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Our briefing for Tuesday June 29, 2021:
Jun 29, 2021 3:20:39 PM
- According to a report from the Financial Times (FT), talks between the United States and United Kingdom regarding a travel corridor between the two countries are increasingly unlikely to reach a conclusion by the end of July. Citing officials familiar with the talks, the FT reported the added rise of the Delta variant in Britain, the complexities of the United States political system and uncertainty over the AstraZeneca vaccine in America, where it is not yet approved, are all reasons for the talks to extend into August and even September. Earlier this month, United States President Joe Biden and United Kingdom Prime Minister Boris Johnson met during the G7 Summit where the discussion of opening the transatlantic corridor was discussed.
- In Canada, a new report from the Royal Society of Canada is noting the number of Canadians that died because of the COVID-19 pandemic could be likely double of what is shown in official numbers. The disturbing report, which looked at excess deaths, suggests that largely racialized communities and essential workers were the demographics that took the brunt of the unreported COVID-19 deaths – often dying at home. Using the numbers from the study, instead of 26,000 deaths due to the pandemic as reported, it could be as many as 52,000. Canadians were led to believe most of the deaths occurred primarily in long-term care homes, which may have distracted from other communities also in need.
- In the United Kingdom, Prime Minister Boris Johnson has echoed the sentiment of his new health minister, telling Cabinet that he is “increasingly confident” that Britain can fully reopen on July 19th and that citizens will learn to “live with” the COVID-19 virus. Prime Minister Johnson told his colleagues that the latest data was looking good and that although cases were continuing to rise because of the Delta variant, the number of hospitalizations and deaths were not rising at the same pace. According to the latest numbers, 84% of adults have at least one dose of a COVID-19 vaccine. New Health Secretary Sajid Javid issued an upbeat assessment of prospects for opening the economy on July 19th in his first statement in the Commons.
- The European Union (EU) is having a hard time coming to a consensus on travel restrictions, especially when it comes to the UK and Delta variant. Portugal and Spain are the latest countries to either impose a quarantine or ask UK residents to show proof of full vaccination or a negative PCR test. Germany and Chancellor Angela Merkel, often seen as the leader of the 27 member EU bloc of nations, has suggested the entire EU should coordinate closely and be more cautious about allowing entry to travelers from external countries. Germany already has a ban on most travel from the UK, which it describes as a “variant area of concern.”
- In the United Arab Emirates (UAE), the capital city of Abu Dhabi will restrict entry to public spaces and schools to people who have been vaccinated. As of August 20th, people who wish to access universities, schools, nurseries, gyms and shopping centres in Abu Dhabi must have been inoculated with a COVID-19 shot. The decision won’t apply to those exempt from taking a vaccine and to children aged 15 and under. Abu Dhabi officials made the move after noting on social media that 93% of target groups have been vaccinated.
- Japan is asking Olympic athletes from India and five other countries hit hard by the Delta variant to agree to daily virus tests for seven days before leaving for the Games. Currently, all overseas athletes are being asked to have coronavirus tests twice during a four-day period before they arrive in Tokyo. Two members of Uganda’s team tested positive last week upon arriving in Japan, heightening concerns about the spread of infections during the Olympic Games. Japanese Olympic Committee president Yasuhiro Yamashita has already conceded there was “no way” to ensure zero coronavirus cases among teams arriving for the Tokyo Games, set to begin July 23rd.
Covid-19 – Due Diligence And Asset Management
Top Executives Freed From Quarantine in England
Brief : Senior executives who have traveled to England can temporarily leave quarantine if their work is likely to bring major benefits to the U.K. economy, the government announced on Tuesday. The exemption from isolation rules for newly arrived travelers applies to multinational executives who are visiting British branches of their firms. Critics of the decision questioned why it wasn’t also extended to smaller businesses. Top executives of foreign companies can also be released from the quarantine requirement if they are looking to make an investment in a British business or set up a new company in the U.K, the government said. “Many other countries have introduced similar exemptions and it’s important the U.K. public don’t lose out on prospective major investment,” Prime Minister Boris Johnson’s spokesman Max Blain said on Tuesday. “This is about making limited exemptions when people can prove they are looking to make significant major investments.” The Telegraph newspaper reported last week that JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon skipped visiting England on a recent trip to Europe due to quarantine restrictions.
Bridgepoint Seeks $2.8 Billion Value in Rare Buyout Firm IPO
Brief: Bridgepoint Group, the buyout firm spun out of Royal Bank of Scotland Group in 2000, will go public in one of the biggest listings of a U.K. private equity firm in decades. The firm plans to raise about 300 million pounds ($416 million) and list at least a quarter of its shares, according to a statement Tuesday. The offering, which is expected to value the company at about 2 billion pounds, will also include the sale of about 200 million pounds from existing holders, said a person familiar with the matter. The buyout firm, which focuses on middle-market companies across Europe and owns stakes in Burger King franchises in the U.K. and a motorbike racing business, is seizing on an ebullient stock market that Bridgepoint’s own chairman said earlier this year was showing signs of being near a top. Unlike the U.S., where firms like Blackstone Group Inc. and KKR & Co. went public more than a decade ago, British buyout groups have tended to remain small private partnerships still dominated by their founders or immediate successors. Closely held firms have been grappling with how to provide exits for founders, while also ensuring rising stars can monetize their stakes.
Moderna Jumps to All-Time High as Delta Variant Fear Deepens
Brief: Moderna Inc. climbed to a record high amid growing concern about a more contagious variant of Covid-19 in nations including India, which cleared the import of its vaccine. The shares rose as much as 6.9% to $238.40, breaking through the prior intraday record set earlier this month. Trading volume was about 1.2 times the 10-day average as of 12:16 p.m. in New York. Moderna said its vaccine produced protective antibodies against the delta variant, which emerged in India and has been spreading throughout the world. India’s drug regulator approved the import of the shots for restricted emergency use on Tuesday. The world’s second most-populous country trails richer nations with a little more than 4% of the population fully vaccinated, compared with almost half in the U.S. Some analysts had expressed concern about Moderna’s recent surge, which has pushed the Cambridge, Massachusetts-based company’s market value past $95 billion. Moderna continues to be driven by momentum, and today’s study results are “clearly showing good coverage of variants with their vaccine,” Michael Yee at Jefferies said in an email.
European Equity Commissions Surge on Pandemic Volatility and Renaissance of Active Strategies, says Bloomberg
Brief : Market volatility caused by the pandemic is set to increase European equity commissions by 19 per cent from 2019, after five years of decline, according to the latest European Institutional Equity Trading Report published Bloomberg Intelligence (BI). The report is based on data from 87 European institutional equity head, and senior traders. Equity commissions are anticipated to increase by 8.8 per cent in 2021 to GBP2.3 billion after climbing 9.2 per cent in 2020. According to the study, a majority (53 per cent) of traders believe that their overall commission payments will rise this year, and more than two-thirds forecast improvements in trading volumes. The Bloomberg Intelligence report notes that, if predictions come true, 2021 will be the second year in a row to see brokerage commissions improve following a decline of a third in 2015-19. Currently, the average blended commission rate is at 3.46 basis points. This period saw a shift from active management strategies to more quantitative and passive strategies put pressure on turnover and fees and a switch to less expensive trading channels. Survey respondents view algorithms as the most important broker service, followed by high and low touch services.
Private Equity Invests in Record 566 CEE Companies in 2020
Brief: Private equity firms invested in a record 566 companies in Central and Eastern Europe in 2020, as the industry supported dynamic SMEs and start-ups that will fuel the recovery from the impact of Covid-19 and underpin long-term economic and social development across the region. Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today released its 2020 Central and Eastern Europe Private Equity Statistics. The report shows that the number of companies receiving private equity investment increased by 15 per cent on the previous year’s record and beat the five-year average by 46 per cent. Venture capital was the driving force for company investments in 2020 as firms backed 474 start-ups and scale-ups with total investment of EUR358 million – just 4 per cent below the all-time high achieved in 2019. Overall private equity investment slipped to EUR1.7 billion in 2020, mainly due to the absence of large buyout transactions involving equity commitments exceeding EUR300 million during the period. Poland was the leading destination with a quarter of the region’s total investment value (ER431 million) and home to almost a fifth of the companies receiving funding.
Real Estate Tech is Bouncing Back From its Pandemic Slump
Brief: The pandemic had a tumultuous effect on the real estate industry. On the one hand, offices stood empty, hotel occupancy rates plummeted and construction was halted for many months. At the same time, demand for residential housing intensified as people were looking for more space to work and study. As a result, 2020 global VC deal flow into commercial real estate technologies fell nearly 80% compared with 2019. Meanwhile, venture investment into residential real estate tech dropped by less than 10% in that time, according to PitchBook data. As pandemic-related shutdowns are phasing out, both segments are seeing renewed interest from venture capitalists. Roughly six months through the year, VC deal activity in residential real estate tech has already reached an annual record of $6.2 billion, according to PitchBook data through June 18. And with $2.6 billion in funding, the commercial segment is on track to make 2021 the second-most valuable year for venture activity. Unlike in previous years, when the buzziest companies in the sector served commercial clients, much of the venture dollars are going to startups focused on disrupting the scorching-hot residential market.
