Written by Tommy Reggiori Wilkes and Sinead Cruise
- LONDON (Reuters) – To expand into private credit and real estate, Sixth Street is hiring up to 20 additional staff members this year and leasing a new regional headquarters in Mayfair, London, marking the largest hiring spree in the company’s 15-year history in Europe.
- “Because of the growing scale of firms like ours, a vibrant ecosystem of companies and entrepreneurs increasingly have the alternative to stay private longer or focus on growing their businesses with the support of long-term private investors,” Salisbury said.
- This is the first time that Sixth Street’s European development strategy has been made public. It is just one more example of American investment corporations’ aspirations to go into less established private lending markets. Other notable firms in the industry include Apollo Global Management (NYSE:APO) and Ares Capital.
- Due to tighter regulations on the amount of lending risk that conventional banks are allowed to carry on their balance sheets, these investment companies are filling the demand from corporate borrowers that they are finding it difficult to service.
- Although private credit currently makes up a small portion of total bank loans, its explosive rise has alarmed some regulators and bankers who are concerned about the relative lack of oversight in the industry and if it may jeopardize financial stability.
- “Tighter provisioning and capital requirements on banks mean it’s more punitive for them to hold these assets now, so they want partners with whom to share that risk,” Salisbury said.
- Sixth Street, which was established in 2009, has over 600 employees, 200 of them are investing experts. CEO and co-founder Alan Waxman is a Goldman grad.
- Salisbury said that despite other cities “opening their doors and catching up” after Brexit, London was the “obvious first choice place” to establish the company’s worldwide operations because of its excellent talent pool.
- Sixth Street has around sixty employees in London, and its new headquarters near the Ritz Hotel on Dover (NYSE: DOV) Street can house twice as many.
- Before joining former coworkers at Sixth Street in February, Salisbury spent 25 years at Goldman. “We expect our business to grow a lot here,” he added.
- A native of Britain, Salisbury expressed his optimism that lawmakers will defend the UK financial services sector, calling it a “crown jewel” ahead of next week’s national elections.
- “Since 2011, we have maintained a local presence here, and we are expanding globally. Asia will be a priority in the future, but for now, London is the main emphasis,” he said.
PUSH FOR REAL ESTATE
- Sixth Street has made investments in companies such as professional women’s soccer team Bay FC and lodging provider Airbnb.
- In March 2022, Sixth Street opened for business as a specialist provider of structured goods. It appointed Michael Dryden, a New Yorker and the former global head of Credit Suisse’s securitized products financing, to head the team, with an emphasis on asset-backed finance as a specific area of interest.
- “Private credit markets are expected to double over the next five years and we think there’s organic growth potential across all our credit strategies,” Salisbury said.
- The business, which has furthermore given funds to the Spanish soccer teams FC Barcelona and Real Madrid, headed the group backed by KKR that acquired Greensky (NASDAQ: GSKY), a platform that facilitates financing for house renovation, earlier this year
- Salisbury said that after the hire of Marcos Alvarado from Safehold (NYSE: SAFE) Inc. to lead its U.S. team in February, strengthening the group’s real estate business in Europe was another objective for 2024.
- Sixth Street sold specialty lender Kensington Mortgages to Barclays two years ago, resisting the urge to make large investments in the down markets of 2021 and 2022.
- It is now prepared to take advantage of the greater discounts that merchants are offering.
- A portfolio of Italian supermarkets and retail centers worth 258 million euros ($275.72 million) was recently purchased by other investors.
- “Real estate has become a real stock picker’s market, with an increasing divergence between winners and losers and a need to drive more returns through operating performance as opposed to simply levered yield trades,” Salisbury said.
- One dollar is equivalent to 0.9357 euros.
Source:
investing
