By Camilla Butcher, Associate Strategist, Siegel+Gale
At first glance, one might assume it’s a pretty great time to be a private equity firm right now. The market has been booming for the past decade and investment into private equity in major markets like Europe is at its highest level since 2007. Interest rates have been held low making borrowing cheap and easy, and there is a lot of “dry powder” about…$1.08trillion of the stuff to be exact.
At the top of the market, in an industry that traditionally hasn’t considered its marketing efforts a priority, it is more important than ever to differentiate yourself by clearly articulating your firm’s core proposition, to cut through the noise of your peers, and to clearly demonstrate the business practices and behaviours that provide better and more reliable returns than your competitors.
But we are a branding consultancy, of course we’re going to say that, right?
Sure, but a private equity market awash with growth and liquidity comes with increased complexity and competition. As firms look to diversify their offerings to open up new markets and geographies, inevitably they are changing the way they operate and how they present themselves. In this crowded landscape competition for fundraising has increased and firms need to differentiate. Alongside achieving crucial differentiation, the benefits of a strong brand for these firms are numerous; from acting as a buffer during times of underperformance, to the proven halo-effect it projects on to the perceived value of a firm’s acquisitions.
It seems many firms clearly recognise the need to update and change the way they position themselves and this is reflected in the way they are communicating intent. They simply have not translated this into action. A quick review of the messaging of the major private equity players reveals that every firm across the board seems to declare ‘responsibility’ and/or ‘realising potential’ – whatever that actually means – as their calling cards. We know that ‘responsible investment’ must stand as a cornerstone of any firm and any investment strategy today. Indeed, one doesn’t have to look very far to see the casualties that a lack of responsible investment strategy brings. Remember the cautionary tale of The Abraaj Group, a Dubai-based private equity firm accused of misusing investor funds for its own corporate purposes. Beyond the statement of intent, it’s those firms that decide to make the shift from simply declaring responsibility to actually demonstrating it, that stand to win. Like the age-oldline “stop telling people you’re funny and just tell a joke”, firms that make this shift will be the only ones making people laugh in a room full of people claiming that they’re funny.
This shift would be supported through the adoption of a range of brand behaviours, from consistently communicating with a distinct tone of voice and language that truly inhabits a consistent character, to creating a signature brand experience. This would mean investors and partners having a clear picture of what to expect from your firm before its representatives even walk into the room. Then, when they deliver upon that expectation, it not only reinforces your signature experience, but demonstrates that you are an organisation that keeps your promises. Businesses that use brand to elevate and unify the moments of influence within their interactions in this way gain both gravitas and trust in the minds of their clients.
A more obvious ‘quick win’ with regards to demonstrating responsibility is with gender diversity in the workplace (or lack thereof). With the recent publication of BCVA’s report on Women in Private Equity, the immediacy of the issue is highlighted. The report reveals that only 6 percent of senior private equity investment professionals are women. It is surprising that an industry so acutely aware of what makes businesses profitable could have overlooked the commercial case that has been made and proven for diversity in the workplace. One only has to look to a recent study by Mckinsey that concludes firms in the top quartile for diversity are over 20 percent more likely to enjoy above-average profitability than those in the bottom quartile. As well as this, diversity of thought when it comes to sound decision-making and the obvious fact that innovation doesn’t happen in an echo chamber, stand out in the long list of reasons why change is necessary. With the series of high-profile female appointments we are now finally beginning to see within the business landscape, there is a very real danger that even within the historic boys’ club of financial services, private equity may be the last to catch up.
If you need to make a compelling demonstration of your commitment to being responsible and fulfilling potential, how about realising the potential that diversity in the workforce brings? Diversity is responsibility in action because it’s a long-term investment for growth through the value of people and building a strong working culture. It’s not relying on the market’s strength today, but creating an environment for sustained success into the future.
For private equity, public perception in terms of attracting the right opportunities, investment and talent has never mattered so much. What could be more responsible than building for the future, now?
Dollar edges lower as investors favor higher-risk currencies
By Stephen Culp
NEW YORK (Reuters) – The dollar lost ground on Friday as market participants favored currencies associated with risk-on sentiment over the safe-haven greenback.
Risk appetite was stoked by better-than-expected economic data and expectations that U.S. President Joe Biden’s proposed $1.9 trillion coronavirus relief package will come to fruition.
“The dollar’s down against other currencies but not by a whole lot,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut. “I expect the dollar to be where it is now at the end of the year, and the main reason for that is while I see some signs of improvement in the economy, monetary policy is going to stay where it is.”
“I don’t think the dollar is underpriced or overpriced,” Pursche added.
For the week, the dollar slid about 0.2% against a basket of world currencies, the euro was essentially flat, and the yen lost more than 0.5%. But the British pound advanced more than 1.1% against the dollar, its best week since mid-December.
Bitcoin continues soar to record highs. The world’s largest cryptocurrency was last up 6.6% at $54,961.67, hitting $1 trillion in market capitalization.
Its smaller rival, ethereum, was last up 0.7% at $1,953.28.
The digital currencies have gained about 89% and 1,420%, respectively, year to date, leading some analysts to warn of a speculative bubble.
“One concern I’ve always had (about cryptocurrencies) is how susceptible they are to manipulation,” Pursche said. “But they’re going to continue to gain legitimacy.”
“While it’s great that Tesla made an investment in bitcoin, I’m more intrigued by Blackrock and other major investment firms taking a hard look at cryptocurrencies as a viable investment.”
The Australian dollar, which is closely linked to commodity prices and the outlook for global growth, was last up 1.21% at $0.7863, touching its highest since March 2018.
The New Zealand dollar also gained, closing in on a more than two-year high, and the Canadian dollar advanced as well.
Sterling, which often benefits from increased risk appetite, rose to an almost three-year high amid Britain’s aggressive vaccination program. It had last gained 0.27% to $1.40.
The euro showed little reaction to a slowdown in factory activity indicated by purchasing manager index data, rising 0.21% to $1.2116.
The yen, gained ground against the dollar and was last at 105.495, creeping above its 200-day moving average for the first time in three days.
(Reporting by Stephen Culp, additonal reporting by Tommy Wilkes; editing by Jonathan Oatis)
Shares rise as cyclical stocks provide support; yields climb
By Saqib Iqbal Ahmed
NEW YORK (Reuters) – A gauge of global equity markets snapped a 3-day losing streak to edge higher on Friday, as the recent selling pressure on high-flying big technology-related stocks eased even as investors showed a preference for economically sensitive cyclical sectors.
Oil prices fell from recent highs as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather, while the U.S. Treasury yields extended their recent rise.
The MSCI’s global stock index was up 0.47% at 681.88, after losing ground for three consecutive sessions.
On Wall Street, stocks steadied as cyclical sectors edged higher while tech names made modest advances after concerns about elevated valuations led to some selling in recent sessions.
“What we saw (this week) represents a market that is tired and may not do very much. So we are headed for some sort of a pullback, but I don’t think we’re there just yet,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Investors are not really pulling out of the market, but they are becoming more cautious. It already has factored in another good positive earnings season.”
The Dow Jones Industrial Average rose 119.97 points, or 0.38%, to 31,613.31, the S&P 500 gained 12.93 points, or 0.33%, to 3,926.9 and the Nasdaq Composite added 92.58 points, or 0.67%, to 13,957.93.
The S&P 500 technology and communication services sectors, housing high-value growth stocks, were among the smallest gainers in early trading, while financials, industrials, energy and materials rose more than 1%.
European shares edged higher on Friday as an upbeat earnings report from Hermes boosted confidence in a broader economic recovery. The pan-European STOXX 600 index was 0.64% higher.
U.S. Treasury yields on the longer end of the curve rose to new one-year highs on Friday as improved risk appetite boosted Wall Street, while the yield on 30-year inflation-protected securities (TIPS) turned positive for the first time since June.
Core bond yields have pushed higher globally, led by the so-called reflation trade, where investors wager on a pick-up in growth and inflation. Growing momentum for coronavirus vaccine programs and hopes of massive fiscal spending under U.S. President Joe Biden have spurred reflation trades.
The benchmark 10-year yield was last up 5.1 basis points at 1.338%, its highest level since Feb. 26, 2020.
Oil prices retreated from recent highs for a second day on Friday as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather.
Unusually cold weather in Texas and the Plains states curtailed up to 4 million barrels per day (bpd) of crude oil production and 21 billion cubic feet of natural gas, analysts estimated.
Brent crude futures were down 28 cents, or 0.44%, at $63.65 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 66 cents, or 1.09%, to $59.86.
Copper jumped to its highest in more than nine years on Friday and towards a third straight weekly gain as tight supplies and bullish sentiment towards base metals continued after the Chinese New Year.
Spot gold XAU= was down 0.58% at $1,785.71 an ounce.
The dollar lost ground on Friday, extending Thursday’s decline as improved risk appetite sapped demand for the safe-haven currency and drew buyers to riskier, higher-yielding currencies. The dollar index was off 0.295%.
Bitcoin hit yet another record high on Friday, hitting a market capitalization of $1 trillion, blithely shrugging off analyst warnings that it is an “economic side show” and a poor hedge against a fall in stock prices.
(Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski)
Oil falls after surging past $65 on Texas freeze
By Stephanie Kelly
NEW YORK (Reuters) – Oil prices fell on Thursday despite a sharp drop in U.S. crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest U.S. energy-producing state.
Brent crude fell 41 cents, or 0.6%, to settle at $63.93 a barrel. During the session it rose as high as $65.52, its highest since January 2020.
U.S. West Texas Intermediate (WTI) crude futures fell 62 cents, or 1%, to settle at $60.52 a barrel, after earlier reaching $62.26, the highest since January 2020.
Brent had gained for four straight sessions before Thursday, while WTI had risen for three.
“The market probably got a little bit ahead of itself,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “But make no mistake, this selloff in oil doesn’t solve the problems. The problems are going to persist.”
Though some Texas households had power restored on Thursday, the state entered its sixth day of a cold freeze. It has grappled with refining outages and oil and gas shut-ins that rippled beyond its border into Mexico.
The weather has shut in about one-fifth of the nation’s refining capacity and closed oil and natural gas production across the state.
“The temporary outage will help to accelerate U.S. oil inventories down towards the five-year average quicker than expected,” SEB chief commodities analyst Bjarne Schieldrop said.
Prices dropped despite a decrease in U.S. oil inventories. Crude stockpiles fell by 7.3 million barrels in the week to Feb. 12, the Energy Information Administration said on Thursday, compared with analysts’ expectations for an decrease of 2.4 million barrels.
Crude exports rose to 3.9 million barrels per day, the highest since March, EIA said.
“The big nugget was the big jump in exports of crude oil,” said John Kilduff, partner at Again Capital in New York. “We’ll have to see what happens with that next week weather in Texas, but I have been looking for a pickup there for a while.”
Oil’s rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping, which includes Russia.
OPEC+ sources told Reuters the group’s producers are likely to ease curbs on supply after April given the recovery in prices.
(Additional reporting by Yuka Obayashi in Tokyo; editing by Emelia Sithole-Matarise, Steve Orlofsky, David Gregorio and Jonathan Oatis)
Former Bank of England Governor Carney joins board of digital payments company Stripe
By Kanishka Singh (Reuters) – Mark Carney, former head of the UK and Canadian central banks, has joined the board...
Airbus CEO urges trade war ceasefire, easing of COVID travel bans
By Tim Hepher PARIS (Reuters) – The head of European planemaker Airbus called on Saturday for a “ceasefire” in a...
Why a predictable cold snap crippled the Texas power grid
By Tim McLaughlin and Stephanie Kelly (Reuters) – As Texans cranked up their heaters early Monday to combat plunging temperatures,...
UK could declare Brexit ‘water wars’ – The Telegraph
(Reuters) – Britain could restrict imports of European mineral water and several food products under retaliatory measures being considered by...
Commerzbank to lose 1.7 million clients by 2024 – Welt am Sonntag
FRANKFURT (Reuters) – Commerzbank expects to lose 1.7 million customers by 2024 as part of its current restructuring, resulting in...
Bitcoin and ethereum prices ‘seem high,’ says Musk
(Reuters) – Billionaire CEO Elon Musk said on Saturday the price of bitcoin and ethereum seemed high, at a time...
Sunak to raise business tax to pay for COVID-19 support – The Sunday Times
(Reuters) – British finance minister Rishi Sunak is set to increase a tax on business to pay for an extension...
FTSE Russell to include 11 stocks from China’s STAR Market in global benchmarks
SHANGHAI (Reuters) – Index provider FTSE Russell will add 11 stocks from China’s STAR Market to its global benchmarks, according...
Foxconn chairman says expects “limited impact” from chip shortage on clients
TAIPEI (Reuters) – The chairman of Apple Inc supplier Foxconn said on Saturday he expects his company and its clients...
Bitcoin, ether hit fresh highs
SINGAPORE (Reuters) – Bitcoin hit a fresh high in Asian trading on Saturday, extending a two-month rally that saw its...