The week in investor relations: Fake Fink letter writer strikes again, Trump Spac shares jump and WeWork finally goes public
– ‘The team behind 2019’s fake letter from BlackRock chief executive officer Larry Fink has struck again,’ said Institutional Investor. Targeting Vanguard and Marvel Entertainment this time, ‘a group of activist comedians’ known as the Yes Men released fake, dueling press releases to journalists on Tuesday, Institutional Investor reported, in a stunt apparently designed to push Vanguard toward action on climate change.
The publication said a fake press release from Vanguard announced that the firm had set up a ‘sustainable investments’ department that would help it strategize on shareholder engagement. The fake announcement also claimed that by 2030, Vanguard would make ‘fossil-free and deforestation-free funds [the] default option’ for investors, and that it would launch a ‘Vanguardians of the Galaxy’ ESG fund for young investors. In addition, the Yes Men published a fake press release from Marvel, which produced the Guardians of the Galaxy film in 2014, denouncing ‘intellectual property misuse to greenwash fossil-fuel financing.’
– The Financial Times (paywall) reported that a group of 11 hedge funds earned millions of dollars in potential gains in a single day this week after a special purpose acquisition company (Spac) that merged with Donald Trump’s new social media group rose as much as 421 percent on Thursday. The former US president this week launched a social media outlet called Truth Social that aims to compete against the likes of Facebook and Twitter, creating a platform for his right-wing supporters ahead of a potential run for office in 2024. Shares in the Spac climbed from $9.96 to as much as $51.90. They eventually closed at $45.50, up 357 percent on the previous day, said the paper.
– ‘After two years, a failed IPO, a plunging valuation and a pandemic that reset many workers’ relationships with the office’, the co-working company WeWork has started ‘a new life’ as a public company, said The New York Times (paywall). The paper’s Dealbook newsletter said SoftBank, the company’s biggest backer, ‘faces an uphill climb just to break even on its multi-billion-dollar investment.’ WeWork was once valued at $47 bn; it is now expected to trade at a market cap of around $8 bn. ‘I made a wrong decision,’ Masa Son, SoftBank’s chief, said last year. The NYT also noted that Adam Neumann, WeWork’s co-founder and former CEO who was ousted by the company after its failed IPO, still owns an 11 percent stake in the company, and can observe board meetings from next year. ‘That raises questions about whether WeWork can ever escape his shadow,’ said the paper.
– Fossil fuel firms have been given no official role in the COP26 climate summit, revealed the Guardian, against a background of what it described as a ‘growing concern among UK officials that big oil’s net-zero plans do not stack up.’ Last year the paper revealed that fossil fuel firms had held a series of private meetings with UK officials in an attempt to be part of COP26. Documents seen by the Guardian revealed that some of the world’s biggest polluters had been lobbying the government, ‘offering money in return for exposure at the event and in one case saying they could act as an intermediary between UK officials and other governments’. Now, though, the UK’s COP unit has confirmed that no fossil fuel majors will have a formal role.
– A ‘tussle for ownership’ of a vast electricity network in Australia is shaping up as a test of the country’s attitude toward foreign investment in critical infrastructure, months after Canberra tightened approval rules for overseas owners, said Nikkei Asia (paywall). AusNet Services, which owns and operates the electricity transmission network and gas and power distribution assets in the country’s second-most-populous state of Victoria, is at the center of a bidding battle between Canadian investment company Brookfield and Australia’s biggest gas pipeline operator, APA Group.
This is the first time since new rules were put in place at the start of the year that a majority stake in a perceived ‘sensitive’ asset is on sale, and the participation of the Canadian company means global investors are paying close attention, reported the news agency. ‘Given that the rules reflect Australia’s sensitivity in particular to investment by Chinese state-owned companies, an added twist with AusNet is that one of the sellers would be the State Grid Corporation of China, which currently owns 19.9 percent of the company. Approval of a deal would remove State Grid from the picture.’
– It seems Bitcoin ETFs are like busses: you wait for one for ages and then two come along at once. That’s what happened this week when not one but two Bitcoin ETFs began trading in the US. Shares of the first US Bitcoin-linked ETF rose on their trading debut on Tuesday: CNBC reported that the ProShares Bitcoin Strategy ETF, ticker BITO, jumped 4.8 percent to close at $41.94. The fund tracks CME[Chicago Mercantile Exchange?? If not, what is CME??] Bitcoin futures, or contracts speculating on the future price of Bitcoin, rather than the cryptocurrency itself. ‘That means investors in the ETF should expect the price and performance of the shares to differ somewhat from the price of Bitcoin itself,’ it[who? CNBC?] explained. ‘This isn’t ideal for existing investors; many take a long view on cryptocurrencies and had hoped for an ETF that would track physical Bitcoin investors could buy and hold.’ The Valkyrie Bitcoin Strategy launches today.
– CNBC said some oil and gas companies are joining dozens of public corporations across all sectors that link ESG to executive pay. As of last year, 51 percent of S&P 500 companies used some form of ESG metrics in their executive compensation plans, according to a report from Willis Towers Watson. Half of companies include ESG in annual bonus or incentive plans, while only 4 percent use it in long-term incentive plans. A related survey last year of board members and senior executives found that nearly four in five respondents are planning to change how they use ESG with their executive incentive plans over the next three years. This reflects the current purpose-over-profit debate in the corporate world, with the environment ranking as the top priority.
– New Zealand became the first country to pass laws requiring banks, insurers and investment managers to report the impacts of climate change on their business, reported Reuters. Around 200 of the largest financial firms in the country, including banks with total assets of more than NZ$1 bn ($718.90 mn), large insurers and equity and debt issuers listed on the country’s stock exchange will have to make disclosures, and several foreign firms that meet the NZ$1 bn threshold – including Australia’s four largest banks – will also come under the legislation.
– According to The Wall Street Journal (paywall), the craze for sustainable investing is extending to the world’s oceans via ‘blue bonds’. The debt is the latest iteration of investments known as green bonds, which aim to fight climate change and help the transition away from fossil fuels by reducing the cost of financing such projects. For example, Seaspan, which has an operating fleet of 132 vessels, initially tapped asset managers for $500 mn of bonds in July – the company’s first US blue bond – to pay for ships that reduce carbon emissions, and the sale attracted more investors than anticipated. The deal demonstrates how investors’ demand for environmentally friendly debt has grown in recent years, part of Wall Street’s rush into selling investments that consider ESG factors.
– The WSJ also reported that, according to two new studies, US public companies added the most diverse slate of new directors on record to their boards over the past year, with an increase in the number of black nominees and elevated numbers of women and first-time directors. The gains were uneven, with about half of public company boards adding no new members and smaller companies lagging behind their bigger counterparts, according to a study from the Conference Board and data analytics firm ESGAUGE. In addition, more companies of all sizes have started disclosing the racial and ethnic make-up of their boards.
– Reuters reported that US buyout firm Silver Lake will acquire Intercontinental Exchange’s (ICE) stake in securities settlement platform Euroclear Holding for €709 mn ($822 mn). NYSE owner ICE had a 9.85 percent stake in Euroclear. Following the investment, which is expected to close in the first half of next year, Silver Lake wants one of its representatives to join Euroclear’s board, the companies said.