ESG Investment Jumps, Stagflation Troubles the ECB and China Real Estate Slumps in this Week's Edition...
Take a Lap Around the Industry
China's Sovereign Fund Buys More Shares in Domestic Big Four Banks (Bloomberg)
Inflation Pressure Builds as Wholesale Prices Rise 0.5% in September (CNBC)
Exxon Bets Big on Fracking, Buys Permian Basin Leader for $60B (NYT)
Singapore Builds Barriers Against Rising Seas Threatening $50B of Real Estate (Bloomberg)
HNWIs Embrace ESG But Social Impact Lags
A new report from TMF Group suggests that interest in ESG investing is rapidly increasing among high net worth individuals (HNWIs) and family offices. The 2023 Global Business Complexity Index indicates that wealthy private clients seeking environmentally-friendly investments rose to 71% over the past year. There was also a 70% uptick in those looking to invest in companies or funds that are responsibly governed. This embrace of ESG investing comes as HNWIs and family offices seek out safe havens amid geopolitical instability. However, the 'S' for social lagged behind, with only 54% increasing investments aimed at driving positive social outcomes. According to Tim Houghton, head of private wealth at TMF Group, this shift reflects evolving generational attitudes and a rethinking of priorities in a post-pandemic world. As younger generations inherit wealth, they appear more inclined to align investments with values.
"We have noticed that private wealth clients are increasingly focusing on more responsible management of their wealth."
Tim Houghton, TMF Group
Private Funding Pulse Check
Stoke Space, a company seeking to develop a 100% reusable rocket, has secured $100M in a Series B funding round joined by Stoneham, MA-based Sparta Group LLC
In a recent Series A round, Raptor Group and Schooner Capital participated in a $17M investment in JetCool, a company specializing in designing and manufacturing micro-convective liquid cooling solutions
Dig Ventures has participated in a $1.7M Seed funding round for Tidalflow, a platform allowing businesses to launch any software product into any large language model (LLM) ecosystem
Rocky Point Ventures has engaged in a $15M Series A follow-on investment in Azul 3D, a Skokie, IL-based leading-edge 3D printing company
ECB Walks Monetary Policy Tightrope as Europe Faces Slow Growth and High Inflation
Concerns over economic stagflation in Europe have risen as the region grapples with a troubling combination of high inflation and slowing growth. The risk of 1970s-style stagflation looms large as core inflation rates exceed 5% while GDP growth stagnates near zero and economies contract, most notably in Germany and the Czech Republic. With business bankruptcies rising and surveys pointing to declining economic activity, Europe faces a precarious high-inflation, low-growth economic environment. In this climate, the European Central Bank (ECB) has come under scrutiny for policy decisions that lifted interest rates to cool inflation but may have slowed growth too rapidly. With risks of wage-price spirals and policy missteps, the ECB must tread carefully to strike the right balance in monetary policy. The ECB's situation underscores the complexity of combating sticky inflation amid weak growth.
"Christine Lagarde, head of the ECB, has expressed apprehension about economic growth and has hinted at the possibility of pausing monetary policy. Such a decision, despite EU core inflation remaining above 5%, could have far-reaching implications for European inflation."
Game of Trades
IMF Slashes China Growth Forecast Amid Real Estate Slump
China's once-booming property sector is showing increasing signs of distress, posing a major threat to the world's second largest economy. The struggles of Country Garden, China's largest developer, in making bond payments this week signal liquidity problems are now spreading to even the strongest players. With the sector estimated to account for up to 30% of China's GDP at its peak, its ongoing woes present a formidable challenge. The IMF cut expectations for China's economic growth in its latest forecast, citing the real estate slump's impact on housing prices, local government revenues and construction activity. Further reinforcing concerns, reports emerged that Beijing may unveil new stimulus aimed at stabilizing growth. The turmoil in China's crucial property industry could dampen demand for key commodities like oil and copper, given the nation's massive appetite, and ripple out to impact global growth.
"Property developers face severe funding constraints, preventing them from completing pre-sold homes ... real estate investment and housing prices continue to decline, putting pressure on local governments' revenues from land sales and threatening already fragile public finances."
IMF
Accolade Raises $325M Fund to Back Diverse Venture Firms
Accolade Partners, an investment firm based in Washington D.C., has successfully concluded its second fund, raising an impressive $325M. This fund was specifically designed to support and empower venture capital funds led by talented women and minorities. The fund, called Accolade Empowerment Fund II, comes amid a challenging fundraising climate but highlights continued interest from institutional investors in promoting diversity in the historically white, male-dominated venture capital industry. Accolade provides critical early stage support to diverse firms as they work to prove themselves top performers, and with its second fund can now make larger investments into its portfolio of funds led by underrepresented managers. According to Accolade's founder Joelle Kayden, diverse venture firms bring unique perspectives that allow them to spot overlooked founders and opportunities. By backing these firms, Accolade and its institutional investors aim to foster more diversity on both sides of the table while generating strong returns. Though some progress has been made, women and minorities continue to be underrepresented in venture capital, owning just 17% and 13% of firms respectively. Through its strategy, Accolade seeks to change the face of venture capital leadership.
"One of the objectives specifically is to help change the composition of leaders in venture and growth equity..."
Wealth Enhancement Group, a national wealth management firm, acquires KCS Wealth Advisory, an independent RIA based in Los Angeles, CA, adding $373M in AUM
KCS Wealth Advisory was founded in 2014 when Laura Gilman and Ken Waltzer merged their individual practices
Laura Gilman, Co-Founder and Managing Partner of KCS, said the deal with Wealth Enhancement Group provides KCS with more resources and capabilities to enhance services for clients
With the acquisition, Wealth Enhancement Group's total assets under management grows to over $70.5B (Cision)
Written by:
Andrew Popp | Sr. Research Associate
FINTRX delivers an industry-leading suite of private wealth data and research solutions to the alternative investment space and private capital markets. Engineered to help clients identify and access family office and RIA capital intuitively, the FINTRX platform ensures accurate and updated data and research on 850,000+ private wealth records globally. To subscribe to our newsletter and see previous versions click below.
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