positioned as the economy reopens from shutdowns during the pandemic, as well as having historically outperformed during the “mid-cycle” when inflation rises, they said. A majority of actively managed U.S. large-cap funds failed to beat the Standard & Poor’s 500 index in 2020 for an eleventh straight year of underperformance, according to a report released last week by S&P Dow Jones Indices, a unit of S&P Global. Amid expectations for an economic rebound this year, the Bank of America strategists estimated the U.S. has now shifted into a “mid-cycle” phase. “In this phase, small caps and value have typically outperformed large caps and growth,” the strategists said in the report. “Small caps and value stocks were also some of the best-performing assets during the inflationary period of the late 60s.”
Brief: Covid-19 is set to dramatically accelerate the intersection of real estate and ‘impact investing’, the practice where positive and measurable social and environmental outcomes are placed alongside financial returns as the ultimate objective for fund managers and their institutional allocators. Impact strategies have attracted growing volumes of capital in recent years, reflecting an emerging consensus that investors can do well by doing good. As an asset class that is physical, local and designed explicitly with communities in mind, real estate has always had an intrinsic impact dimension and has been at the forefront of impact investing’s journey from specialist focus to mainstream product. But it may be the pandemic that proves the defining moment in this convergence – initially and most visibly in the areas of homes, healthcare and education. In addition to its enormous public health ramifications, Covid-19 has exposed a range of systemic problems in advanced economies. The experience will shock investors into profoundly rethinking their role and responsibilities, beyond solely maximising financial returns, to encompass tackling structural societal challenges.
Brief : It’s a year since COVID-19 mayhem sent the S&P 500 index reeling 12% for its second-worst day ever, yet the bull market born from that selloff has in the subsequent 12 months added more than $40 trillion to the value of world stocks. On March 16, 2020, when the S&P 500 endured its worst one-day fall since the “Black Monday” of October 1987, MSCI’s global equity index plunged almost 10%, only to rise back thanks to huge central bank support. Effects have rippled out to every market sector. Here is a look at markets that day and in the year since: As COVID-19 spread around the world between late February and the end of March 2020, triggering unprecedented lockdowns, world stocks saw their market value collapse by $21 trillion. Markets troughed on March 23, then claimed a record high five months later. The market capitalisation of the MSCI global index has risen $40 trillion between March 23 and now, making it a $65 trillion round-trip.
Brief: Two Sigma Investments won’t require employees to return to the office until at least September and will experiment with a hybrid model that allows them to work remotely two days a week. Employees should expect to return after Labor Day, “but that’s going to depend on the science, the availability of vaccines, and schools opening, global regulations,” Two Sigma Chief Technology Officer Jeff Wecker said Monday during the AI and Data Science in Trading conference. The $58 billion quant firm, which has gradually allowed staff to return to its U.S. offices, plans to re-evaluate the hybrid model before the middle of next year. Employees have been working remotely since last March. Wecker joined New York-based Two Sigma in July from Goldman Sachs Group Inc. -- in the middle of the pandemic -- and said he hasn’t been able to meet many of his new colleagues in person. “I’m looking forward to seeing everybody,” he said.
Brief: The coronavirus pandemic has significantly strengthened the market power of dominant firms, which could drag on medium-term growth and stifle innovation and investment, the International Monetary Fund said on Monday in a new research paper. Key indicators of market power are on the rise, including price markups over marginal costs, and the concentration of revenues among the four biggest players in a sector, the IMF study said. Part of this was due to increased bankruptcies as the pandemic caused competition to fall away. “Due to the pandemic, we estimate that this concentration could now increase in advanced economies by at least as much as it did in the 15 years to end of 2015,” IMF Managing Director Kristalina Georgieva said in a blog post accompanying the paper. “Even in those industries that benefited from the crisis, such as the digital sector, dominant players are among the biggest winners.”
Brief: Some chief executive officers are so eager for their employees to get vaccinated against Covid-19 that they’re granting workers time off or cash incentives to get shots. In the U.S., retailer Lidl is giving its staff $200, while Aldi, Dollar General Corp. and Trader Joe’s Co. are offering extra hours of pay. Online grocery delivery firm Instacart Inc. is providing a $25 stipend for workers and contractors. Yogurt makers Chobani LLC and Danone SA are offering as much as six hours of paid leave, and the French company says it will cover the cost of inoculation in countries where vaccines aren’t free. Other companies are taking a harder line. U.K. handyman empire Pimlico Plumbers Ltd. has said it plans a “no jab, no job” policy for new members of its workforce. United Airlines wants to make shots mandatory, drawing concerns from unions. Many CEOs see themselves as leaders of the fightback against a pandemic that’s killed more than 2.6 million people. They’re standing up against anti-vaccination sentiment that’s strong in countries like the U.S., France and Russia, and trying to keep their workers safe. For some, there’s also a more pragmatic motivation: Vaccination will facilitate a return to the office after a year of working from home that’s strained corporate cultures and spawned a new epidemic of Zoom fatigue.
Brief: PE investors expect a ‘U-shaped’ recovery, according to ‘Covid-19 and the world of private equity: optimism in an uncertain environment’, a survey released today by audit firm Mazars, that gauges investor sentiment in the institutional funding market. While the majority (63 percent) of respondents still anticipate a U-shaped recovery - compared to 82 percent in June - the number of respondents expecting a V-shaped recovery has increased from 10 percent to 27 percent - likely on the back of vaccinations starting in Q1 2021, in combination with business support schemes being implemented by governments. Meanwhile, around 70 percent of respondents report seeing more distressed opportunities, according to the research. This figure compares to 54 percent of respondents in June saying they had come across distressed opportunities. Despite expectations that revenues will fall over the next 12 months, participants in the survey view the decline as less severe than previously reported. Some 30 percent of respondents expect a fall in revenue of 11 percent to 25 percent, compared to 50 percent of respondents in the June 2020 survey. A little over one third, or 39 percent, of respondents said they focus on originating new platform opportunities.
Brief: Euro-area governments should be ready to keep up emergency support for their economies even after the worst of the coronavirus crisis is behind them, according to the official who leads meetings of the region’s finance ministers. Speaking before chairing a virtual gathering of his counterparts on Monday, Paschal Donohoe warned that the currency zone will require ongoing aid as it recovers lost ground to reach its pre-pandemic growth levels. “There will be a need for the euro area and for finance ministers to continue to support our economies beyond the acute emergency of large parts of last year and parts of this year,” the so-called Eurogroup president said in an interview. “The risk and consequences of cutting support too early are currently bigger than the risks of pulling support too late.” Donohoe, who is also Ireland’s finance minister, spoke before a discussion with colleagues that is expected to result in a pledge to keep fiscal policy in the region supportive through next year, and to only gradually ease support for businesses and workers. Such a commitment would help cement more aid that already totaled about 8% of euro zone output in 2020, along with a new stimulus fund and liquidity schemes worth around a fifth of gross domestic product. To allow that support, the European Commission this month signaled it will extend its suspension of rules limiting debt through next year.
Brief : The theater where Tony Bennett and Steely Dan once performed is still dark. Players at the blackjack tables are separated by plastic partitions. The gondoliers offering rides along faux canals wear face masks and aren’t allowed to sing. The Venetian Las Vegas isn’t the resort it was a year ago. But that didn’t stop Apollo Global Management Inc. and its real estate partner, Vici Properties Inc., from plunking down $6.25 billion to purchase the property, the neighboring Palazzo and the adjacent Sands Expo Convention Center from Las Vegas Sands Corp. last week. The deal surprised observers such as Stephen Miller, director of the Center for Business and Economic Research at the University of Las Vegas, Nevada. “Are they off their nut or are they on to something?” he asked. Despite a long list of problems, Apollo partner Alex van Hoek sees opportunity -- for soaring tourism and a return of convention travel that made the city one of the top destinations for business groups. “We are very bullish on the recovery of Las Vegas,” said van Hoek, who led the investment firm’s purchase. It’s no sure thing. A year after the coronavirus shut down its famous casinos, America’s gambling capital is trying to crawl back from one of its deepest slumps ever. The glittering palaces along the Strip began reopening last June, but business is still slow. Unemployment, at 10%, is the highest among big U.S. cities. Tourist traffic in January slumped almost two-thirds from last year. Gambling revenue on the Strip was off 44% and the convention business nonexistent.
Brief: Deutsche Bank paid Chief Executive Christian Sewing 7.4 million euros ($8.8 million) in 2020, up 46% from a year earlier, prompting criticism from unions and politicians. The bank’s bonus pool was up 29% as it rewarded staff for a pandemic-related trading boom, which helped the German lender to eke out a profit after years of losses. The disclosure in the bank’s annual report on Friday came as Deutsche said revenue would be “marginally lower” this year. In Germany, which is facing an election year and where the public disapproves of high pay, the Verdi labour union called the payouts “grossly disproportionate” and politicians were critical. “It doesn’t fit with the times that Deutsche Bank, which has also indirectly benefited from bailouts time and again, is having a coronavirus party,” Fabio De Masi, a member of Germany’s parliament, said in a statement to Reuters. Last year marked a turnaround for Deutsche and Sewing, who took up his post in 2018, after the bank had faced a series of costly regulatory failings, including over money laundering. The bank has lost 8.2 billion euros over the last decade.
Brief: The European Union’s pandemic recovery fund has run into early trouble, with the bloc’s executive arm judging that most of the national spending plans submitted so far still need work to get approved, raising the risk of delays in disbursements to some of the region’s battered economies. Germany’s submission is among those deemed to fall short of expectations, with southern European nations including Greece and Spain having the strongest plans, according to officials familiar with the discussions who asked not to be identified. Some countries haven’t made proposals at all yet, and others are way behind, they said. The German government is in talks with the Commission to reduce some of the hurdles to investment in its plan, one official said. A commission spokeswoman said that staff are in “intensive dialogue” with member states with the aim of making disbursements starting from mid-2021, but that “it is also essential” that these plans meet the key objectives of the fund. A spokesperson for the Greek government also declined to comment, and spokespeople for the German finance ministry and Spanish government didn’t immediately respond to a request for comment.
Brief: A growing number of Americans want to get the coronavirus vaccine, and a majority also support workplace, lifestyle and travel restrictions for those not inoculated against COVID-19, according to a Reuters/Ipsos poll released on Friday. Altogether, 54% of respondents said they were “very interested” in getting vaccinated. That was up from a January survey, when 41% expressed the same level of interest, and 38% in a May 2020 poll before a coronavirus vaccine was developed. Interest in the vaccine increased over the past year among whites and racial minorities, with about six in 10 whites and five in 10 members of minority groups now expressing a high level of interest. Twenty-seven percent of Americans said they were not interested in getting vaccinated, which was relatively unchanged from a similar poll that ran in May. But foreshadowing the social challenges that may emerge as the United States begins to pull out of the yearlong pandemic, the latest poll showed a majority of Americans want to limit the ways in which unvaccinated people can mix in public.
Brief: In the first part of the year, the vaccine rollout is supporting a robust economic recovery and global central banks continue to operate very loose monetary policy. This scenario favours the emerging markets (EM) asset class, which is relatively well placed to benefit from the global 'reflation' trade. We are, however, mindful of the impact of higher US Treasury yields (and especially a rapid rise) on EM fixed income, especially some of the higher quality parts of EM. This is because the credit spread in this EM sector is insufficient to absorb the total return drag implied by a sell-off of US Treasuries. Today, higher yielding EM is better placed to navigate these challenges, although even in this asset class it is important to differentiate between the high yield EM sovereigns with positive credit stories and those with impaired balance sheets and a weakening outlook Another positive driver for EMs is the new US President. The Biden administration is, on balance, supportive for EM as it implies more international co-operation and less isolationism. Yet, the stance towards China is unlikely to change very much and remains a source of risk while attitudes to Russia may also become harsher.
Brief: The number of private equity buy and build transactions in the UK rose by 35 per cent during 2020, as private equity houses looked to bolster their portfolio during the Covid-19 pandemic, according to research by Rickitt Mitchell. Analysis by the corporate finance boutique, in partnership with Experian Market iQ, reveals that a total of 370 bolt-on transactions were completed in 2020 – up from the 276 seen over the course of the previous year. The bounce back following the Covid-19 pandemic is highlighted by the active second half of 2020, with 232 transactions completed during that period. In contrast, just 46 deals were completed during the second quarter, at the height of the national lockdown. Despite the rise in volumes, the total value of transactions fell by a small portion over the last year. GBP1.2 billion of deals were completed in 2020, just lower than the GBP1.3 billion seen in 2019, which further highlights the trend of bolt-on deals during this period, which typically have smaller average values than other deal types.
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.
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.
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.
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.
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.
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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