BlueBay Asset Management Plc, (BBAY) a London-based fixed-income investment firm owned by Canada’s biggest lender, plans to expand into debt that’s less easily tradeable including direct lending to European companies.
“The next big strategic goal for BlueBay is to build the illiquid credit business to add to our existing products,” David Burnside, the firm’s head of alternative investments, said in an interview at the SuperReturn International conference in Berlin.
BlueBay will start making loans as part of its new strategy, according to Burnside. European investment-grade and emerging-market corporate and sovereign debt are already areas of focus for the firm and account for a “significant” part of its $38 billion of funds under management, he said.
BlueBay is looking to fill the gap left by European banks, which have cut lending to reduce the capital they need to hold under stricter rules aimed at preventing a re-run of the global financial crisis.
“Banks have enormous capital-raising and deleveraging to go through while the alternative lending market is tiny in Europe,” said Anthony Fobel, who joined BlueBay from Och-Ziff Capital Management Group in September to head up its direct lending unit. “Banks are increasingly becoming safe, deposit- taking, lending utilities, so we expect more asset managers to move into the illiquid debt space this year to fill the gap.”
Fobel was head of Och-Ziff’s European private investments business before joining BlueBay. Before that he was a director at CVC Capital Partners Ltd.
Royal Bank of Canada (RY) bought BlueBay in 2010 for 963 million pounds ($1.5 billion) to expand its wealth management business. Mark Poole and Hugh Willis founded the firm in 2001.
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