{"id":259929,"date":"2025-11-03T15:28:17","date_gmt":"2025-11-03T15:28:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/259929\/"},"modified":"2025-11-03T15:28:17","modified_gmt":"2025-11-03T15:28:17","slug":"asset-management-more-private-credit-warnings","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/259929\/","title":{"rendered":"Asset Management: More private credit warnings"},"content":{"rendered":"

Welcome to FT Asset Management, our weekly newsletter on the movers and shakers behind a multitrillion-dollar global industry. This article is an on-site version of the newsletter. Subscribers can sign up here<\/a> to get it delivered every Monday. Explore all of our newsletters here<\/a>.<\/p>\n

Does the format, content and tone work for you? Let me know: mary.mcdougall@ft.com<\/a><\/p>\n

One scoop to start: The Competition and Markets Authority is considering asking a court to ban<\/a> Supraj Rajagopalan as a director of Cinven after the private equity group was fined \u00a352mn over price gouging by a drug company it owned.<\/p>\n

In today\u2019s newsletter:<\/p>\n

Meet Utah\u2019s flashy Onset Financial<\/p>\n

Limited partners call the shots<\/p>\n

Revenues soar at London quant groups<\/p>\n

Private credit worries linger on \"OnsetOnset Financial\u2019s offices in Draper, Utah \u00a9 Kim Raff\/FT<\/p>\n

More than a month has passed since Ohio-based automotive parts maker First Brands filed for bankruptcy, with investors still taking stock after one of America\u2019s highest-profile bankruptcies in years. <\/p>\n

HSBC is the latest to warn on the wider risks in private credit markets, highlighting that even financial institutions with limited direct exposure to recent blow-ups are on an alert, write Arjun Neil Alim and Ortenca Aliaj. <\/p>\n

\u201cWhat is very important in these situations is to consider the second and third-order risks,\u201d said Pam Kaur, HSBC group chief financial officer, adding that the exposure of smaller lenders and hedge funds \u201cthat we may be dealing with\u2009.\u2009.\u2009.\u2009becomes a primary focus for us\u201d.<\/p>\n

Similarly Steven Meier, chief investment officer at the $302bn New York City Retirement Systems, told Sun Yu and Mary McDougall that the collapse of First Brands, which came on the heels of the collapse of subprime auto lender Tricolor, signalled a build-up of credit risks, suggesting some companies may have relaxed their lending standards. <\/p>\n

\u201cYou wonder if there was a proper level of due diligence conducted on these companies\u2009.\u2009.\u2009.\u2009it is hard to protect against fraud other than doing your due diligence,\u201d he said.<\/p>\n

In a fascinating piece, Jill R Shah went to the exurbs of Utah\u2019s Salt Lake City to get to the bottom of a nearly $2bn claim from a little known lender Onset Financial<\/a>, a leasing firm which lent more than $1bn to First Brands over the past year. <\/p>\n

Onset called itself a \u2018dominant force\u2019 in financing everything from chickens to helicopters. The firm prides itself on being \u201clightning fast\u201d and boasts a corporate jet and a corporate penthouse for its chief executive, former college basketball player Justin Nielsen, that has a hot tub and sauna.<\/p>\n

Onset is by no means the only creditor facing losses. Some of the most sophisticated investment firms in the world are poised to fight over their share of the collateral.<\/p>\n

K&E softens as private equity downturn deepens<\/p>\n

Powerhouse Kirkland & Ellis has come under fire for uncooperative behaviour in negotiations between its private equity clients and their investors, known as limited partners, writes Alexandra Heal. <\/p>\n

The law firm has been training its lawyers on their communication style<\/a> following complaints about their combative nature at an industry event last year, where limited partners were asked to name one thing they would like private equity groups to do if they could wave a \u201cmagic wand\u201d. <\/p>\n

Displayed prominently in a word cloud of responses was: \u201cFire K&E\u201d, according to people who attended. <\/p>\n

K&E\u2019s response is a sign of how the pendulum swung, writes Sujeet Indap in the Lex column<\/a>. Before interest rates rose, everyone wanted to put their money into private equity, and the general partners who run funds on investors\u2019 behalf carried considerable market clout. Now it\u2019s those who put money in who are able to call the shots.<\/p>\n

The long lull in mergers and listings has made it hard for private equity funds to return capital, and to raise new funds. For the year to the end of June, just $600bn<\/a> of private equity funds were raised, the lowest level in seven years, according to Preqin data.<\/p>\n

As such, investors can extract better terms from private equity managers such as calling for lower fees and more disclosure on investment performance. Some are poaching their staff<\/a>. Or, as in this case, demand better manners from arrogant corporate lawyers.<\/p>\n

Chart of the week<\/p>\n

London is establishing itself as a centre for quantitative finance<\/a>, with a number of trading firms and investors based in the capital becoming multibillion-dollar forces in the market, write Costas Mourselas, Jamie John and Nikou Asgari. <\/p>\n

Algorithmic trading firm XTX along with quantitative investors Qube and Quadrature have each made more than \u00a31bn in revenues over the past year, according to public filings by their UK entities, cementing their positions at a time when London\u2019s status as a global financial hub has been called into question. <\/p>\n

\"Column<\/p>\n

So-called \u201cquant\u201d trading firms and hedge funds use mathematical models combined with vast amounts of data and computing power to spot correlations and asymmetries in asset prices and make bets. <\/p>\n

They rely much less on human input and, partly because of less onerous regulation, have quietly become some of the most dominant and profitable firms in the trading world. <\/p>\n

Some of the biggest quant firms are based in and around New York but there is \u201cabsolutely\u201d a quant renaissance in London, according to Raffaele Savi, global head of BlackRock\u2019s quantitative investing teams. <\/p>\n

\u201cIt\u2019s the combination of great [universities] in the UK and Europe, a good regulatory framework, and tradition,\u201d he said.<\/p>\n

Five unmissable stories this week<\/p>\n

Phoenix Group is in talks to raise more than \u00a31bn from private capital firms including Blackstone, Sixth Street and KKR as it seeks to expand its pension-risk transfer business and win a bigger share of an increasingly competitive and lucrative part of the insurance market<\/a>.<\/p>\n

Manulife\u2019s CQS, Algebris Funds and Deltroit Asset Management have adopted a new tactic in the distressed debt wars, arguing in a New York lawsuit filed on Tuesday<\/a> that heavy-handed deals violate US anti-monopoly and cartel laws. <\/p>\n

Blackstone has poached Apollo\u2019s lead European buyout dealmaker Michele Rab\u00e0 in a rare switch<\/a> at the senior level of the world\u2019s two biggest private capital firms. <\/p>\n

Janus Henderson has received a takeover bid from Nelson Peltz\u2019s Trian Fund Management and General Catalyst. The groups offered $46 a share in cash for the asset manager, valuing it at $7bn<\/a>, and sending its shares up about 12 per cent on the day. <\/p>\n

UK investors have poured money into offshore bonds as a fiscal crackdown has prompted wealthy Brits to look for new ways to lower their tax bill.\u00a0New investment in the 12 months to the end of June hit \u00a310.5bn across all providers<\/a>, according to data seen by the Financial Times, a sharp increase from \u00a35.1bn the previous year.\u00a0 <\/p>\n

And finally\"\"Peter Doig: House of Music with Sound system by Laurence Passera \u00a9 Prudence Cuming Associates<\/p>\n

Peter Doig\u2019s House of Music at the Serpentine<\/a> adds a soundtrack to his paintings, for the first time. Each engages with music in a different way \u2014 some depict spaces where music is played or heard, others show musicians performing or people dancing.<\/p>\n

Thanks for reading. If you have friends or colleagues who might enjoy this newsletter, please forward it to them. Sign up here<\/a><\/p>\n

We would love to hear your feedback and comments about this newsletter. Email me at emma.dunkley@ft.com<\/a><\/p>\n

Recommended newsletters for you<\/p>\n

The Week Ahead \u2014 Start every week with a preview of what\u2019s on the agenda. Sign up here<\/a><\/p>\n

Working It \u2014 Everything you need to get ahead at work, in your inbox every Wednesday. Sign up here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Welcome to FT Asset Management, our weekly newsletter on the movers and shakers behind a multitrillion-dollar global industry.…\n","protected":false},"author":2,"featured_media":259930,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185],"class_list":{"0":"post-259929","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/259929","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=259929"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/259929\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/259930"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=259929"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=259929"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=259929"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}