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NEWSLETTER | 6 Nov 2020

'A contested US election outcome is not new to history'

Both presidential candidates in the US election still have a path to 270 electoral college votes. And although we still don’t know who the next president will be, the Democrats have set up a transition website, while the Chinese yuan rose on the prospects of a Blue win.

Based on the fact that a Joe Biden-led White House would likely lead to less strained US-China relations, the yuan-dollar exchange rate ended on a 28-month-high yesterday.

It is also widely accepted that a Biden victory would impact M&A and private equity deals as he intends to introduce higher corporate tax, new regulation and increased antitrust measures. More on this in coming weeks.

PEWire published a podcast with Mike Bego, founder and managing partner of US-based secondary private equity firm Kline Hill Partners. The interview centres around the current rise in credit defaults in the US as well as globally, key takeaways from 2020, some red flags in the current climate, and the fact that a contested outcome in the US election – which looks like a probable scenario at this stage – is nothing new.

Meanwhile, investors continue to monitor any updates on the US election outcome to determine how it could impact global markets. Emerging market players in particular might benefit from a Democratic US government.

“We view a Biden Presidency as supportive for EMs asset class, as it’s likely the US will seek a more multilateral approach, which will see continued monetary and technical support to EM countries from global institutions such as the IMF and World Bank as they deal with the aftermath of the Covid-19 shock,” commented Polina Kurdyavko, head of emerging market debt at BlueBay Asset Management.

She added that a multilateral approach could also translate into less open conflict and trade uncertainty with respect to China. “This global backdrop should support a benign inflationary environment – with the lack of a very large fiscal package in the US, we also see oil prices remaining somewhat stable, anchoring headline inflation trends, with core trends globally still under downside pressure,” Kurdyavko said.

In other news, KKR invested about USD 6.2 billion in markets across private equity, infrastructure and real estate in the third quarter, a figure which exceeded its previous peak of USD 5.5 billion in the second quarter as the firm takes advantage of pandemic-related turmoil.

PEWire also published a series called ‘Shariah in the spotlight’ this week, where we look at the relationship between ESG, Shariah practices and private equity investments.

Karin Wasteson
Editor, Private Equity Wire

'A contested US election outcome is not new to history'

Fri | 6 Nov 2020, 13:07

This latest PEWire podcast features a conversation between Private Equity Wire editor Karin Wasteson and Mike Bego, founder and managing partner of US-based secondary private equity investment firm Kline Hill Partners.

Fri | 6 Nov 2020, 13:07

AI-focused VC-firm Air Street Capital has closed a USD17 million fund, targeting early-stage founders in Europe and the US who combine AI expertise with sector-specific knowledge in the enterprise, consumer and life sciences sectors.

Fri | 6 Nov 2020, 13:07

In this article, Tim Cook, manager of corporate trust national sales at UMB Bank, takes a brief look at three scenarios that show why escrow arrangements are best practice and three potential pain points to avoid.

Fri | 6 Nov 2020, 13:07

By Emily Fuller, Deborah Low, Ellen McGinnis and Emma Russell, Haynes and Boone – ‘Sustainability’ and ‘ESG’ have become trendy buzzwords in the finance world of late, but is the concept that wealth creation and management should be beneficial to the environment and society really that new? This article will look at the similarities and differences between ESG investment guidelines and long standing principles of investment practiced under Shariah law and discuss the implications of such restrictions for fund finance.

Fri | 6 Nov 2020, 13:07

By Emily Fuller, Deborah Low, Ellen McGinnis and Emma Russell, Haynes and Boone – Environmentally friendly investment guidelines have come to the fore recently due to increased focus on climate change and governmental action aimed at protecting our planet. With heightened focus on the economic impact and carbon footprint of corporations and industries, investors have an increased appetite to invest capital in sustainable projects such as renewable energy research, and development or real estate and infrastructure projects that seek to minimize environmental impact through sustainable construction.

Shariah in the spotlight III: Understanding governance in Shariah Law and ESG

Fri | 6 Nov 2020, 13:07

Governance is perhaps the least talked about component of ‘ESG’, but is based on concepts of fairness, transparency and accountability that form the basis of good corporate governance.

Fri | 6 Nov 2020, 13:07

By Emily Fuller, Deborah Low, Ellen McGinnis and Emma Russell, Haynes and Boone – If an investor in a private equity fund is subject to Shariah, or committed to making ESG investments, then such investor might seek to be excused from participating in certain investments that are non-compliant with its investment guidelines. In the context of fund finance, such restrictions can pose problems for lenders, as in capital call facilities the lender is providing short term liquidity for the fund to acquire investments that is backed by the unfunded capital commitments of the fund’s investors, and, frequently, loans are advanced when the investment is first made without a simultaneous capital call and opportunity for investors to review and, potentially, raise excuse rights with respect to, the investment.