Credit Suisse Drags European Banks Down, the U.K. Plans a Fiscal Overhaul and Chinese Builders Restructure Credit in this Week's Edition...
Take a Lap Around the Industry
U.K. Home Prices Fall 10% From Peak, Transaction Counts to Follow (Bloomberg)
Canadian Pacific Wins U.S. Approval for $27B Rail Deal Amid Derailments (Bloomberg)
T-Mobile to Acquire Mint Mobile, Ultra Mobile in Deal Valued up to $1.35B (MarketWatch)
Ray Dalio and Larry Fink Believe the SVB Collapse is Just the Beginning (Bloomberg)
European Banks Decline Following Credit Suisse Plummet
Credit Suisse’s shares and bonds both plunged yesterday amid increasing concerns that the bank will need to be rescued, with experts warning that a failure to properly handle the situation could have "knock-on effects" across the entire banking sector. The company has been the "troubled child of European banking" for several years and has been hit by repeated scandals and financial losses, which have caused an exodus of client withdrawals. The bank's bail-in bonds fell sharply, while the Saudi National Bank, Credit Suisse’s largest shareholder during a Bloomberg TV interview, stated it wasn't considering topping up its investment as it would prompt additional regulatory obligations. The bank is classified as a “systemically important financial institution” under international banking rules, with roughly 70% of its balance sheet located outside Switzerland.
"If regulators do not handle the Credit Suisse situation well, this will send shockwaves through the whole sector...To make matter worse, both sides of the Atlantic have banking issues."
Joost Beaumont, ABN Amro
Private Funding Pulse Check
Breyer Capital has recently participated in a Seed funding round worth $6M for HeadRace, a software company that operates a marketplace for recruiting services
Elyn, an innovative e-commerce clothing platform, has secured a $2.7M Pre-Seed funding round investment from Financière Saint James. Their unique 'Try Before You Buy' experience is gaining traction in the market and this investment will help them expand their reach
Envisics, a cutting-edge technology company specializing in holography, head-up displays, and augmented reality, has secured a $50M Series C investment from Tarsadia Investments
PSQ Capital Family Office took part in a $15M Series C deal with ONL Therapeutics, a clinical-stage biopharmaceutical company committed to helping patients with retinal disease and conditions
U.K to Overhaul Tax and Benefit Programs to Spark Economic Growth
U.K. Chancellor of the Exchequer, Jeremy Hunt, has announced changes to the country’s tax and benefit system in a bid to stimulate investment, encourage job creation and boost the economy. Companies will benefit from £9B in annual tax relief under a system of allowances for investments, while families will receive £94B over the next two years to offset the rising cost of living, with more than £5B set aside for childcare costs. The plan also includes a series of measures to get more people over 50 back to work, alongside investments in research and development to support 20,000 innovative companies. Savers will also be allowed to push an unlimited amount into pensions, removing a cap that discouraged older people from staying in work.
"The UK economy is on the right track...In November we delivered stability. Today it’s growth — the best investment incentives in Europe. The biggest ever employment package."
Jeremy Hunt, U.K. Chancellor of the Exchequer
Chinese Builders Enter Credit Restructuring Talks Amid Turbulence
Chinese dollar bonds issued by distressed developers saw increased stress in February. Bloomberg’s China Credit Tracker, a scale illustrating the stress of credit markets, showed an increase in stress from 2 to 4 in January, the lowest reading since data collection began in 2021. The recent global pullback caused by fresh U.S. interest-rate worries and the failure of several U.S. banks has contributed to a 1.6% decline in Chinese dollar bonds, as investors look to restructuring plans from struggling developers such as Sunac China Holdings and Zhenro Properties Group. The Chinese government is seeking to promote stable development for the real estate industry following a nationwide debt crackdown that resulted in falling home sales and record defaults. New-home sales for China’s largest developers rose year-over-year last month for the first time since June 2021, signaling the effectiveness of policymakers’ support measures. Despite some developers making progress with debt restructuring, including China Fortune Land Development’s recent issuance of $5.1B in new dollar bonds, the lack of action seen from others such as China Evergrande Group highlights the increasingly unpredictable nature of the process.
"If the housing market is considered having potential to recover, issuers will be more willing to push restructuring since it may help them open refinancing channels and ride the sector up-cycle in the future."
Xuchen Zhang, Jupiter Asset Management
Indian Family Offices Look to Set Up Abroad
India's wealthy individuals are increasingly looking to set up family offices overseas following a change in the country's investment rules. The Reserve Bank of India in August 2022 allowed profitable non-financial entities to establish financial services units outside India and invest up to 400% of the investing firm’s net worth. Singapore and Dubai are popular jurisdictions for such ventures, offering a favorable tax regime and regulatory environment, as well as proximity to India. However, Indian regulators may be hesitant to see HNWIs investing via foreign family offices, with the government likely to bring in regulations to support domestic set-ups. Challenges to such ventures include restrictions on liberalized remittance scheme (LRS) limits, limited global exposure, lack of robust trust and family laws and the need for a regulatory environment for professional trustees.
"This is a welcome liberalization and allows Indian business and industrial houses to create a investing vehicle and family office outside India in a regulatory-compliant, flexible and also tax-efficient manner, and tap opportunities outside India, listed as well as unlisted."
Captrust Financial Advisors has announced it has acquired Houston, TX-based RIA Monroe Vos Consulting, adding 17 staff and $5.8B in assets (FAIQ)
Prime Capital Investment Advisors has finalized a deal to purchase Reno, NV-based RIA Cornerstone Comprehensive Wealth Management, adding more than $400M in assets (BW)
Memphis, TN-based RIA Creative Planning has acquired Telarray Advisors, bringing its AUM to more than $225B across 50 states and 65 countries (FAIQ)
Written by:
Andrew Popp | Sr. Research Associate
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