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Hedge funds seek to expand into private credit

Millennium, Point72 and Third Point among those seeking to push into popular asset class

Big hedge funds are pushing into private credit as they seek to establish themselves as diversified financial institutions, with Millennium Management, Point72 and Third Point all looking to launch new funds and strategies.

Third Point, a $20bn firm with a history as an activist investor, plans to launch a publicly traded private credit fund next month called Third Point Private Capital Partners, which will lend directly to businesses.

Millennium, which manages more than $75bn in assets, has been weighing whether to launch a separate fund to invest in less liquid assets, including private credit, its first new fund in more than three decades.

Steve Cohen’s Point72 earlier this year hired Todd Hirsch, formerly a senior managing director at Blackstone, to lead its private credit strategy. He has also recruited Alex Greeley from Linden Partners, Jay Ditmarsch from Carlyle and Rudder Zhang from Brookfield Asset Management.

“Hedge funds are in the asset gathering business,” said one leading banker to hedge funds. “The boom in private credit has really attracted their attention.”

Millennium, Point72 and Third Point declined to comment.

Private credit — or non-bank lending that encompasses everything from risky corporate loans to debts tied to music royalties — has become a huge growth area as asset managers displace banks as lenders.

Millennium, Point72 and Third Point — among the world’s largest and oldest hedge funds — have typically specialised in trading so-called liquid securities, such as equities, fixed income and commodities, that they can move in and out of quickly.

But private credit offers a way for them to target higher returns, access longer-term capital and cement their positions as more than just hedge funds, attracting potentially richer valuations for their businesses.

“If you’re the founder of a hedge fund and hitting that retirement succession phase, if you’re going to cash out, how am I going to get the best multiple?” the banker said.

Their investors, such as pension funds, endowments and sovereign wealth funds, were also increasingly looking for a “one-stop shop”, they added.

Third Point’s founder Dan Loeb said in April that he had looked on as the enterprise values of alternative asset managers such as Brookfield and Apollo soared, and that moving into private credit was one way to seek to compete with their pace of growth.

“We’ve always been involved in credit . . . [but] I wanted access to opportunities in the credit world that I wasn’t getting through public high-yield and structured debt,” he said. “And I realised I had to elbow my way into the party in the private credit world.”

Third Point has brought on a team of investors from Madison Capital Partners and Credit Suisse to lead the effort, according to an investor document seen by the Financial Times. It expects to make the majority of its loans to private equity firms and their portfolio companies, according to the document, even at a time when leveraged buyouts have largely stalled.

Loeb himself was committing more than $100mn to the publicly traded fund, according to two people familiar with the strategy. The hedge fund plans to focus on parts of the market that are not already dominated by bigger players, such as lending to mid-sized companies, added one of the people.

Cohen of Point72 said earlier this year that he wanted to expand into private credit in part because his firm was “more than just a hedge fund”. “Why define myself as just a hedge fund . . . I can do more than that,” he said.

Yet the hedge funds that embraced private credit years ago still have modestly sized strategies in comparison with their broader firm’s investments.

Multi-strategy firm DE Shaw, which first raised a private credit-focused fund more than a decade ago, remains a relatively small player. Its latest funds have drawn in about $1bn from investors, and the hedge fund currently has about $5bn devoted to the strategy, according to two people familiar with the matter. This is a small fraction of the firm’s overall $65bn in assets under management.

There is already intense competition between established private credit players, including Apollo Global Management, Ares Management and Blackstone, to find deals and fundraise the billions of dollars they need to remain competitive.

“You can’t just raise some capital and say, hey we’re open for business,” said one executive at a private credit firm.

“Across the board, hedge funds or otherwise, you’re going to see that some of these newer entrants, or what I might call tourists, aren’t going to be able to generate the same types of returns as the more established platforms.”

Mainstream assets managers such as BlackRock, Franklin Templeton and T Rowe Price have also jumped into the space through multibillion-dollar acquisitions. Rating agency Moody’s projects the asset class could grow to $3tn by 2028.

Advisers warned that hedge fund forays into private credit were not straightforward.

“What happens is these managers get bored with their main business, and then they want to do different things,” said one adviser. “But it’s wishful thinking on their part to think they can become like a Blue Owl or an Apollo or Cerberus.”

European ports ‘overflowing’ as Trump tariffs cause congestion

Barges and container ships face unusually long waits at major hubs with problems expected to last several months

Donald Trump’s erratic tariff policies combined with low river levels are causing Europe’s worst supply chain congestion since the coronavirus pandemic, shipping and logistics companies warn.

Barges have been left waiting days to pick up goods and container ships have faced long waits, with the problems — worst at the ports of Rotterdam, Antwerp and Hamburg — expected to persist for at least several months.

“All the large hubs are overflowing,” said Caesar Luikenaar, managing director of WEC Lines, a Netherlands-based shipping company. A number of important ports across Europe were operating at their maximum capacity, Luikenaar said.

Albert van Ommen, chief executive of the Netherlands-based logistics company Euro-Rijn Group, said he thought the congestion was the worst since the pandemic, when cargo flows remained unexpectedly resilient and overwhelmed ports that were struggling with staffing.

The problems are the latest blow to a worldwide logistics system that had until recently allowed many companies to maintain minimal stock inventories, secure in the knowledge that scheduled shipping services would replenish stock regularly, to a fixed timetable.

One German logistics company, Contargo, has warned customers that barges are waiting an average of 66 hours to load containers at Antwerp and 77 hours at Rotterdam. Barges are normally offered fixed time slots to load at container terminals, to ensure they can remove the containers quickly and efficiently.

Casper Ellerbaek, a senior executive at Germany’s DHL, said the delays had not yet forced any of his customers to halt production because of component shortages but that such “drama” remained a risk.

Van Ommen said that at Antwerp, Europe’s second-busiest container port, ships were unloading between three and five days behind schedule.

“When we collect the containers by barge, they can’t load on time because the sea vessels aren’t on time,” Van Ommen said. “In the end, the customer or final end user is getting his stuff late.”

Logistics companies blamed the crisis on issues including the sharp changes of US tariff policy under US President Donald Trump, which have forced container shipping lines to revamp their networks to accommodate sharply changing worldwide trade flows.

The problems are being further exacerbated by restrictions on the loading of barges on the River Rhine after a dry spring left the water unusually shallow.

At the same time, terminals have been coping with a substantial realignment of alliances between shipping lines after Switzerland’s Mediterranean Shipping Company and Denmark’s Maersk, the two biggest container lines, ended their previous co-operation agreement. Such changes can lead to short-term disruption because they prompt lines to change their schedules or switch to different terminals.

Meanwhile, European ports are also coping with increased import volumes from Asia, as high US tariffs cause goods to be diverted elsewhere.

DHL’s Ellerbaek blamed the sharp growth in container volumes from Asia to Europe — which he estimated was running at about 7 per cent year-on-year — on changes of strategy by Asian exporters.

“If you look at the growth levels on the different trades, there’s no doubt that we’ve seen Europe take in a lot of share that historically would have been meant for the US market,” Ellerbaek said.

Industry figures said terminal operators — mostly private companies that lease quay space from publicly owned port authorities — were rushing to recruit new staff and buy new equipment to try to alleviate the strains.

ECT, one of the main terminal operators in Rotterdam, acknowledged the facility was “quite busy” but insisted the phenomenon was common across ports in northern Europe.

It pointed to the changes in alliances, rising demand and “geopolitical and economic uncertainties” as reasons for the issues. HHLA, the main terminal operator in Hamburg, did not immediately respond to a request for comment.

Mark Rosenberg, chief commercial officer for ports and terminals at Dubai’s DP World, which owns terminals in locations including Antwerp and Rotterdam, said the company’s teams were “working diligently” to manage the flow of cargo and “mitigate disruption wherever possible”.

“DP World remains committed to maintaining high service levels, investing in capacity, and driving resilience across our European terminal network to support our customers through this period of industry-wide transformation,” Rosenberg said.

The Port Authority of Antwerp-Bruges, the public sector landlord for the port, acknowledged there was “prolonged, increased congestion”.

It added: “This leads to short-term operational inefficiencies, but our systems continue to function within the planned buffers.”

However, some in the industry expressed pessimism that the congestion could be easily resolved.

Luikenaar said some shipping companies serving the local market in Europe were being forced to spend a week, instead of the normal maximum of three days, collecting containers from different terminals at Rotterdam for distribution to the region’s ports.

He said it would take years for investments in capacity to resolve all of the problems.

He added: “This is not something that goes easily away.”

Additional customs inspections cause long delays that threaten to disrupt global supply chains

China’s export controls are spilling over into products beyond the rare earths and magnets officially identified by Beijing, threatening broader supply chain disruption and undermining US claims that a new trade deal had resolved delays to shipments.

Beijing, which dominates global supply of critical minerals, began requiring licences for exports of seven rare earth metals and related magnet materials in April in retaliation for Donald Trump’s sweeping tariffs on Chinese imports.

On June 10, the US said it had agreed with China that rare earth shipments should be expedited, reviving a 90-day trade truce on their tariff war reached the previous month in Geneva.

But China’s commerce ministry and customs officials have started to demand additional inspections and third-party chemical testing and analysis of products that are not included in the original control list, according to Chinese companies and western industry executives.

“As long as it contains even a single sensitive word [such as magnet], customs won’t release it — it will trigger an inspection, and once that starts, it can take one or two months,” said a salesperson at a Chinese magnet exporter. 

“For example, titanium rods and zirconium tubes are also being held up,” the person said. “The actual controlled item is titanium powder. While our rods and tubes are not on the control list, they still aren’t being cleared.”

A representative of a second Chinese company said it had been “heavily affected” and that logistics companies were “refusing to handle magnets”. The company serves customers across various sectors including magnetic separators, industrial filtration, apparel, food and electronic components.

“Even if the products don’t contain controlled substances . . . they worry that, if customs inspect the shipment, it could affect other goods in the same container and cause delays for the whole shipment,” the person said. 

China’s General Administration of Customs and Ministry of Commerce did not respond to questions. 

Beijing’s export controls are a significant point of leverage over its trading partners. The country dominates the processing of rare earths and the manufacturing of the magnets in which they are used. Rare earths and their related magnets are widely deployed in electronics, heavy machinery and defence applications such as in fighter jets.

In response to US curbs on tech exports to China, Beijing has over the past two years expanded controls over other strategic materials crucial to chip manufacturing, including gallium, germanium, antimony, graphite and tungsten. 

The Financial Times reported earlier this month that the commerce ministry has been asking for production details and confidential lists of customers to secure rare earths and magnets, raising concerns about potential misuse of data and exposure of trade secrets.

According to several industry insiders, the commerce ministry’s export control licence approval process has improved since it was first implemented in April.

Over recent weeks, European companies, industry associations and EU officials have been providing the ministry with lists of the “most urgent applications”. These have mostly been approved by the Chinese side, but European groups said that, under ideal circumstances, more companies and countries would be covered.

“We have seen an improvement of licence approvals recently, but in order to stabilise global supply chains, we need to switch from the current firefighting mode to a regular, stable and predictable approval process,” said Jens Eskelund, president of the EU Chamber of Commerce in China. 

According to a survey conducted among western companies in China in June, more than 60 per cent of respondents reported that their export applications had not been approved.

One senior European executive in China who requested anonymity said some companies that had obtained an export licence for rare earths and related magnets had subsequently encountered additional delays, due to the customs authorities’ new chemical testing and analysis requirements. 

“It is like a black box: you have no idea who is doing the analysis, how long it takes, where we are in the process. This is very frustrating,” the person said.

Some exporters with licences were choosing to airfreight the approved magnets, rather than ship them. While more expensive, this is believed to lower the chances of being hit with additional testing and analysis requirements. 

“Our products are heavy but small, so we can still use express shipping — though that also carries some risk, inspections there are less strict,” another Chinese magnet salesperson said.

Targeted attacks showed intelligence prowess and took out a layer of leaders, but a new generation could blunt the impact

When Israel’s attacks on Iran began before dawn on June 13, explosions shattered the homes of some of Iran’s top scientists, killing nine people who had worked for decades on Tehran’s nuclear program. All nine were killed in near-simultaneous attacks to prevent them from going into hiding, according to people familiar with the attacks.

Eleven days later, hours before a cease-fire brokered by the U.S. and Qatar took effect Wednesday, an attack in northern Iran killed another scientist, Sayyed Seddighi Saber, according to Israeli and Iranian state media. He was sanctioned just weeks ago by the U.S. for his nuclear weapons-related work.

The attack on the scientists was considered so fantastical by even its planners that it was called “Operation Narnia,” after the fictional C.S. Lewis series.

The killings were the culmination of 15 years of efforts to wipe out one of Iran’s most prized assets—the top cadre of scientists who worked on a secret nuclear-weapons-related program that Iran had pursued at least until 2003. Israel has closely tracked the scientists ever since.

While the U.S. and Israel are trying to assess the extent of damage done by their strikes on Iran’s main nuclear sites, Israeli Prime Minister Benjamin Netanyahu has claimed the killings have pushed back Iran’s nuclear program by years.

Former officials and experts say the attacks against the scientists delivered a powerful blow against Iran’s ability to race for the bomb in the aftermath of the conflict. Most of the people killed, a total of at least 11 by the time a cease-fire took effect Wednesday, had hands-on experience in testing and building components of a warhead, like the detonation systems, high explosives and the neutron sources that trigger the chain reaction.

“It’s one thing to lose that expertise slowly over time, especially if you are not trying to actually build a bomb. You have time to replace them,” said Eric Brewer, who was U.S. national security director for counterproliferation. “But if you’re in the middle of trying to build a bomb or if you see that as a potential near-term option, then it’s going to have a bigger impact.”

Iran has retained and passed a lot of that expertise on to a new generation of scientists. It has denied ever having sought the bomb, saying its program is peaceful.

The U.N. atomic agency said Iran had a nuclear-weapons-related program, known as the AMAD project, until 2003. Israeli and Western officials say that Iran’s nuclear weapons work has continued in a more fragmented way since then, leaving Iran within months of being able to build a bomb. But much of that work has been confined to studies and computer modeling, always carefully designed to be explained away as conventional military work.

A week after the June 13 attacks, Israel used a drone to kill another scientist who was being kept in what was supposed to be a safe house in Tehran. The person hasn’t been named. Israel also said last week it had bombed the Tehran headquarters of the SPND, the successor organization of AMAD.

The deadly airstrikes were the first to target Iran’s nuclear scientists since 2020, when Mohsen Fakhrizadeh was gunned down with a remote-controlled weapon. Israel has never denied or confirmed its role in the deaths of five Iranian scientists between 2010 and 2020.

On Saturday, thousands attended the funerals of the scientists and other prominent Iranians killed during the conflict, Iranian state media said. Some of the coffins carried family members of the scientists, the semi-official Fars News Agency reported. Israel hasn’t commented on whether family members were also killed in the strikes targeting the scientists.

Israel said its actions have stopped Iran from crossing the threshold to having a nuclear weapon.

Among the most important targets was Fereydoon Abbasi-Devani, the former head of the Atomic Agency of Iran and one of the founders of Iran’s nuclear weapons-related work, according to David Albright, president of the Institute for Science and International Security. Abbasi-Devani was a manager and senior adviser to the AMAD program, with his scientific work focusing on the development of neutron initiators, which fire neutrons into the core of a weapon to trigger a chain reaction.

Abbasi-Devani survived a car-bomb assassination attempt in 2010 on the same day another Iranian nuclear scientist was killed. In a recent TV interview, Abbasi-Devani said Iran had all the knowledge it needed for a nuclear weapon. “If they tell me to build a bomb, I will build it,” he said.

Another killed scientist was Mohammad Mehdi Teranchi, who led a unit under Fakhrizadeh focusing on high explosives, which are needed to detonate a nuclear weapon, according to the U.S. Treasury Department. He later became a professor at the physics department of Tehran’s prestigious Shahid Beheshti University, where a large number of nuclear scientists, including Abbasi-Devani, worked, said Ronen Solomon, an Israeli security analyst.

One of the last targets, Sayyed Seddighi Saber, was head of the key Shahid Karimi Group, which runs explosives-related projects for the SPND program. A spokeswoman for the Israeli military declined to name the person killed.

“Seddighi Saber is linked to projects including research and testing applicable to the development of nuclear explosive devices,” the U.S. Treasury Department said when it sanctioned him on May 12.

Abbasi-Devani and Teranchi were also sanctioned by the U.S. along with others for their nuclear-related work. So was Shahid Beheshti University.

Andrea Stricker, a research fellow at the Foundation for Defence of Democracies, a Washington think tank, said Israel’s targeted killings took out the “brain trust of nuclear scientists” and dealt “a blow to Iran’s ability to draw on people who have past and possibly ongoing experience in constructing specific components of nuclear weapons.”

Yet others describe a sophisticated system Iran had developed for retaining and advancing its nuclear-weapons expertise. That system has allowed Iran’s nuclear program to advance even as its top scientists were being killed.

Iran has for years maintained a nuclear archive detailing all the work it had carried out before 2003, as well as Tehran’s future plans. It was discovered and raided by Israeli commandos in 2018. Iran kept old nuclear-weapons-related equipment, including undeclared enriched uranium, just down the road from the archive. It was dispersed in 2018 and the U.N. atomic energy agency has been demanding answers ever since to where it was sent.

Iran has used universities like Shahid Beheshti, the Sharif University of Technology and Malek Ashtar University to keep alive its nuclear-weapons expertise over the past two decades, Solomon said.

At these universities, Iran often matches up its nuclear scientists on experiments and other studies with younger students, Solomon said. Two of the scientists killed on June 13, Ahmadreza Zolfaghari and Abdulhamid Minouchehr, published an article in the Annals of Nuclear Energy in June 2024 that used advanced computer modeling to show how neutron sources behave in a chain reaction, he said.

That information can be used for civilian purposes, like building a nuclear reactor, or to help trigger a chain reaction in a nuclear weapon.

“There are the professors, and they are teaching the younger scientists…to enter the heart of the Iranian nuclear program,” Solomon said.