White Bridge Capital Expands to Texas with Nat Parsons’ Leadership

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White Bridge Capital, a cross-border real estate investment firm, is extending its reach to Texas to cater to global family offices, high-net-worth individuals, and overseas entities seeking to benefit from the state’s robust economic expansion and the resulting impact on its flourishing real estate market. The portfolio encompasses multi-family residences, build-to-suit properties, industrial facilities, and commercial developments across the state.

In Texas, White Bridge Capital will be spearheaded by newly appointed Partner Nat Parsons, a third-generation developer by training and leading real estate and construction veteran with nearly two decades of experience, including the banking sector.

Co-founded by Tommy Campbell and Regina Garcia Handal, with headquarters in Miami, Florida and operations in Mexico City, White Bridge Capital sources real estate deals, structures investments, secures financing for underlying assets, and manages client investments throughout the real estate development cycle.

“The expansion to Texas marks a significant step in the firm’s growth and its intent to have a strategic physical presence to look after our clients’ overall interests,” said Campbell who added that “investors are focused on long-term appreciation and greater control, and White Bridge Capital, with our ‘boots on the ground’ approach, stands ready to source real estate investments in Texas that offer clients active management.”

Cross-border family office real-estate investments across the Americas are on the rise, propelled by macroeconomic and geopolitical drivers. White Bridge Capital is bridging this investment opportunity with its unique customized investment platform underpinned by high-touch, local intelligence, and a robust network of experts across the Americas.

“Nat is an outstanding business leader. His extensive experience and strategic vision in managing complex real estate deals, leading construction projects and teams, will be invaluable to our firm and clients,” said Garcia Handal. “In partnership with Nat, we look forward to our Texas office thriving into the future,” she added.

A graduate of Texas A&M University, Nat holds a master’s in business administration and a bachelor’s in construction science, focusing on business, project planning, and construction management of high-quality facilities. A proud and devoted father, Parsons is a U.S. rugby player, the son of architects and grandson of Nathaniel E. Parsons, president of N. E. Parsons Sheet Metal and Roofing Company 1924.

“White Bridge Capital’s leadership, client base, and market reach are unparalleled,” said Parsons. “Together with Tommy, Regina, and Texas’ pro-business and investor-friendly policies, I look forward to serving new and existing clients. The opportunities to grow in Texas are endless.”

Texas is an appealing destination for investors, particularly those from Latin America, given its overall business-friendly environment, infrastructure development, technological advancements, and strong economic growth – accelerated by trade with Mexico – attracting diverse industries to the state, resulting in population growth and an attractive real estate market.

The SEC Issues Alert on Common Frauds in Crypto Assets

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The SEC’s Office of Investor Education and Advocacy has issued an alert to investors, warning about the increasing use of crypto assets in scams targeting retail investors. Crypto assets, which include cryptocurrencies, coins, and tokens, are being exploited by fraudsters looking to capitalize on their popularity, according to the regulatory body.

Fraudsters often resort to technological innovations to perpetrate their scams, and investments related to crypto asset securities are no exception. “Despite ongoing efforts by federal and state regulators to combat these frauds, recovering stolen money remains a challenge,” the statement says.

Fraudsters use advanced technologies to hide their identity and the trail of funds, often sending them overseas, which makes recovery difficult, the statement adds.

The most common strategies used by fraudsters are (i) contacting through social media and text messages, (ii) exploiting emerging technologies, (iii) impersonating trusted sources, (iv) “pump and dump” schemes, and (v) demanding additional costs. The SEC explains in more detail how they operate in each case.

Contacts on Social Media and Text Messages: Scammers often initiate contact with potential victims on social media platforms, dating sites, and messaging apps, or through unsolicited text messages. They pretend to be friends of the victim or claim to have contacted them by accident, gaining their trust before disappearing with the invested funds. This type of scam, known as “pig butchering,” involves creating a fake friendship or romantic relationship to convince the victim to invest.

Exploitation of Emerging Technologies: The growing popularity of artificial intelligence (AI) is used as a lure to attract investments in crypto assets. Scammers use AI-related terms and claim to use bots to find the best investments, but their real goal is to steal investors’ money. Additionally, they use AI to create realistic websites and marketing materials, as well as deepfakes of celebrities or government officials to deceive investors.

Impersonation of Trusted Sources: Communications that appear to come from government agencies, including the SEC, can be forged by scammers. Using AI technology, scammers can impersonate friends or family members, posting messages from hacked accounts to promote fraudulent investments. It is vital to verify any investment offer, even if it appears to come from a reliable source.

Pump-and-Dump Schemes: In these schemes, scammers promote crypto assets, including “memecoins,” on social media to artificially inflate their price. Once the price rises, the promoters sell their assets for a profit, leaving other investors with significant losses when the price drops abruptly.

Demand for Additional Costs: Scammers may demand the payment of additional costs, fees, or taxes to allow the withdrawal of funds from an investment account. This advance fee fraud tricks investors into paying more money with the false promise of recovering their investment. They may also request refunds of money supposedly deposited by mistake, or deceive investors who have already lost money by promising to help them recover their funds, only to scam them again.

Precautions for Investors

To protect themselves from these frauds, the SEC recommends not making investment decisions based on advice from people known only online or through apps. Do not share financial or personal information, and verify the legitimacy of any investment offer, especially those that require the use of crypto assets to make payments. Staying informed and cautious is key to avoiding falling into the complex strategies of scammers.

 

Bolton Global Capital partners with Wealth Management GPT

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Bolton Global Capital, has announced a strategic partnership with Wealth Management GPT, a pioneer in artificial intelligence, to provide Bolton’s advisor network with innovative generative AI tools for highly effective and personalized messaging as well as financial education.

This collaboration combines the expertise of both companies to offer a state-of-the-art AI solutions platform tailored for financial advisors, the release said.

The tool equips advisors with multi-language marketing capabilities, enhanced personalized communications, streamlined workflows, and efficient content generation. The platform enables advisors to generate content in 20 seconds or less, offering features such as case templates and the ability to create 500-word blogs instantly.

Additionally, it can analyze the context and purpose of advisor messaging to deliver a differentiated client value proposition. Bolton’s implementation of Wealth Management GPT has multi-language capabilities, with the ability to create AI-generated content in English, Spanish, and Portuguese – a feature that is exclusive to Bolton, to suit the needs of its international clientele.

“Our partnership with Wealth Management GPT provides financial advisors with unprecedented potential to better serve their clients and achieve a superior outcome. With its advanced capabilities and intuitive interface, this tool is set to be a game-changer” said Matt Beals, Bolton’s Chief Operating Officer.

Wealth Management GPT Founder Marc Butler added “We are ecstatic to be partnering with the Bolton team to deliver the power of Wealth Management GPT to their advisors and help them continue to enhance their industry leadership.”

This partnership marks a significant step forward in leveraging AI to enhance the efficiency and effectiveness of financial advisory services.

BBVA Returns to Miami Due to “Strong Demand” in the Growing Offshore Business, Says Murat Kalkan

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Photo courtesyMurat Kalkan, Head of BBVA Global Wealth Advisors

BBVA Group has returned to the US Offshore business by establishing a new entity called BBVA Global Wealth Advisors, and locating an office in Miami due to the high demand from Latin American clients seeking the service, said Murat Kalkan, head of the new office located in the city’s financial center, to Funds Society.

In the office at 501 Brickell Key, which still smells new, Kalkan turns his back on the sun’s reflection through the windows to receive Funds Society and talk about the firm’s new objectives in South Florida.

“The main objective is to serve BBVA group clients in Latin America for their international wealth management needs,” the executive responded, clarifying that this was a short and simple answer.

However, Kalkan elaborated to provide context regarding BBVA’s “strong presence” in Latin America. In this regard, the Spanish bank projected that the US has been the main and largest offshore wealth management center for these clients for a long time.

According to estimates from consulting firms such as McKinsey and Boston Consulting Group (BCG), offshore share of LATAM individuals’ financial wealth ranges between ~30% and ~45%,and the largest booking center for those funds offshore is the US.

In 2021, BBVA Group sold its US banking entity to PNC Bank, and that sale included the US private banking unit, including the investment advisory business in the United States for international clients. However, “strong demand” led BBVA to conclude that “its own investment advisory service in the United States for the group’s high-net-worth clients was a fundamental component of its aspirations.”

Regarding the client profile, Kalkan insisted that the institution is “primarily focused on serving Latin American clients” and currently does not plan to target Spanish clients.

“We project that the US market has been a less prominent offshore option for BBVA Group clients in Spain, and those outside of Latin America. For those clients, other international wealth management service centers like BBVA Switzerland or BBVA Spain play a key role,” he explained.

The executive is an industrial engineer with an MBA from The Wharton School and has been with the firm for five years, having worked in New York and Houston offices.

US Offshore Business

Kalkan analyzed the business from various angles. Firstly, from a market perspective, US Offshore has been “generally attractive, driven by economic stability, the strength of the legal system, the solidity of financial infrastructure, access to opportunities, as well as the strength of the currency, which has recently had more weight,” he commented.

Given that Latin America is believed to be the leading source of US Offshore reserves, and that LATAM clients are believed to maintain a larger percentage of their wealth offshore than clients in all other regions, the US is “a bit different” from other offshore booking centers in the world. In other words, clients who have their wealth in US Offshore accounts allocate a much larger portion of their wealth to these accounts compared to clients from other regions who have their money in other international centers.

In Kalkan’s opinion, “this increases the importance of trust, the importance of stability, the importance of the relationship with the wealth management provider and its professionals.” Additionally, the head of BBVA GWA mentioned a Deloitte study showing that the US Offshore business has been one of the fastest-growing booking centers among offshore centers in the world.

“In my opinion, with the relative risk of geopolitical and economic instability in the LATAM region vs. other parts of the world, it is likely that this growth will continue in the near future,” Kalkan estimated, recalling that historically the offshore business was “highly competitive.” However, he noted that some global players have exited the business or significantly increased the minimum asset thresholds for their accounts.

“Moreover, from a wealth management service standpoint, we see that fee-based advisory share in US offshore is growing fast, but remains well behind US domestic market levels. Hence, I expect that this catch-up game is likely to continue.

Lastly, from an investment perspective, the point to highlight is the increase in client preferences for ETFs and alternative products.

Difference Between Domestic and Offshore Clients

Kalkan, based on his conversations with both U.S. residents investing domestically and Latin American residents investing in US Offshore, highlighted his personal views on the most important differences.

In his opinion, international clients and American clients have similarities but also some fundamental differences in their objectives, their decision-making criteria in selecting their advisors, or even the types of products they seek to have in their portfolios.

Firstly, from the objective of getting wealth management services in the US standpoint, American clients primarily seek to “maximize returns or optimize their life after retirement,” and while international clients also care about these they mainly seek to protect and preserve their wealth: both from political or currency risks they may face in their home countries.

“Therefore, their objectives are similar but also different,” he summarized.

Secondly, if he had to talk about the key factors in their decisions to go with a specific private bank or wealth management provider, American clients seek more product capabilities or institutionalization, professional service, or the track record of the advisors. On the other hand, offshore clients also care a lot about the availability of products and professional service, but “above all, they seek a strong relationship with their financial advisor or cultural synergy, which includes simply speaking their own language and understanding their customs and traditions, as well as attentive service,” he explained.

“In my opinion, there are obviously many similarities but also some significant differences between American clients and LATAM clients; and understanding the intricacies of LATAM clients’ needs and behaviors is critical to serve those clients well. At BBVA, we are proud of how well we understand the complexities of LATAM clients, which is something I believe is a differentiator for us,” Kalkan concluded.

BBVA announced the opening of its Miami office on March 14 to serve high-net-worth Latin American clients. According to the information provided by the company, in this initial stage, it will primarily serve Latin American clients interested in having an international investment advisory solution in the United States. It will mainly be offered to non-resident clients ready to invest more than $500,000.

Nearshoring and Real Estate: Changing trends in LatAm investment

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The pandemic-induced disruption of supply chains completely restructured the distribution of global trade and forced hundreds of American corporations to withdraw their operations from Asia and move them to Latin America, generating a boom in nearshoring.

While Mexico stands out and other nations such as Costa Rica, Guatemala and the Dominican Republic are emerging, the Inter-American Development Bank (IDB) says other countries, including Panama, Brazil, Peru, Uruguay, Colombia, Paraguay, Argentina and Chile, could reap an additional $29 billion annually in exports derived from nearshoring.

These investments are also significantly boosting local commercial real estate markets, offering interesting options for capital deployment with attractive risk-adjusted returns.

Varun Gupta, a professor of logistics and business analytics at the University of North Georgia (UNG), anticipates a continental transformation. “Nearshoring will likely have ripple effects, such as increased reliance of the U.S. and Canada on Latin America and influence on regulations and treaties with these countries to secure supply chains,” Gupta commented.

According to a Forbes report, nearshoring is expected to create four million jobs in Mexico by 2030, with foreign direct investment of up to $50 billion annually, increasing GDP by up to 2.5% in the next six years. In total, this trend could add $78 billion in additional exports of goods and services in Latin America and the Caribbean.

This global shift in production distribution is a wakeup call for real estate developers. Demand for industrial space in Mexico doubled in 2022 compared to 2019. Meor predicts demand for almost 13 million square meters of industrial space over the next five years. Just in Guadalajara, industrial space increased by 50% in the first quarter of 2024.

To capitalize on these opportunities, it is essential to have a thorough understanding of the markets and establish local partnerships that can offer insight into the unique aspects of each country’s real estate segment. Strategic entry into these markets requires understanding local laws, economic environment and the ability to mitigate the risk associated with political fluctuations.

How can we capitalize on this opportunity and join the trend while minimizing the risks of investing in different countries?

From my experience managing more than $550 million in real estate investments for international funds which, with exhaustive due diligence processes, have proven successful returns, I have witnessed first-hand the transformative impact that strategic real estate investments can have in Latin America.

Those of us who have a comprehensive understanding of these dynamics and with established networks throughout the region are well positioned to generate investment strategies aligned with current economic trends. The opportunity to be part of this economic change is at an inflection point, which makes very important to have a thoughtful commitment to the diverse opportunities that the region offers.

As we consider the future of investment in Latin America, we must emphasize the strategic relevance of local partnerships and expert know-how. Both governments and the private sector face great challenges to generate the appropriate infrastructure and policies in different countries to enable investors to maximize the benefits of nearshoring.

Investing in real estate in LatAm requires a nuanced understanding of local markets and different macroeconomic factors. Establishing regional strategies with an individualized approach per country is a key success factor for any investor who wants to establish a presence in these booming economies through nearshoring.

Key principles to consider include:

Diversification: Although Mexico offers stability and proximity advantages, diversifying investments in different LatAm countries mitigates geopolitical and economic risks.

Adequate Infrastructure: Regions with established or improving infrastructure, particularly in transportation and public services, will be more attractive as they reduce operating costs for companies setting up.

Leveraging technology and focusing on sustainability: Investing in properties that incorporate technology and sustainable practices is not only a social demand, but also a regulatory requirement. These features significantly increase the value of the assets.

Interaction with local entities: Successful investment in the real estate sector requires aligning with governments, companies and communities. Understanding and navigating local laws and cultural norms is essential to the flow of the operations and its long-term sustainability.

Monitoring economic indicators: Monitoring indicators such as GDP growth rates, employment levels, and foreign direct investment flows, provides information on potential real estate demand and economic stability in the region.

Exchange rate: For international investors, currency fluctuation represents a significant challenge.  Among the countries that already have a dollarized market are Mexico, Costa Rica, Panama and Peru.

Forging a new global production center

In the first five months of 2023, investments related to business relocation to Mexico exceeded the total recorded in 2022 by 38%. Some speculate that “Made in Mexico” will soon be the new “Made in China,” as data shows the Latin American country is, for the first time in 20 years, the United States’ top source of global imports. According to research published by construction company QUIMA, across industries, 57% of US and EU-based companies consider nearshoring as an essential element of their supply chain strategy.

Mexico has positioned itself as a cornerstone for companies seeking to mitigate the risks associated with long supply chains in Asia. It is the only developing country that has free trade agreements with the US, Canada, the European Union and Japan, and is geographically and politically in a unique location, which gives it enormous potential to be an intermediary partner between the main economies of the world.

The country is also enormously attractive from a labor perspective: 42% of the population (about 49 million workers) is between 20 and 49 years old; and the average hourly wage is $5 compared to $6 in China.

Gregorio Schneider, Founder and Managing Partner of TC Latin America Partners, highlights the importance of Mexico in the future of global production: “A light has been shining in Mexico due to the activity related to nearshoring, which has been driven by trade tensions between China and the US and the ratification of the Agreement between Mexico, the United States and Canada (USMCA). These events have created a unique scenario that I have not seen before in my professional career.”

This influx is accelerating growth in established industrial centers such as Tijuana, Monterrey, and Queretaro, and also catalyzing the development of new logistics centers along the US-Mexico border. Major global players in the automotive industry such as BMW, Audi and BYD have already committed to establishing new facilities in the country, which will create a unique opportunity for manufacturers and suppliers of the industry. As a result, top AAA industrial and logistics properties in these areas are experiencing significant rent increases and high occupancy rates, often exceeding 95%. Rental rates for state-of-the-art facilities can reach up to $10 per square foot annually, a rent previously unimaginable.

In conclusion, growth due to this transformation is a reality and a great opportunity that, with the appropriate strategy, can generate investments with great profitability and sustainability over time. The gateway for nearshoring to Latin America has been Mexico, but there is great potential for generating business in other Latin American countries as well.

UBS Global Family Office Report 2024: balance is back

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UBS has released its Global Family Office Report 2024, with data from 320 family offices in seven regions around the world. The report, which represents families with an average net worth of $2.6 billion and covers more than $600 billion of wealth, confirms that it is the most comprehensive and authoritative analysis of this influential group of investors.

Among the most notable findings is that portfolios shifted to more balanced allocations, with the largest weighting in developed market fixed income in five years. In addition, confidence in active management as a means of portfolio diversification increased, while artificial intelligence (AI) leads investment themes. On the other hand, alternative investments continue to form a significant part of portfolios, providing an additional source of diversification and return. What family offices are most concerned about, in the medium term, is the danger of a major geopolitical conflict, climate change and high levels of debt.

“Our 2024 report shows that family offices followed through on the plans for material shifts in strategic asset allocation foreseen in 2023’s report. By increasing weightings in developed market fixed income, they reintroduced greater balance between bonds and equities,” said George Athanasopoulos, Head of Global Family and Institutional Wealth, Co-Head of Global Markets at UBS.

Benjamin Cavalli, Head of Global Wealth Management Strategic Clients at UBS, highlighted: “The enlarged and globally comprehensive dataset allowed us to deepen our analysis and gain insights on how family offices’ operating businesses impacted their asset allocation. This enables us to provide them with tailored findings and advice.”

Allocations shift to more balanced portfolios, geographical tilt towards North America

The 2024 survey showed that family office portfolios moved back to a greater balance between bonds and equities. Possibly adjusting for a world of moderating inflation and declining policy rates, this change appears to reflect elevated bond yields, and it is consistent with the moves foreshadowed by last year’s report.

On average, family offices have kept their largest regional allocations in North America (50%), over a quarter (27%) in Western Europe, and 17% in either Asia-Pacific or Greater China. Looking ahead, North America and Asia-Pacific (excluding Greater China) are set to be the top destinations of added allocations, with over a third looking to increase allocations to each of these regions over the next five years (38% and 35% respectively).

Diversifying through active management, as generative AI is the top ranking investment theme

Just as balanced portfolios appear to be back in favor, so too does active management. Amid rapid technological change, shifting rate expectations and uneven growth, the increased dispersion of returns

offers opportunities for active management. Almost four in 10 (39%) family offices globally state that they are currently relying more on manager selection and/or active management to enhance portfolio diversification, up 4% from 2023. On the alternative investment side, hedge funds are used by a third (33%) of family offices for diversification. From a thematic perspective, generative AI is the most popular investment theme, with more than three quarters (78%) of family offices stating it is likely to be an area of investment in the next two to three years.

Geopolitics and inflation lead short term concerns, over five years climate change and debt emerge as top concerns

While economies appear to be stabilizing, geopolitics emerges as the top concern for family offices, followed by climate change in the medium term. Over 12 months, 58% are worried about the possibility of a major geopolitical conflict. There also appear to be concerns that central banks may only be able to cut interest rates slowly, with 37% of family offices stating they have concerns about higher interest rates and 39% about higher inflation. When asked to look further forward over five years, longer-term worries come into sharper focus. While geopolitical conflict remains the top concern (62%), almost half (49%) are worried about climate change and nearly as many (48%) are concerned about a debt crisis at a time when Western countries are burdened by high levels of public debt that might appear unsustainable.

As focus on sustainability increases, family offices seek greater sophistication

Sustainability is becoming an increasingly important topic affecting not just family offices’ investment portfolios, but also the long-term outlook of operating businesses. More than half (57%) of family offices with an operating business are either taking sustainability considerations into account already for their operating businesses or plan to do so in the future. As the topic of sustainability matures, family offices need more information and advice. Better data analytics to measure the impact of investments and/or business operations would help in achieving sustainability and/or impact goals, according to 37% of respondents.

Regional findings:

U.S.

US family offices have the lowest (7%) allocations to fixed income, on average, with 59% of those holding fixed income saying they do so to benefit from high yields. Their portfolios have the highest tilt allocated towards North America (82%) and just 8% towards Western Europe on average. In the US, high-quality short duration fixed income is the most popular means of diversification (47%). 83% of US family offices state they are likely to invest in AI. In the next 12 months, the top concern among US family offices is a major geopolitical conflict (57%). Over the next five years, US family offices are most concerned about higher taxes (73%).

Latin America

Compared to their global peers, Latin American family offices have the highest allocations, on average, to fixed income (27% in developed market bonds, 7% in emerging market bonds). Those that hold fixed income investments mainly do so to preserve capital (63%), help balance risk (58%) and benefit from the high yields (54%). The cash holdings are the lowest, on average, in Latin America (5%). In the next 12 months, the top concern is inflation (60%), while over the next five years, it is climate change (48%) and technological disruptions affecting their operating business and/or investments (48%).

South-East Asia

Among southeastern Asian family offices, 88% believe we will have positive real interest rates for longer. They rely more on manager selection and/or active management to diversify (50%). Compared to their global peers, allocations to real estate are the lowest (6%), on average. A major geopolitical conflict and higher inflation are top concerns (55% each) in the next 12 months, while over the next five years they are higher taxes (59%) and climate change (56%).

North Asia

North Asian family offices have, on average, high cash holdings (14%) and the highest allocations (24%) to Greater China of all the regions. In comparison to their global peers, the likelihood to invest in AI over the next two to three years is the highest (89%). They prefer high-quality short duration fixed income to enhance portfolio diversification (45%). Over 12 months and in the next five years, North Asian family offices are most concerned about a major geopolitical conflict (56% and 70% respectively).

Europe ex. Switzerland

Among European family offices, 38% believe that US real interest rates will fluctuate around zero. Compared to their global peers, the share of family offices planning to make changes to their strategic asset allocation in 2024 is the highest in Europe (42%) and, on average, there is a strong home bias to allocating their portfolios to Western Europe (49%). Compared to their global peers, the share of family offices being covered against financial risks is highest in Europe (67%). Currently and over the next five years, European family offices are most concerned about a major geopolitical conflict (61% and 71% respectively).

Switzerland

Also 38% of Swiss family offices believe that US real interest rates will fluctuate around zero. Compared to their global peers, they have the highest allocations, on average, to equities (29% developed market, 2% emerging market) and only 11% are planning to change their strategic asset allocation in 2024. Swiss family offices have a strong home bias, allocating on average 54% of their portfolios to Western Europe and use precious metals to enhance their portfolio diversification (34%). 76% of Swiss family offices are likely to invest in healthtech in the next two to three years. Over 12 months and in the next five years, Swiss family offices are most concerned about a major geopolitical conflict (62% and 71% respectively).

Middle-East

Compared to their global peers, Middle Eastern family offices have, on average, the highest allocations to real estate (15%) and use high-quality short duration fixed income to enhance portfolio diversification less than their global peers (10%). In the next 12 months they are most concerned about a major geopolitical conflict (68%) and over the next five years they are most worried about a financial market crisis (57%).

KKR Provides $300 Million Corporate Credit Facility to Origis Energy

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EBW Capital and AIS Financial form strategic alliance
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KKR and Origis Energy (“Origis”), a renewable energy and decarbonization solution platform, announced that vehicles and accounts managed by KKR’s insurance business have provided a $300 million corporate financing facility to Origis.

Proceeds from the facility will support the continued development and construction of Origis’ pipeline of solar and storage projects.

S&P Global Commodity Insights recently ranked Origis third on its list of ten largest owners of planned solar installations through 2028. Since inception, Origis has developed more than 250 solar and storage projects. In the U.S., the company’s current operating, contracted and mature development project portfolio stands at more than 12 gigawatts (GW), with an additional 13 GW in the pipeline.

“We are on a remarkable trajectory at Origis and focused on delivering for our customers. We are pleased to be working with KKR in this next phase of our growth,” said Vikas Anand, CEO of Origis.

“Demand for renewable energy financing is stronger than ever and we are pleased to support Origis Energy, one of the leading developers in this space,” said Sam Mencoff, Director at KKR.

This investment aligns with KKR’s Asset-Based Finance (ABF) strategy, which focuses on privately originated and negotiated credit investments that are backed by large and diversified pools of financial and hard assets, offering diversification to traditional corporate credit and attractive risk-adjusted returns.

KKR’s ABF platform began investing in 2016 and now has approximately $54 billion in ABF assets under management globally across its High-Grade ABF and Opportunistic ABF strategies.

Three reasons for continued market optimism

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After a 6% drop in the S&P 500 in April, it took only 33 days for the index to set a new all-time high. Despite fears of stagflation, iCapital’s experts say there are more positives than negatives in this environment and estimate three reasons why we should increase equity exposure, especially if it is underweight relative to strategic allocations.

Reason 1: April’s inflation report should support market spirits

Despite the sticky inflation prints to start the year, iCapital believes April’s inflation reading should support market spirits as it confirms that, with a 3.6% year-over-year (YoY) core CPI and 2.8% YoY core PCE, we are squarely in the “last mile” of fighting inflation. While recent readings may warrant a Fed on hold, they certainly do not warrant a hike – as Chair Powell has stated in recent speeches. With goods disinflation, the two remaining drivers of inflation are shelter (5.5% YoY) and car insurance (+22% YoY). However, the direction of shelter inflation is still lower, as it continues to ease on a month-over-month (MoM) and YoY basis.

The Federal Reserve must also acknowledge that interest rates may influence the demand side of rate-sensitive sectors of the economy, but they do not control the supply. The reason why the last mile of inflation is sticky is that while the Fed’s policies helped reduce demand for housing (new/existing home sales) and demand for labor (JOLTS job openings), they cannot affect the supply side of the equation, which is limited by the number of housing units and the availability of labor. It will take time for the supply side to catch up, as new multi-family units come online and additional workers enter the labor force (most likely through migration).

While recent trends have been firmer than we, and the Fed, would have liked, inflation is now in the 2-3% range. This is a notable improvement from a year ago, when we were still in the 4-5% range. To us, this is a lack of “flation” in the stagflation narrative and, in fact, 2-3% inflation can help sustain pricing power of corporates and, therefore, earnings.

Reason 2: The fears of stagflation in our view seem overblown

With inflation in its last mile, growth has remained strong. Despite the weak headline GDP print, underneath the surface growth was quite strong. Indeed, private domestic final purchases, which capture services consumption and residential construction, rose a solid +3.1%, which is much stronger than the +1.6% headline GDP and in line with the last two quarters of consumption. This trend appears to have continued in the second quarter as the Atlanta Fed GDPNow remains around 4%.

Analysts also believe this level of activity should be supported by a resilient consumer. Even despite some of the weakness in retail sales, which looks primarily at goods spending, real-time spending data remains healthy and is running above 2022 and 2023 levels. Consumption should be further supported by healthy labor markets and real wage growth returning to positive territory for all income cohorts, a welcomed departure from the last two years.

Reason 3: Growth is also picking up globally

The strength of economic activity has not been limited to the U.S.; there has also been an improvement in global economic growth. Global GDP growth, as proxied by the Bloomberg Global Growth tracker, is running at a +4.3% annualized rate for the month of April. This is a stark improvement from the tracker’s +0.8% annualized rate in Oct 2023. In addition, iCapital have also seen economists revise their global growth forecast higher throughout the year. Indeed, forecasts for global growth have been revised higher by 30 bps to 2.90% for 2024.

Investment Implications: Returns worth staying for

After the swift recovery to all-time highs on the S&P 500, we see a path towards 5,500-5,600, especially as earnings continue to inflect higher and broaden throughout the year. With 80% of companies reporting earnings so far this quarter, earnings are coming in better than expected. Indeed, 77% of the companies are beating estimates with an earnings surprise of +7.5%, which is above the 10-year average. And with sticky prices, this should support nominal revenue growth.

Even as the Fed maintains rates at a “higher-for-longer” level, markets still perform well during periods of Fed pauses. Indeed, markets return an average of 9.2% during pause periods. And as long as growth remains strong, we see no reason why the current pause should be different.

Public Markets: Maintaining our cyclical bias

Within public markets, the experts continue to like the cyclical sectors: consumer discretionary, industrials, financials, and semiconductors. While the macro environment discussed above is broadly supportive of these sectors, strong earnings growth has also supported their performance so far this year. Indeed, consumer discretionary, information technology and industrials have all reported YoY earnings growth that has been better than the S&P 500. “We believe this trend should continue, as consumer discretionary, industrials and financials have some of the best earnings revisions ratios over the last three months”, the report said.

Private markets: Favorable growth and income opportunities

Looking at the opportunity set in private markets, iCapital continues to favor private equity, private credit and real estate debt asset classes.

In private equity, valuations are rebounding with public markets, but remain below public market valuations. The analysts continue to believe private equity is a way to access themes such as AI, as managers (GPs) are working to infuse AI improvements to drive value creation in their buyout businesses. With lack of IPO volumes, companies are once again staying private for longer. But, exit activity should continue to improve throughout the remainder of the year.

In private credit, floating rate coupons should remain higher with rates on hold for longer (10-12% income yields). This provides a nice pick-up in yields relative to leveraged loans and high yield. Over time, private credit has provided consistent returns through consistent income, low volatility, and prudent underwriting.

Finally, real estate debt, banks are definitely pulling back from CRE lending amidst the large wall of upcoming maturities. But CRE debt funds do have $77 billion in dry powder to help alleviate the funding gap. Investors can earn ~ 9% yields in CRE debt and benefit from a higher place in the capital structure and equity cushions.

Citi Appoints Mitali Sohoni as New Head of Markets in the U.S.

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Blue Mahoe Capital ficha asesoría estratégica de Kingswood

Mitali Sohoni has been promoted to the new Head of U.S. Markets at Citi, industry sources reported on Monday.

Sohoni will maintain her current role as Head of Asset-Backed Financing in addition to her new position, according to the specialized media outlet The Trade.

The executive joined Citi in 2004, according to her LinkedIn profile.

During her tenure, she has overseen various business areas, including credit financing, asset-backed securities, clean energy, global infrastructure, the residential sector, Citi Community Capital, the municipal sector, and Citi’s Asset Financing Group.

Meanwhile, Dina Faenson was appointed CEO of Citigroup Global Markets (CGMI).

Faenson will report to Andy Morton, Head of Markets, and will maintain her current position as Head of Markets, Counterparty Trading, and Risk, reported Global Trading.

With over 18 years at Citi, Faenson has held positions of responsibility, including Head of Markets and Global Co-Head of Rates and Currencies for Valuation Adjustments.

Alternative Asset Classes Set to See Biggest Increase in Fund Raising in 2024

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Guía de Charles Schwab para RIA

A new research from Carne Group reveals that alternative asset classes are set to see the biggest increase in fund raising in 2024, with private equity, renewable energy, and hedge funds expected to lead the way.

The recent survey of over 200 alternative asset, equity, and fixed income fund managers in 10 countries, collectively managing $1.6 trillion, found that private equity came top, followed by renewable energy, hedge funds, private debt, and real estate, as the top five asset classes expected to see the biggest increase in fund raising in 2024.

According to the global study, a significant majority of wealth managers and institutional investors, who collectively manage $1.7 trillion in assets, anticipate increasing their allocation to private equity by 10% or more in 2024. Similarly, 70% of respondents expect to increase their allocation to private debt. The study also found that 64% of respondents plan to increase their allocation to renewable energy, 49% to real estate, and 42% to hedge funds.

However, a big challenge for alternative fund managers is an expected increase in consolidation in their markets driven by fund raising challenges and increasing regulatory costs. Over the next five years, 84% of fund managers surveyed expect the level of consolidation in the real estate fund management sector to increase, and the corresponding figures for the private equity, private debt, and hedge fund sectors are 69%, 64%, and 68% respectively.

“The appetite for alternative asset classes amongst investors is increasingly rapidly, fuelled by a growing desire from investors to diversify their portfolios and to manage volatility,” John Donohoe, CEO at Carne Group said.

However, the challenges facing alternative fund managers around growing regulatory complexity makes it more difficult for them to capitalise on increased investor appetite for their funds, the Carne Group’s added.

About the Research

The research was conducted by Carne Group, a fund regulation and governance solutions for the asset management industry, in partnership with Pureprofile, a market research company. The survey was conducted in December 2023 and January 2024, and included over 200 senior executives working for fund managers in 10 countries, as well as 201 investors working for pension funds, family offices, wealth managers, insurance asset managers, and consultants to institutional investors and asset managers.