Latest news with #privatecredit
Reuters
a day ago
- Business
- Reuters
Private credit's deal desperation lands in India
MUMBAI, May 29 (Reuters Breakingviews) - India's largest-ever private credit deal is a prime example of investors having capital burning a hole in their pockets. Struggling conglomerate Shapoorji Pallonji Group has just sold a 298 billion rupees ($3.5 billion) bond to a group including BlackRock (BLK.N), opens new tab, Ares (ARES.N), opens new tab and Pimco. Lending to financially challenged companies is where the fast-growing industry cut its teeth. But with around a quarter of assets in private credit providers' portfolios sitting idle, per BNP Paribas, the hoops all sides are jumping through to get this deal done smacks of desperation. For starters, it's a zero-coupon bond, meaning the issuer pays no interest. That's useful for SP Group. Granted, operating profit at the group's flagship company covers twice its interest bill for the six months to the end of September. That's a big improvement from four years ago, per rating agency ICRA. But last year, the state-backed Power Finance Corporation declined, opens new tab its borrowing request, and rates on another unit's bonds rose after it missed deadlines for asset sales. The bondholders make their money – a 19.75% yield – by buying the debt at a discount to face value and holding it until it matures in three years' time. They don't seem overly confident the borrower will stay out of trouble, as the terms include not one, not two, but three different layers of protection. First, SP Group must pay back part of the debt if it sells certain assets. Second, its real estate business is providing a 100% guarantee on the paper. Even that's not enough. As a third level of defence for its creditors, the issuer has agreed to stump up as collateral 9% of Tata Sons, around half its holdings in the company which owns large stakes in Tata Consultancy Services ( opens new tab, Tata Motors ( opens new tab and more. That pledged chunk could be worth between $8 billion and almost $19 billion, based on research by analysts at wealth manager Spark last year that factors in how much of a discount is applied to the unlisted company's various public investments. Trouble is, it's not certain that Pimco and partners, which also include Farallon Capital Management and Deutsche Bank ( opens new tab, would be able to get their hands on SP Group's portion: Tata Trusts, which is Tata Sons' controlling shareholder, insists the stock is not "freely transferable". Despite their evident trepidation at SP Group's ability to repay them, the bondholders will be hoping they won't need to put that to the test. Follow Shritama Bose on LinkedIn, opens new tab and X, opens new tab.
Bloomberg
a day ago
- Business
- Bloomberg
Who Wants Another Private Credit ETF? Asking for State Street
PRIV has been met with muted demand. But State Street is already planning a second one. By Save Welcome to ETF IQ, a weekly newsletter dedicated to the $14 trillion global ETF industry. I'm Bloomberg News reporter and anchor Katie Greifeld. 'If you build it, they will come' hasn't necessarily been State Street Corp.'s experience in launching the first-ever private credit ETF, which has been met with incredibly muted demand. Nevertheless, the firm is already planning for round two.
Globe and Mail
a day ago
- Business
- Globe and Mail
UBS Group's Arm to Divest O'Connor Business to Cantor Fitzgerald
UBS Group AG 's UBS subsidiary, UBS Asset Management (Americas) LLC, has announced a definitive agreement to sell O'Connor, its hedge fund, private credit, and commodities business, to Cantor Fitzgerald as part of its ongoing strategy to streamline operations. The initial close of the transaction is expected during the fourth quarter of 2025, subject to regulatory approvals and other customary closing conditions. Details of UBS's Divestiture Deal The sale includes six investment strategies with approximately $11 billion in assets under management. Upon closing the deal, O'Connor's investment and support teams will transition to Cantor Fitzgerald. Additionally, UBS Asset Management and Cantor Fitzgerald will work closely together to ensure a seamless transition for clients. As part of the agreement, UBS Asset Management and Cantor Fitzgerald will establish a long-term commercial arrangement, maintaining continuity for UBS Global Wealth Management clients. Following the sale, UBS will remain one of the leading alternative investment managers, with over $440 billion in invested assets across its Unified Global Alternatives, Global Real Assets, and Credit Investments Group businesses. Aleksandar Ivanovic, president of UBS Asset Management, stated, 'We have substantial growth ambitions and are focused on expanding our differentiated alternatives capabilities where we are positioned to win at scale. In deciding to sell O'Connor, we considered several factors, including its strategic fit and growth potential within UBS, and have been guided by the best interests of investors.' Ivanovic added, 'Our priority has been to select a buyer with complementary capabilities, culture and team, and we believe that Cantor Fitzgerald is strongly placed to take the O'Connor business forward.' Blake Hiltabrand, Global Head of O'Connor, stated, 'This marks a pivotal new chapter for our business. As a cornerstone of Cantor Fitzgerald's alternative investment platform, the O'Connor team is excited about the opportunity to invest in and expand our capabilities while staying true to our roots as fundamental investors.' Our Take on UBS Restructuring Efforts The decision to divest the hedge fund unit aligns with UBS's overall strategy of streamlining its operations, focusing on its core operations following the acquisition of Credit Suisse in 2023. According to its business restructuring plans, it is likely to wind down its non-core and legacy portfolio and aims to reduce non-core and legacy risk-weighted assets to below $8 billion by the end of 2025 and around $2 billion by the end of 2026. In sync with its restructuring plan, in April 2025, UBS made a strategic partnership with 360 ONE WAM Ltd, one of India's leading wealth and asset managers. Under this arrangement, UBS will purchase warrants to acquire a 4.95% share and will sell its onshore Indian wealth business to 360 ONE, while clients based in Singapore will continue to be served by UBS Singapore. Through these efforts, the company is well-positioned to enhance the client experience and unlock further cost reductions toward the end of 2025 and into 2026 as it delivers on its ambition of $13 billion in gross cost savings by the end of 2026. Zacks Rank & Price Performance of UBS Shares of UBS have dipped 2.4% against the industry 's 21.7% growth in the past six months. Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Restructuring Efforts by Other Finance Firms This week, Citigroup Inc. C, through its subsidiary Citibank Europe Plc, announced that Citi Handlowy has announced an agreement to sell its consumer banking business in Poland to VeloBank S.A. (Velobank). This transaction aligns with Citigroup's broader strategy to exit consumer banking and strengthen its focus on core operations. The agreement involves the demerger of Citi Handlowy's consumer banking operations, including wealth management, micro business banking, credit cards, consumer loans, deposits, and assets under management, consumer clients of the brokerage business, branches, and other consumer-related assets to VeloBank. Notably, employees and branches of the consumer business of C will also transition to VeloBank S.A. upon completion of the transaction. Likewise, in February 2025, SEI Investments Co. SEIC agreed to divest its Family Office Service operations to Acquiline Capital Partners LP (Acquiline) for $120 million. The family office business of SEIC will continue to operate as Archway upon completion. Under the terms of the transaction, employees based in SEI's Indianapolis, Denver and Oaks offices, including key members of the leadership team, will transition to Aquiline along with the business. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Citigroup Inc. (C): Free Stock Analysis Report UBS Group AG (UBS): Free Stock Analysis Report SEI Investments Company (SEIC): Free Stock Analysis Report
Bloomberg
a day ago
- Business
- Bloomberg
High-Yield Bonds Have Outshone Private Debt, Says Dimensional
When direct lenders pitch private credit to pension funds and insurance firms, many tout its ability to beat public debt returns. But Dimensional Fund Advisors isn't buying it. 'There is no outperformance relative to high-yield bonds,' said Savina Rizova, Dimensional's co-chief investment officer and global head of research, speaking about private credit on the Bloomberg Intelligence Credit Edge podcast. The Austin-based firm, with almost $800 billion in assets under management, often uses academic research to guide its investment strategy.
Khaleej Times
a day ago
- Business
- Khaleej Times
How to invest like a rich person amid market volatility
The wealthy are increasingly seeking investment opportunities that offer less correlation to the public equity markets that have long dominated their portfolios. That search has taken on new urgency following renewed market turbulence in the wake of the Trump administration's April 3 tariff announcements. While shifting towards bonds and cash equivalents provides a degree of insulation, it often comes at the expense of meaningful returns. A growing cohort of family offices and sophisticated investors are now reallocating capital towards private assets — a broad universe that includes private equity, private credit, real estate, infrastructure, and venture capital. These markets have expanded dramatically over the past decade. According to the Economist, private assets under management have surged to $24 trillion (Dh88 trillion) from $10 trillion (Dh36 trillion) a decade ago. That trajectory shows no sign of slowing. Bain & Company estimates that private market AUM will rise to between $60 trillion and $65 trillion by 2032. If realised, private assets would represent nearly one-third of global investable capital — more than twice the projected growth rate of public markets. The Rise of Private Credit Among the most striking growth areas is private credit. Once a niche segment of the market, it has grown tenfold since 2009, with AUM approaching $2 trillion by the end of 2023, according to McKinsey. As traditional banks retreat from corporate lending, the wealthy have stepped in to fill the void — drawn by the promise of attractive yields in a persistently low-rate environment. Fewer Public Listings, More Private Opportunity This structural shift is occurring alongside a broader decline in public market participation. The number of publicly listed companies globally fell from 62,959 in 2018 to 61,170 by the close of 2024. The US trend is even more pronounced: listed firms have declined from a 1996 peak of 7,300 to just 4,300 — a drop of more than 40 per cent. A combination of regulatory burden, increased merger activity, and the abundant availability of private capital has made remaining private an increasingly attractive option. Consequently, an estimated $2.6 trillion in 'dry powder' — capital raised but not yet deployed — now sits on the sidelines, ready to be invested. From the Magnificent Seven to Emerging Growth For forward-looking investors, the appeal of private markets lies not only in diversification but also in early access to the next generation of growth. Sectors such as Artificial Intelligence, climate technology, and biotechnology often reach scale long before entering the public arena. Many HNWIs are now looking beyond the overstretched valuations of publicly listed giants — the so-called 'Magnificent Seven' — to back tomorrow's innovators earlier in their life cycle. Market-Leading Private Asset Products Firms such as Blackstone and KKR have emerged as leading providers of private market access for qualified investors. Examples of a selection of key offerings include: Blackstone Private Equity Strategies Fund (BXPE): Launched in 2024, this non-listed evergreen fund offers individual investors access to Blackstone's flagship private equity platform. Sector exposures include digital infrastructure, technology, business services, financials, and aerospace. Blackstone Private Credit Fund (BCRED): Launched in 2021, it is a direct lending vehicle that targets middle-market companies in the US. BCRED provides a scalable entry point into the fast-growing private credit space. Blackstone Real Estate Income Trust (BREIT): A pioneering launch in 2017, this is a non-listed REIT that offers exposure to income-generating, institutional-grade real estate. Blackstone Mortgage Trust (BXMT) : A publicly listed real estate investment trust focused on originating senior loans secured by commercial real estate assets. Similar offerings are available from other global private asset managers, including Apollo, Carlyle, Partners Group, and Brookfield. The SLY Trade-Off: Safety, Liquidity, Yield Investors entering private markets must carefully consider what might be called the 'SLY' triangle — Safety, Liquidity, and Yield. Typically, optimising for one requires trade-offs with the others. The pursuit of high yield, for example, often entails reduced liquidity and higher risk exposure. For investors accustomed to daily liquidity and mark-to-market transparency, the realities of private markets — multi-year lockups, irregular capital calls, limited secondary market access — can be sobering. Fees also tend to be high, with incentive structures that may not always align with investor interests. Valuation presents another risk. Unlike public assets, private investments are typically valued on a quarterly basis — and often by the fund managers themselves. This creates both opacity and potential conflicts of interest that can be unsettling for those new to the asset class. Proceeding with Caution — and Conviction Given these complexities, financial advisors routinely urge the wealthy to approach private markets with caution and purpose. Allocations should reflect each investor's liquidity needs, investment horizon, and risk appetite — and remain a portion of a well-diversified portfolio. For those prepared to navigate the illiquidity, complexity, and longer time horizons, private assets offer more than just higher potential returns. They offer enhanced risk-adjusted returns, particularly in an era of volatile public markets and fading alpha. Private markets are no longer the preserve of institutional behemoths. But accessing their full potential requires the same level of discipline, due diligence, and long-term perspective.
