Capital Calls: Gas Boost – Breakingviews
– Gas and taxes
Inflate it. Gasoline prices are now nearly $6 a gallon in California, 80% higher than a year ago. Governor Gavin Newsom is proposing to give residents $400 per car, with a limit of two. He’s not alone, as lawmakers in several states are considering waiving fuel taxes or sending out gas stimulus checks. They fill the wrong pockets.
According to the Energy Information Administration, the wealthiest quintile of the population spends three times as much on fuel as the poorest 20%. Poorer households spend more of their income on gas and are therefore more likely to reduce their spending on basic necessities. Writing checks is therefore slightly fairer than cutting taxes, which favors those who consume more gas.
But in general, these subsidies reward those who consume several gases, which reduces the relative attractiveness of electric cars, public transport or the bicycle. The best long-term solution to high gas prices would be an overhaul of the transportation system. Spending state money to support the use of the combustion engine defeats this purpose. (By Robert Cyran)
Sign out. After winning an Indian court battle to enforce its right to call a shareholder vote at broadcaster Zee Entertainment, Invesco decided not to use its 18% stake to hold a ballot. Originally, the US fund manager wanted to oust boss Punit Goenka. It’s now redundant after Zee agreed to a $7 billion merger with Sony Pictures Networks India that will revamp the board and help check the media mogul’s influence. Invesco has done well to come to this. Stepping back increases the chances that Sony’s deal to create a media powerhouse will go through.
A first-time activist, Invesco’s initial intervention was clumsy, coming only after its push for an alternative union with part of Mukesh Ambani’s Reliance Industries failed. Zee rejected the fund’s claims, taking the stalemate to court for an important and broader test of shareholder rights. A 17% jump in Zee shares on Thursday underscores widespread relief that Invesco is ready to pull out; overall, the stock is 63% higher than its undisturbed price in September. A strong result for Indian corporate governance, and not bad for Invesco. (By Una Galani)
Ivory flowers. Australia’s decision to keep its borders closed for much of the first two years of the pandemic has warped parts of its economy. It has also led to a funding crisis for venture capital firm Uniseed, whose owners include the universities of Melbourne, Queensland, Sydney and New South Wales, as well as a government agency.
First, university fee pools suffered as border restrictions physically prevented international students from enrolling. Second, candidates for the country’s separate visa regime for major investors have dried up. To get one, hopefuls invest up to A$5 million ($3.7 million), and Uniseed is often a beneficiary as one of the companies people can put money into.
Cue Uni Super. It is one of the largest pension funds in the country, catering in particular to university employees. His A$75 million investment in Uniseed on Thursday will give him access to subsequent start-up funding rounds, where he can invest much larger capital as he, like his peers, seeks to diversify his assets. It’s taking advantage of the crisis. (By Antony Currie)