- Zealand Pharma (22Z TH) +2.1%
- Hochtief (HOT TH) +1.9%
- Hochtief Raised to Buy at Jefferies on Step Change in Growth
- Carlsberg (CBGB TH) +1.6%
- Frontline PLC (HF6 TH) +1.6%
- Midyear Outlook: Global Marine Shipping
- Investor AB (IVSD TH) +1.6%
- Umicore (NVJP TH) +1.5%
- Rubis (BYN TH) +1.2%
- AB InBev (1NBA TH) +1.2%
- Fresenius Medical Care (FME TH) +1%
- BAE (BSP TH) +1%
- Barclays (BCY TH) -1%
- Carl Zeiss Meditec (AFX TH) -1.2%
- Carl Zeiss Meditec PT Cut to 85 euros from 145 euros at RBC
- Aixtron (AIXA TH) -1.5%
- Philips (PHI1 TH) -1.7%
- Zalando (ZAL TH) -4.6%
- Zalando Downgraded at Morgan Stanley on Top-Line Concerns
DAX:
- BMW (BMW TH) +1%
- Zalando (ZAL TH) -5.2%
- Zalando Downgraded at Morgan Stanley on Top-Line Concerns
MDAX:
- Hochtief (HOT TH) +2.2%
- Hochtief Raised to Buy at Jefferies on Step Change in Growth
SDAX:
- Deutz (DEZ TH) +9.8%
- Deutz Shares Jump on Tradegate After Defense Re-Entry Report
- Mutares (MUX TH) +3.5%
- Suess MicroTec (SMHN TH) +1%
- PNE AG (PNE3 TH) +1%
- Douglas AG (DOU TH) +1%
- Metro AG (B4B TH) -1%
- Grand City Properties (GYC TH) -1.2%
- Schott Pharma AG & Co KGaA (1SXP TH) -1.8%
- Synlab (SYAB TH) -2.3%
- PVA TePla (TPE TH) -4.6%
>>> Up
* Britvic Raised to Buy at Investec; PT 1,350 pence
* Hochtief Raised to Buy at Jefferies; PT 124 euros
>>> Down
* Hochtief Raised to Buy at Jefferies; PT 124 euros
>>> Down
* Carl Zeiss Meditec PT Cut to 85 euros from 145 euros at RBC
* Flutter Cut to Hold at Peel Hunt; PT 15,000 pence
* Forvia Cut to Hold at Stifel; PT 12 euros
* Raute Cut to Accumulate at Inderes; PT 15 euros
* Raute Cut to Accumulate at Inderes; PT 15 euros
* Valeo Cut to Hold at Stifel; PT 11.30 euros
* YouGov Cut to Hold From Buy by Liberum
* Zalando Cut to Equal-Weight at Morgan Stanley; PT 24 euros
>>> Initiation
>>> Initiation
* Envipco Rated New Buy at Nordea; PT 8.31 euros
* GE Vernova Rated New Outperform at Haitong Intl; PT $211.83
>>> Call
* Deutsche Bank Says ‘Time For Another Breather’ in S&P 500 Rally
* GE Vernova Rated New Outperform at Haitong Intl; PT $211.83
>>> Call
* Deutsche Bank Says ‘Time For Another Breather’ in S&P 500 Rally
* Flutter a Great Company at a Fair Price, Peel Hunt Cuts to Hold
* Goldman Flags Tariffs as Key Risk to US Stocks From Elections
* Hochtief Raised to Buy at Jefferies on Step Change in Growth
* Morgan Stanley’s Wilson Says Market Focusing on Softening Growth
* Zalando Downgraded at Morgan Stanley on Top-Line Concerns
A gauge of Asian currencies slipped for a third session, kicking off a week of inflation data that may help guide bets on the global interest rates outlook. Bloomberg’s Asia dollar index fell. The yen stayed below 160 per dollar, Japan’s top currency official, Masato Kanda, said authorities are ready to intervene to support it 24-hours a day, if needed. Traders have been wary of an escalation in official rhetoric after the yen’s 1.5% slide this month, while retail investors appear to be reloading bets for a rebound. An index for the region’s stocks also declined, with equities in South Korea, Hong Kong and mainland China all falling. Those for Japan fluctuated. European and US share futures were also softer. The moves come as markets are at a critical juncture for positioning into the second half of 2024 with the outlook for central bank policy rates from New Zealand to Japan and the US unclear. Inflation prints in Australia and Tokyo, as well as the Federal Reserve’s preferred gauge of consumer costs, may yield clues, but political risks loom large. The first UK prime ministerial and US presidential debates are scheduled, and the first round of voting in the French legislative election is set to take place this weekend. This should “set the tone for fiscal risks,” Savage said. Treasury 10-year yields were steady in Asian trading. Later this week, the Federal Reserve’s favored inflation yardsticks are poised to show the tamest monthly advances since late last year — which may pave the way for officials to begin lowering interest rates. Meanwhile, China’s currency fixing was little changed at 7.1201 per dollar on Monday, after the country’s assets sold off again last week as policymakers showed no urgency to roll out more stimulus. The yuan’s weakness is symptomatic of deteriorating sentiment toward the world’s second-largest economy, which is also seeing a bond market rally as investors seek out haven assets. Benchmark yields have tumbled toward record lows amid mixed economic data and expectations of further stimulus. Separately, China and the European Union have agreed to start talks on the bloc’s plans to impose tariffs on electric vehicles imported from the Asian nation. The S&P 500 fell on Friday, and traders and strategists begin to question how long this year’s rally can persist given shifting bets on central bank rate cuts and election uncertainties in Europe. The S&P 500 Index has likely logged most of the gains it will see this year as investors are growing increasingly nervous about the stock market’s rich valuations, according to the latest Bloomberg Markets Live Pulse survey published on Monday. Signs of skittishness are evident as about half of survey takers say stocks will see the beginning of a correction of at least 10% this year. In commodities, oil extended the previous session’s decline toward $80 a barrel amid a stronger greenback and a technical indicator suggesting the recent rally has gone too far. Gold was little changed, having racked up a loss the previous week as investors pared bets on US rate cuts.
Nikkei +0.76% Hang Seng -0.80% CSI -0.08% Shanghai -0.62% Shenzen -1.53%
Eur$ 1.0693 CNH 7.2892 CNY 7.2615 JPY 159.73 GBP 1.2644 CHF 0.8934 RUB 89.0751 TRY 32.8477 WTI$ 80.65 -0.10% Gold 2,325.25 +0.14% BTC 62,400 -2% ETH 3,357 -2.15%
S&P -0.01% Nasdaq +0.04% EuroStoxx +0.02% FTSE -0.16% Dax +0.05% SMI -0.04%
Macro :
- Japan Intervention Warnings Halt Yen’s 7-Day Slide: Macro Squawk
- China to create fund to rescue financial companies [no source cited]; the new fund would be used to prevent the collapse of financial firms - Nikkei
- China Talked With EU, Members for Over 80 Times on Tariff: CCTV
- China Talked With EU, Members for Over 80 Times on Tariff: CCTV
- Goldman Flags Tariffs as Key Risk to US Stocks From Elections
- Rahm Emanuel calls on US and Japan to accelerate missile production
Keep an eye on :
Keep an eye on :
- ALKB DC : ALK-Abello Boosts FY Revenue in Constant Currency Forecast
- ALKB DC : ALK-Abello Outlook Encouraging, But China ‘Stumble’: Street Wrap
- AMZN US : Formula 1 and Amazon Aim for AI-Powered ‘Personalized’ Viewing
- AAPL US : Apple Won’t Roll Out AI Tech in EU Market Over DMA Concerns
- AAPL US : Apple, Meta Have Discussed an AI Partnership -- WSJ
- ARGX BB : Argenx’s Vyvgart Shot Gains US Approval for Rare Nerve Disorder
- BMW GY : BMW Will Manufacture Fully Electric Vehicles in US Plant By 2026
- BA US : NASA, Boeing Delay Starliner Crew’s Return From Station Again
- BVIC LN : Pepsi gives its blessing to Carlsberg’s £3bn deal for Britvic
- CO FP : Casino Sells Corsica Unit to Rocca, Auchan Amid Debt Restructure
- CCR LN : Activist Engine Said to Call for Sale of Magners Cider Maker C&C
- DOO LN : Sky News: Private equity suitors aim to wrap up £2bn parcel delivery group Evri
- ENX FP : Business needs to calm down about French election, says Euronext CEO
- MBG GY : Mercedes-Benz Files Recall of 16,967 Vehicles: NHTSA
- NESN SW : Big Food Tries to Offset Obesity Drug Blow With Vitamins, Meals
- NHY NO : Macquarie Finalizes $332 Million Stake in Norsk Hydro Green Unit
- NOVOB DC : Ozempic Maker Novo Nordisk Scraps Plan for Dublin Factory: Times
- NVDA US : Nvidia Sales Grow So Fast That Wall Street Can’t Keep Up
- NVDA US : Qatar’s Ooredoo to Launch AI Platform Powered by Nvidia for MENA
- PAY LN : PayPoint Has Made A Strategic Investment Into Yodel Business
- PAY LN : PayPoint Has Made A Strategic Investment Into Yodel Business
- PRX NA : *PROSUS CONSOLIDATED E-COMMERCE TRADING PROFIT $38M IN FY24
- PRU LN : Prudential to Buy Back $2 Billion Worth of Insurer’s Own Shares
- ROG SW : Genentech Wins FDA Approval for Rare Blood Disease Therapy
- ROG SW : Roche Says EMA Has Initiated Review of Elevidys Filing in DMD
- STLN SW : Swiss Steel CFO Portman Leaves, Thomas Löhr Is New Finance Chief
- TLGO SM : SPAIN MULLS BUYING 29% OF TALGO FROM TRILANTIC: EL CONFIDENCIAL
- THG LN : THG PLC Keeps Expectations Unchanged
- TKA GY : Thyssenkrupp Rules Out Forced Job Cuts in Steel Overhaul: WAZ
- 2330 TT : ByteDance, Broadcom Explore AI Chip TSMC Will Make, Reuters Says
- UBSG SW : Bank M&A Won’t Help Europe. Deeper Markets Will: Paul J. Davies
UK listing reform is too important to be stalled by small stakeholders
Dual-class struggles
In postwar Paris, signs above kitchens often declared that the owner eats his own cooking, attesting to the cook’s confidence in the dishes amid the era’s food rationing.
This phrase springs to mind in the debate over proposed UK listing rules reforms. Corporate governance bodies and pension funds are mounting a co-ordinated, last-ditch bid to thwart changes that would allow dual-class share structures (DCSS) with no mandatory sunset clause and remove the need for shareholder approval for significant and related-party transactions.
In their letters to the UK Financial Conduct Authority, the International Corporate Governance Network and a coalition of UK pension funds pull no punches. They argue that the rule changes could deter investment in UK-listed shares, hike up the cost of capital for British firms, and erode London’s status as a financial centre — a triple whammy of woe for beleaguered Britain.
The pension funds state that the proposals (Alphaville emphasis):
. . . will make the UK less appealing as a destination for capital, exacerbating the current issues by making UK-listed companies less attractive to the kinds of high-quality, long-term investors that both our pre- and post-IPO companies . . . are looking for. In turn, this could raise the cost of capital for UK-listed companies as investors require a higher return for the increased risk.
Similarly, the ICGN’s letter — co-signed by shareholder and governance groups from Portugal, Italy, Canada, and Australia — argues that the UK’s high standards set it apart and draw in investors from all over the world. Relaxing them could scare away the foreign investors vital to the London market (our emphasis again):
The UK’s reputation for high quality listing and governance standards and resultant overseas investor confidence is both a competitive advantage and a positive differentiator for the UK market in a global context. According to the . . . Office for National Statistics, the proportion of shares in UK companies listed on the London Stock Exchange (LSE) held by overseas investors increased to a record high of 57.7% of the value of the UK stock market in 2022 . . . [B]eing listed on the UK premium segment is a powerful signal that the company adopts the highest governance standards and is well-placed to thrive over the long-term . . . [M]arket integrity is something that must be preserved, and not diluted.
The language carries an implied, but unmistakable, threat to divest from the UK.
The merits of the reforms are finely balanced and have been hotly debated. The ICGN cites studies suggesting that the benefits of dual-class share structures vanish after seven years, though the letter stops short of alleging any outright detriment. In fact, it’s not difficult to find counterexamples, and indeed the area is an academic minefield, with various studies struggling to find any link between governance and corporate performance. Whether long-term DCSS empowers visionaries or entrenches subpar management depends on myriad factors that fund managers have elsewhere been free to assess for themselves.
Whatever the pros and cons, two issues overshadow the arguments from the conscientious objectors. First, their investment choices belie their statements. Most of their equity portfolio is invested in companies and markets whose governance practices they decry. Second, their assumption that high standards attract investment is unsubstantiated and likely erroneous in the UK context.
For starters, the institutions represented by ICGN seem to have few qualms about investing in markets with less stringent standards, such as the US and various European countries. Its membership roster includes some of the largest investors in dual-class share structures and in markets that don’t require shareholder approval for significant and related-party transactions. Presumably, the corporate governance is good enough in those other venues to make their listed stocks investible.
So there’s a clear discrepancy between the governance groups’ advocacy and investment teams’ actions. The ICGN’s letter doesn’t address the inconsistency or explain why the UK should maintain uniquely tougher standards than the other markets in which its members happily invest.
UK pension funds, meanwhile, have largely forsaken the domestic stock market, accounting for four per cent of total holdings. Pension funds have rotated much of their assets out of listed equities, and to the extent they are still invested, they barely hold any UK shares. Take this snapshot from lead letter author Railpen’s factsheet on its Global Equity Fund:
Or the disclosed allocation of the “Global Investments (up to 100 per cent shares) Fund” of cosignatory People’s Partnership:
And the top 10 holdings are all American and include companies with multiple classes of shares:
It’s a similar story with another signatory, Brunel Pension Partnership. The top 20 holdings of each of its four non-regional “Active Equity” funds include only one UK-listed stock; the 80 names are predominantly American and include dual-class share structures and even some Chinese firms.
This is not a criticism of their investment decisions. Quite the opposite: multiple-class share companies like Alphabet and Meta have been phenomenal stocks to own! But the critics’ investment choices mean their implied threat to pull their money out of the London market rings hollow. British pension funds have, as HSBC analysts recently pointed out, “nothing left to sell.”
With so little skin in the (listed UK) game, the pension funds can scarcely be described as having “vested interests”. More like “uninvested interests”.
Similarly, it is difficult to give much credence to the groups’ claim that London’s gold-plated standards attract investment and thus result in a lower cost of capital. The commenters don’t cite any studies to substantiate this assertion; nor do they try to reconcile it with the bargain-basement rating and perennial underperformance of UK stocks.
Even as the ICGN and UK pension funds warn that lowering governance standards could deter investment, their own investment practices suggest a more nuanced reality. It’s probably more accurate to say that once governance reaches a threshold-acceptable level, other factors take precedence. Overly rigorous standards may not attract investment and may even be counterproductive by distracting management or discouraging companies from listing there.
The proposed listing reforms are the first, baby steps in the campaign to rehabilitate London as an equity market after a torrid period marred by delistings, reduced liquidity and an IPO drought. Much more will need to be done, especially around pensions, insurance and tax, and these efforts will attract scrutiny, debate and opposition from various interests. It would bode ill for the City’s revival if the UK couldn’t even amend its listing rules to align them with the rest of the world.
It is a fine line between being principled and priggish, and the UK has derived little benefit from wearing the hair shirt of its stricter standards.
China’s Foreign Direct Investment Falls Further in May
Foreign direct investment fell 28.2% for the January to May period
China’s foreign direct investment fell further in May, extending a streak of declines for the 12th straight month, official data showed.
China attracted 412.51 billion yuan ($56.81 billion) worth of foreign direct investment in the January to May period, down 28.2% from the same period last year, the Ministry of Commerce said late Friday.
That widened from the 27.9% drop recorded for the first four months of the year. The metric has been falling since June 2023.
China’s commerce ministry said the wider decline was mainly due to a high comparison base last year, adding that the actual scale of foreign investment is still at a historically high level.
“Currently the expectations and confidence of foreign investors are generally stable,” the ministry said after releasing the data.
The commerce ministry also highlighted an increase in the number of newly established foreign-invested firms in China, which rose 17.4% to 21,764 firms in the first five months.
The decline in FDI comes amid escalating tensions between China and the West, as more punitive measures have soured trade and economic relations. The U.S. and the European Union have introduced higher tariffs on Chinese electric vehicles, while Beijing has opened an antidumping probe into pork imports from the EU.
Bulk of UK renewables projects fail to get beyond planning stage
Analysis shows challenges the country faces in hitting clean energy targets
The majority of Britain’s onshore renewable energy projects are failing to get beyond the planning stage, according to analysis that highlights the challenges the country still faces in hitting its clean energy targets.
Sixty-three per cent of the roughly 4,000 applications submitted for wind, solar and battery projects between 2018 and 2023 have been refused, abandoned, withdrawn, or had their planning permission expire, according to Cornwall Insight, an energy consultancy.
A further 18 per cent have been sent back for revision, leaving only a fifth of projects either waiting for a planning decision or ready to be built.
Both the Conservative and Labour parties have promised planning reforms ahead of the general election on July 4, with the Tories pledging to cut from four years to one the typical time it takes to sign off major infrastructure projects.
“The UK has set ambitious targets to boost renewable energy capacity,” said Lucy Dolton, assets and infrastructure manager at Cornwall Insight. “These figures reveal a substantial shortfall in meeting these targets, something which is largely driven by the slow pace of progress in deploying renewable energy projects.”
The findings, shared with the Financial Times, come as the UK is under pressure to rapidly increase renewable energy capacity to meet its legally binding goal of cutting carbon emissions to net zero by 2050, and decarbonising the electricity system well before then.
The low rate of successful projects partly reflects a surge in speculative applications, according to researchers at Cornwall Insight, as developers submit multiple plans on the expectation that not all will succeed.
Developers complain that the planning system does not have enough resources to deal with the rising number of applications, while lengthy waits to get connections to electricity grids can stall projects’ progress through the approval process.
Nathan Bennett, at trade group RenewableUK, added: “There is a UK-wide resourcing challenge, a lack of people able to process consents in a timely manner.”
The analysis, which covers England, Scotland and Wales, showed a sharp annual rise in planning applications for renewable projects in recent years, with 66 per cent more applications in 2023 than in 2022.
At a regional level, 37 per cent of battery projects that applied for planning permission in the north-west were either waiting for a decision or ready to be built, compared with 19 per cent in the south-east. For solar projects in the south-west, the figure was 68 per cent.
The Labour party, which has a lead of around 20 points in opinion polls, wants to double onshore wind capacity, triple solar power capacity and quadruple offshore wind capacity by 2030 to meet its interim goal of decarbonising the electricity system by then. The Conservatives want to decarbonise the electricity system by 2035.
Labour has promised to make “major projects faster and cheaper by slashing red tape and to hire 300 planning officers. More than 3,000 left the profession between 2010 and 2020.
The Conservatives have also pledged to reform “outdated EU red tape” and “end frivolous legal challenges” to development.
National Grid and other electricity network owners have been working to try and speed up the grid connections queue. The National Grid’s electricity system operator said its latest proposals could halve the size of the queue. The government declined to comment.
Business needs to calm down about French election, says Euronext CEO
Stéphane Boujnah says both far-right and leftwing alliance would struggle to implement their plans in government
The French chief executive of Europe’s biggest stock exchange group has appealed for business leaders to stay “calm” ahead of the country’s looming snap elections, saying that neither the far-right party or a new leftwing alliance would be able to enact their policy pledges.
Stéphane Boujnah, head of Paris-based Euronext, told the Financial Times that the plans of both Marine Le Pen’s Rassemblement National (RN) party — which polls suggest will win the first round vote next week — and the leftwing Nouveau Front Populaire (NFP) are “a concern for the future of the French economy”.
But he added: “I suggest that everyone keep calm and wait until July 7 or July 8 to analyse the results.
“I can hardly imagine that in the event one of these two forces get into the office that they will be able to implement everything they promise because of the combination of rating agencies, unions”, pressure from the EU and the president’s power, which would “mitigate the impact of any outlier or [inexperienced] party” doing what they want.
His comments come as investors fret over the potential impact of the RN or the NFP if they were to come to power, since both promise a break with President Emmanuel Macron’s pro-business policies.
France’s Cac 40 stock index has fallen about 5 per cent while the gap between French and German benchmark borrowing costs — a market barometer for French political risks — has soared since Macron’s announcement earlier this month.
French executives are privately seeking to court the RN, which is yet to issue a formal economic programme, but has said it wants to cut value added tax on energy and potentially lower the retirement age. Both moves would add to France’s already heavy public debt.
Meanwhile the leftist NFP, currently second in the polls, has put forward a radical tax-and-spend agenda, which includes raising wealth and inheritance taxes and increasing income tax for top earners. The NFP is a group that includes the far-left party known as La France Insoumise (LFI), centre-left Socialists, Greens and Communists.
Boujnah, who has led Euronext since 2015 and previously worked as a banker at Santander and Deutsche Bank, said the key question for both the NFP and the RN “is how long will it take for them to water down explicitly their ambition”. It was one thing “to propose things that sound [and] smell extreme to be voted; another one . . . to run a country and be confronted with complexity”, he said.
“The risk of a Liz Truss mini budget, forex crisis does not exist because of the euro,” Boujnah said, referring to the gilt market chaos triggered by the former UK Prime Minister in 2022. France’s finance minister last week warned the country could face a similar crisis if the RN wins the election.
The European Central Bank’s chief economist last week dismissed the idea that intervention would be required in France’s government debt market after the sell-off.
Boujnah, whose company runs trading and listing venues in cities including Paris, Amsterdam and Lisbon, added that either outcome “is definitely less good than with the incumbent Macron because Macron is definitely one of the most pro-Europe, pro-business presidents that France ever had, and I believe that it will be different”.
“There are two unknowns: how much time it would take both of them to work down their programmes when they face reality, and second, whether they mean what they say,” he added.
At a press conference in Paris on Friday, the NFP outlined plans to increase spending by €25bn this year and then take the total to €150bn by 2027, which is the end of Macron’s term. The spending will go to boost spending power for households, fight climate change, and invest in public services.
“Our spending will be covered by our revenue,” said LFI’s Éric Coquerel, referring to planned tax hikes. He pledged they would not increase France’s budget deficit.
The RN has not costed its policies but party chief Jordan Bardella, its potential prime minister, said on Thursday that immediate measures to lower VAT on fuel and electricity from 20 to 5.5 per cent would cost €12bn.
Proposals by both parties to repeal Macron’s pension reform and reduce the age of retirement from 64 to 62 for most citizens would cost €13bn, based on expected savings from Macron’s reform.
HPS amasses $21bn private credit fund as it plots expansion
Investment manager has doubled in size in four years and is now considering IPO or merger
HPS Investment Partners has raised one of the largest private credit funds on record, confirming its spot as one of the leaders in the industry as the firm debates a possible public listing or merger.
HPS amassed $21.1bn for its flagship Specialty Loan Fund VI, its largest fundraising since the firm was founded in 2007. The mammoth fund received $14.3bn of commitments from investors, one of the largest sums ever raised by a traditional direct lending fund, according to data provider Preqin. The $21.1bn figure also includes billions of dollars of bank loans, which increase its ability to invest.
The fundraising, following on the heels of a string of large hauls last year, comes as leaders at HPS consider options that could see the firm go public or merge with a rival private investment group, according to people briefed on the matter. The firm manages $114bn, more than double its size from the start of 2020.
“Performance attracts capital,” Michael Patterson, a governing partner of HPS, said in an interview. “You then have to put that capital to work [while] maintaining that performance. This is a big, very public demonstration that’s what is happening at HPS.”
The firm and several of its rivals have over the past four years become some of the most important players on Wall Street, lending to a growing list of blue-chip companies, buying loan books that banks are keen to shed and taking on risks that traditional lenders have retreated from.
Their ascension has been driven by strong performance and a fundraising prowess that has helped the industry accumulate hundreds of billions of dollars in recent years, boosting managers such as Ares, Apollo, KKR, Blackstone and Sixth Street. Many have become go-to portfolio managers for insurance companies — including insurers they own themselves — replacing traditional corporate bond and loan investors.
Patterson said HPS saw “significant” areas to grow the company’s business, including in the fast-growing area of private investment grade and asset-backed debt. The areas have been a focus for competitors who are now financing aircraft leases, music royalty streams and even semiconductor manufacturing plants.
HPS was formed in 2007 by Scott Kapnick, Scot French and Patterson, before the financial crisis and resulting regulation prompted many banks to scale back the types of lending they were doing. All three had worked at Goldman Sachs during their careers before starting the new firm, which they built within JPMorgan Chase’s asset management business.
But as post-crisis regulation bit and JPMorgan’s commitment to the unit wavered, they moved to exit the bank. Top executives ultimately bought the business in 2016, separating HPS from JPMorgan with new investors Dyal Capital and Guardian Life purchasing stakes in the firm.
The firm is now debating its next steps. It has filed documents with securities regulators in preparation for a potential initial public offering, according to people briefed on the matter. A listing would allow HPS to reward senior staff or pay for the acquisition of a rival. The firm could also merge with a rival private investment group looking to bolster its private credit bona fides. Insiders caution that no decision has been made and HPS could remain independent. HPS declined to comment on its business plans.
The new Speciality Loan Fund VI lends to relatively risky companies in need of capital, and the fund often steps in ahead of restructurings or difficult refinancings. The typical loan the fund offers carries an interest rate 7 percentage points above Sofr, the floating interest rate benchmark. That can yield between 12 and 13 per cent today.
HPS last year provided a €1.5bn loan to finance the buyout of packaging maker Constantia by One Rock Capital as well as an $800mn loan to medical device manufacturer Tecomet.