Serrari Group

Sixth Street, a prominent U.S.-based investment firm, has announced an ambitious European expansion, driven by the growth of private credit markets. The firm is establishing a new regional headquarters in London’s Mayfair district and plans to add up to 20 new employees this year, marking its largest recruitment drive in Europe to date.

Strategic Growth in Private Markets

Julian Salisbury, co-chief investment officer at Sixth Street, highlighted the positive outlook for private markets in Europe. He noted that the firm’s expansion offers companies and entrepreneurs more opportunities to stay private longer or grow their businesses with the support of long-term private investors. This expansion reflects a broader trend of U.S. investment firms, including Ares Capital and Apollo Global Management, increasingly entering Europe’s developing private credit markets.

Meeting Market Demand

The private credit sector, while still smaller compared to traditional bank lending, is growing rapidly. Strict lending regulations are making it more challenging for banks to manage lending risks, leading them to partner with private credit firms. “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,” explained Salisbury.

Real Estate and Broader Investments

In addition to its focus on private credit, Sixth Street is also expanding its real estate business in Europe. Recent strategic hires, such as Marcos Alvarado from Safehold Inc., signal the firm’s commitment to strengthening this division. Sixth Street has made several significant acquisitions, including a portfolio of Italian supermarkets and shopping malls valued at 258 million euros.

London as a Strategic Hub

London’s strong talent pool made it an ideal location for Sixth Street’s European operations. The firm’s new office on Dover Street, near the Ritz Hotel, will support this growth, allowing the team to expand further. Salisbury, who joined Sixth Street after a long career at Goldman Sachs, emphasized the importance of London’s financial services industry, especially as the UK approaches its national elections.

Future Prospects

Sixth Street’s global ambitions extend beyond Europe. The firm has invested in a diverse range of businesses, from Airbnb to the professional women’s soccer franchise Bay FC. It launched a structured products business in 2022 and has attracted high-profile hires like Michael Dryden from Credit Suisse. “Private credit markets are expected to double over the next five years, and we see organic growth potential across all our credit strategies,” Salisbury stated.

As Sixth Street navigates the expanding private credit sector, it remains focused on leveraging its expertise and strategic positioning to drive growth, even as regulators and financiers express concerns about the sector’s rapid expansion and relative lack of supervision. With its strategic investments and ambitious plans, Sixth Street is well-positioned to shape the future of private credit and real estate markets in Europe and beyond.

photo source: Google

By: Montel Kamau

Serrari Financial Analyst

3rd July, 2024

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