Sector developments and company hires

Apollo, PIMCO set to acquire Credit Suisse SPG
Credit Suisse has unveiled its new strategy and transformation plan, following a strategic review of the bank’s businesses (SCI 28 July). The bank says it is taking “extensive measures” to deliver a more integrated business model, with the goal of creating value for shareholders.

Over the next three years, Credit Suisse expects to radically restructure the investment bank to reduce RWAs of around 40%, including by reducing its exposure to securitised products and spinning CS First Boston out as an independent capital markets and advisory firm. Additionally, the bank will create a non-core unit (NCU) to accelerate the run-down of non-strategic, low-return businesses and markets to release capital. The objective is to allocate almost 80% of capital to wealth management, its Swiss bank, asset management and markets by 2025.

As part of the restructuring, Credit Suisse has entered into a framework and exclusivity agreement to transfer a significant portion of its securitised products group (SPG) to an investor group led by Apollo Global Management. Under the terms of the proposed transaction, investment vehicles managed by affiliates of Apollo and PIMCO will acquire the majority of SPG’s assets and other related financing businesses from Credit Suisse, enter into an investment management agreement to manage the residual assets on the bank’s behalf, hire the SPG team to the new platform and receive certain ongoing services from Credit Suisse in order to “maintain a seamless, high-touch experience for clients”.

The framework agreement is subject to the signing of final binding documentation, which is anticipated during 4Q22. Closing of the proposed transaction is subject to customary closing conditions and is expected to occur during 1H23.

Meanwhile, the newly-created CS First Boston envisions attracting third-party capital, as well as a preferred long-term partnership with the restructured Credit Suisse. Michael Klein will step down from the board of directors to act as advisor to group ceo Ulrich Körner, helping launch CS First Boston. It is anticipated that he will be appointed ceo designate of CS First Boston in 2023, pending regulatory approvals.

During this transition period, David Miller will continue in his current role as global head of investment banking and capital markets, reporting directly to Körner and supporting the establishment of CS First Boston as an independent firm. In addition, Mike Ebert and Ken Pang are appointed co-heads of the markets business, effective from 1 November. They will also report directly to Körner.

Louise Kitchen has been appointed head of the capital release unit, reporting directly to cfo Dixit Joshi. Kitchen most recently served as head of the capital release group and member of the group management committee at Deutsche Bank.

Finally, Christian Meissner - who has served as ceo of the investment bank and member of the executive board - will leave Credit Suisse with immediate effect.

In other news…

Acquisitions
Aristotle Capital Management is set to acquire Pacific Life Insurance Company’s third-party credit asset management firm, Pacific Asset Management (PAM). As part of the transaction, Pacific Life will receive a minority interest in Aristotle.

The transaction represents the transfer of US$20.7bn in assets under management and over 50 professionals, including 23 investment team members, to Aristotle. Subsequent to the close of the transaction, Pacific Asset Management will be known as Aristotle Pacific Capital.

Aristotle Pacific will be led by PAM ceo Dominic Nolan as ceo. The transaction is expected to close during 1H23, subject to customary approvals.

General Atlantic is set to acquire Iron Park Capital Partners to create General Atlantic Credit (GA Credit). GA Credit will expand and enhance the firm’s ability to provide creative capital solutions to high-quality companies in need of a strategic partner at multiple stages of corporate and economic lifecycles. Tripp Smith, ceo and founder of Iron Park, will be ceo of GA Credit.

Iron Park’s investment offerings include funds that invest in both the public and private credit markets, including Atlantic Park, a joint venture formed with General Atlantic in 2020. The GA Credit team includes nine mds and 18 additional investment professionals based in New York and London.

The transaction is expected to close in 1Q23, subject to regulatory approval.

Nuveen has entered into a definitive agreement to acquire a controlling interest in Arcmont Asset Management, the European private debt investment manager with US$21bn in committed capital. The acquisition will expand Nuveen's private capital expertise and presence into Europe, complementing its North American private debt and private equity investment specialist Churchill Asset Management.

With approximately 100 employees across six offices in Europe, Arcmont's experienced team of investment professionals combines pan-European origination capabilities with long-standing relationships among private equity firms, corporates and advisers. The combined capabilities of Arcmont and Churchill will create one of the world's largest private debt managers, with more than US$60bn in combined committed capital, bringing Nuveen's firmwide alternative credit assets under management to US$178bn.

Arcmont and Churchill will combine to form a new entity dubbed Nuveen Private Capital. Both firms will continue to be managed by their own respective leadership teams, but will benefit from the considerable resources, expertise and distribution capabilities of Nuveen. With more than 240 investment and support professionals, Arcmont and Churchill serve a combined investor base of approximately 600 institutional and family office investors.

Churchill president and ceo Ken Kencel and Arcmont ceo Anthony Fobel will be co-ceos of Nuveen Private Capital, reporting to William Huffman, head of Nuveen equity and fixed income. Huffman will also serve as chairman of Nuveen Private Capital.

The definitive agreement for Nuveen to acquire a controlling interest in Arcmont Asset Management includes the minority stake held by Dyal Capital Partners IV. The transaction is expected to close in 1H23, subject to regulatory approval.

EMEA
Banca Akros has appointed Daniela Di Filippo as md, corporate securitisation, based in Milan. She was previously a director within the global structured finance enhanced analytics team at Fitch. Before that, Di Filippo worked at Intesa San Paolo.

Nile Capital Group Holdings has completed a minority non-controlling investment in Prytania Asset Management. The investment will enable the firm to continue focusing on providing clients with superior investment performance, while Nile assists with strategic value-creating growth initiatives.

Nile is a long-term investor and has primarily purchased interests from outside minority holders, while Prytania staff are all remaining with the business and will maintain a large stake in the firm. The team remain focused on creating strong risk-adjusted returns for clients over time.

GSE guarantee fees reviewed
The FHFA has announced targeted changes to Fannie Mae and Freddie Mac's guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans. The move will result in savings for approximately one in five borrowers of the GSEs’ recent mortgage acquisitions.

Specifically, the FHFA is eliminating upfront fees for: first-time homebuyers at or below 100% of area median income (AMI) in most of the US and below 120% of AMI in high-cost areas; the GSEs’ flagship affordable mortgage programmes HomeReady and Home Possible loans; HFA Advantage and HFA Preferred loans; and single-family loans supporting the Duty to Serve programme. The agency says it will work with the GSEs and announce an implementation date for the changes shortly.

The implementation of new fees for cash-out refinance loans will begin on 1 February 2023, in order to minimise market and pipeline disruption.

North America
GoldenTree Asset Management has appointed Kathy Sutherland as its first ceo, reporting to managing partner and cio Steve Tananbaum, whose role will remain unchanged. He will continue to be responsible for the management of the investment team in his capacity as cio and will continue to oversee the firm’s executive committee. Sutherland will be responsible for GoldenTree’s global strategy, product and business development, as well as long-term planning.

Sutherland will continue serving as a partner and a member of the firm’s executive committee. She joined GoldenTree as a partner and head of European business development in 2008, becoming head of business development in 2014 and head of business development and strategy in 2019. She has been a member of the firm’s executive committee since June 2014.

Prior to joining GoldenTree, Sutherland spent 12 years at JPMorgan, ultimately serving as an md.

Structured credit ETF launched
Angel Oak Capital Advisors has launched the Angel Oak UltraShort Income ETF, its first exchange-traded fund, which will provide investors with an opportunity to invest in short-duration structured credit assets and cash-like instruments that seek to provide higher yield without sacrificing credit quality.

The actively managed ETF is one of the first in the ultrashort space that will have a sizable allocation to non-agency RMBS and ABS. Angel Oak believes its bottom-up approach to uncovering yield in the short-duration space will drive institutional and retail dollar flows alike.

To support its advancement into the ETF industry, the firm added Ward Bortz in June to serve as head of ETFs. Bortz previously served as head of strategy for fixed-income factors at Invesco US.