FT : Alternative investments lose steam as fundraising slows down

Alternative investments lose steam as fundraising slows down
Investor says ‘it’s all changed’ as inflows drop by hundreds of billions of dollars

Flows of money moving into so-called alternative investments have slowed down this year, defying a predicted boom for funds with portfolios outside traditional stocks and bonds.

Alternative funds — which invest in assets such as private equity, hedge funds, real estate and credit — have raised $740bn since the start of the year, down 27 per cent from $1.02bn in same period last year, according to data provider Preqin.

The data shows how investor interest has moderated for a sector that was expected to double in size between 2021 to 2026, bringing assets under management to $26tn, according to a 2022 Preqin report. Alternative funds raised $1.5tn in 2022 as a whole.

“Fundraising has been more challenging in the last 12 months than any time in the last 15 years,” said Drew Schardt, the head of investment strategy at private markets investor Hamilton Lane, which produces a closely watched report on the sector. “It’s all changed.”

Schardt cited volatility, geopolitics and interest rates, which have all shaken markets in the past year, as causes.

The pullback comes after a frenetic period of dealmaking, with large, institutional managers and mutual fund houses swallowing up alternative managers in a race to offer the products to investors.

But falling stock markets last year prompted some investors to reassess allocations to alternatives at the start of 2023. Institutional investors such as pension funds, endowments and foundations have self-imposed limits on the balance of capital they can invest in each asset class, and prior commitments to “alts” such as private equity left many overexposed and unable to allocate more.

“The institutional bit of alts has slowed down,” said Jenny Johnson, chief executive of the fund manager Franklin Templeton. She noted that interest from wealthy investors and wealth managers was increasing.

Alternative funds have also not been paying out as much cash to investors due to depressed valuations and a stagnant IPO market that has made managers reluctant to sell assets, restricting the fresh capital that their investors would allocate to new funds.

Institutions looking to reduce their exposure to private equity have also caused a boom in the secondary market where PE stakes are resold, she said.

Private credit and some parts of commercial real estate — a sector hit hard by the pandemic — have been other brighter spots for fundraising, while asset classes such as private equity and infrastructure are on track to raise less than in previous years, according to Preqin data.

“It’s still growth, albeit smaller growth for now,” said Alex Blostein, an analyst at Goldman Sachs. “Even the managers who are struggling are just raising less rather than raising nothing at all, and it’s asset-class dependent.”

The number of alternatives funds raised since the start of the year is down by 53 per cent compared with the same period in 2022, while the average fund size, $600mn, is nearly $200mn higher than in 2022, according to Preqin. Managers say the shift points to a flight to larger, more established managers.

As the market for alternatives remains sluggish, “it is taking longer for existing raises to get done and it will take firms longer to come back to market with their next vintage”, Blostein said. For new alternatives offerings, “if you were going to go out in 2024, maybe now it’s going to be 2025”.

Reuters : Catalent nears settlement with Elliott for board seats -sources

Catalent nears settlement with Elliott for board seats -sources

(Reuters) - Catalent Inc is close to reaching a settlement with Elliott Investment Management that would lead to a shake-up of the U.S. contract drug manufacturer's board of directors after its share price lost half of its value in the last year.

The company is poised to agree to add four new directors proposed by Elliott to its board, which currently has 12 members, people familiar with the situation said on Monday.

The sources declined to be identified because the information is confidential and cautioned a deal could still collapse at the last minute.

Spokespeople for Catalent and Elliott declined to comment.

>>> US After Hours Summary: Quiet after-hours session; GSHD +8.6% and JXN +7.8%

After Hours Summary: Quiet after-hours session; GSHD +8.6% and JXN +7.8% up on index changes; HEI -4.9% down on earnings

After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: None
Companies trading higher in after hours in reaction to news: GSHD +8.6% (replacing NUVA in the S&P SmallCap 600), JXN +7.8% (replacing NEX in the S&P SmallCap 600), LIAN +3% (results from Phase 3 trial), MGRM +2.9% (stock offering), CTLT +2.5% (nearing settlement with Elliot, according to Reuters), GLPG +1.9% (starting Phase 2 study), ONTO +0.6% (finalizing $100 mln in orders), GOOG +0.2% (selling new mapping APIs to solar companies, according to CNBC), CSCO +0.1% (announces new partnership with Nutanix), CAAP +0.1% (files stock offerings), MSFT +0.1% (OpenAI launches ChatGPT enterprise)

After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: HEI -4.9%
Companies trading lower in after hours in reaction to news: None

Business Of Fashion : The Luxury Brands Pushing the Upper Limit of What Makeup C

The Luxury Brands Pushing the Upper Limit of What Makeup Can Cost
Designer houses are marketing formerly disposable beauty products into collectibles, with prices to match. Welcome to the age of $500 lipstick.

Encased in a ceramic tube handcrafted by the 160-year-old French house Maison Bernardaud and printed in a Toile de Jouy print, Dior’s new Rouge Premier lipstick, which is infused with hibiscus extract and 24K gold, looks like something that would have been on Marie Antoinette’s vanity.

And that’s the point.

“We wanted to do lipstick that you can also hand down, and make it a whole couture piece that is expensive and precious,” said Peter Philips, creative and image director for Christian Dior Makeup, as he sat on a couch inside a custom Dior-decorated room at the Hôtel Plaza Athénée. “Maybe you save for it, or maybe you buy it for yourself, for a special moment.”

The average customer would certainly have to save up. Retailing for a little over $500, the lipstick, which comes in 12 special edition shades, is available in select Dior boutiques in Europe, and will launch on Dior.com and in a handful of Dior boutiques in the US this September. While the ceramic case will only be sold in a limited batch — only a few thousand were produced globally — lipstick refills will be available indefinitely.

Lipsticks, compacts and eye shadow palettes priced from $200 to $1,000 were once rare, but are becoming more common. Beyond high-end ingredients like the 24k gold extract found in Dior’s Rouge Premier lipstick, luxury lines are positioning cosmetics as high art or keepsakes that are meant to be collected. Valentino’s Go-Clutch Refillable Radiant Setting Powder, launched in 2021, comes in a red lacquered case with a gold chain, which can be worn as a necklace or bag. The price is $205. Earlier this summer, Chanel debuted Codes Couleur, an artful limited edition collection of matching nail files, mirrors and brush sets with pouches in nine brilliant pop art shades, retailing for upwards of $160.

While expensive for the beauty category, ultra-pricey designer makeup is still less than a collectable Panerai watch or a Hermès bag. For now, one-off items are unlikely to move luxury houses’ bottom line, but ultra-collectable cosmetics follow the same philosophy as extensions into homewares and even accessories: It gives new, high-end customers, especially Millennials and Gen-Zers, entry into their world.

Past in Present
Philips likes the idea of dressing lipstick in couture.

He said Rouge Premier was inspired by Christian Dior’s obsession with outfitting a customer’s complete life — stockings, bags, accessories, hats, home decor and more — with extreme colour coordination, much like the original Christian Dior boutique in Paris.

For the most part, luxury cosmetics like Dior’s Rouge Premier have a strong connection to the world of fashion, allowing brands to tap into large budgets, historical references and archives.

“These sorts of limited-run products encourage brands to consider long-lasting materials and concepts that will stand the test of time,” said Megan Bang, a beauty analyst at trend forecasting firm WGSN. “Artful objects can also serve as a connection to heritage through traditional crafting techniques, ingredients or aesthetics.”

High-end makeup is trending. According to data from Circana, designer brands are growing at a faster rate of 21 percent year-over-year versus total prestige makeup as of May 2023.

A nod to history is a selling point for Gen-Z and Millennial consumers who otherwise may not have the means to buy from a luxury brand, noted Bang.

Compelling Storytelling
A luxury price point alone doesn’t solve the problem of limited-edition cosmetics appearing like a cash grab. Weaving an authentic story is crucial in ensuring high-end beauty products feel like a branch of the brand, not a gimmick.

“It makes sense that brands are cutting through the noise via high concept items,” said Jessica Matlin, Moda Operandi director of beauty, noting that luxe, stand-out products are just one response to the overcrowding of the beauty market. “The product itself has to work harder, from a PR perspective, than it did five or ten years ago.”

For Dior’s part, it plans to use Rouge Premier as a vehicle to do future “collaborations with craftsmen, artists and all kinds of creative people,” Philips said. “There’s always storytelling, especially with your first lipstick.” According to the house, a premium coffret featuring the entire Rouge Premier line will be available starting in October, with more to come next year.

“Having these luxurious pieces in their portfolios help maintain a couture image for brands,” said Larissa Jensen, vice president and beauty industry advisor at Circana.

Because Dior and other houses are intent on keeping these items limited in nature, they can take creative risks. It is a chance to work with an out-of-the-box creative or use ultra-expensive materials. And preserving brand image is something that luxury lines are willing to go above and beyond for.

>>> Tropical Storm Idalia Forecasted To Intensify Into "Major Hurricane" Before

Tropical Storm Idalia Forecasted To Intensify Into "Major Hurricane" Before Striking Florida

Tropical Storm Idalia is forecasted to become a major hurricane before striking Florida's Gulf Coast on Wednesday morning, the National Hurricane Center (NHC) said.
NHC senior hurricane specialist Eric Blake told local newspaper Orlando Sentinel​​​​​​, "The risk continues to increase for life-threatening storm surge and dangerous hurricane-force winds along portions of the west coast of Florida and the Florida Panhandle beginning as early as late Tuesday."

NHC's early morning forecast said Idalia is "forecasted to become a hurricane when it nears Western Cuba Today," adding "life-threatening storm surge and dangerous winds becoming increasingly likely for portions of Florida."
NHC said Idalia is forecasted to become a "dangerous major hurricane over the northeastern Gulf of Mexico by early Wednesday." On the Saffir-Simpson Hurricane Wind Scale, this means the storm will be rated as a Category 3 system or higher.
On Sunday, Florida Gov. Ron DeSantis declared a state of emergency for 33 Florida counties while campaigning for president in Iowa. He activated the Florida Division of Emergency Management to prepare for the storm. Also, 1,100 National Guard members were deployed.
"These things can wobble, so Floridians along our Gulf Coast should be vigilant even if you're currently outside the [forecast zone] cone," DeSantis said.
"The bottom line is that rapid intensification is becoming increasingly likely before landfall," Blake said. He noted, "It should be emphasized that only a small deviation in the track could cause a big change in Idalia's landfall location in Florida due to the paralleling track to the west coast of the state."