CalPERS and private equity, Art Market – Breakingviews

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– CalPERS

– Sotheby’s / Macklowe Collection

– Swiss SPAC

– JP Morgan

– Cosmetics M&A

Silver linings. CalPERS mission is to ensure a comfortable retirement for its 2 million members. In doing so, it will also help elite financiers to enjoy the high life to their prime.

The California Public Employees Retirement System voted on Monday to increase its $ 495 billion in assets, adding more private equity investments and a little more leverage. The change is rather moderate: CalPERS plans to borrow only the equivalent of 5% of its assets, where it can in theory go up to 20%. Former chief investment officer Ben Meng signaled last year that the fund may need to add more private equity-style investments to the pot to keep returns at zero.

Higher returns, however, come with higher fees. CalPERS is not alone in allocating more funds to alternative investment managers like blackstone, who extract generous payments for their services. Blackstone’s annualized management and advisory revenue increased 24% in the last reported quarter. Rival KKR increased by 42%. California public sector employees may benefit from CalPERS ‘new approach to risk, but some private sector employees will do well as well. (By John Foley)

Post-pandemic art. “I am only interested in the expression of basic human emotions – tragedy, ecstasy, misfortune, etc. »Abstract artist Marc Rothko could have added hostility and euphoria, two ingredients that helped Sotheby’s auction house achieve a total sale of $ 676 million Monday night. Hostility, because the cession of the collection in question was ordered by the judge overseeing the bitter divorce of real estate mogul Harry Macklowe and his ex-wife Linda. And euphoria, because the art market is making a comeback.

The no. 7 “sold for $ 82.5 million, including commissions. Jackson Pollock’s” Number 17, 1951 “set a new record for the artist at $ 61.2 million. Meanwhile, three flagship sales last week at Christie’s have totaled nearly a billion dollars, including works by Vincent van Gogh and Beeple. Sotheby’s big rival touted digital advancements that made the experience more “immersive” for those who came in person to Christie’s auction house. Auctioneers, like others, have improved their digital game thanks to Covid-19. The result, however, is another reminder that the wealthiest prospered during the pandemic. (By Richard Beales)

Mountain to climb. The Swiss join the SPAC party late. Swiss stock exchange operator SIX this Tuesday approved brand new rating standards for specialist acquisition companies, shells created to target acquisitions. Such vehicles will be able to list in Switzerland from December 6, later than in rival European sites, which collectively collected $ 3.9 billion in revenue by the end of May, said Deloitte. The rise of PSPC in the United States, of course, is on a different scale. Revenue reached nearly $ 100 billion at the end of May, up from around $ 80 billion for 2020 as a whole, although even there the pace has recently slowed down.

Switzerland, like other European markets, relies on investor protection. Swiss PSPC vehicles will be subject to more stringent disclosure requirements than ordinary listed companies, according to SIX. These include disclosing detailed information about their founders, potential conflicts of interest, and how much an investor would recover if they objected to a merger or delisting. US SPAC requirements, on the other hand, may be more lenient on issuers than those applied to an initial public offering. By setting the SPAC bar higher, the Swiss cannot move the European needle much. (By Lisa Jucca)

Nominal value. Jamie Dimon has long been optimistic about China. Today, the CEO of JPMorgan became the first Wall Street boss to visit the region since the start of the pandemic. It helps that he got an exemption from the usually mandatory three-week hotel quarantine. The official line is that his visit is good for “economic development”, with Hong Kong’s own boss Carrie Lam adding that JPMorgan is “a very big bank”.

The region is certainly important to JPMorgan. Greater China is responsible for approximately 90% of JPMorgan’s revenue growth in Asia. And the bank was the first to gain approval for full control of its securities business on the continent. Being the first to show a face can score brownie points.

Hong Kong and its financial services industry, meanwhile, have been caught up in the US-China feuds. The city’s strict Covid-19 control measures, mimicking those on the mainland, have raised fears that Western banks will accelerate the exodus. Dimon’s visit could provide a much needed psychological boost. (By Yawen Chen)

Superficial. Blank check firm Waldencast Acquisition slaps on a double layer of cosmetics mergers and acquisitions. The ad hoc acquisition company declared Monday that it plans to merge with two skin care and makeup brands in a $ 1.2 billion deal, creating a company run by L’Oréal and Procter & Gamble veteran Michel Brousset. Milk Makeup creates vegan and cruelty-free products, while Obagi is a doctor-issued brand popular with dermatologists.

Natural products without animal testing are hardly new; young consumers are practically waiting for them. And the industry is full of competitors. But the beauty business has room for insurgent brands. Unilever, Procter & Gamble and L’Oréal together held only 25% of the market in 2020, and their share has fallen since 2015, according to Euromonitor International data cited by Waldencast. Milk and Obagi are expected to increase their combined income by almost 20% next year.

The case in addition values ​​the new company at 16.5 times the company’s projections for 2023 Adjusted EBITDA, compared to 25 times for L’Oréal and Estée Lauder, according to Refinitiv data. That makes it a punt on attractive growth, without an ugly price tag. (By Sharon Lam)

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