Category Finance News

By PARKERYL Finance News

AE Industrial’s ‘Captain’ Kirk Konert On Firefly Beating Musk’s SpaceX, PE Space Race


Kirk Konert is a Managing Partner at AE Industrial, where he sits on the board of several portfolio companies, including Firefly Aerospace, BigBear.ai, and York Space Systems. Firefly became the first private company to land a spacecraft on the moon, beating Elon Musk’s SpaceX to the punch and underscoring the new era of commercialized space exploration.

Global Finance: Congrats on Firefly’s Blue Ghost, which completed its lunar mission in March.

Kirk Konert:  It was a little surreal and unbelievable, watching the Blue Ghost softly land on the moon. Firefly is the first commercial company to have accomplished this feat. So therefore, AE Industrial is the only private equity firm with a portfolio company that has achieved this milestone. There’s a lot of pride on our team. Obviously, we’re not the engineers, but we have helped the company get to where it is today, and we’re excited to play a small part in that.

GF: Are we officially in the era of space privatization?

Konert: I believe so. We are now past the point of asking, “Is this an investable sector for private equity and private investment firms?” We were in this sector earlier than others, but now we’re seeing large blue chip buyout firms taking substantial bets on the space industry, like Advent International with their $6.4 billion acquisition of Maxar, and KKR’s acquisition of OHB SE, a German space and technology company, last year. People are starting to believe that there’s a real opportunity to invest capital. Competition for assets has increased, and that’s a great sign. It’s good to be part of a healthy ecosystem where you have larger buyout firms participating alongside middle market firms like ours.

GF: LPs are growing concerned about their lack of returns. What’s their reaction to potential returns from the space sector?

Konert: Initially, LPs were a little skeptical. They sort of looked at it as an industry that’s in too early of a stage, and riskier than your traditional buyout. So far, we’ve been able to show that’s not necessarily the case. The companies we’re investing in are underpinned by real demand, real contracts and real growth. That’s different than saying, “Hey, we’re investing in a venture company that could make a satellite that could do XYZ.” We’re investing in companies that are not dissimilar to other end markets we focus on, such as defense, aerospace and industrial services. It just happens to be that this is a sector that maybe had a stigma of being a little riskier. But we kind of view space as just another domain, and we’re investing in a way that aligns with what our LPs expect.

GF: How does that pitch go whenever an LP is skeptical?

Konert: We’re always speaking to our existing investors about how we’re spending their capital and managing risk versus return. And for new investors, we present case studies of what we’ve done. American Pacific Corporation, for example, is a specialty materials manufacturer for national security and space programs that we originally bought from a family and improved. We sold it to New Market Corp. last year for $700 million. We also point to Redwire. At the time, we made a picks-and-shovels play for this “space gold rush.” We predicted it would happen and [the IPO] was great for investors. So, we show those success stories and say, “Look, you might see headlines of a rocket blowing up… We’re not investing in that. We’re investing in technology that works.” Also, there’s additional value that investors don’t price into the space market—things like Blue Ghost landing on the moon. We didn’t price that in when we invested in the company. But that’s obviously a huge value creative event and we will benefit from that option value that we didn’t underwrite in our model.

GF: I understand you earned the name Captain Kirk because of your space expertise. What’s the backstory?

Konert: [Laughs] The backstory is maybe not as inspiring as you might think. We were investing in the supply chain for commercial aerospace and defense businesses; there was a space component to those assets. And we started to notice that SpaceX was a line item in our company and thought, “Is this something we want to focus on?” We started digging and saw similarities to what happened in aviation where flying was very expensive, but that cost curve came down substantially. And then asset manufacturing went up substantially. So, we wondered how we can invest in that embedded growth and take a deep dive into that industry. It’s been a decade-long experience to become experts in the sector. But we believe in the mission; it gets us out of bed every day to say we’re investing in technologies that matter for the long term, whether it’s for human exploration to Mars, or protecting critical infrastructure for national security.

GF: What are the key barriers of entry for a company like Firefly in a world where Musk dominates media reaction and SpaceX is mainstream?

Konert: You got to give credit to SpaceX for changing the game. It’s the reason why we can invest in the space sector, but there’s always room for other great companies to participate in the market. And I think Firefly is one of them. They serve a specific niche that SpaceX does not serve. And I think that’s how we view it. We can be complimentary to what SpaceX is doing. Their Falcon 9 is not a perfect rocket for the missions that Firefly’s Alpha should be serving. It’s similar to what we’ve seen in legacy businesses. We’re not going to go head-to-head with Lockheed Martin and develop an F35 [fighter jet]. We’re going to find mission areas around that where we can carve out a niche and hopefully grow the entire pie for everyone in the space market. So, I think that’s how we look at SpaceX. We will beat them in some areas.

GF: You already did.

Konert: We did. Healthy competition is good for the incumbent, or the dominant player. Without that, you create complacency and overall stagnation of the market. Great competition creates a bigger, better, healthier market. I think SpaceX welcomes that. Hopefully Elon views it the same way. I think he does based on his view of the world. SpaceX is good at making satellites for Starlink and for their constellation. But our portfolio company, York Space, is better at some mission areas than SpaceX. York is good at making satellites for missions that are more bespoke and custom for national security. That’s a different part of the market where we can both play. We’ll beat them in some places, and they’ll beat us in some places.

GF: Earlier this month, Firefly secured a US Defense Department contract for an on-orbit mission in 2027, but SpaceX benefits from receiving generous US government contracts. What are the roles that regulators play in this sector and is there room for a company like Firefly to score contracts as well?

Konert: Investing in space has a lot of tailwinds as it relates to the US. The pacing threat is China, which is, in some ways, beating us in some areas within the space market. The headlines are one thing. But if you look at the broader community, they’re saying we need to have more investment in space—period. SpaceX will have a role to play. So will other companies like Firefly and York. We think the best solution, the best technology and the best cost will ultimately win the day. From our standpoint, we see a lot of opportunity and we’re also going to continue to find commercial and other markets to play in that can be additional growth areas. So, we see it as a positive that space is so in the forefront of the Trump administration’s mind. There will be more contracts for SpaceX, but I think there’ll be more contracts for the industry overall.

GF: Are there other sectors besides space, like drones or AI, where similar growth is evident?

Kirk: This year, one of our space-related portfolio companies, Redwire, acquired a drone company called Edge Autonomy. Now they have both a low-Earth orbit satellite just above the atmosphere, plus a drone company that’ll operate just below that—full domain expertise within one company. Before that deal, AeroVironment, a major drone maker, bought a space- and defense-tech company called BlueHalo for $4.1 billion.

We have investments in both those areas and see a convergence of it all to some degree. AI is going to be part of every company. Going forward, if you don’t have an AI strategy, you’re probably going to lose. AI will be used for space exploration, too. We used AI for Blue Ghost’s moon landing, for example. It’s also a key component of how you invest in your own portfolio companies. Our strategy is to invest in companies that take AI models and use their domain expertise to apply those models to help the customer. What we’re not investing in is large language models. We’ll let Elon Musk and Sam Altman do that work. We’ll focus on taking their models to apply it to the problems we’re trying to solve in our core sectors.

The Space Boom Is Here

Falling costs, private investment, and new business opportunities are fueling a rapidly expanding space economy poised for major growth.

Read More



Source link

By PARKERYL Finance News

CK Hutchison Denies $1.2 Billion Panama Claim Amid US-China Canal Tensions


Home News CK Hutchison Denies $1.2 Billion Panama Claim Amid US-China Canal Tensions

CK Hutchison, the Hong Kong-based parent of Panama Ports Company (PPC), denied on Wednesday allegations that it owes $1.2 billion to Panama—disputes that surfaced as US-China tensions intensify over canal infrastructure and regional influence.

Panama’s comptroller general announced this week that an audit of Panama Ports Company (PPC), a subsidiary of Hong Kong conglomerate CK Hutchison, uncovered irregularities in the renewal of a 25-year concession agreement. 

The allegations are “absolutely contrary to reality,” PPC said in a statement.

“At no time has PPC failed to comply with the payments corresponding to the rates applicable to port operators in Panama for the movement of containers,” the company said in a statement.

The dispute surfaced on the same day US Defense Secretary Pete Hegseth arrived in Panama for a regional security summit.

Hegseth met with Panamanian President José Raúl Mulino and later attended a ribbon cutting ceremony for a new US-financed dock at the Vasco Nuñez de Balboa Naval Base. At the podium, Hegseth declared that the US “will take back the Panama Canal from China’s influence.”

The dispute comes amid mounting geopolitical friction in the region. China is Panama’s largest trading partner and a dominant force in Latin American infrastructure, largely due to its demand for raw materials and commodities (i.e., soybeans). Roughly 20% of all cargo passing through the canal is either bound for or originates from China, making it the second-largest user after the US.

Beijing swiftly condemned CK Hutchison’s recent decision to sell its Panama port operations to a consortium led by US-based asset manager BlackRock.

The $19 billion deal, expected to generate substantial proceeds for the company founded by Hong Kong billionaire Li Ka-shing, was publicly celebrated by US President Donald Trump as a move to “take back” control of the strategic waterway.

Since taking office in January, Trump has repeatedly claimed that the US needs control of the Panama Canal and Greenland “for national security.”

While Panama has formally withdrawn from China’s Belt and Road Initiative (BRI), trade between China and Latin America remains strong.

Brazil, now China’s largest regional trading partner, is not a BRI signatory highlighting Beijing’s economic footprint in the region is likely to remain resilient.

Currently, the Trump administration has a 104% tariff on imports from China. Beijing clapped back with additional tariffs on US goods, with President Xi Jinping stating Wednesday that China will build a “shared future with neighboring countries.”

Later that day, Trump announced a 90-day pause on the new tariffs for certain countries but raised existing tariffs imposed on imports from China to 125%, “effective immediately.”



Source link

By PARKERYL Finance News

Bulgaria: Return To Growth | Global Finance Magazine


Vital Statistics
Location: Southeastern Europe, adjacent to the Black Sea
Neighbors: Romania, Greece, Turkey, Serbia, North Macedonia
Capital city: Sofia
Population (2025): 6.7 million
Official language: Bulgarian
GDP per capita (2024): $18,460
GDP growth (2024, est.): 2.3%
Inflation (2025): 2.6% (IMF)
Gross Government Debt: 25.4% of GDP (IMF)
Currency: Lev
Investment promotion agency: InvestBulgaria (investbg.government.bg)
Investment incentives: Equal treatment of foreign and domestic investors; investment encouraged in manufacturing, services, high technology, education, and human resource development; purchase of municipal or state-owned land without tender; state financing for basic infrastructure and training new staff; reimbursement for employer’s portion of social security payments; tax incentives for public-private partnerships; grants for R&D; special economic zones; special incentives in economically disadvantaged regions.
Corruption Perceptions Index (2024): 76 (out of 180 countries)
Political risk: Political instability constant; seven inconclusive elections in four years; in January, minority coalition government formed, headed by Prime Minister Rosen Zhelyazkov, includes pro-Russia party; controversy over miscount of votes in October parliamentary election; new election this year probable; priorities include administrative reform, bolstering rule of law, health care/education reform.
Security risk: Bulgaria enjoys generally good relations with its neighbors and is a member of NATO and the EU. It joined the Schengen Area on January 1, 2025, and hopes to join the eurozone on January 1, 2026 provided it is found to have met the economic criteria.
Foreign Direct Investment: Stock of FDI: $57.4 billion, inflows = 2.8% of GDP (Figs 2024, IMD World Competitiveness Survey)
Pros
Member of NATO, EU, Schengen Area; hopes to join eurozone January 1, 2026.
Location in strategic area of southeastern Europe with links to neighbors.
Diversified economy focused on information and communications technologies, tourism, business services, and transport.
Cons
Poor transparency and corporate governance remain serious concerns, as does excessive bureaucracy.
Infrastructure development lags other EU countries.
Skilled labor shortages are a growing concern.

Sources: Bulgarian Central Bank, EBRD, Fitch, Government of Canada Global Travel Advisory, IMD World Competitiveness Center, IMF, InvestBulgaria, Transparency International, US State Department, World Bank, World Population Review

For more information on Bulgaria, check Global Finance’s Bulgaria GDP report.

In recent years the economy has refocused toward electronics, information technology, sustainable energy, and health-life sciences, all areas where FDI has been flowing. The Trakia Economic Zone in south-central Bulgaria is now southeastern Europe’s biggest industrial development, attracting some €3 billion (about $3.24 billion) in investment from the likes of ABB, Schneider Electric, Ferrero, Osram, and Kaufland.

Prior to the 2008 financial crisis, Cracan notes, “manufacturing, tourism, and construction attracted large-scale FDI. But over the past few years, this has shifted, with electronics, software development and outsourcing, and automotive parts now the main recipients.” Companies from the Netherlands, Austria, and Greece have been leading the investment charge.

In the wider economy, large-scale investments in infrastructure and other key areas—much of it funded by the EU, which has chipped in some €16.3 billion to Bulgaria since its accession in 2007—and a stable, proactive financial sector have boosted modernization. All this has made the country more attractive to Western companies and banks.

Committed To Reform

And 2025, thus far, looks encouraging. On January 1, Bulgaria joined the EU’s Schengen zone, which guarantees free movement of people in 29 countries. Against expectations, a minority coalition government was formed that month, heralding a possible end to almost four years of political squabbling that impeded reforms and put a much-needed absorption of EU funds at risk.

Although it includes a pro-Russian party, the new government says it is committed to measures that include reforming public procurement, reducing bureaucracy and corruption, and—in essence—doing whatever is needed to unlock EU Recovery and Resilience Facility (RRF) funds, some of which will disappear forever unless they are used this year.

“Bulgaria stands to gain some €5.7 billion in grants—money that doesn’t have to be repaid and which accounts for around 6% of GDP, provided it undertakes the structural reforms to unlock it,” says Cracan, who notes that Bulgaria lags all other Central and Eastern European countries in absorbing the RRF funds.

In updating its country strategy for Bulgaria, the EBRD is highlighting three priorities: enhancing the competitiveness of the private sector, including small and midsize enterprises and further boosting Bulgaria’s appeal as an FDI target; boosting the resilience of the financial system to make it more flexible and capable of absorbing EU funds; and supporting the green transition by boosting the use of renewables, raising energy efficiency, and improving long-term energy security.

The EBRD has already invested nearly €4.8 billion in over 307 projects in Bulgaria and figures on the strategy, combined with the promised government reforms, enabling more investment going forward.

The green transition received a boost in February when the government unveiled its 2025-2029 Governance Porgram. Prepared with the help and support of international financial institutions EBRD and the World Bank, the blueprint includes a strategy for sustainable energy development and plans to undertake huge infrastructure investments, including new hydro and nuclear units.

Coal currently accounts for half of power produced in Bulgaria. Existing efforts to reduce that dependence include investments in solar energy, which are expected to boost capacity from 1 GW to 3 GsW over the next several years. Further investments in wind and hydro are expected.

Renewables investors include Austria’s Enery, which acquired the 174 MW Karadzhalovo solar park in Plovdiv five years ago; and the Czech Republic’s Rezolv, which is working on St. George, a 165-hectare, 229 MW solar project near the Romanian border.

FDI Inflows Lagging

So how does the future look? Fitch Ratings gives Bulgaria a BBB positive outlook, which Malgorzata Krzywicka, director, sovereign ratings, says is based on the country’s anticipated eurozone accession on Jan. 1, 2026.

“The country has a good external and public balance sheet,” she notes, “with general government debt levels the lowest in the EU after Estonia, whilst the currency board—in situ since 1997—has also been important, helping create a highly ‘euroized’ economy.” But the jury is still out, she adds, on whether the good news will keep on coming. Meaningful institutional and structural reforms are vital.

“To date, structural reforms have been more cautious and weaker than those implemented by Bulgaria’s neighbors,” Krzywicka points out, “whilst wages and costs have been rising. This means its competitive advantage is shrinking, which, combined with the tight labor supply, means an environment not so conducive to FDI.” 

FDI inflows fell last year. According to the Bulgarian Central Bank, foreign investment dropped by almost 55% compared to 2023, to €1.49 billion, equivalent to just 1.5% of GDP versus 3.5% in 2023.

Political instability—and a sense of economic policy drift—doubtless played a part in this, and governance issues also haven’t helped. Bulgaria lags its neighbors, Romania and Hungary, in corruption perception, Krzywicka notes. 

Absorption rate of EU funds is one bellwether of FDI fitness; and in this, she contrasts Bulgaria’s record with Croatia’s.

“That [Croatia] has the highest absorption rate of the funds under Croatia’s ongoing National Recovery Plan economic program is due to government’s strong commitment to the reform agenda,” she says. “Improved institutional capacity ensures funds are forthcoming and are used in an efficient and transparent manner.”

Investors, too, are looking for reform before they dip their toes back into Bulgaria, but their contribution is crucial if Bulgaria is to close the convergence gap with other EU countries.



Source link

By PARKERYL Finance News

Asia-Pacific: Economic Growth Taking Off


The region is set to drive global economic growth, powered by its population and tech sector.

The Asia-Pacific region (APAC) will lead global economic growth over the next 15 years thanks to several factors, some of which are already manifest and some of which have yet to emerge. APAC’s growth will stem from four key large-scale trends: urbanization, connectivity, the energy transition, and the looming “baby bust.”

These will result in innovations in labor productivity, massive investment in infrastructure as megacities blossom, new economic segments flowing from green energy, and regional hyperconnectivity.

Overall, regional demographics are favorable, with a population dynamic currently marked by young populations and a low dependency ratio of young working people supporting the aged. The UN Department of Economic and Social Affairs forecast in a 2022 paper that APAC will grow from 4.2 billion citizens to 4.6 billion by 2040 and the region will account for over 60% of global output, according to a 2024 World Bank report.

Multinational research firm BMI views the region’s young and large population as a force for growth: “in particular, Indonesia, which will see its population grow by 12 million people,” says Cedric Chehab, BMI’s chief economist. “Another structural driver will be significant investment in infrastructure related to power generation, trade, and manufacturing.”

He adds that the increasing population will improve productivity and increase urbanization rates. “Bank funding will continue to play an important role, but this will be compounded by external financing via bilateral or multilateral efforts.”

At the same time, a new financial system is emerging based on digital assets that range from those issued by regional central banks to digital currencies. The move to tokenized holdings in Hong Kong and Singapore has already upended standard bond issuance and real-world assets and has gained traction in South Korea.

Soaring consumption driven by a growing middle class will reduce the region’s reliance on exports for growth, a necessary dynamic as the global free trade model comes into question. Regional debt is below the global average (with the notable exceptions of China and Japan), and local capital markets are rapidly developing in depth and sophistication, propelled by distributed ledger technology (DLT).

This is exemplified by Vietnam, where real GDP growth averaged 6% in the decade to 2024, according to the Vietnamese General Statistics Office. However, its low fertility rate of 1.9 children per woman is lower than Southeast Asia’s average of two, although ahead of Singapore’s and Thailand’s rates of one and Malaysia’s of 1.6, respectively. This presents an impending baby bust, according to data from the General Statistics Office.

“Vietnam’s economy continues to benefit from strong manufacturing and export activities, growing foreign direct investment, and government support, particularly in improving infrastructure. We expect domestic growth to continue and wealth to rise,” says Jens Lottner, CEO of Techcombank in Hanoi. “This rising affluence, increasing digitalization, and the large potential for more product penetration across mortgages, bonds, stocks, and insurance mean Vietnam’s banking industry still has huge growth potential.”

By contrast, the populations of China, Japan, South Korea, and Singapore are forecast to shed a combined 64 million people over the next 15 years due to age-related mortality and declining fertility, but they are developing new economic models based on health care, consumption, education, and leisure to cope with higher dependency ratios.

Tony Yang, president of CTBC Bank in Taipei, notes there are three major downside risks to the region’s growth over the next 15 years: an excessive reliance on a single market, leading to dramatic fluctuations in economic growth; rising geopolitical risks, most likely dragging down investment activities and leading to a loss of orders; and increased protectionism that is not conducive to escaping the middle-income trap.

Digital Assets Bloom

Hong Kong, Singapore, and Japan are emerging as regional digital asset hubs, boosted by a fast-developing regulatory framework. Some 70% of Asian institutional investors own digital assets (compared to the low 40% range in the US and low 50% range in Europe) according to a 2024 report from SBI Digital Asset Holdings. The ballooning family office industry in the region is firing up demand for digital assets, particularly in the nascent fixed-income and real-world asset (RWA) tokenization arena.

In February 2023, the government of the Hong Kong special administrative region issued the first sovereign tokenized green bond via an HK$800 million (about $103 million), one-year offering. The SAR followed on a year later with a HK$6 billion multicurrency bond denominated in Hong Kong dollars, renminbi, dollars, and euros under the Government Green Bond Programme (since renamed the Government Sustainable Bond Programme). The deal was the largest digital bond yet issued and attracted a final book of more than 50 global investors.

Incorporating DLT into the international primary debt market is at a nascent stage, according to Tim Fang, head of Debt Capital Markets for Greater China at Credit Agricole CIB in Hong Kong.

Theunis, DBS: Expect increased demand for tokenized assets from institutional investors and wealthy investors.

“Hong Kong has been the standout pioneer [along with the European Investment Bank] in the use of blockchain for primary issuance,” says Fang. “The two transactions the Hong Kong government brought to market using DLT can be regarded as laying the foundations for its use by other potential issuers in the sovereign, financial, and corporate spaces there—although the market beyond the government itself is still experimenting with DLT.”

Still, many hurdles must be addressed before primary debt-market issuance can be executed solely via DLT. Due to the technical and legal complexities of such a migration, notes Fang, traditional syndication will remain favored in the short term.

Nonetheless, APAC has been leading in progressive regulation for tokenization, with the Monetary Authority of Singapore (MAS) piloting DLT-based financial projects for more than a decade, says Julian Kwan, co-founder of Singapore-licensed RWA platforms IX Swap and InvestaX and CEO of the latter.

The MAS selected InvestaX to tokenize Singapore’s new onshore investment vehicle, alongside UBS, State Street, PwC, and the Tezos Foundation.

“The past 18 months have seen a major shift, with the rise of institutional-grade issuers focusing on treasuries and other publicly traded assets. This has brought legitimacy, scale, and a clear product-market fit, driving rapid adoption,” he adds.

Last November, OCBC became the city-state’s first financial institution to offer tokenized bonds via its own paper, to a midsize manufacturer looking to diversify its treasury holdings.

“A corporate or accredited investor client [with assets of S$10 million—around $7.5 million] can subscribe to tokens in denominations of S$1,000 and can similarly liquidate investments in those denominations to meet cash-flow requirements, with OCBC acting as market maker in its bonds,” says Kenneth Lai, head of Global Markets at OCBC in Singapore. “Exit prices are determined based on market prices of the underlying bonds that the tokenized bonds reference, and it is possible to sell and settle the transactions on the same day.”

As a credit proposition, the tokens can be treated like the underlying paper they reference. In the event of a debt restructuring, they will receive the same treatment.

“We expect a surge in demand for tokenized securities that cater to the needs of institutional investors and HNWIs [high net worth individuals],” says Evy Theunis, head of Digital Assets in the Institutional Banking Group at DBS Bank in Singapore. “Institutional investors want the ability to quickly rebalance between cryptocurrencies and yield-generating assets in response to rapidly changing market conditions, without having to keep on- and off-ramping.”

She adds that DBS “could see the issuance of more tokenized private assets, like privately held shares, as HNWIs seek exposure to an asset class that is typically accessible only to institutional investors.”

Indeed, this trend was underlined in early March when Singapore-based DigiFT, a digital exchange for tokenized assets, secured a license to offer custody services for investment products. The company recently listed a tokenized version of a $6.3 billion private credit fund managed by US asset manager Invesco.

“For investors, the key factor remains the quality of the underlying asset. The token itself is merely a vehicle for value transfer—if the asset has no or low value, investor demand won’t follow. Publicly traded RWAs reflect NAV [net asset value] transparently, but private market tokenization still lacks this level of visibility,” says InvestaX’s Kwan.



Source link

By PARKERYL Finance News

US Investors Swarm Italy’s Football Clubs And Stadiums


Serie A, B, and C teams are all in play as private equity firms join the “mad rush” to buy a dwindling number of assets.

In March, Italian football clubs Internazionale Milano (Inter Milan) and Associazione Calcio Milan (AC Milan) made a bold play: buying the legendary Stadio Meazza and its surrounding area, a real estate deal that’s due to wrap up in July.

After sharing the iconic San Siro since 1947, the two rivals are teaming up to build a sleek, sustainable new stadium that could redefine Milan’s football scene (soccer, to you Americans). The proposal includes a major urban regeneration project aimed at attracting global fans while offering new perks for locals. San Siro, after hosting the two football titans for over 75 years, appears to be getting the makeover it deserves.

Such talk of modernizing Italy’s old yet venerable sports facilities is nothing new. But what’s getting the ball rolling this time is major backing from US-based private equity (PE) investors. Inter’s recent takeover by Oaktree Capital, with a €47 million (about $51 million) investment; and AC Milan’s €1.2 billion acquisition by RedBird Capital in 2022, are setting the stage for a future that looks as grand as the legendary clubs themselves.

PE players, it seems, are changing the game of football one purchase at a time—and enjoying the tax benefits that come with it.

According to a report from PwC—one of the biggest accounting firms that advises on these matters—“sports organizations are turning to institutional investors to provide capital to finance growth projects, such as stadium renovations, transitions to direct-to-consumer business models, and international expansion.”

Those investors, for their part, see Italy’s football stadiums as thriving businesses with long-term potential. They’re asking how technology can transform them into smart, revenue-boosting venues. By leveraging existing expertise and portfolio assets, investors see opportunities to optimize sponsorship deals and naming rights and create synergies that add value.

“These are things that a lot of clubs aren’t doing right now,” says Eric Andalman, an attorney at Hogan Lovells who specializes in sports, entertainment and project development. “All the investors that come in here are looking at those sorts of opportunities and different ways to revolutionize the club.”

In Italy, PE-backed football clubs now have sufficient cash to not only build new stadiums but deduct operational costs, player wages, and stadium upgrades as business expenses. Infrastructure investments like stadium renovations may qualify for incentives such as “super-depreciation” deductions, which allow businesses to claim larger, accelerated depreciation on assets, reduce taxable income, and provide immediate savings.

This encourages investment in capital improvements, PwC argues. There are also tax credits related to sports sponsorships, which may benefit firms involved in the development of football stadiums through advertising partnerships.

To Hellas And Back

Oaktree and RedBird aren’t the only PE players eyeing new stadiums. In January, Texas-based Presidio Investors swooped in to acquire Hellas Verona FC at a reported €130 million valuation.

There’s potential for the football club to earn even more if it keeps its feet in Serie A and doesn’t get relegated to Serie B—a major blow for any team. Why? Because it would result in a significant revenue drop, especially from TV deals, sponsorships, and matchday income. Key players often leave for top-tier clubs, weakening the team’s chances of a comeback. Fan engagement and sponsorships also suffer, and the club faces difficulty securing promotion back to Serie A, jeopardizing growth and stability.

For Hellas, this scenario almost became a reality on several occasions. At last check, the club is languishing in 14th place among Italy’s top-flight teams. For frustrated fans, the hope is that Presidio can infuse more than just hope into the club’s future. There’s the potential to generate cashflow and deepen the bench with new talent.

“For private equity, the story is very different, because they typically adopt a more structured approach. They try to emphasize long-term growth,” says Paola Barometro, a partner in the corporate finance practice at Hogan Lovells.

Financial sponsors like Presidio, which Barometro and Andalman advised on the Hellas deal, put great emphasis on growing revenues through licensing, marketing, and monetizing the fan base.

“Now, at least in Italy, we have a very interesting mix of investors that I think also bring different management styles and are creating a dynamic environment,” she adds. Ten years ago, this was unheard of.

“Just to give you a sense of the trend in Italy; In 2011, all of the Serie A clubs were owned by Italian individuals or companies,” she notes. “So, the trend now is very, very different.”

In 2020, US billionaire Dan Friedkin took the reins of Associazione Sportiva Roma from previous owner James Pallotta. The Friedkin Group fueled the financial revival with a mix of smart commercial deals and a solid Serie A finish.

Hellas Verona’s new PE owners are hoping to mimic that magic. And, like Roma, Hellas does not currently have its own stadium.

Roma shares Stadio Olimpico with Società Sportiva Lazio. And while Roma has long had plans to build its own dedicated facility, the project has faced numerous delays and complications, including political issues, zoning problems, and financial hurdles.

Over just a few short months, Hellas Verona had better luck. Its current home, Stadio Marcantonio Bentegodi, was opened in 1963 and last renovated ahead of the 1990 World Cup. The fact that the city of Verona’s mayor, Damiano Tommasi, is a former Hellas Verona infielder helped get things moving. Now American investors once again appear ready to revitalize one of Italy’s historic venues.

“Mad Rush”

The trend isn’t exclusive to Italy. The future of England’s Premier League recently got a whole lot more American, too.

“We’re up to 10 now,” says Marc Trottier, partner at law firm Bryan Cave Leighton Paisner in London, noting how half of the league’s teams are now under majority US ownership. “The growth and value of the clubs has been phenomenal over the last few years.”

Among the standouts are Arsenal, Chelsea, Liverpool, Manchester United and Everton, which is “a phenomenal asset,” Trottier says. After Friedkin bought it in December, the club is planning a “beautiful new stadium” at Bramley-Moore Dock.

Arena, Chiomenti: Lower-league teams are a little bit cheaper, but have a big upside.

While UK clubs command heftier price tags, Italy presents dealmakers with a more affordable entry point. With too many buyers and a scarcity of assets, that’s an issue.

Coincidentally, 10 teams in Serie A are owned by North American entities, too. In addition to Inter Milan, AC Milan, Roma, and Hellas Verona, North American proprietors also own Parma, Venezia, ACF Fiorentina, and Bologna (owned by Canadian and Club de Foot Montréal president Joey Saputo).

“There’s a mad rush,” Trottier says. “There are only so many soccer teams you can buy. There are the lower-league clubs as well; but there’s only so much you can invest, and people are worried about missing these deals.”

Rumors abound concerning other clubs in Serie A and even lower divisions. Clubs in Serie B, Italy’s second-tier league, are ripe for investment because of their potential for promotion into Serie A. An upgrade would lead to a significant boost in television rights, sponsorship deals, and matchday revenues.

While Serie C clubs may not offer the immediate financial rewards of Serie A or Serie B, they provide a low-cost entry point for investors looking to build long-term value.

“There are several teams that are potentially for sale if they get the right offer,” says Salvo Arena, a leading member of the M&A practice specializing in sports finance at Chiomenti, a Rome law firm. These lower-league teams “are a little bit cheaper, but you have a big upside.”

For now, the trend toward US ownership in Italian football “will remain hot,” Arena predicts. With Presidio Investors’ acquisition of Hellas Verona as the latest example, more firms are expected to follow suit.

“There’s very high interest and right now the Amercians are the ones who are buying,” Arena says. “There’s no reluctance on that. I receive so many calls from Serie A, B, and C teams. All the owners ask, ‘You know someone who wants to buy my team?’”



Source link

By PARKERYL Finance News

Embedded Finance Comes Of Age


Embedded finance is revolutionizing global trade, making financing as simple as a click, and empowering SMEs previously locked out of traditional systems.

Imagine a world where accessing trade finance is as simple as clicking a button, woven seamlessly into the fabric of online commerce. This isn’t a distant future; it’s the promise of embedded finance (EF), and it’s transforming global trade.

Traditional trade finance is often slow, complex, and difficult to access, leaving many small and midsize enterprises (SMEs) struggling to secure funding. EF offers a potential multibillion-dollar opportunity to streamline transactions and empower businesses. By integrating financial services into nonfinancial platforms, EF allows companies to access financing options like invoice factoring or supply chain finance at the point of transaction.

The shift in how goods and services are bought and paid for is driven by e-commerce growth and infrastructure governed by application programming interface (API) rules and protocols. APIs, blockchain, and artificial intelligence (AI) are the core technologies behind EF. APIs allow real-time data sharing and quick credit approvals, blockchain ensures transaction security, and AI automates risk assessment for faster funding. AI also increases access to financing for SMEs, whether via the integration of EF into e-commerce platforms or the provision of business-to-business (B2B) buy now, pay later services.

Goel, Xalts: The biggest barrier to offering embedded trade finance solutions has been the manual nature of trade finance processes.

Already we are seeing the emergence of EF APIs like Plaid and Stripe Treasury. Plaid connects to bank accounts and Stripe connects to cards. Both enable real-time data sharing and instant credit decisions, crucial for embedded trade finance. Fintechs are joined by big banks like HSBC and Standard Chartered and online giants like Amazon, Alibaba, and PayPal in mining this new line of business.

Future Market Insights projects EF revenues growing to $291.3 billion by 2033, up from $63.2 billion in 2023. As EF continues to mature, it has the potential to level the playing field, empowering businesses of all sizes to participate in global trade and drive economic growth.

“Entrepreneurs build and innovate at warp speed, but traditional banks haven’t kept up,” Shopify argued when it unified all of its financial solutions under the Shopify Finance platform last October. In a Shopify-Gallup Entrepreneurship study of nearly 47,000 entrepreneurs, 60% rated lack of funding as the biggest challenge they face.

To help remedy cash shortfalls at startups, Shopify Balance provides an alternative to traditional business banking, providing merchants with next-day payouts, while Shopify Capital loans provide faster funding for eligible merchants, regardless of size and financial maturity.

Shopify is not EF’s only new kid on the block. In November 2023, FreshBooks, which provides cloud-based accounting software for small businesses, partnered with YouLend to launch a flexible financing solution for more than 100,000 customers across the US.

These platforms are well positioned for EF because they control the customer journey, accumulate rich data on transaction history, and can integrate financial services seamlessly.

The Big Banks Catch On

The EF shift in e-commerce is not happening in isolation; traditional financial institutions also recognize the opportunity, driving collaboration between banks and fintechs as they realize they can achieve more together.

Last October, HSBC launched a jointly owned venture, Semfi, in partnership with Tradeshift, a B2B global network, to deliver seamless EF solutions to businesses on e-commerce platforms. Semfi embeds HSBC’s payment and trade solutions across Tradeshift’s B2B network, enabling SME suppliers to access faster and more-transparent digital invoice financing from HSBC via e-commerce platforms.

Some banks are building their own banking-as-a-service (BaaS) platforms. Standard Chartered’s BaaS platform nexus, which allows e-commerce partners to offer their customers EF propositions, led to the launch of the Audax platform, which embeds the technology stack in other financial institutions.

BNY Mellon’s Trade Network Access Service (TNAS) aims to simplify trade finance for other banks. Instead of managing complex systems for international transactions all by themselves, banks can connect to a global network via TNAS, reducing costs and expanding their reach. This plug-and-play approach makes it easier for smaller banks to offer sophisticated trade finance services, ultimately benefiting their customers.

“By utilizing value-added risk mitigation and financing services,” says Joon Kim, global head of Trade Finance, Working Capital, and Portfolio Management at BNY Mellon Treasury Services, “adopters of TNAS can enhance trade revenue by having access to over 4,000 [relationship-management applications] across the globe. TNAS offers distinctive value in a buy-versus-build solution in an area where a financial institution’s need may not be consistent day-to-day.”

While not a new concept in trade finance, EF’s impact could be felt all along the transactional chain, from large to small financial institutions to their customers, Kim argues.

“From a growth perspective,” he says, “if you consider the limitations of a smaller regional or community bank trying to reach networks that provide international access for an importer or exporter, such access could lead to direct growth from providing everything spanning foundational access to more end-to-end needs.” Efficiency and client service improve when trade finance is a one-stop shop with frictionless delivery of services ranging from letters of credit to trade distribution.

“Innovation via digitalization and collaboration has been moving the industry forward and will only continue as more parties make the move away from manual processes,” Kim predicts. 

Where Tech Meets Trade

Singapore-based fintech Xalts, which trains AI agents in multiple trade finance tasks including documentary credit, guarantees, and collections, bought the digital trade platform Contour Network early last year to streamline digital connectivity between banks and corporates. Xalts first examines every problem with an agent, then delves deep to introduce a fully vertical solution for finance teams.

“Due to our integrations with leading banks globally and our expertise in trade finance, we are the only company which is building vertical AI agents to solve operational challenges in trade finance,” says Xalts CEO Ashutosh Goel.

“The biggest barrier to trade finance digitalization, and hence offering embedded trade finance solutions, has been the manual nature of trade finance processes,” he adds. “With our AI agents and now the added capabilities [from Contour] of sending trade transactions to banks, we are solving the operational challenges that come with embedding trade finance solutions.”

The Xalts platform integrates with enterprise resource planning software, accounting systems, logistics partners, and banks, while its AI agents use large-language models to reduce integration times and costs for any platform. The agents consume data in a format-agnostic manner and process outcomes as per the organization’s preexisting policies.

“This allows organizations to introduce new solutions,” continues Goel, “including embedded trade finance, seamlessly as operational processing is simplified, because agents can deal with end-to-end flow in any transaction: including sending transactions to banks.”

Online marketplaces have led when it comes to EF as they seek to integrate financial services into their ecosystems. Increasing customer satisfaction and loyalty also creates monetization opportunities.

Amazon and Alibaba each offer trade finance, for example. Amazon makes working capital loans to Amazon sellers via its Amazon Lending program and other loan options, including daily advances, merchant cash advances, and invoice finance.

Alibaba has partnered with lenders, credit-rating agencies, and banks to provide trade finance. It also extends payment terms up to 60 days for SMEs. Similarly, PayPal Working Capital offers cash advances of $1,000 to $200,000 to first-time applicants—and up to $300,000 to subsequent applicants—based on their PayPal sales volume and account history.

Further digitalization and standardized trade documentation, coupled with SWIFT-powered interoperability studies, promise to unlock EF’s potential even further as more offerings emerge.



Source link

By PARKERYL Finance News

World’s Best Investment Banks 2025: Debt


Debt markets were busy last year, but 2025 is off to a slow start as issuers take a wait-and-see approach.

Debt capital markets enjoyed a 36% surge in total deal volume in 2024 compared to 2023, according to Dealogic. The US touted a 45% increase. Asia-Pacific (50%), Africa and the Middle East (57%), and Latin America (66%) did even better; and Europe posted a 19% gain. Japan was the only major market to decline, by 3%.

Underwriter revenue from global Debt Capital Markets (DCM) reached $27.3 billion. Corporate issuance hit $3.1 trillion, including $2.7 trillion of investment-grade and $419.8 billion of noninvestment-grade bonds.

Cross-border deals by US issuers totaled $2.8 trillion, while issuers in Europe, the Middle East, and Africa sold $2.55 trillion in bonds and Asia-Pacific issuers $588.5 billion.

Whether 2025 maintains the momentum remains to be seen. Global DCM activity year-to-date totaled $2.1 trillion, down 16% from last year’s levels. The US has seen a 14% decline. Investment-grade bond volume is down 14% thus far across the globe and global high-yield volume is 16% lower.

“Some of that change in volume may have been attributable to issuers taking an opportunistic approach at the beginning of the year,” suggests Jeff Ramsay, securities and capital markets partner at Paul Hastings law firm, “waiting to see how the change in [US] administration may affect the macroeconomic environment.”          —AN

Global, North America

BofA Securities

With most developed economies cutting interest rates, DCM volumes soared last year. Bank of America Securities was in the thick of it, sponsoring several of the largest deals. BofA Securities captured an eye-popping $2.7 billion-plus in revenue from fixed-income offerings alone, for a commanding 6.9% of total global market share, as per Dealogic. Among the bank’s landmark deals, it acted as sole arranger of Ecuador’s $1 billion sovereign debt conversion, targeted at preservation of the Amazon’s ecosystems, one of the largest of its kind completed to date. It also played a significant role in boosting the mergers and acquisitions market from the debt side, arranging a $1.8 billion leveraged loan for Lone Star Funds as part of its acquisition of Carrier Global’s commercial and residential fire unit.

BofA Securities also played a significant role in North America-based debt arrangements last year. The firm announced the redemption of $2 billion in 2.46% fixed/floating rate senior notes due in October 2025, effective October 22, 2024.

Meanwhile, the bank’s Community Development Banking division provided $7.8 billion in debt and equity financing last year, facilitating the creation and preservation of 12,600 housing units across the US and underscoring BofA’s commitment to support affordable housing initiatives. Together, this range of activities highlights BofA Securities’ active involvement in significant debt arrangements within the US during 2024.

So far in 2025, the bank has served as a bookrunner for Mars’ substantial, eight-part investment-grade bond issue, aimed at financing the acquisition of Pringles maker Kellanova. Projected to raise between $25 billion and $30 billion, the deal stands as one of the year’s largest acquisition financings this year.     —AN and TM

Africa

Standard Bank

After a prolonged period of corporate bond issuances plummeting to record lows across major markets, appetite for African debt is building up. Standard Bank, through its debt solutions and DCM offerings, has been the continent’s leader in the field, particularly in large funding quanta. The bank has also emerged as the region’s dominant force in sustainable energy initiatives, for which it has allocated some $300 million.

Across all of Standard Bank’s 2024 activity, it showed a knack for structuring innovative and fit-for-purpose solutions. Its deal portfolio included helping Zambia’s Copperbelt Energy raise a staggering $90 billion, acting as lead manager and underwriter for the oversubscribed 15-year green bond offering, which lured local and international investors. In South Africa, Standard Bank helped CrossBoundary Energy raise a $300 million debt facility.      —JN

Asia-Pacific

ICBC

With a focus on technological upgrading and equipment renewal projects, Industrial and Commercial Bank of China (ICBC) continued to step up lending to manufacturing last year, especially in the form of medium- to long-term loans and with a focus on high-end, intelligent, green development. But the behemoth bank was active across the debt market spectrum as well. In the first half of the year, loans and bond investments constituted 59.1% and 26.75% of ICBC’s assets, respectively, marking increases of 0.7 and 1.1 percentage points from the first quarter.

This strategic allocation underscores ICBC’s efforts to stabilize asset returns in a low interest rate environment. In the first half, yuan-denominated loans by its domestic branches increased by 1.74 trillion yuan ($240 billion), or 7.1%. The balance of its yuan bond investment increased by 1.1 trillion yuan while its domestic lead underwritings of bonds totaled nearly 770 billion yuan, leading the market by total size and growth of investment and financing.

ICBC’s loans to manufacturing grew by 13%, loans to strategic emerging industries by 14.7%, green loans by 13.7%, and inclusive loans by 21.5%. As of the end of June, loans to strategic emerging industries stood at 3.1 trillion yuan, an increase of nearly 400 billion yuan from the beginning of the year.     —LZ

Central And Eastern Europe

TBC Bank

A mixture of local market and eurobond offerings is helping TBC Bank leverage its leading position in Georgia’s up-and-coming economy to post phenomenal growth. With corporate bond issuances totaling $850.8 million in 2024, TBC maintained an impressive 52% share of its home market. The main focus of the bank’s DCM expansion was in the foreign exchange however, where it saw a nearly 50% rise in issuances from the year prior.

In dollar bonds, TBC Capital arranged 12 transactions, seven of which were exclusively managed by its team, and participated in four eurobond deals—up from none in 2023. Others included Georgia’s first-ever secured bond and fixed-rate bond offerings denominated in local currency, a milestone for fixed income in the nation.

The bank, based in Tbilisi, Georgia, also expanded its bond business into Uzbekistan last year, with two offerings in Central Asian country.       —TM

Latin America

BBVA

Taking advantage of a solid year for DCM in Mexico and Argentina, Spanish powerhouse BBVA leveraged its best-in-class presence in Latin America (outside of Brazil) to maintain steady growth in 2024. The big bank led the Mexican market with a total of 62 offerings, representing a commanding 22% of the country’s total issuance. BBVA also participated in 24 cross-border deals, amassing total volume of around $4.5 billion.

Among the region’s major 2024 debt deals, BBVA acted as the sole structurer and joint bookrunner on Engen Capital’s approximately $250 million debt issuance. The Spanish bank kicked off 2025 by issuing $1 billion in AT1 debt at the lowest spread ever for a Southern European bank, signaling strong investor confidence. A lower spread means cheaper borrowing costs, reflecting BBVA’s solid financial standing.            —TM

Middle East

Standard Chartered

Standard Chartered is a top emerging markets bank with a strong focus on both Islamic finance and traditional banking. It ranked third for DCM in Africa and the Middle East in 2024, with 81 deals completed amounting to $13.5 billion, according to Dealogic. Standard Chartered ranked first for Islamic bond volume, with 43 deals closed on a balance of $5.5 billion.

A standout deal was the bank’s structuring of a $1 billion debt facility for First Abu Dhabi Bank (FAB) that was FAB’s debut in the tier 2 bond market. The deal’s capital structure enhanced FAB’s capital position, and diversified its investor base as a significant portion of the transaction was placed outside the Middle East. Also last year, Saudi Arabia’s Public Investment Fund (PIF) issued a $5.5 billion facility with a diversified orderbook six times oversubscribed. Standard Chartered was the joint green structurer and ESG structuring bank. The deal was upsized because of strong investor demand, and its 7-, 12-, and 30-year tranches were new tenors (maturities or durations) for PIF.    —AM

Western Europe

BNP Paribas

Amid a solid year for global and European DCM, French giant BNP Paribas used its commanding position on the continent to extend its business globally. The bank’s DCM activity grew domestically and internationally in 2024, reaching 3.5% of the global market by revenue, according to Dealogic. In Europe, BNP led its rivals in revenue, volume, and number of deals.

Among BNP’s most notable transactions, it backed Iceland’s record-breaking inaugural green bond, with a final order book of over €7 billion ($7.5 billion). The bank also pushed the envelope of Europe’s DCM by arranging and placing the eurozone’s first-ever sovereign digital bond issue, for the government of Slovenia. —TM

Best Debt Banks 2025
Global & North America BofA Securities
Africa Standard Bank
Asia-Pacific ICBC
Central & Eastern Europe TBC Bank
Latin America BBVA
Middle East Standard Chartered
Western Europe BNP Paribas

More from the 2025 Best Investment Bank Awards



Source link

By PARKERYL Finance News

Financing The Future: Q&A With Standard Chartered’s Abbas Husain


Abbas Husain, Standard Chartered’s global head of Infrastructure and Development Finance, discusses the rapid pace of change and innovation in the field with Global Finance.

Global Finance: Standard Chartered is this year’s Best Investment Bank for Infrastructure Finance. How does this award reflect the firm’s mission?

Abbas Husain: This award reinforces our role as a trusted partner in driving sustainable development and economic progress. It reflects our commitment to delivering innovative financial solutions that enable critical infrastructure projects, strengthen trade corridors, and support long-term growth.

GF: Is infrastructure finance changing?

Husain: Alternative sources of capital—development finance institutions (DFIs), export credit agencies (ECAs), infrastructure funds, and capital markets project bonds—are becoming increasingly important.

We’ve also seen longer tenors for strategic projects. Some megaprojects, particularly in renewables and infrastructure, are securing tenors beyond 20 years. Middle Eastern deals structured with short-term vehicles like “soft-mini perms”—a type of loan that becomes subject to more onerous terms if it is not refinanced by the maturity date—have incentivized sponsors to refinance before the contractual maturity of the facilities. There’s also been an increased use of refinancing strategies as sponsors secure short-term bank financing with plans to refinance via the bond market.

GF: In which regions are you seeing the most innovative infrastructure projects?

Husain: There’s a strong pipeline. MENA is home to many major infrastructure projects for transportation, water and waste management, and renewables and green hydrogen. Regional governments are actively pursuing privatization and public-private partnerships (PPPs) to attract foreign investment and ease fiscal pressures. Meanwhile, infrastructure has become an attractive asset class for banks, private credit, and sovereign funds.

Governments are accelerating their clean energy targets, resulting in several large-scale solar/wind, waste-to-energy, carbon capture, and green hydrogen projects. Growing water scarcity concerns are driving investments in desalination and wastewater treatment, with many pro-jects structured as PPPs. We are witnessing a renewed demand for baseload power after several years of focus on renewable energy, leading to a surge in the number of combined-cycle gas turbine projects in the region. Driven by the need for energy storage and peak shaving, or load shedding, we are also seeing a surge in projects related to battery energy storage systems.

GF: What trends do you expect will shape the infrastructure sector in the next year?

Husain: There’s a strong pipeline. MENA is home to many major infrastructure projects for transportation, water and waste management, and renewables and green hydrogen. Regional governments are actively pursuing privatization and public-private partnerships (PPPs) to attract foreign investment and ease fiscal pressures. Meanwhile, infrastructure has become an attractive asset class for banks, private credit, and sovereign funds.

Governments are accelerating their clean energy targets, resulting in several large-scale solar/wind, waste-to-energy, carbon capture, and green hydrogen projects. Growing water scarcity concerns are driving investments in desalination and wastewater treatment, with many pro-jects structured as PPPs. We are witnessing a renewed demand for baseload power after several years of focus on renewable energy, leading to a surge in the number of combined-cycle gas turbine projects in the region. Driven by the need for energy storage and peak shaving, or load shedding, we are also seeing a surge in projects related to battery energy storage systems.

GF: What trends do you expect will shape the infrastructure sector in the next year?

Husain: Global spending in clean energy investments exceeded $2 trillion for the first time in 2024. Achieving net-zero targets by 2030 will require even greater capital commitments, creating opportunities for innovative financing solutions.

At the same time, AI and digitalization are driving demand for data centers, with trillions of dollars in investment anticipated by 2030. Institutional investors and sovereign wealth funds are playing an increasingly active role in this space, particularly in high-growth regions.

Beyond sector-specific developments, we are likely to see an increase in refinancing and capital market solutions as sponsors adapt to evolving high-interest-rate conditions and seek to optimize their capital structures. This will drive demand for capital market solutions and alternative financing, including private credit, institutional funds, ECAs, and DFIs.

GF: Is investor appetite for infrastructure and project finance deals keeping pace?

Husain: Despite the rising complexity of cross-border investments, infrastructure projects have long-term economic viability, and we continue to see significant interest. Also, there are vast capital pools; Global Infrastructure Investor Association members have more than $2 trillion in assets under management either invested or ready to invest. In addition to ECAs, classic infrastructure funds, and multila-teral development agencies, we have seen pension funds, insurers, and asset managers flood the market in search of alternative and stable long-term growth.

GF: How are regulations impacting infrastructure finance?

Husain: Some of the most acute funding shortfalls are in developing markets. Addressing these requires public and private capital, impactful policy initiatives, appropriate risk allocation, and greater cross-border collaboration. To attract more investor capital, we need to help these markets pursue policy liberalization, address risks and governance issues, and provide transparent avenues for sustainable investing. The success of some ASEAN markets has been driven in large part by similar initiatives while China, for example, demonstrates the benefits of opening financial markets to global trade and collaboration.



Source link

By PARKERYL Finance News

Insurers’ Big Bet On Alternative Investments


Faced with low yields, insurers are deepening ties with private equity and asset managers, turning to alternative investments amid regulatory headwinds.

Life insurance companies used to be conservative investors.

For decades, they relied on long-term bonds—safe, steady, and predictable—to match their policy obligations. But as interest rates plunged following the 2008 financial crisis, traditional investment models no longer delivered sufficient returns.

Now insurers are embracing alternative investments like private debt, infrastructure, and real estate—often partnering with asset managers and private equity firms to boost yields. This shift is transforming the industry, raising both profit opportunities and regulatory concerns as insurers take on riskier, harder-to-value assets to increase investment returns.

“With interest rates way down after the Great Financial Crisis, the cost of insurers’ pre-2008 liabilities were still high,” says Ramnath Balasubramanian, global co-leader of the life insurance and retirement industry practice at McKinsey & Company. “Insurers needed to find ways to de-risk their balance sheets and deploy capital more efficiently.”

Slowly but surely, they are finding ways. The solution for most insurance companies has been twofold: Sell off swaths of high-cost legacy obligations to reinsurers to free up capital, and invest more of their premiums into alternative assets: most notably private debt with higher yields and risks than investment-grade bonds. Insurance companies across global markets have been building, buying, and partnering their way to better investment returns for the past decade.

Private Equity Pushes Change

Private equity firms in the US have been a major catalyst to transformation in the insurance industry globally. Big firms like Apollo Global Management, Brookfield Reinsurance, and KKR have launched or bought insurance companies since the financial crisis; others, like Blackstone and Carlyle, have taken minority stakes in other insurers.

The operating model is straightforward: Buy legacy books of insurance liabilities and reinvest the underlying assets into higher-yielding investments. Since the financial crisis, private equity firms have completed over $900 billion in transactions acquiring insurance liabilities worldwide, according to McKinsey research. They now have a 13% share of the US insurance market—up from 1% in 2012—and account for 35% of new sales of US fixed and fixed-index annuities, the consultancy reports.

“The search for yield was the motivation,” says Meghan Neenan, a managing director at Fitch Ratings, who provides ratings for asset managers. “The success they’ve had in terms of returns has been significant, and the migration in insurance portfolio profiles is still ongoing.”

Investing more in private markets and alternative assets arguably heightens insurance companies’ diversification, but it also increases risks. “Their investment portfolios are generally less liquid,” notes Neenan. Insurers’ demand for private loans—most of which have floating interest rates—has continued to grow as rates have risen.

Neenan, Fitch: The success insurers have had in terms of returns has been significant.

“Ultimately, it depends on what the investor is looking for,” explains Neenan. “If [an insurance company] is underfunded and needs higher returns that they can’t get solely in the public markets, they could toggle alternative assets higher to meet that return hurdle.”

The migration of insurance portfolios toward alternative investments is now happening across global markets. Some insurers have built out investment-sourcing capabilities themselves, others have partnered with asset managers to provide those capabilities, and still others have handed off their asset management to third parties entirely. “There is a wide spectrum of models in the marketplace now,” says Balasubramanian. “The choices insurers make depend on their starting position.”

French multinational insurer AXA decided it was better off getting out of the asset management business. In December, the group sold AXA Investment Managers to BNP Paribas for €5.1 billion (about $5.5 billion) to manage its assets going forward.

Italian insurance giant Generali, on the other hand, is growing its asset management operations. The company has made several major acquisitions recently, including a deal to buy investment manager Conning from Cathay Life Insurance last year. Generali also paid $320 million for a 77% stake in MGG Investment Group earlier this year. The US firm is focused on direct lending to mid-market companies. Like a growing number of insurers, Generali is building out its own direct-lending platform.

In January, Generali announced a transformational deal, agreeing to merge its asset management operations with Natixis Investment Managers, owned by Groupe BPCE. The 50/50 joint venture will manage €1.9 trillion in assets, making it the ninth largest asset manager globally.

“The new entity would be ideally positioned to further expand its activities for third-party clients,” the insurer said in a January statement, “also thanks to Generali’s commitment to contribute a total of €15 billion in so-called seed money over the first five years to launch new initiatives and investment strategies in the alternative investments sector (particularly in private markets).”

As the private debt markets evolve into new areas like asset-based lending and equipment leasing, large asset managers will increasingly be leading the way. The big transactions recently between insurers and asset managers in Europe are only the most obvious sign of industry consolidation and restructuring. Smaller deals to reinsure liability risks and expand insurance investment platforms are happening across global markets.

Japan Leads Asia’s Growing Market

Asia is the next frontier, particularly Japan, which has about $3 trillion in life and annuity reserves in force, according to the Society of Actuaries (SOA). To date, most of the activity there has been on the liability side of insurance company balance sheets as Japanese insurers become more comfortable with block reinsurance transactions. Notable recent deals include the reinsurance by KKR-owned Global Atlantic of a nearly $4 billion block of Manulife Japan whole life policies, and a ¥700 billion (about US$4.7 billion) block of Japan Post Insurance annuities by Reinsurance Group of America.

The SOA estimates that as much as $900 billion in Japanese insurance obligations could be reinsured in the coming years thanks to new regulations mandating higher capital reserves that come into effect this year.

The global insurance industry is still on a path of transformation. “I think we’re somewhere in the middle innings of this evolution,” says McKinsey’s Balasubramanian. “Many insurers are still determining whether they will build, buy, or partner for new investment capabilities, and the deals are now happening in both directions.”

Regulators Track Risking Risk

All the activity is making insurance regulators’ jobs much harder. The assets backing insurance obligations have become more opaque and more difficult to value as companies have expanded their investment landscapes. The National Association of Insurance Commissioners (NAIC) in the US launched a task force in February to establish principles for updating risk-based capital solvency formulas for the industry.

“The extended low interest rate period that followed the Great Financial Crisis created an industry trend to search for yield in investment portfolios, resulting in a major shift in the complexity of insurers’ investment strategies, resulting in more liquidity risk than historically seen,” said Wisconsin Insurance Commissioner Nathan Houdek, a task force co-chair, in an NAIC statement.

The Bank of England, within which the financial services regulator Prudential Regulation Authority operates, warned in its Financial Stability Report last year of growing risks at insurance companies owned by private equity and in the broader industry due to the shift toward private-debt investments. “This business model, while promising benefits, has the potential to increase the fragility of parts of the global insurance sector and to pose systemic risks if vulnerabilities are not addressed,” The Bank stated.

For now, insurers see the opportunities in alternative investments as worth the risks. Insurance companies and asset managers are increasingly in competition to build better investment platforms, but they also make natural partners. The former generate lots of cash while the latter focus on getting better investment returns in public and private markets.

“The deals will continue because they’re beneficial for both parties,” says Neenan. “Insurers with long-term investment horizons get higher yields for patient investing, and alternatives managers collect fees on the assets.”

A match made in heaven … for the time being.



Source link

By PARKERYL Finance News

Critical Minerals, Critical Moves: Q&A With BMO Capital Markets’ Ilan Bahar


Home Awards Winner Insights Critical Minerals, Critical Moves: Q&A With BMO Capital Markets’ Ilan Bahar

Global Finance: Metals & mining has proven particularly sensitive to geopolitical shifts. How are you guiding your clients through this landscape?

Ilan Bahar: In the volatile environment they are experiencing today, it is important that our clients focus on long-term macro fundamentals. For example, energy transition and electrification trends are not going away and the need for critical minerals is not abating. We believe longer term supply and demand fundamentals will persist through this period of volatility, with strong demand continuing a long-term bullish cycle for key commodities that support energy transition.

Gold and silver prices are testing all-time highs as precious metals continue to be seen as a natural hedge to broader market dislocation. So for our clients, it is important not to let short-term, reactionary decision-making impair their long-term strategic priority to build shareholder value.

GF: Global metals dealmaking slowed last year, but BMO still delivered impressive results in this sector. Is your deep industry expertise the key differentiator, or are additional elements contributing to your success?

Bahar: BMO has remained steadfast in its commitment to the sector. Next year, we will be hosting the 35th edition of our annual Global Metals, Mining & Critical Minerals conference. We are proud to say it is the leading conference in the world in the sector, setting the tone for the calendar year for both corporate clients and the institutional investor community. We are proud of our organization’s deep sector knowledge and the strength of our client relationships across the entire commodity complex.

GF: Does the current macroeconomic backdrop suggest a possible uptick for M&A activity in metals & mining going forward?

Bahar: We actually have seen a reasonable amount of consolidation among junior and intermediate producers where the industrial logic of the combination is strong and creates synergies. The combination provides increased exposure to current metal prices, and the opportunity presents itself to become larger and more relevant to investors in the sector. 

Size brings added liquidity and, in theory, more investor attention. Large-cap consolidation in the gold space was extremely active in the past few years, resulting in a few clear industry leaders in gold—Newmont, Agnico and Barrick in North America—and we are seeing the next wave of consolidation now among the intermediates and juniors.

We expect producers looking to bolster their longer-term development pipelines through earlier-stage acquisitions to utilize strong cash positions for future development and, where the opportunity exists, to structure accretive transactions, given that earlier-stage companies trade at large valuation discounts to the producers. We have seen notable transactions in the silver space recently, driven by a relative scarcity value of primary silver assets.

GF: Government agencies and corporations are focusing on essential minerals and rare earth elements, recognizing their role in powering the AI revolution. Have you expanded your offerings in this space?

Bahar: We are attuned to the macroeconomic factors that will drive the increased importance of critical minerals to the world’s economic engine. The simplest demonstration of our commitment was the rebranding of our conference in 2023 to specifically include critical minerals in the name, but also by dedicating a portion of the agenda to them. In addition to our equity research commitment, we have investment bankers focused on critical minerals stationed across the globe, from our offices in Toronto, New York, London, Beijing, Vancouver, and Melbourne.

GF: Sustainable finance has historically followed boom-and-bust cycles. Does the current cycle represent a fundamental shift from this pattern?Bahar: Several sustainable technologies have now achieved a cost advantage over incumbent technologies; renewable power has the lowest marginal cost for power generation, and energy-efficiency technologies now have positive net present value for many investments. Those changes—combined with the continued differential demand for carbon-free electricity and enhancements to the power grid—mean that we are seeing a persistent demand for these technologies despite policy uncertainty in certain jurisdictions, and a continued long-term need for the metals and minerals that support those investments: copper, uranium, and critical minerals.



Source link