Thinking About the Restart...Economic Relief for Small Businesses...Virtual IPO Roadshows in Asia

[Goldman Sachs]( [BRIEFINGS] April 14, 2020 Update From Goldman Sachs Research: Thinking About the Restart As the coronacrisis continues to weigh on the growth outlook, attention has turned to how the global economy will restart. Optimists think the apparent peaking of new active cases globally will allow economies to reopen soon, while pessimists counter that continued social distancing will be necessary to hold off a large second wave of infections. Even if “business as usual” is off the table until a vaccine is ready, a sharp increase in testing and changes to business practices could bring back part of the lost output in sectors like manufacturing and construction, which account for about half the total hit to GDP in April by Goldman Sachs Research estimates. If policymakers manage to thread the needle between continued virus control and a gradual reopening of the economy, the level of GDP should begin to move higher in the months ahead. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=GIR%20Update&body=) COVID-19’s Impact on US Small Businesses The economic shutdown due to the coronavirus pandemic is creating unprecedented challenges for small businesses. “I think if you talk to any small business owner, we all have the same pain point, and that’s cash flow, full stop,” said Erin Andrews, owner of Indi Chocolate, a Seattle-based chocolate factory. Andrews spoke during a recent episode of our Exchanges at Goldman Sachs [podcast]( in which we talked with graduates of Goldman Sachs’ 10,000 Small Businesses program. "Everybody is pretty shaken up,” said Matt Jozwiak of Rethink Food, a New York City-based nonprofit. “The people who drive the trucks, the people who cook the food, our partners, and also my family and my fiancée." But on a more positive note, Jozwiak said he’s encouraged by the increased sense of community, a thought echoed by Andrews. "We’ve had so many people come out to help, including our customers who have bought online,” Andrews said. “That really helps us keep our doors open, and I’m extremely thankful for that.” Also in this episode, Margaret Anadu, head of Goldman Sachs’ Urban Investment Group, explained the firm’s recent announcement to commit $500 million in capital for emergency loans to small businesses, which raised the firm’s total commitment to COVID-19 relief efforts to $550 million. In a recent episode of Talks at GS, Goldman Sachs Chairman and CEO David Solomon spoke with Jovita Carranza, administrator of the U.S. Small Business Administration about the federal government’s most recent relief efforts for small businesses (listen [here](. Carranza pointed to federal relief offered through the Paycheck Protection Program (PPP), a loan program to help small businesses keep workers on their payrolls. “We say ‘small’ business, but you are such a vitality in this economy, you represent half of the GDP,” she said to small business owners who dialed into the call. “That's why we are so dedicated and focused on making this PPP a success.” Learn more about policy details and other programs in the US and UK on the [Goldman Sachs Small Business Resource Center](. [Listen to podcast]( [Listen to Talks at GS]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=COVID-19%E2%80%99s%20Impact%20on%20US%20Small%20Businesses&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpodcasts%2Fepisodes%2F04-08-2020-margaret-anadu.html) The Daily Check-In With Goldman Sachs In our latest Daily Check-In videos—which highlight insights from Goldman Sachs experts around the world, recorded from wherever they are working—we heard from Goldman Sachs Research’s [Prachi Mishra]( on India’s nationwide shutdown and the impact to economic growth, [Michele Della Vigna]( on the challenges facing the world’s oil producers and [Jari Stehn]( on the measures being taken to address Europe’s slowdown in growth. [Kara Mangone]( Chief Operating Officer of Goldman Sachs’ Sustainable Finance Group, discussed how the global pandemic is impacting the way corporates and investors approach ESG, while Goldman Sachs Asset Management’s [Kathleen Hughes]( explained the factors driving volatility in money market funds. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fthe-daily-check-in%2Findex.html) Briefly…on How COVID-19 is Reshaping the Corporate IPO in Asia The face to-face meetings between investors and executives, often requiring week-long tours of major cities across the globe, are emblematic of the IPO process. But such in-person presentations may soon be giving way to virtual IPO roadshows in a travel-restricted landscape. We spoke with Goldman Sachs’ Bill Chu, Sam Thong, James Wang and Darius Naraghi of the Investment Banking team in Hong Kong about the trends that are reshaping the IPO process in Asia. Last month, you helped take China biotech firm InnoCare Pharma public during a time when much of the country was in lockdown. How did you manage that process? Sam Thong: It was a time when everyone—clients, investors and ourselves—were adapting to a completely new situation. Given our prior work with the company, the management team was open to meeting prospective investors virtually, through phone calls and videoconferences. In a typical Hong Kong IPO roadshow, the management team would be traveling to the major cities in Asia, Europe and the US to meet with potential investors. In the virtual format, we were able to schedule back-to-back meetings with investors, starting with Asia in the morning, moving to Europe mid-day and ending with East Coast investors at night. We used the time zones to our advantage. In doing so, we achieved a number of efficiencies. For example, we compressed the time of the road show itself from seven working days to 3.5 days. For us, that was critical given the market volatility. We wanted to limit the number of trading days that we would have to be in the market. How comfortable were companies and investors with the virtual format? Bill Chu: In early February, there was a lot of uncertainty, and many investors and clients wanted to limit their travel. As a result, they were very comfortable with the new format. In fact, we have found that the level of engagement, client calls and activity has picked up. From my perspective, the efficiency gains mean that we’re spending less time traveling and more time speaking with clients about market dynamics and their specific needs. For some of our clients, those conversations have focused on their liquidity needs, which has resulted in accelerated equity sales or increasing the size of their equity issuance. We’ve even kicked off some IPOs in the midst of the lockdown through video conferences. How is the IPO process likely to change as a result of COVID-19? James Wang: This might be the new norm for the new world. While the virtual IPO roadshow format worked well for InnoCare—which I would describe as a medium-sized transaction for Hong Kong IPOs—we have yet to see if a virtual format works for larger deals. Logistically, we set up multiple contingency plans—having backup phone systems in different rooms, for example—to ensure the investor meetings went as smoothly as possible. We considered every aspect of the deal structure to de-risk as much as possible, such as locking in cornerstone investors as early as possible. How would you describe the broader outlook for deal activity in Asia at this time? James Wang: If the market continues to be volatile, issuance volume is likely to be down compared with year-ago levels. However, since much of Asia has been in lockdown for longer than other parts of the world, we are seeing that companies are adjusting to the new normal and are returning to the markets. This is a type of market that is demand driven—that is, if issuers are flexible on price, they’re willing to push ahead with their plans to raise capital. Darius Naraghi: Investors are in a similar situation to the rest of us. The interest from buyside investors hasn’t dried up just because they’re working from home. We spent a lot of time working with our colleagues across divisions, legal, compliance and engineering, to figure out how to conduct due diligence on transactions in a context where people are unable to travel. The level of trust between the banks and investors is more critical in the virtual world than in the physical world. You have to have trust in the banks and the management team, whom you may have never met. SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20How%20COVID-19%20is%20Reshaping%20the%20Corporate%20IPO%20in%20Asia&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpages%2Ffrom_briefings_14-Apr-2020.html) Goldman Sachs Media Highlights Providence Business News - April 13 [R.I., Goldman Sachs announce $10M in paycheck relief loans to small businesses and nonprofits]( Fortune - April 10 [During coronavirus, CEOs David Solomon and Brian Moynihan stand alone on Wall Street—literally]( CBS - April 9 [Goldman Sachs pledges $550 million to small businesses amid pandemic]( (7:22) CNBC - April 9 [Goldman Sachs expects Japan to see its ‘deepest negative annual growth since 1995’]( (2:33) Bloomberg - April 8 [Goldman’s Katie Koch Says It’s Too Early to Give the ‘All Clear’ for Stocks]( (2:27) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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