FT : Electric car costs draw level with petrol and diesel

Electric car costs draw level with petrol and diesel
Cheaper recharging and rising fuel prices mean EVs cost no more across Europe and UK, data show

Rising fuel prices this year mean that the cost of owning and running an electric car is now lower than petrol or diesel in almost every country in Europe, according to data from automotive lease provider LeasePlan.

Battery vehicles remain more expensive than traditional engine models to buy, although have lower running costs because of less maintenance and cheaper refuelling.

The industry considers the point at which electric cars become as cheap as petrol models to own, run and service — the “total cost of ownership” — a key moment that could trigger a widespread switch to battery vehicles.

LeasePlan, which has 1.9mn vehicles used by corporate fleets, collated running costs and lease prices for its vehicles, comparing them by segment and across 22 countries.

“EVs in nearly every segment and European country are now the same price or cheaper on a TCO [total cost of ownership] basis than petrol or diesel cars,” said the report.

It found the costs of a standard family car, such as a Ford Kuga or an electric Škoda Enyaq, were equal or lower in 19 out of 22 European countries, including the UK, France, Germany and the Netherlands. Only in Poland, Italy and the Czech Republic was the model notably more expensive when electric.


Among smaller cars, such as the Renault Megane or the Kia Nero, the UK purchase and running costs were €919 a month for electric, €941 for diesel and €954 for petrol, it found.

The same cars in France were only €735 a month for electric, compared with €904 for diesel and €868 for petrol.

While petrol and diesel refuelling costs remained similar across most areas, the costs of recharging an electric car varied wildly. Typically, charging at home overnight for several hours was a cheaper alternative to using public fast-chargers, which attract a premium for their higher speed.

For its EV charging calculations, LeasePlan took the current charging habits of its average electric customer, with 65 per cent of charging at home, 20 per cent at a workplace, and 15 per cent at a more expensive public charging point.

LeasePlan found that charging costs amounted to 15 per cent of the cost of owning and running an electric car, while the cost of refuelling a diesel was 28 per cent of the total ownership cost.

“Despite energy price inflation, fuel costs remain significantly lower for electric cars than petrol and diesel cars,” the report found.

 Its data was taken from a four-year lease and assuming an annual mileage of 30,000km, with prices from almost 3,000 cars across 132 models.

 The overall cost of running any vehicle still varied significantly across the region, the report added. With Greece the cheapest country at an average of €905 a month, to Switzerland, which has an average of €1,313.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: In 2022, a surge of interest in the primary-care market exploded into a buying binge

Cover Story:
In 2022, a surge of interest in the primary-care market exploded into a buying binge. Amazon.com announced a $3.9B deal to buy One Medical in July, while Walgreens Boots Alliance and Cigna pitched in on an $8.9B deal to create a massive doctor’s group that includes a primary-care chain. Walmart, meanwhile, is expanding its primary-care offering, and UnitedHealth Group continues to snap up doctor groups. More recently, a couple of costly new issues emerged for CVS: In October, the federal government cut the quality ratings for certain Medicare Advantage plans run by CVS’ insurance arm, Aetna. That will eliminate government-paid bonuses that the company had expected to receive in 2024. Then, insurer Centene, a customer of CVS’ Caremark PBM, announced that it will switch to a competitor in 2024, further ramping up pressure on earnings targets.

Interview:
-About a year ago, Felix Zulauf, who heads Zulauf Consulting in Switzerland, and who is a former Barron’s Roundtable member, was looking for a steep market drop in 2022 from tightening monetary and fiscal policies. Barron’s spoke to him recently Zulauf suggests that before any predictions for 2023, it’s important to take one step back to see the big picture: “I think that geopolitics and politics will play a more dominant role. We see the building of two major blocs—a democratic bloc led by the U.S. and an autocratic bloc let by China. And this means that the period of globalization of the past 30 years is over. I think we deglobalize for, let’s say, the next 10 years. That means the world will get less efficient and more inflationary. A safe supply chain will be more important than a cheap supply chain.”

Tech Trader:
-There are bargains to be had in the financial markets if you look hard enough and have a little patience. I would suggest that internet and media company IAC is a textbook case of an undervalued stock that deserves more attention. Founded in 1986 as a TV station owner called Silver King Broadcasting, IAC has bought, built, revamped, and sold companies in the media and internet business, over and over again. It’s a holding company, and the nature of its portfolio changes significantly over time. In a 2006 interview with Barron’s, IAC’s longtime chairman and former CEO, Barry Diller, laid out his philosophy on running IAC, which still applies 16 years later.

The Trader:
-“With Christmas just a couple of weeks away, it’s easy to look ahead to candy canes, caroling, and presents under the tree, but there’s still work to be done. The coming week certainly won’t be boring, with highly anticipated inflation data and a Federal Reserve decision on back-to-back days. The two events will do much to determine the direction of the market for the coming weeks—a deeper slide or a resumption of the Santa Claus rally. All eyes will be on the November consumer price index, out Tuesday morning. It’s expected to show some moderation in inflation from the reading a year ago on the headline and core levels—but for both to remain above 6%.”
-It was a bad week for Carvana and a bad week for used-car dealers. But some auto-dealer stocks might still be worth buying. After falling almost 40% this past week, Carvana (ticker: CVNA) is off an incredible 98% this year, wiping out almost $44 billion in market value. That’s more than the size of all other publicly traded auto dealers combined. It’s not hard to see why. Analysts and journalists have started using the word “bankruptcy” to describe where it might be headed. Carvana dismisses this, saying it has “substantial liquidity” to attain its business goals. The concerns about Carvana, along with falling used-car prices, have dinged other preowned-auto dealers, such as CarMax. Yet Carvana just isn’t big enough for its problems to disrupt the market. It sold about 103,000 used vehicles in the third quarter of 2022, or 1.2% of total U.S. used-car volume. And the Carvana brand “has value, so even if it [restructures] the brand will remain,” says Benchmark analyst Mike Ward.

Features:
-A week ago, internet infrastructure supplier Rackspace reported that after discovering a “security incident,” it took some servers offline, resulting in a major service outage preventing thousands of the company’s customers from sending or receiving email. The issue involves the company’s Microsoft Exchange hosting business, which provides customers with Microsoft-based email, calendar, and contact software. Rackspace says the Exchange business accounts for about $30M a year in revenue, or about 1% of the company’s revenue. But the outage is disrupting the operations of a huge number of small businesses, and the company is likely to face considerable related legal and remediation costs.
-Regal Rexnord, a maker of motors and powertrain equipment used in factories, has slumped 15% over the same period. Regal did it to itself. On Oct. 27, the company announced the acquisition of Altra Industrial Motion, a smaller competitor, for $62 a share—and the stock promptly tumbled 13%. Investors have concerns about the timing of the deal.. At a time when many investors thought Regal should be getting ready to play defense, it decided to go on the attack. Those concerns are fair but overblown. Regal has a long history of doing deals and making them work. At the same time, the new company will make enough money to pay down its debt, leaving more equity for shareholders. And while the timing isn’t ideal, it’s better than investors think, given the government spending on infrastructure that could boost demand for Regal’s products. If all goes well, Regal Rexnord’s stock could gain 40% or more over the next 12 months.

European Trader:
-Hermès International, the French maker of Birkin handbags, watches, and silk scarves, has seen its shares fall 3.8% in the past 12 months to a recent 1,516 euros ($1,599), worse than Vuitton bag maker LVMH Moët Hennessy Louis Vuitton, which is flat, but better than the 19.2% decline of Gucci owner Kering. The dip in Hermès shares might be a buying opportunity because luxury goods are typically resilient during hard times—wealthy consumers tend to cut back less on spending. Hermès is in a strong position. Sales in the key China market “picked up strongly” in the third quarter, according to the company, and group sales for the third quarter exceeded analysts’ consensus by 9%. The company also boasts hundreds of thousands of high-end enthusiasts willing to pay whatever it takes to snap up the latest exclusive limited-edition leather goods, which means that Hermès won’t have problems passing on price increases.

Emerging Markets:
-On December 6, the Jakarta parliament unanimously passed a new criminal code that dictates a year in jail for sex outside marriage, and three years for “insulting” the president or various state institutions. Not a great look for a country that welcomed 16 million foreign tourists in the prepandemic year of 2019. President Joko Widodo, better known as Jokowi, blocked similar legislation three years ago. This time, with 14 months left in his second and final term, he sat on his hands. “Jokowi is either so passive now, or he shares a distrust of how democracy has developed in Indonesia,” says Joshua Kurlantzick, senior fellow for Southeast Asia at the Council for Foreign Relations.

Commodities:
-Many traders expected oil prices to hit $200 per barrel mere weeks ago. Instead, prices have crashed. Brent, the international benchmark, fell below $80 per barrel on Tuesday for the first time since January and continued to drop on Wednesday. West Texas Intermediate, the US benchmark, was down 3.3% to $71.84. The crash has been caused by a mix of fundamental factors and trading dynamics. Yawger thinks that fundamentals carry about 70% of the weight and speculation accounts for the other 30%. The biggest fundamental factor was that Europe’s ban on Russian oil shipments included a mechanism for Russia’s oil to flow elsewhere. Oil can still be sold to other countries like India as long as prices are capped at $60.

Streetwise:
-Jack Hough offers some considerations about social media companies and, especially, those that offer an important video streaming component. He notes that BofA Securities has recently published a report predicting that rising short-form video consumption will be the biggest shift in internet usage over the next five years. By 2024, short videos will account for more than 12% of time spent on the internet, up from 5.4% last year. By 2028, shorts will fetch an estimated $108B in advertising, even assuming lower ad rates than for traditional video. Meanwhile, Texas Gov. Greg Abbott banned TikTok on government devices, citing data-harvesting risks. He joins his colleagues in Maryland, South Dakota, South Carolina, and Nebraska. BofA reckons that a broader US ban on TikTok isn’t the likeliest course, but that it would provide the most immediate benefit to industry pipsqueak Snap. New rules limiting TikTok’s access to user data, on the other hand, could hurt its monetization push.

FT : Fashion factory: Mango brings production closer to home in rethink on China

Fashion factory: Mango brings production closer to home in rethink on China
Beijing’s policies and global supply chain chaos prompt sourcing reforms at clothing chain

In 1970, a young Turkish immigrant named Isak Andic began importing blouses from the country of his birth to Spain, bringing something different to people living under a dictatorship. Aged 17, he traded them first as a wholesaler in Barcelona, then opened a store and also sold them from the back of a car he drove around the country. It was the start of a fashion business that 14 years later he would name Mango.

Today, Andic’s status as Mango’s sole shareholder has made him one of the richest people in Spain and his empire has expanded to about 2,600 stores worldwide. It continues to buy clothes from Turkey as well as 18 other countries. But the pandemic and a war in Europe, together with friction between Beijing and the west, are forcing a rethink of its supply chain and China’s central role in its operations.

Toni Ruiz, appointed as chief executive by Andic in 2020, said that globalisation had enabled companies to become “super efficient” in limiting production costs in tranquil times. “But in the end, what we’ve realised is that things can change from one moment to the next.”

He recalled recent shortages of Taiwanese microchips and the European car factories that were brought to a halt by the lack of a Ukraine-made wire harness. “The whole [supply] chain is only as strong as its weakest link,” he said.

In Mango’s case, the chain is mind-bogglingly complex. The retailer procures its glittery €40 party dresses, €15 T-shirts and €100 winter coats from 408 suppliers that own some 1,000 factories, three-fifths of them in Asia. Apple, which recently warned of disrupted supplies because of a lockdown revolt at a Chinese factory, has 180 direct suppliers.

“What we’re looking at is the extent to which all this global sourcing, developed over many years, might become more local,” Ruiz said. “We’re constantly mulling alternatives.”

Mango already exercises a lot of central control. No product reaches shoppers without first passing through its distribution centre north of Barcelona, where 75,000 items an hour swoop along a circuit of overhead rails to be sorted into a giant 170m-long wardrobe.

But during the pandemic, the company was in a constant scramble, dialling production up and down across Asia as Covid-19 outbreaks flared and faded in China, Vietnam, Bangladesh and India. Last year, a lack of container ships left its products stranded far from Europe. “In September, October, November, we were all praying that the weather wouldn’t be bad because we didn’t have any warm clothes,” Ruiz said.

There are specific issues in China, where Mango sources from 262 factories, starting with the zero-Covid policies that Beijing has this week begun to relax and strict visa and quarantine rules that deter business travellers. Then there are Beijing’s fraught relations with Washington and European powers, which Ruiz highlighted, and worries about potential conflict between China and Taiwan, which he described as “part of it all”.

“In this debate about whether 30 years of globalisation will continue or go backwards, the most important thing for us to follow in detail is the China issue,” he said. Asked if Mango would reduce the proportion it buys from the country, Ruiz replied: “I would say yes, but we’ll be very alert to how things evolve.”

Mango gains some freedom from the fact it has only six stores in mainland China and consumers there contribute little to total sales, which it predicts will this year surpass its 2019 record of €2.4bn.


Other brands have already moved more decisively. The US jeans maker Levi’s and UK bootmaker Dr Martens have been reducing their sourcing from China since before the pandemic.

Another factor forcing companies to reassess their exposure is Xinjiang, says Brian Ehrig, a supply chain expert at Kearney, a consultancy. Allegations of the use of forced labour in the region’s factories have led to legislation in the US, UK, Germany and elsewhere that pressures companies to eliminate potential links to abuse. “What we’re seeing more is that the path of least resistance is to move production out of China as quickly as possible,” said Ehrig. Mango said it had no Xinjiang suppliers and did not work directly with any other company in the region.

The retailer has alternatives to China through a twin-track supply chain. Asia is the “long distance” track, producing basics such as T-shirts that normally take six to eight weeks by ship to get to Spain. The “proximity” track comprises mainly Turkey and Morocco, where it produces its most fashionable outfits, all designed at its headquarters in Palau-solità i Plegamans in the Catalan countryside. Those products reach its distribution centre in four to six days, giving Mango the ability to ramp up production quickly to replenish supplies when an item is popular.

Turkey and Morocco play a similar role for Zara owner Inditex and are the obvious places for Mango to expand production closer to home. It also pointed to the potential of Romania, where it uses three factories. Ruiz said Mexico was an option in Central America as it plans to quadruple the number of stores in the US to 40 by 2024.


Luis Casacuberta, director of Mango’s women’s, kids’ and home businesses, said the company was looking for not only flexibility but “robustness”. Unlike carmakers, he said, that did not mean simply having a larger number of suppliers on hand. “We have a reasonable level of diversification already. What we are aiming for is the opposite. How do we build a much more solid base?”

Key to that, he said, was finding suppliers that already did a good job making Mango products and were willing to open up factories in more than one country. “So the flow of ships from the Bangladeshi ports is disrupted? Or there’s been flooding? That allows us to pivot with the same supplier.”

Ruiz has been grappling with unwelcome surprises from day one. He succeeded Andiz, now Mango’s chair, as the pandemic took hold. The first document he signed put several thousand employees on furlough. But if Mango obsessed too much about what could go wrong, he said, “we wouldn’t do anything”.

“The things that are outside our sphere of influence are so huge, but it’s about managing the things that are inside our sphere of influence. So let’s be on the offensive, let’s conquer the market, then let’s have alternative plans in case things happen.”

WSJ : Binance Is Trying to Calm Investors, but Its Finances Remain a Mystery

Binance Is Trying to Calm Investors, but Its Finances Remain a Mystery
Crypto exchange has begun releasing data to shore up confidence following collapse of FTX

Binance recently made a commitment to transparency, but it has a long way to go before it discloses enough meaningful information to give investors confidence in its future, accounting and financial specialists say.

The world’s largest cryptocurrency exchange is seeking to reassure customers about the safety of their holdings after the collapse of FTX. Binance’s position means its success or failure will weigh heavily on the entire crypto market.

“It’s important for us to show users that the coffers are not bare, like at FTX,” said Binance’s chief strategy officer, Patrick Hillmann.

Over the past month, Binance has publicized details about its crypto wallet addresses. It has hired an outside accounting firm to prepare a “proof of reserve report” covering a portion of its assets and liabilities, including a small set of financial data. And it has promised more information will be forthcoming.

“When we say proof of reserves, we are specifically referring to those assets that we hold in custody for users,” Binance says on its website. “This means that we are showing evidence and proof that Binance has funds that cover all of our users assets 1:1, as well as some reserves.”

Investors still shouldn’t be satisfied with the report, said Douglas Carmichael, an accounting professor at Baruch College in New York and former chief auditor of the U.S. Public Company Accounting Oversight Board. “I can’t imagine it answers all the questions an investor would have about the sufficiency of collateralization,” Mr. Carmichael said. “That’s the main thing it seems to speak to.” The report said its purpose was to show customers that the assets covered in the report “are collateralized, exist on the blockchain(s) and are under the control of Binance.”

Binance, which is private, isn’t required to produce audited financial statements, and it hasn’t released anything that would provide a comprehensive overview of its financial condition or liquidity. Nor has it indicated plans to do so.

The reserve report, released Wednesday, is a five-page letter from a partner at the South African affiliate of the global accounting firm Mazars. It contained three numbers. The letter wasn’t an audit report, didn’t address the effectiveness of the company’s internal financial-reporting controls, and said Mazars did “not express an opinion or an assurance conclusion,” meaning it wasn’t vouching for the numbers.

Mazars said it performed its work using “agreed-upon procedures” requested by Binance and that “we make no representation regarding the appropriateness” of the procedures.

The letter was addressed to a Binance entity called Binance Capital Management Co. Ltd., which is based in the British Virgin Islands, though it wasn’t clear if the assets it counted were held by that unit. The report didn’t show total assets or total liabilities. Rather, its scope was limited only to bitcoin assets and bitcoin liabilities. Binance said it would begin releasing information about other crypto tokens in the coming weeks.

In an interview, Binance’s Mr. Hillmann said the Mazars letter covered all the bitcoin assets and bitcoin liabilities for the company’s Binance.com exchange—although the Mazars letter itself didn’t say this. Mr. Hillmann also said the Mazars letter didn’t cover any assets or liabilities at Binance’s U.S. operations. “This is the first step in what’s going to be a much longer process,” he said.

The Mazars partner who wrote the letter, Wiehann Olivier, declined to comment.

The few numbers in the report raised fresh questions about the ability of Binance to meet its financial obligations to customers.

On the last page of the Mazars letter was a brief section called “report details,” which consisted of the three numbers, each denominated in bitcoin. One number was labeled “customer liability report balance” and showed a balance of 597,602 bitcoins. Another number, labeled “asset balance report,” showed a balance of 582,486 bitcoins.

The upshot is that the total bitcoin liabilities cited in the Mazars letter were 3% greater than the bitcoin assets that were included within the scope of the report as of the reporting date, which was Nov. 22. In other words, Binance didn’t meet its 1:1 ratio of reserves to customer assets. In U.S. dollar terms, based on bitcoin’s price at the time, the liabilities would have been about $9.68 billion, while the assets would have been $9.43 billion, or about $245 million smaller, according to calculations by The Wall Street Journal.

The third number painted a different picture. That number was labeled “net liability balance (excluding in-scope assets lent to customers)” and showed a liability figure that had been adjusted downward by about 21,860 bitcoins to 575,742 bitcoins. Binance noted that it lets customers borrow crypto assets through loans or margin accounts.

On this adjusted basis, the Mazars report showed, the liabilities were 1% less than the assets, leading Mazars to state that “Binance was 101% collateralized” when using that methodology. At the same time, Mazars also wrote that “Binance was 97% collateralized” when using the larger liabilities number for the calculation.

Binance spokeswoman Jessica Jung said the difference of 21,860 bitcoins was “made up of BTC loans made to customers through the Binance loan program” and that “the collateral for said loans are not in BTC, but in other currencies.” If Binance hadn’t provided these bitcoin loans, she said, then “we would be 101% collateralized.” The reasons for the adjustment appear to be tied to the scope of the Mazars report, which focused only on bitcoin so it didn’t count collateral in other currencies.

Binance announced its new “proof of reserves system” in a Nov. 25 news release that referred to the numbers as “audit results.” Mr. Carmichael, the former PCAOB chief auditor, said: “It is a gross misrepresentation to call this an audit.”

During the interview, Mr. Hillmann also at times referred to the work performed by Mazars as an “audit.” Asked about the appropriateness of Binance’s use of the term “audit” in the news release and elsewhere, Mr. Hillmann said: “We’re talking about a review of our assets in custody.” He also said: “I would just say we’re parroting others’ descriptions of this as an independent audit.”

Other basic information about Binance is lacking. Mr. Hillmann said he couldn’t provide the name of Binance’s ultimate parent company because Binance over the past year and a half has been in the process of a broad corporate reorganization. He confirmed that Binance’s founder and chief executive, Changpeng Zhao, is the majority owner of the Binance.com exchange and Binance’s U.S. operations.

Hal Schroeder, a former Financial Accounting Standards Board member and investment manager who teaches accounting at Rutgers University, said the Mazars report means little without any information about the quality of Binance’s internal controls, such as its systems for keeping accurate books and records.

“We don’t know how good Binance’s systems are to liquidate assets to cover any margin loans,” he said. “And we know in the U.S., even with all the good systems, banks have occasionally been caught off-guard. In light of what we’ve seen in the Bahamas, I don’t want to conclude that all the systems are that good.” He was referring to FTX, which had its headquarters in Nassau.

What would happen if Binance had a shortfall? The company in a Nov. 9 news release pointed to an “emergency insurance fund” it said it established in 2018, called the “secure asset fund for users,” or SAFU for short. The company said, “We’ve topped the SAFU balance back to” $1 billion.

Binance said the fund consisted of a combination of bitcoin and two tokens created by the company—one called Binance USD and another called BNB. Binance hasn’t released financial statements for the fund showing its assets and liabilities, but it says on its website “the value of the fund will fluctuate based on the market.”

FT : Blackstone may slow launch of private equity fund after investor withdrawal

Blackstone may slow launch of private equity fund after investor withdrawals
Asset manager’s real estate and credit vehicles have been hit by wave of redemption requests

Blackstone has warned of the risk of delays to the launch of a new private equity fund designed for wealthy individuals, as it copes with heavy investor withdrawals at two other funds in real estate and credit aimed at a similar clientele.

The New York-based investment manager has been preparing to open a fund called the Blackstone Private Equity Strategies Fund, or BXPE, that would become its flagship strategy for rich individuals to participate in its private equity business. Blackstone has historically catered to institutional clients such as pension funds.

Blackstone has in recent days informed wealthy investors and their financial advisers that it may wait for fundraising conditions and financial markets to improve before launching BXPE, according to people familiar with the matter. Clients of Blackstone’s other “retail” products told the Financial Times they had expected the fund to be launched by early 2023.

The potential delay comes days after the group limited withdrawals from its $69bn Blackstone Real Estate Income Trust after a spate of redemption requests from its wealthy individual investors. In 2021 Blackstone launched a similar product designed for credit investments that has also received redemptions.

The curbs on withdrawals from the real estate fund have raised concerns over its future growth and hit Blackstone’s share price. Blackstone declined to comment.

Blackstone has also informed clients that it will not be raising new capital for vehicles known as Blackstone Total Alternative Solutions funds, which were designed nearly a decade ago when it initially sought to attract assets from wealthy individuals.

The BTAS funds have a 10-year life and are raised annually. Blackstone instead plans to direct interested clients to BXPE, designed to be a perpetual vehicle that does not return capital at the end of a fund’s life. BXPE clients would commit their capital when they initially invest instead of having it called on a deal by deal basis.

Since the years just after the financial crisis, Blackstone founder Stephen Schwarzman has been seeking ways to make the buyout business available to a broader swath of investors beyond the pensions, endowments and sovereign wealth funds that have traditionally been the firm’s clients.

BXPE is being set up to invest in corporate buyouts and equity-oriented strategies including late-stage venture investments, musical royalties and the purchase of stakes in other private equity firms or their funds.

The fund is poised to be Blackstone’s most complex product yet. Unlike Breit and Bcred, the sister credit fund, which both generate a significant portion of their returns from regular cash distributions to investors, BXPE will not pay dividends.

Investors will earn their returns from episodic and unpredictable asset sales, or the complex and often subjective mark-up or writedown of the quarterly net asset value of its holdings.

That structure may run into issues if investors begin to withdraw their money when markets fall or financial conditions become stressed, said Kevin Kneafsey, a senior investment strategist at Allspring Global Investments.

“The mechanism is going to run into a problem when people are taking money out and there needs to be a valuation of the underlying assets,” said Kneafsey, who noted that if Blackstone were to value the portfolio too low it could fuel redemptions. If the assets are valued too high, the investors redeeming from the fund at the inflated prices would “effectively be taking money from the people who aren’t redeeming”, he added.

“The valuations of BXPE’s assets may differ from liquidation values that could be realised in the event that BXPE were forced to sell assets,” the BXPE prospectus warns.

Since last spring investors have been withdrawing from Breit at an increasing rate, hitting limits Blackstone established to safeguard against the risk of being forced into a fire sale of illiquid real estate properties to meet redemptions.

Breit allows for 2 per cent of total assets to be redeemed by clients each month, with a maximum of 5 per cent allowed in a calendar quarter. This quarter, both Breit and Bcred have hit their redemption caps, though withdrawals have not been limited for the latter.

BXPE will allow investors to commit on a monthly basis, but only allow withdrawals each quarter up to a 5 per cent cap. BXPE will invest up to 80 cent of its assets in equity-oriented strategies and up to 20 per cent in debt securities, according to filings.

When it launches, BXPE will compete against products managed by competitors including Partners Group, Hamilton Lane and StepStone Group.

Executives at these funds conceded that Breit’s recent withdrawal limits and more volatility may slow new commitments from wealthy investors. But they expressed confidence in the market’s long-term prospects.

Bob Long, chief executive of StepStone Private Wealth, told the FT that equity-oriented funds may not suffer the same redemption risks as Breit because there are no obvious ways to get public market exposure to private equity strategies, unlike in real estate or credit where investors have access to scores of publicly listed vehicles.

FT : Solar power expected to surpass coal in 5 years, IEA says

Solar power expected to surpass coal in 5 years, IEA says
Renewable energy forecast to become largest source of electricity generation as soon as 2025


Solar power is undergoing a boom as the energy crisis drives a shift to renewable energy following the war in Ukraine and is expected to surpass coal power by 2027, the International Energy Agency has forecast.

Renewable energy overall will become the largest source of global electricity generation by early 2025, the IEA said, and the world will add twice as much renewable capacity from 2022 to 2027 as in the previous five years.


Not only were countries driving “the expansion of new renewables” to achieve climate goals, but energy security and the need to “diversify” renewables supply chains away from China had become increasingly important, IEA executive director Fatih Birol said in an interview.

“There is a strong competition between the largest economies of the world to have a pole position when it comes to the next chapter of the industry sector,” he said, whether in solar, wind power, batteries or electric vehicles.

The rush to replace the oil and gas that is no longer coming from Russia, and to build domestic renewables sectors, has led to a push for industry incentives and subsidies.

The US is forging ahead with its landmark climate package, the $369bn Inflation Reduction Act, which includes incentives for solar manufacturing through $10bn allocated for tax credits for clean energy overall and $27bn set aside in a “green bank” to support clean energy projects in communities.

Between 2022 and 2027, global renewable power capacity will increase by 2,400 gigawatts, an amount equal to China’s power capacity today, the IEA estimated in its latest annual report on renewable energy. This is 30 per cent higher than the IEA had forecast a year ago.

The US and India are expected to lead diversification of the solar manufacturing supply chain, the IEA said, reducing China’s dominance. Solar investment by the two countries is expected to reach almost $25bn between 2022 and 2027, a sevenfold increase from the past five years.

China, however, will remain a “dominant player”, the IEA said, with its market share estimated at around 75 per cent in 2027 compared with 90 per cent today.

The IEA warned in June that China’s hold on the solar panel supply chain could slow the global shift to cleaner energy. The country will account for almost half of newly added renewable power in the years to 2027, helped by policies included in China’s latest five-year plan, the agency said this week.

The solar boom is expected to pick up pace in the next two years. Iberdrola, a leading European renewable energy company, planned to “more than double our global solar capacity to 10.6 gigawatts by the end of 2025”, said Xabier Viteri Solaun, director of the sustainable energy business.


Solar projects can be developed and built more quickly than other renewable sources, he added, and the company is “seeing an increase in solar capacity being added to new and existing wind farms”.

Even faster growth can occur if European countries make it easier to obtain permits for new projects, improve incentives for rooftop solar installations and offer better terms in renewable energy auctions, the IEA noted.


Despite the encouraging overall trends, the European wind industry was suffering a “major challenge”, Birol said. The combination of Chinese and US competition and soaring raw material and supply costs is creating financial stress.

Birol also repeated warnings about the replacement of fossil fuels from Russia with new oil and gas projects. Supply should come from existing fields, he said, while steps should be taken to drive down demand.

“The invasion of Ukraine by Russia should not be a justification for large scale fossil fuel investments,” he said, as these would not only put “climate targets at risk” but end up as stranded assets.

However, even with the IEA’s “accelerated” scenario — where renewable capacity grows more quickly than in the main case due to policies and other measures that are not currently in the works — the world will fall short of what is needed to limit global warming.

Temperatures have already risen by at least 1.1C since the late 1800s. Under the Paris accord, almost 200 countries agreed to cut emissions enough to keep the rise to well below 2C, and ideally 1.5C.

Renewable energy growth “would significantly narrow the gap” to the pathway, bringing the total capacity to 2,950GW by 2027, the IEA said. But this would still leave a gap of 800GW to reach net zero greenhouse gas emissions by 2050.

>>> Weekend Papers Summary

Weekend Papers Summary

NEW YORK TIMES
-Senator Kyrsten Sinema’s announcement that she would become an independent left Democrats in her state, many of whom have long wanted to defeat her in a primary, facing a new political calculus.
-Past hostage exchanges have sparked criticism, but the response to Brittney Griner’s homecoming has been fueled by the politics of race, gender and sexual orientation.
-US officials say Moscow had been pushing for the release of a Russian assassin being held in Germany before finally agreeing to release Ms. Brittney Griner for Viktor Bout, a Russian arms dealer.
-Recruited for the Navy SEALs, many sailors wind up scraping paint. The high failure rate of the elite force’s selection course shunts hundreds of candidates into low-skilled jobs.
-Lina Khan, aiming to block Microsoft’s Activision deal, faces a challenge.
Ms. Khan, the chair of the Federal Trade Commission, has staked an ambitious trustbusting agenda on a case that may be difficult to win.
-The department of Justice had asked a federal judge to force a representative of Donald J. Trump to swear under oath that there are no more classified documents at any of his properties.
-Kari Lake has sued Arizona’s largest county, seeking to overturn her defeat. Ms. Lake, who fueled the false claims that the 2020 election had been stolen from Donald Trump, lost the Arizona governor’s race by 17,000 votes.
-The kind of critically praised dramas that often dominate the awards season are falling flat at the box office, failing to justify the cost to make them.
-New Yorkers are urged to wear masks indoors as covid and flu cases rise
An increase in Covid, flu and RSV cases prompted health officials on Friday to tell residents to wear masks indoors and in crowded outdoor settings.
-Israeli Prime Minister Benjamin Netanyahu’s right-wing bloc won Israel’s general election last month. But several issues have complicated the forming of his government.

THE FINANCIAL TIMES
-Russian president Vladimir Putin has threatened to cut oil production in response to the G7’s price cap on Moscow’s crude exports, a measure western countries hope will keep oil flowing while denting revenues for the Kremlin’s war in Ukraine.
-The US alleged on Friday that Russia is providing Iran with “an unprecedented level of military and technical support” as Moscow’s full-scale invasion of Ukraine draws the increasingly isolated countries closer together.
Citing US intelligence, National Security Council spokesperson John Kirby said Iran is set to receive stepped up military and technical support from Russia in exchange for supplying it with drones.
-Europe’s ban on crude oil imports from Russia, the world’s biggest oil exporter, is a genuine sanction, aiming to force Moscow to reroute supplies and halt the ugly optics of allies of war-torn Ukraine funneling petrodollars to President Vladimir Putin. But the G7’s price cap plan aims to take the edge off. When the EU announced it would impose sanctions on any tanker hauling Russian crude, even one sailing to Asia, there was concern in some western capitals that the measures would bring a crash in Russian exports and a rise in oil prices.
-The Federal Trade Commission’s legal challenge on Thursday to the software company’s $75B purchase of gaming company Activision Blizzard marks the first direct regulatory threat to the US software giant in more than two decades. With competition authorities in the UK and EU intensifying their own investigations, it has threatened to touch off a spate of actions that could unravel the gaming industry’s biggest deal.
-Arab states and China pledged deeper ties at a summit with president Xi Jinping on Friday, with Saudi Arabia saying it would balance its relationships with Beijing and the kingdom’s traditional partner, the US.
Xi wrapped up a three-day stay in the Saudi capital Riyadh, saying China would work more closely with the region and boost oil and gas trade, after a visit the US was watching closely.
-Brad Pitt’s Plan B Entertainment, the acclaimed Hollywood producer behind Moonlight and The Big Short, has been bought by France’s Mediawan in a rare transatlantic deal that values the US group at more than $300M in cash and shares.
-Venture capitalists are rushing to invest in artificial intelligence start-ups as growing hype around “generative AI” fills the void left by failing cryptocurrency and blockchain ventures.
-Kyrsten Sinema, a centrist senator from Arizona, is leaving the Democratic Party, in a blow to Joe Biden and his party just after a successful midterm election in which they added an extra seat to their majority in the upper chamber of Congress.
-Most in Peru’s business community were relieved to see President Pedro Castillo, who took office in July 2021, ousted from office, while many of Peru’s newspapers cheered his downfall. “Democracy holds,” read the headline of an editorial in El Comercio.
But for thousands demonstrating across the country, the former primary school teacher from rural Chota province is a victim of persecution by a corrupt Congress and elite.
Last month, polling by the Institute of Peruvian Studies found Castillo’s approval rating was 19% in Lima and 33% in urban areas nationwide but 45% in rural areas.
-China is under-reporting coronavirus cases and fatalities, obscuring the scale and severity of the health crisis just as the world’s most populous country enters its deadliest phase of the pandemic, analysts warn. Official statistics on Friday revealed no new deaths and only 16,363 locally transmitted coronavirus cases in China, less than half the peak caseload reported last month.

NY POST
-Influential U.S. soccer journalist Grant Wahl died in Qatar while covering the World Cup, his brother announced. He was 49. While covering Argentina’s quarterfinal win over the Netherlands on Friday, Wahl, who had run his own Substack after a long career at Sports Illustrated, collapsed at Lusail Iconic Stadium and was rushed to a nearby hospital. It’s unclear whether he died at the hospital or in transport.
His brother, Eric, believes foul play from the Qatari government may have been involved.
-Violent and disrespectful classroom behavior has led to a staggering 50 teachers and bus drivers to quit a Florida school district in the last two years. Brevard County School District, the state’s 10th-largest, held a heated meeting Thursday that offered an unvarnished and often disturbing glimpse into the state of its classrooms.
-A New York art gallery is featuring Hunter Biden’s artwork in a show that opened on Friday night. This is the latest triumph on the president’s son’s Redemption Tour. Hunter Biden is totally corrupt, sporadically depraved, and utterly untrustworthy. His “Laptop from Hell” exposed enough dirt to spur a deluge of federal charges. But instead of doing time, Hunter is being feted as if he were the resurrection of Vincent Van Gogh.
-Ex-Marine Paul Whelan wasn’t freed with back-in-the-USA basketball star Brittney Griner because Russia demanded the release of a killer spy who’s imprisoned for life in Germany.
Negotiations to swap Russian “Merchant of Death” arms dealer Viktor Bout for both Griner and Whelan broke down over Russian demands that convicted assassin Vadim Krasikov be included in the deal, according to multiple reports.
-Uber is suing Washingtoin DC over its plan to raise the minimum wage for ride-share drivers by nearly 24% per mile – claiming the drastic hikes will damage the entire ride-sharing industry, new court papers allege.
The city Taxi and Limousine Commission last month approved the first increase in metered fares since 2012 — including increases in per-mile and per-minute rates for Uber and Lyft Inc. drivers.