Private Wealth

Weekly Research Briefing: Prime Time

September 11, 2023

With the summer now ended, September begins the wind up through the year end for the financial markets. So, while companies are executing on their M&A and capital structure plans, portfolio managers and advisors are thinking about their calendar year performance numbers. Also under consideration is a Federal Reserve looking to shift gears, a calendar full of economic data and corporate CEO/CFOs hitting the busy September investor conferences. Now you know why September's stock market is often an active one.

The stage is set. A strong but slowing U.S. economy. Weakening inflation. Solid interest rates. Healthy credit markets. Elevated equity markets. And an IPO market that is primed and ready. The investor/strategist/economist crowd is all over the map with their forecast and projections. One day bad news is good and the next it reverses to bad news is bad. Now that market participants are back in their offices, it is time to find out where the bets will be placed and what direction the markets will move thru year end. Prime time baby!

This week is a big one. Wednesday = CPI & Apple iPhone event. Thursday = PPI, Retail Sales, Industrial Production, NY Empire Fed index, the ECB meeting and the UAW contract deadline. Friday = Univ. of Michigan Consumer Sentiment details and possibly a first trade in the largest IPO of the year, Arm Holdings. Next week won't slow down as it is a FOMC meeting week. Enjoy all the activity and welcome back to the office?

The Fed whisperer hears something over the weekend...

When Nick Timiraos writes, you read. It is looking more and more likely that we have seen the last hike.

Fed officials raised rates at 11 of their past 12 meetings, most recently in July, to a range between 5.25% and 5.5%, a 22-year high. They appear to be in broad agreement to hold interest rates there at their Sept. 19-20 meeting, giving them more time to see how the economy is responding to increases.

The bigger debate is what would prompt them to raise rates again in November or December. In June, most officials projected they would need to raise rates by another quarter point this year.

Projections to be released at the end of the September meeting will likely show that an additional increase is still on the table. But whether they deliver such an increase is an open question.

For the past year, officials have placed the burden on evidence of a slowing economy to justify pausing rate increases. As inflation cools, the burden has shifted toward evidence of an accelerating economy to justify higher rates.

This is apparent from how Fed Chair Jerome Powell recently described the risk that firmer-than-expected economic activity would slow recent progress on inflation. Last month, he twice used the word “could” instead of the more muscular “would” to describe whether the Fed would tighten again. Evidence of stronger growth “could put further progress at risk and could warrant further tightening of monetary policy,” he said in Jackson Hole, Wyo.


The U.S. economy looks healthy according to last week’s better than expected ISM Services index...

Business activity, New Orders and Employment all showed good gains.


And the job market remains strong as weekly jobless claims fell to a six-month low of 216k last week...

Companies continue to retain and hire workers from an expanding pool of available workers. Good for the consumer economy, good for consumer credit and even good for wage inflation.


Both Mastercard and Visa have good things to say about recent consumer spending trends...

"I would say I am very surprised by the consumer resilience. We continue to see very strong spend across the board. The consumer has been outperforming expectations. Obviously, our business is a good indicator of what the consumer is doing. We have more data than probably many others. So what we are seeing is a resilient consumer all throughout. We told you that in the second quarter conference call. And as we look at data running up until the end of August, we continued to see the same trends. So resilient consumer, that’s good." - Mastercard Co-President Ling Hai

Visa CEO when asked about the state of the consumer: "I think you nailed it when you said stable. Stability, resiliency, in the US and around the world..." Visa Aug US payment volume +7%, credit +6% y/y; Global processed transactions +10% y/y

The Transcript

Ditto for UBER...

UBER CEO pointed to the US and Global consumer remaining strong and did not highlight any sign of broad based weakness across Mobility or Delivery. UBER is gaining category position in 8 of its top 10 Mobility markets and 9 out of its 10 Delivery markets.

UBER at Goldman Sachs Conference

Alex Pelle, the U.S. economist at Mizuho Securities, wants you to worry less about the U.S. consumer...

The consumer balance sheet is exceptionally healthy. For what it is worth, our estimate of excess accumulated PCE savings is between $400 billion to $1 trillion, relative to the San Francisco Fed’s conservative estimate of around $100 billion. Relative to disposable income, net wealth is just off its all-time highs at 860% — with equities and real estate assets just off the highs at 400% and cash & cash-like holdings just off the highs at around 90%. Household liabilities are around their 20-year lows relative to income at around 100% — with credit card balances still around 30-year lows at around 5% to 6% of disposable income... Despite the rise in interest rates, debt service costs are still near all-time low due to the extraordinary situation in the mortgage space... Although non-mortgage interest paid has shot up near 20-year highs at over 2.5% of disposable income, mortgage interest paid is just about the lowest on record at just 2.7% of income.


One of the top retail stores in the U.S., Lululemon, is also not worried about current U.S. consumer trends...

[LULU] Exec: Sees North American business accelerating relative to Q2; Q3 off to a solid start - earnings call comments

  • Have seen a noticeable uptick in travel and tourism within Asia Pacific, which is also having a positive impact on business
  • Guests are responding well to Back-to-School and early Fall product innovations
  • At the end of Q3 we expect inventory to be up in the high single to low double-digits y/y
  • See really strong, healthy growth across each of the 3 months of the quarter in China


No doubt helping U.S. consumer psychology is the recent surge in their net worth's due to home equity and stock prices...

The Daily Shot

The recent PCE data continued to emphasize core price deflation giving the Fed more room to breathe on interest rates...

Today’s report also provided an encouraging signal on inflation, with headline and core PCE rising 0.2% on the month in July. While a 2.5% jump in financial services led to a solid 0.5% monthly gain in “supercore” inflation, market-based PCE price measures were much softer. Overall, we think the data suggest an inflation trend that is returning closer to the FOMC’s target.

J.P. Morgan

With the CPI and PPI dropping this week, it might be important to review this paper showing that recent price deflation has been caused by the supply side, not the demand side...

Last week Mike Konczal of the Roosevelt Institute published an article arguing that the majority of the disinflation that we've seen is a result of expanding supply and not diminished demand.

He writes:

The majority of disinflation has been driven by expanding supply rather than decreasing demand. Decomposing price and quantity changes for 123 core PCE items, I find 73 percent of all core items, and 66 percent of services, see prices falling with quantities increasing—a sign of expanding supply.

There's quite a few interesting aspects of this paper. First again, the headline point is that since December 2022 — across both goods and services — the majority of items have seen both a decrease in price and an increase in volume.

As you can see in this chart, there are very few categories in the bottom left quadrant, where price declines have coincided with a reduction in demand. Where we see improvement in price is much more in areas where the quantity has gone up.


10-yr UST real yields are near the 2% level. How much more will the market allow them to climb?

@lisaabramowicz1: US 10-year real yields are bumping up against the highest levels since 2009:

Financial assets have butchered their recession probabilities from October...

From high-yield credit to equities, the odds of an economic downturn priced into financial assets have fallen to the lowest since April 2022, according to JPMorgan Chase & Co. It’s a big reversal from the doom and gloom of the past year, when a recession was effectively seen as a done deal...

Equity, credit and rate markets together are assigning 16% probability to a US recession over the next six to 12 months, down from more than 50% in October, a JPMorgan trading model reveals.

The S&P 500 is assigning just 22% odds to recession, down from 98% in October while the market for junk bonds sees a 9% chance. The bank calculates the metrics by comparing the pre-recession peaks of various classes and their troughs during the economic contraction.


Goldman Sachs took their recession probability down to 15% last week...

@NickTimiraos: Goldman Sachs chief economist Jan Hatzius:

"We have further reduced our 12-month US recession probability back to 15%, from 20%" in July

"This change reflects continued encouraging inflation news, a favorable real income outlook, and the decline in the jobs-workers gap."

And this weekend, BofA Global makes it official and moves into the recovery phase...

@carlquintanilla: B of A: “It’s official: we’re in a Recovery. Admittedly, the last few years have not felt well-defined from a “cycle” perspective .. But our US Regime Indicator .. improved for its 2nd consecutive month in August... Five inputs improved (Inflation, GDP forecast, 10-yr Treasury yield, ISM PMI, and Capacity Utilization) ..”

Does Major League Baseball impact economic forecasting...

Guess which Federal Reserve district is in 1st place and which is in last place.

The Daily Shot

Some good stats out of earnings last week on how AI and EV pushes semiconductor growth...

"I think everybody reads about chips in every industry, transforming every market, 7,000 chips in an electric vehicle. If you look at an AI server versus an industry-standard server enterprise or cloud, you had 8x the amount of foundry logic chips in that server and about 8x DRAM. So those markets, and we're still in the early innings of that transition to those AI servers." - Applied Materials CEO Gary Dickerson

"I know a lot of people talk about, well, content growth, content growth, content growth. But in reality, take, for example, our content. We have $50 worth of content in an internal combustion engine, $750 in EV. This is on the drivetrain side. So mathematically, you can have 10 less cars in internal combustion and one car of EV and for us to be flat, grow slightly. Just mathematically, that's the content growth story for us specifically and that applies to some of our peers." - ON Semiconductor Corporation CEO Hassane El-Khoury

The Transcript

If you like companies that make opportunistic stock buybacks...

Restoration Hardware spent $1.2 billion repurchasing 17% of the company in the Q2 that just ended in July. That is big. This management team thinks like owners and know where they are headed. They think that buying stock in the low $300/share is a better idea than making 4-5% on the cash sitting on their balance sheet.


U.S. equity prices continue to be driven by the technology mega-caps...

Good if you own them, but difficult to be overweight them due to concentration ceilings.

Goldman Sachs

Helping the S&P 500 has been the improving rolling forward earnings estimate which is nearing an all-time high...


But by most valuation metrics, the S&P 500 is looking the opposite of cheap...

Goldman Sachs

With the public market valuation back near highs, it is time to crack open the IPO floodgates...

First up, the largest IPO in two years. Arm Holdings is so oversubscribed, that they are closing the books early to launch the deal. Expect pricing and first trading this week.

SoftBank’s $50bn flotation of Arm is more than five times oversubscribed, according to bankers pitching investors on the biggest initial public offering in nearly two years, as the UK-based chip designer forecast accelerating revenue growth boosted by the artificial intelligence boom.

Despite investor concerns about a drop in profits in Arm’s most recent quarter amid a smartphone industry slowdown and the company’s exposure to multiple risks in China, advisers working on the Nasdaq listing said there was “little price sensitivity among investors”, many of whom would be forced to buy because of Arm’s inclusion in indices.

Brokers from the 28-strong army of banks selling Arm’s IPO gathered more than 100 of the world’s biggest fund managers at a New York hotel this week to convince them that this was their chance to be big winners in AI.

“AI is going to be everywhere and it all runs on Arm,” Rene Haas, the SoftBank-owned chip designer’s chief executive, told prospective investors in a pitch video seen by the Financial Times.

Arm executives projected revenue growth would accelerate after a flat year in 2023, as it increased the royalties it is paid by smartphone makers, said people who attended the roadshow. Arm indicated it could achieve revenue growth of at least 20 per cent in the financial year ending March 2025, ahead of analysts’ expectations, these people said...

Earlier this week, Arm set an initial price range of $47-$51 per share, raising up to $4.9bn for its parent SoftBank and valuing the Cambridge-based company at up to $52bn.

Financial Times

Next IPO on deck is the grocery-delivery unicorn, Instacart...

While the IPO valuation will be lower than its last funding round, the fact that there is going to be a public liquidity event should be a positive for all venture capital investors.

Instacart is targeting a valuation of roughly $8.6 billion to $9.3 billion in its imminent IPO, a fraction of what the grocery-delivery company was previously worth, in the latest sign of diminished investor enthusiasm for private growth companies...

The expected valuation, on a fully diluted basis, is a far cry from the roughly $39 billion Instacart garnered in a fundraising round in 2021, the year it started laying the groundwork for a public listing. Since then, valuations of high-growth startups have fallen as interest rates rose, making riskier investments less attractive...

Founded in 2012, Instacart sends couriers to grocery stores to pick out and deliver orders to customers’ homes. The company has raised more than $2 billion in venture-capital funding over the years and has long said it expected to go public.

The company revealed its financials last month, saying it generated $242 million in profit for the first six months of the year compared with a $74 million net loss a year earlier.


And then an IPO for the pickleball, tennis and skiing crowd...

  • Owner of Salomon, Arc’teryx plans listing by early next year
  • Anta-led group bought Amer Sports for $5.2 billion in 2019

Sports, the maker of Wilson tennis rackets and Salomon ski boots, has filed confidentially for a US initial public offering that could value the group at as much as $10 billion, people familiar with the matter said.

The company is working with Bank of America Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley on preparations for the share sale, said the people. Amer Sports plans to list by early next year, the people said, asking not to be identified discussing information that’s private.

Amer Sports is targeting an IPO of more than $1 billion and could end up seeking as much as $3 billion depending on market conditions, some of the people said. The company, which is backed by China’s largest athletic-apparel producer Anta Sports Products Ltd., also owns brands including Louisville Slugger baseball bats, Arc’teryx outdoor gear and Atomic winter equipment.


Even Japanese IPO's are getting in on the action...

Private equity firm KKR Group plans to list Kokusai Electric Corp.’s shares in Tokyo as early as October at a valuation north of ¥400 billion ($2.7 billion), a person familiar with the matter said.

KKR will float a portion of the shares it owns in the former Hitachi Ltd. operations on the Tokyo Stock Exchange, the person said, asking not to be named as the talks are not public. While it’s not yet clear how much equity will be sold to investors, the initial public offering would raise roughly $540 million if the company sold a 20% stake.


Expect the fall IPO wave to spike the below YTD 2023 bar...

@dailychartbook: IPOs: "Issuance YTD remains low ($9bn YTD), with dry powder on the sidelines eagerly awaiting a return of deals." - Goldman Sachs

Rising equities, lifting IPOs and jumping M&A activity as J.M. Smucker pays up for Hostess Brands...

Sounds like a bidding war + big cost synergies drove the price higher. Now what about the potential for a Twinkie/Uncrustable crossover?

But the announced enterprise value amounts to a very high multiple of 17.2 times expected, adjusted earnings before interest, taxes, depreciation and amortization this year. By contrast, snacking companies Mondelez International, which owns the Oreo and Cadbury brands, and PepsiCo, which owns Frito-Lay, trade at 16.4 times and 16.8 times, respectively, on a similar basis, according to FactSet. Those are both huge, global businesses with very strong long-term track records. Hostess has posted good sales results recently, but it has also been through two bankruptcies.

The high price might be the result of a bidding war: The Wall Street Journal reported that there was heated competition with General Mills for the deal. Smucker says the multiple would fall to 13.2 times after expected synergies, but that is still rather high. Smucker itself trades at an enterprise value to Ebitda multiple of just 11 times.


Also a $19b paper company merger is in the works...

WestRock is nearing a deal to merge with Europe’s Smurfit Kappa Group in a move that would create a global paper and packaging powerhouse valued at some $20 billion, according to people familiar with the matter.

After The Wall Street Journal published a report on the move, Smurfit Kappa confirmed that it is in talks with WestRock over a potential merger.

Smurfit Kappa said the discussions involve the creation of a new company—Smurfit WestRock—in a combination with a WestRock subsidiary. WestRock shareholders would receive shares in the combined group, Smurfit Kappa said. The company didn’t provide any financial details about the potential merger.

“Discussions between the parties remain ongoing regarding the potential combination. Smurfit Kappa and WestRock are engaged in a mutual due diligence process,” Smurfit Kappa said.


And in North America, Enbridge acquires three U.S. based utilities to create largest natural gas utility franchise for $14B in cash and debt...

Enbridge has entered into definitive agreements with Dominion Energy, Inc. to acquire The East Ohio Gas Company ("EOG"), Questar Gas Company ("Questar Gas"), and its related Wexpro companies ("Wexpro" and collectively with Questar Gas, "Questar"), and Public Service Company of North Carolina, Incorporated ("PSNC") (collectively the "Gas utilities") for an aggregate purchase price of US$14.0 billion (CDN$19 billion1), comprised of US$9.4 billion of cash consideration and US$4.6 billion of assumed debt (the "Acquisitions").

  • Creates North America's largest natural gas utility platform delivering ~9.3 bcf/d to ~7 million customers across multiple regulatory jurisdictions.
  • Historically attractive acquisition multiples, based on 2024 estimate of ~1.3x Enterprise Value-to-Rate Base and 2023 estimate of ~16.5x Price-to-Earnings.
  • Compounded annual growth rate of approximately 8% on the consolidated rate base is expected to deliver long-term value for Enbridge shareholders.


Also in the Americas, the fourth largest cement company is being created...

[SUM] To combine with Argos in cash and stock deal worth $3.2B

  • Entered into a definitive agreement with Cementos Argos S.A under which Summit will combine with Argos North America Corp, the US operations of Cementos Argos in a cash and stock transaction valued at $3.2B.
  • The combination of Summit and Argos USA will create the fourth-largest cement platform in the United States and accelerates Summit's 'Elevate Summit' strategy, enhancing the company's materials-led approach and positioning it for even greater success with a national footprint and significantly improved scale.
  • The transaction reflects a pre-synergized enterprise value to EBITDA multiple of approximately 10x based on full year 2023 estimated EBITDA for Argos USA or below 8x on a post-synergies basis.


And after ten years of a flat stock price, NextGen elects to become a private company...

[NXGN] To be acquired by Thoma Bravo at $23.95/shr cash - Under the terms of the agreement, NextGen Healthcare shareholders will receive $23.95 per share in cash. The per share purchase price represents a 46.4% premium to the Company’s unaffected closing stock price on August 22 (the last trading day prior to published market speculation regarding a potential transaction involving the Company) and a 39.2% premium to the 30-day volume-weighted average price for the period ending September 1.

NextGen Healthcare, Inc. provides software and services for ambulatory healthcare services in the United States.


A glance at the high yield credit markets shows that the markets are in a good mood...

This will further fuel the M&A markets in the last third of 2023.

Tight credit spreads also helped price one of the largest debt deals of 2023 last week...

Rogers Communications Inc. priced the largest corporate bond issuance so far this year as the telecom company refinances debt after it completed the acquisition of a smaller rival.

The Toronto-based wireless company sold C$3 billion ($2.2 billion) of investment-grade rated notes in four parts, according to data compiled by Bloomberg. The longest portion of the offering, a 10-year tranche, was priced at the tight end of a range between 232 basis points and 235 basis points over the Canadian government curve, said the person, who asked not to be identified as the details are private.


And corporation's concerns regarding bank lending have eased in this quarter's conference calls...

@MikeZaccardi: Q2 earnings season 'bank lending' discussions.. Concerns About Bank Credit Have Normalized

BlackRock sees improved private equity deal flow for the second half of 2023...

Overall, we anticipate dealflow in H2 to be better. If you look at previous downturns, the outperformance of private equity compared to public equity has increased during times of volatility and crisis. So, the opportunity set is maybe smaller than in previous years, but also more interesting. In terms of what is driving dealflow, firstly, the financing markets are opening up. Leverage is still expensive, but we are seeing it beginning to open up definitively in the US and a bit in Europe. Second, whenever you have volatility, it can take six to nine months for buyers and sellers to converge on prices and close the valuation gap, which we saw emerge at the tail end of 2022. I think it has dawned on people that increased interest rates and inflation are here to stay. So, the valuation mismatch has started to close. The upside is that more deals are not only being started but also being closed.

PE Hub

One new regulatory reason for public companies to go private...

The new public company share repurchase rules begin in less than 20 days for most companies. They will be an extra burden for those companies who are active buyers of their common stock.


U.S. small capitalization public companies have significantly underperformed U.S. large caps over the last 5 years. U.S. private companies did much better...

The MSCI USA Small Cap Index has gained less than half of the S&P 500 Index and less than one-third of the Nasdaq 100 Index. Equally dismal have been the US SMID cap indexes stamping out a nearly identical return to small caps. Given that the majority of companies owned in private equity portfolios are of a similar $1-$5 billion market cap size, that got me wondering how PE funds focused on U.S. companies have fared versus their public company peers.

As the data below shows, all three private company fund categories (Buyout, Growth Equity & Venture Capital), outperformed the MSCI USA Small Cap Index. Buyout funds had the steadiest performance over the five years whereas Venture Capital returns have been the most affected by the rise in interest rates and fall in long duration public equities. Growth Equity fund valuations have provided the best returns to private equity (PE) investors, more than doubling the public market index.

Some might argue that PE investing is just a leveraged play on small cap stock investing and while most buyout fund investing does involve much leverage at the time of initial purchase, leverage used in the venture cap space is significantly less. But if falling rates benefited leveraged balance sheet valuations for the first half of this chart, they may become a headwind for the second half of it. In addition, the economy witnessed both booms and busts through these five years that affect all companies' operations and valuations.

Typically, investors allocate toward small cap public companies and funds thinking that they will be rewarded with better growth and more opportunity to outperform the indexes by investing in less Wall Street covered companies. But as this chart shows, historically if you outperformed your Small Cap benchmark, investing in private companies was a far superior choice.

Past performance is not an indicator of future results.
See definitions below.1

No matter what future economic and inflation scenario you choose, the investment choice remains the same...

Private equity bested public equity benchmarks in nearly every economic regime. In an average GDP growth and low inflation environment, the S&P 500 beats private equity by a nominal amount. But in any other growth and inflation environments, private equity ownership wins. So where is your outlook?

Source: Hamilton Lane Data, Bloomberg (July 2023)

Returns modeled using annualized 1 year returns from 1990 to 2022 on a quarterly basis.
Past performance is not an indicator of future results.

Hamilton Lane

I couldn't imagine my property insurance premium rising 25% for a 85% decline in coverage...

But even for the moderately wealthy, insurance costs are beginning to verge on unaffordable: The cost of so-called high-value insurance, loosely defined as policies covering homes worth more than $1 million, is outpacing the rise in premiums for more modestly valued homes by anywhere from two to 70-fold.

“I’ve done this 32 years and I’ve never seen rates rise the way it’s happening today,” said Cindy Zobian, managing director at insurance broker Alliant Private Client. “If you’re getting a rate increase under 20% it’s almost a gift.”

Increases of up to 800% are closer to the norm, she said, and it’s not uncommon for those triple-digit rate hikes to be accompanied by lowered coverage limits.

A home in Florida that was insured for $60 million, excluding contents, with full wind coverage carried a premium of about $600,000 last year. This year the insurer dropped wind coverage. After negotiating and finding a separate carrier for a wind policy, the homeowner wound up agreeing to pay $750,000 in premiums for $50 million less coverage. “That was a considered a win,” said Zobian.

In Florida, the problem boils down to this: Too many people have moved into areas that might be at danger from rising sea levels and more frequent and intense tropical storms.


Looking at it another way, today might be the lowest insurance prices ever in Florida's future...

According to NOAA's 129-year database, this is the hottest year on record for Florida. The same for Louisiana and Alabama. With a nationwide count of 23 weather disasters costing over $1 billion, it is difficult seeing U.S. property insurance prices headed lower.

Future high demand graduates will include architects, engineers and real estate majors who learn how to repurpose commercial real estate...

Mayors and city planners will need to ease their zoning rules as they choose to become a city of the future or an apocalyptic looking west Texan ghost town.

More than three years after the coronavirus pandemic began, workers have not fully returned to once-bustling downtowns across the country. Many government officials worry that they never will, sounding alarms about how such a reality will drag down tax assessments and threaten the revenue needed to fund public services.

Cities big and small, including nearby D.C. and Alexandria, Va., have sought to address this looming crisis by trying to turn vacant office towers into apartment buildings. It’s a buzzy idea that has drawn broad support as a way to reinvent downtowns while tackling a housing crunch, too.

But it may be easier said than done, with many newer office towers lacking the sunlight or plumbing to easily carve the space into apartments.

If that’s the case, then Chon’s Balian Springs spa — and a handful of projects like it sprouting up around the country — offers one alternative that is increasingly being explored by real estate brokers and local officials: Why not turn an empty office into, well, basically anything else?

“I don’t see a silver bullet or even a series of bullets that can solve the office-vacancy crisis,” said Dror Poleg, an economic historian and the author of “Rethinking Real Estate.” Yet, he added, “now that people are working in more places and moving around more throughout the day, suddenly there is low-hanging fruit that will become relevant to fill space.”

Some possibilities are already being tested. What was once the tallest building in Portland, Ore., is being marketed as a potential home for data centers to power cloud computing. Inside a 22-story Chicago office tower across from City Hall, there could soon be a vertical farm growing tomatoes and herbs.

And closer to Chon’s Northern Virginia spa, officials in Arlington County are trying to make way for a range of potential new tenants — from breweries and podcasting studios to doggy day cares — by loosening rules that limit what can go inside empty offices without the need for a government permit.

Washington Post

Sign me up for a Rolling Stones show from the 60's and a Smashing Pumpkins show from the 90's...

This is pretty incredible and has to be in the back of every legendary musician alive today.

Abba is making more than $2 million a week touring as avatars

Seven times a week, the Swedish supergroup ABBA performs in front of a sold-out crowd in east London. None of the band’s four members are on stage.

Audiences at ABBA Voyage watch three-dimensional renderings of Agnetha Fältskog, Björn Ulvaeus, Benny Andersson, and Anni-Frid Lyngstad perform hits like Chiquitita and Fernando backed by a 10-piece band. They look 28, they sound 28 and they move … like they are a little older than 28.

The ABBA Arena, which seats about 3,000 people, was built specifically for this show, featuring LED screens that make the venue seem deeper and 291 speakers to deliver surround sound. All told, ABBA Voyage is one of the most expensive productions in music history, with a price tag of £140 million (about $175 million) before the first show opened in May 2022.

That investment is starting to look like one of the savvier bets in modern music history. In 15 months, the show has generated more than $150 million in sales and sold more than 1.5 million tickets, surpassing all but a handful of the biggest live shows last year. The venue is 99% full every night and, with an average ticket price of about £85 ($105), the show is making more than $2 million a week.


Learn more about the Hamilton Lane Strategies

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Buyout – Any PM fund that generally takes control position by buying a company.

Growth Equity - Any PM fund that focuses on providing growth capital through an equity investment.

Venture Capital – Venture Capital incudes any PM fund focused on financing startups, early-stage, late stage, and emerging companies or a combination of multiple investment stages of startups.

MSCI USA Small Cap Index – The MSCI USA Small Cap Index is designed to measure the performance of the small cap segment of the U.S. equity market.

Private Equity – A broad term used to describe any fund that offers equity capital to private companies.

S&P 500 Index – The S&P 500 Index tracks 500 largest companies based on market capitalization of companies listed on NYSE or NASDAQ.

Nasdaq 100 Index – The Nasdaq 100 Index is a stock index of the 100 largest companies by modified market capitalization trading on Nasdaq exchanges.


The information presented here is for informational purposes only, and this document is not to be construed as an offer to sell, or the solicitation of an offer to buy, securities. Some investments are not suitable for all investors, and there can be no assurance that any investment strategy will be successful. The hyperlinks included in this message provide direct access to other Internet resources, including Web sites. While we believe this information to be from reliable sources, Hamilton Lane is not responsible for the accuracy or content of information contained in these sites. Although we make every effort to ensure these links are accurate, up to date and relevant, we cannot take responsibility for pages maintained by external providers. The views expressed by these external providers on their own Web pages or on external sites they link to are not necessarily those of Hamilton Lane.

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