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Written by Sinead Cruz and Tommy Reggiore Wilkes
LONDON (Reuters) – Sixth Street Bank has embarked on the biggest European recruitment drive in its 15-year history, leasing a new regional headquarters in London’s Mayfair and adding up to 20 staff this year to focus on private credit and real estate.
“The outlook for private markets in Europe is really strong,” Julian Salisbury, co-chief investment officer of the $75 billion global investment firm, whose leadership includes a number of former Goldman Sachs stars, told Reuters.
“Due to the growing size of companies like ours, the vibrant ecosystem of companies and entrepreneurs increasingly has the option of staying private longer or focusing on growing their business with the support of long-term private investors,” Salisbury said.
Sixth Street’s European growth plan, first announced here, is the latest example of the ambition among U.S. investment firms to expand into less-developed private credit markets. Ares Capital and Apollo Global Management (NYSE:) have also become major players in the sector.
These investment firms meet demand from corporate borrowers that traditional banks are struggling to serve as a result of stricter rules on how much lending risk they can hold on their balance sheets.
Private credit still represents only a tiny fraction of total lending by banks, but its rapid growth has alarmed some regulators and financiers, who are concerned about the relative lack of oversight in the sector and whether it could undermine financial stability.
“The tightening of provisions and capital requirements on banks means it is now punitive for them to hold these assets, so they want partners who share this risk with them,” Salisbury said.
Sixth Street was founded in 2009 and employs more than 600 people, including more than 200 investment professionals. Alan Waxman, a Goldman alum, is one of the founders.
Salisbury cited London’s attractive talent pool and said the city was the “obvious first choice” to build the company’s international business, although other cities are “opening up and catching up” after Brexit.
Sixth Street employs around 60 people in London and its new offices on Dover Street (NYSE:) near the Ritz have the capacity to accommodate twice that number.
“We expect our business to grow a lot here,” said Salisbury, who spent 25 years at Goldman before joining his former colleagues at Sixth Street in February.
With the UK national election next week, British-born Salisbury said he hoped politicians would protect the UK’s financial services industry, which he described as the “jewel in the crown”.
“We have had a local presence here since 2011 and are growing our international business. At the moment, we are focusing on London, with Asia as a priority in the future,” he said.
Real estate payment
Sixth Street has invested in businesses ranging from Airbnb to Bay FC, a professional women’s soccer company.
Sixth Street launched its structured products business in March 2022. It has appointed New York-based Michael Dryden, former global head of securitized products finance at Credit Suisse, to lead the team, which views asset-backed finance as a special interest market.
“Private credit markets are expected to double over the next five years and we believe there is potential for organic growth across all of our credit strategies,” Salisbury said.
The company, which has also provided capital to Spanish soccer clubs Real Madrid and FC Barcelona, was leading the KKR-backed consortium that bought Greensky (NASDAQ:), a lending platform for home improvement loans, earlier this year.
Salisbury said strengthening the group’s real estate business in Europe was another priority in 2024, following the appointment of Marcos Alvarado from Safehold (NYSE:) Inc. In February to head her team in the United States.
Sixth Street has resisted the temptation to invest heavily in bear markets in 2021 and 2022 and sold specialty lender Kensington Mortgages to Barclays two years ago.
Now they are ready to take advantage of the deeper discounts offered by sellers.
Recent deals include the purchase, along with other investors, of a portfolio of Italian supermarkets and shopping malls for €258 million ($275.72 million).
“Real estate has become a real stock-picking market, with increasing variance between winners and losers and the need to generate more returns through operational performance rather than just high-yield trades,” Salisbury said.
(1 dollar = 0.9357 euro)
