Sector developments and company hires

AG acquisition creates credit powerhouse
TPG is set to acquire Angelo Gordon in a cash and equity transaction valued at approximately US$2.7bn, based on TPG’s share price as of 12 May, including an estimated US$970m in cash and up to 62.5 million common units of the TPG Operating Group and restricted stock units of TPG. The transaction also includes an earnout based on Angelo Gordon’s future financial performance, valued at up to US$400m.

Angelo Gordon’s US$55bn credit platform offers scaled and diversified capabilities across the credit investing spectrum, including direct lending and structured credit, and its US$18bn real estate platform manages dedicated value-add real estate strategies with significant reach in the US, Europe and Asia. Similar to TPG, Angelo Gordon has delivered significant and sustained momentum and growth, doubling its AUM over the past five years.

TPG and Angelo Gordon had a combined AUM of US$208bn as of 31 December 2022. The addition of Angelo Gordon marks a significant expansion into credit investing for TPG, establishing additional levers to drive organic growth and further expanding the breadth, diversification and reach of the TPG platform.

Upon closing of the transaction, Angelo Gordon’s co-ceos Josh Baumgarten and Adam Schwartz will become co-managing partners of the platform, reporting to TPG ceo Jon Winkelried. The transaction is subject to customary closing conditions and is expected to close in 4Q23.

In other news…

BIG bags fifth B-piece
BIG Real Estate BP II, an entity wholly owned by Basis Investment Group, has acquired the B-piece in the BANK5 2023-5YR1 CMBS. Totaling US$1.025bn, the securitised pool comprises 24 newly originated five-year senior mortgage loans originated by Bank of America, Citi, Morgan Stanley and Wells Fargo. The loans are, in turn, collateralised by 134 office, retail, multifamily, hospitality and self-storage properties throughout the US.

BANK5 2023-5YR1 marks the second conduit CMBS consisting fully of five-year loans, reflecting the recent surge in borrower demand for shorter-term, fixed-rate debt in response to rising interest rates. Basis says it believes that the combination of pool metrics, collateral quality and yields make it a good time to invest in these positions.

The investment represents Basis’ fifth B-piece acquisition. The firm also opportunistically acquired the deal’s entire triple-B minus class and the majority of the triple-B class.

Basis has designated CWCapital as special servicer for the portfolio.

EIB, Santander ink energy efficiency deal
The EIB Group and Santander have signed a new synthetic securitisation to support the financing of energy efficiency investments in Portugal, including the construction of new nearly-zero-emissions buildings and the renovation of existing residential properties in line with sustainable standards. The transaction will facilitate new green and sustainable mortgages to individuals, as well as SMEs and midcap companies, to invest in building renovations or new construction with high energy-efficiency standards.

The agreement represents the first synthetic securitisation transaction of Santander with the EIB Group in Portugal. Under the transaction, the EIB Group will provide a €81m unfunded guarantee that will enable Santander to finance new energy efficiency investments for an amount equal to twice the size of the EIB Group guarantee. The individual projects benefitting from the new financing may reach an investment of up to €25m, with a maximum amount of funding of up to €12.5m, and a minimum term of two years.

The projects financed by this operation will contribute to the reduction of CO₂ emissions, deliver health benefits through improved air quality and contribute to climate change mitigation. The project supports the objectives of the European Performance of Buildings Directive (EPBD), the Energy Efficiency Directive (EED) and the Renewable Energy Directive (RED), as well as Portugal's National Energy and Climate Plan (NECP).

EMEA
ARC Ratings has appointed Alex Cataldo as deputy ceo, with key responsibilities including the continued growth of ARC’s rating business, as well as the accelerated delivery of ARC’s broader strategic objectives. Prior to joining ARC Ratings, Cataldo worked at Moody’s in both Milan and London, where he was most recently md, head of EMEA relationship management. During the past 20-plus years with Moody’s, he has undertaken several senior roles, across both analytical and commercial functions, including head of EMEA ABS ratings.

Goldman fined for misreporting RWAs
The ECB has imposed an administrative penalty of €6.63m on Goldman Sachs, after the bank reported incorrectly calculated risk-weighted assets for credit risk. In 2019, 2020 and 2021 - for eight consecutive quarters - Goldman reported lower RWAs for credit risk than it should have because the bank misclassified corporate exposures and applied a lower risk-weight to them than what banking rules prescribe. Furthermore, deficiencies in internal controls prevented it from detecting this mistake in a timely manner.