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What’s been happening in the commercial world over the last two weeks? Read on to find out!
After a volatile few weeks, Monday morning saw global markets rally. Key performers included the Japanese stock market the Nikkei, which hit its highest level since 1991. Similarly, the Europe-wide Stoxx 600 increased by 1.4%, encompassing the gains made by Germany’s Dax and France’s Cac. At its opening, the FTSE 100 reached its highest level since the 14th of October.
Towards the end of last week, markets, particularly in the US, slumped in response to Trump’s fraud accusations and Biden’s failure to secure a landslide victory. Now, it seems as though the markets have accepted a Biden win and are looking forward to the policies he might enact such as a greater financial stimulus package to combat the impact of COVID-19.
Talking point: Which industries do you think will see a boost through Biden’s policies?
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New Zealand’s national rugby team is reportedly up for sale after it was revealed executives were in talks with private equity investors. During the pandemic, the All Blacks burned through almost half of its £45m cash reserve and failed to bring in revenue anywhere close to its 2019 £100m level. Executives have predicted a 70% decline in 2020’s revenue. The All Blacks are also set to lose AIG as a sponsor after the insurance company announced it would not renew their contract after 2021.
This financial fragility extends to many national sports teams. It is reasonable to consider now the role private equity will play in keeping these franchises afloat. Private equity firm CVC has already purchased parts of the English Premiership and Europe’s Pro14. CVC is also in discussions to potentially buy a 14% stake in the Six Nations. Buyout groups are operating globally with the newly established Sport Investment Group Italia last month offering Italian football club Calcio Catania €54.5million, a sum which would cover the team’s debts. Similarly, US group RedBird Capital Partners is in advanced talks to take an 85% stake in French football club, Toulouse.
Private equity funds are attracted to the multiple revenue streams of sports teams such as ticket sales generated for match days and events, earnings from transfers, selling broadcasting rights to games and advertising sponsorships. Following COVID-19, private equity firms therefore are expecting to see huge returns for general partners.
Talking point: What other private equity firms are considering purchasing sports teams?
It is clear the electric vehicle (EV) market is huge right now. Only weeks after ride-hailing company Uber announced electric fleet goals, luxury carmaker Bentley has unveiled plans to go fully electric by 2030. This move comes as sales of electric cars in the UK have tripled this year to 76,000, taking a 6.7% market-share in the 2020 new-car market. Another motivating factor is the enactment of European legislation which carries punitive fines for the automotive industry if carbon emissions are not drastically cut.
Bentley aims to roll out its first electric car and make its factory plastic neutral by 2025. Given Bentley is part of the VW group, we can expect brand cousins Audi and Porsche to follow suit.
Talking point: What are your predictions for the EV market in 2021? What legal issues might arise from electric vehicle use?
On Monday, American pharmaceutical company Pfizer and German biotechnology company BioNTech announced that they had developed a COVID-19 vaccine which prevented more than 90% of people from getting the virus. This marks the fastest vaccine to go from the drawing board to being approved. The joint enterprise is applying for emergency approval to use the vaccine by the end of November.
Pfizer and BioNTech have predicted they can supply 50million doses by the end of 2020 and 1.3billion by the end of 2021. The UK is expected to receive 10million doses by the end of the year, with a further 30million already ordered for 2021. A final decision has not been made on the recipients of the vaccine but it is likely hospital staff and care home workers will be at the top of the list.
US president-elect Joe Biden has hailed the developments as ‘excellent news’ and UK Chief Medical Officer Professor Chris Witty indicated this ‘is a reason for optimism for 2021’. In response, global markets surged further. Pfizer’s own shares climbed 9% and the FTSE 100, already up due to the resolution of the US election, jumped nearly 5%. Monday saw the FTSE 100 add roughly £82bn to the value of its shares, the market’s best day since March. Star performers included EasyJet, whose shares rose by 34% and Rolls-Royce, whose shares rose by 44%. Interestingly though, the Nasdaq, a very tech-heavy stock exchange, fell 1.5%. Exercise bike firm Peloton plunged 20% and Zoom saw a drop of 17%. A similar fate befell the companies boosted by the pandemic in the UK with shares in Ocado and Just Eat dropping 11% and 8% respectively.
Talking point: How do you think the vaccines should be designated amongst the population?
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