The week in investor relations: BlackRock defends itself on ESG, Target CEO to stay as firm scraps retirement age and Kardashian enters private equity
– BlackRock published a letter pushing back on one it received last month from 19 Republican state attorneys general who accused the world’s largest money manager of putting its ‘climate agenda’ ahead of clients, collaborating with climate activists and boycotting energy companies, reported The New York Times (paywall). Tensions between BlackRock and Texas in particular came to a head last month when the state accused the firm of boycotting energy companies, violating a 2021 law that aims to protect the energy industry from the growing popularity of climate-minded investing.
Now BlackRock is seeking to defend its reputation on ESG, said the paper. In its letter, BlackRock says it’s looking to correct ‘misconceptions’ and ‘inaccurate statements’ about its climate position. It argues that it has never dictated specific emission targets to any company and that it doesn’t co-ordinate its investment decisions or shareholder votes with others on climate issues, as the attorneys general claimed. Far from boycotting, BlackRock says it has invested ‘hundreds of billions of dollars’ in energy companies.
– Target’s CEO Brian Cornell agreed to stay on in his role for about three more years, as the retailer announced it is scrapping its retirement age of 65, said CNBC. ‘We enthusiastically support his commitment and his continued leadership, especially considering his track record and the company’s strong financial performance during his tenure,’ said Monica Lozano, lead independent director of Target’s board of directors, in a news release.
Cornell, who is 63, has been Target’s chief executive since 2014. Under his leadership, the company expanded its customer base and built on its reputation as a discounter with unique and fashion-forward merchandise. More recently, however, the news outlet said Target has grappled with huge shifts in shopping habits, causing sales to slow and unwanted merchandise to pile up.
– Reality TV star Kim Kardashian launched her own private equity firm, co-founded with a former partner at investment firm the Carlyle Group, reported the BBC. SKKY Partners will reportedly focus on investing in consumer and media businesses, with Kardashian serving as a co-founder and co-managing partner, while Jay Sammons will handle the day-to-day operations of the firm. Kardashian’s mother, Kris Jenner, will also be a partner at the firm.
Sammons is the former global head of consumer, media and retail at the Carlyle Group, an American multinational investment firm, according to the BBC, which lists some of his notable clients as including well-known brands Supreme, Beats by Dr Dre, Vogue International, Moncler and McDonald’s China.
– Vanguard is ‘snapping at BlackRock’s heels’ in US ETFs, a $6.6 tn ‘competitive battleground’ for the world’s two largest asset managers, said the Financial Times (paywall). US ETF assets under Vanguard’s management totaled $1.84 tn at the end of August, compared with the $2.21 tn run by BlackRock’s iShares ETF unit, according to newly released data. Vanguard led the pack in attracting money into US ETFs in 2021 and is ahead again this year, receiving four times as much as BlackRock in August, added the paper.
As they ‘jostle for dominance’, the two groups have left other investment houses behind, the FT noted, pointing to the fact that BlackRock and Vanguard control more than 60 percent of a US ETF market that has increased almost fivefold from $1.35 tn a decade ago. The single-largest ETF by assets is State Street’s SPDR S&P 500 index tracker – though BlackRock and Vanguard offer 15 of the next 16 largest.
– In related news, also reported by the FT, an anti-ESG ETF got ‘off to a roaring start’, attracting $315 mn in less than a month – something the paper describes as ‘an eye-catching success for its start-up issuer’. Strive Asset Management’s US Energy ETF’s success in raising assets comes at a time when a swath of other ‘anti-woke’ ETFs have struggled to get past $25 mn, noted the FT, adding that the launch comes after Florida passed a resolution barring its pension fund managers from embedding ESG-related factors into their investing strategies, while Texas criticized BlackRock and nine European financial houses for ‘boycotting’ the fossil fuel industry as part of their ESG drives.
– Pan-European exchange operator Aquis launched its dark trading venue into Europe, according to The TRADE. Named the Aquis Matching Pool EU, the new venue is a sister to Aquis’ dark trading business in the UK, which it absorbed from UBS in April. The deal was the exchange operator’s first move into dark trading. ‘Regulators on either side of the channel appeared to differ in their approaches to dark trading at the beginning of this year,’ noted the publication, with the UK planning to scrap dark volume caps (DVCs) and the EU seemingly keen to clamp down on non-transparent venues. In their most recent update to Mifid II, however, European regulators began toying with the idea of scrapping DVCs as well.
– According to The Wall Street Journal (paywall), Volkswagen said it would list its carmaker Porsche in one of the biggest IPOs of recent years. The offering could value Porsche at between €60 bn and €85 bn, according to analyst estimates, bringing new cash that Volkswagen executives say will help the company pay for its transition to electric vehicles and self-driving cars. Oliver Blume, CEO of both Porsche and the entire Volkswagen company, welcomed the decision by Volkswagen’s supervisory board to move forward with the planned listing, saying it would grant Porsche greater independence.
– The Guardian reported that the Biden administration said US technology companies that receive government funding will be banned from building ‘advanced technology facilities’ in China for a decade. The requirements come under the US government’s near-$53 bn plan to scale up manufacturing of semiconductor chips, which are predominantly produced in Asia. The US Chips and Science Act (Chips), approved by Congress in August, is part of the government’s response to a long-running technological dispute between the US and China, as US firms demand more government support to reduce reliance on components produced in Chinese factories.
‘We’re… going to be implementing the guardrails to ensure those who receive Chips funds cannot compromise national security,’ said US commerce secretary Gina Raimondo. ‘They’re not allowed to use this money to invest in China; they can’t develop leading-edge technologies in China; they can’t send latest technology overseas.’
– CNBC reported that Digital World Acquisition Corp (DWAC) – a ‘Trump-linked’ special purpose acquisition company that is aiming to take the former president’s media company public – adjourned its shareholder meeting until October 10 ‘to allow voting to continue on delaying the merger’. DWAC had already twice adjourned the meeting earlier in the day after previously adjourning it Tuesday, said the news outlet. The deadline for the merger was set for Thursday. The vote could decide the fate of a $1.3 bn cash infusion from DWAC’s public offering and Trump Media and Technology Group’s potential listing on the stock market.
– The European Central Bank raised interest rates across the eurozone by a record margin to combat soaring inflation that has reached double figures in some of the currency bloc’s 19 member countries, reported The Guardian. Setting aside concerns that higher rates would add to the current squeeze on consumers’ disposable incomes and increase the depth of a looming recession, the central bank’s 25-member governing council raised its key benchmarks by an unprecedented 0.75 percentage points to 1.25 percent.
‘The move follows a similar increase by the US Federal Reserve and is expected to put pressure on the Bank of England to follow suit when its policymakers meet next week to review the UK’s monetary policy,’ said the paper.
– Despite recent reports that the US and China might be nearing agreement on access to audit reports of US-listed Chinese firms, the South China Morning Post (paywall) said SEC chair Gary Gensler has cast doubt on the possibility of a deal being reached.
‘I’m not particularly confident – it’s really up to our counterparties,’ Gensler reportedly said this week in a media conference call, adding that ‘good-faith’ negotiations continue ‘but there is a risk here’. US and Chinese officials have been negotiating for more than two years to ensure staff from the Public Company Accounting Oversight Board can access the audit papers of Chinese companies traded in the US. If a deal cannot be reached, these firms face being de-listed from US stock exchanges.