Written by Sinead Cruz and Tommy Reggiore Wilkes
LONDON (Reuters) – Sixth Street is embarking on the biggest European recruitment drive in its 15-year history, taking up a new regional headquarters in London’s Mayfair and adding up to 20 staff this year to focus on private credit and real estate.
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 the outlook for private markets in Europe is really strong.
“With the increasing size of companies like ours, the vibrant ecosystem of companies and entrepreneurs increasingly has an alternative to staying private longer or focusing on growing their businesses with the support of long-term private investors,” Salisbury said.
Sixth Street’s European growth plan, first announced here, is the latest example of an 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 small portion 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 may undermine financial stability.
“The tighter capital and provisioning requirements on banks mean it’s more punitive for them to hold these assets now, so they want partners to share that risk with,” Salisbury said.
Founded in 2009, Sixth Street employs more than 600 people, including more than 200 investment professionals. Alan Waxman, a Goldman alumnus, is co-founder and CEO.
Salisbury cited London’s attractive talent pool, saying the city was the “obvious first choice” to build the company’s international business, although other cities were “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 Sachs before joining his former colleagues at Sixth Street in February.
With the UK’s national elections approaching next week, Salisbury, who is of British descent, said he hoped politicians would work to 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,” he said. “At the moment, that is focused around London, with Asia a future priority.”
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 practice in March 2022. It hired New York-based Michael Dryden, the 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 is another priority in 2024, after appointing Marcos Alvarado from Safehold (NYSE:) Inc. in February to head its U.S. team.
Sixth Street resisted the temptation to invest heavily in down markets in 2021 and 2022, selling specialist lender Kensington Mortgages to Barclays two years ago.
Now she is ready to take advantage of the bigger discounts offered by the sellers.
Recent deals include the purchase, along with other investors, of a portfolio of Italian department stores and shopping malls for €258 million ($275.72 million).
“Real estate has become a real stock-picking market, with increasing disparity between winners and losers and the need to generate more returns through operating performance rather than just high yield trades,” Salisbury said.
($1 = 0.9357 euros)
(This story has been refiled to add “CEO” as Alan Waxman’s job title in paragraph 8.)