Can BlackRock harpoon personal credit score’s ‘big whale’? | USAEMALL.com

One thing to start: Second-hand fashion site Vinted — which is valued at €5bn and backed by TPG — plans to expand beyond clothes as the profitable Lithuanian start-up seeks to capture more of the booming market for used goods.

In today’s newsletter:

• HPS becomes Wall Street’s big obsession

• Real estate values face reality

• Boeing’s troubles mount

HPS and the art of ‘creating tension’

Goldman Sachs’ former head of investment banking is staring down perhaps the biggest deal of his life. For now, he’s keeping his options open.

Scott Kapnick, the press-averse 65-year-old chief executive of private credit manager HPS Investment Partners, has been busy drawing up the firm’s next chapter.

He’s across the table from the biggest name in asset management — BlackRock. That was part of the plan all along, DD’s Eric Platt writes.

While HPS has spent the past two years preparing for an initial public offering, it has also used the prospect of a listing to drum up demand from someone who will potentially buy the firm outright.

“They recognise . . . that waiting around for a sale that potentially doesn’t ever happen ultimately is not in their best interests,” one person briefed on the matter said.

It’s not just BlackRock. The firm has also held discussions to sell a minority stake to Middle Eastern sovereign wealth funds, including Abu Dhabi’s Lunate.

One person familiar with the process said those talks, as well as the IPO, were being done in part to “create tension” with a would-be buyer of the entire firm. HPS is looking for a valuation of $10bn or more.

Talks with BlackRock have been progressing and in recent weeks the two firms have exchanged terms over a deal.

While BlackRock has been the main focus for HPS, there is also interest in drawing out JPMorgan Chase, HPS’s former owner. HPS started out as a unit of the Wall Street giant, but JPMorgan’s willingness to invest in the division came into question as post-financial crisis regulation stifled the bank’s appetite to make risky loans.

Talks with potential suitors could still fall apart, which is why the IPO process is still progressing. A person familiar with HPS senior executives’ thinking said the group believed they had “a lot of options, [but] have yet” to pick one.

The asset management world is watching closely: a deal for HPS could also put one of its rivals into play.

After all, if you’re BlackRock or JPMorgan and you’re contemplating a private credit acquisition, it only makes sense to canvas the entire field.

What are those skyscrapers worth, really?

Commercial real estate deals are back in motion.

For the past two years asset owners have gritted their teeth through painfully high borrowing costs. But now, there’s a bit of relief: central banks are cutting rates and the market is coming back to life.

Big portfolios of European warehouses have changed hands — Blackstone recently bought a big stake from landlord Burstone. Commercial mortgage-backed securities are being refinanced, like the recent one of New York’s iconic Rockefeller Center.

This is important not just for parched investment bankers and agents who have been trying to survive a once-in-a-decade drought in transaction fees. Investors are also keen to have some proper market evidence on what people are willing to pay for properties.

In the City of London, for instance, the last building to sell for more than £500mn was just over two years ago. And in commercial real estate, transactional evidence is everything. A lack of sales have made current values uncomfortably sketchy.

Brookfield is hoping to break the dry spell with its sale of CityPoint ahead of a debt deadline early next year. This and a handful of other big buildings — like London’s “Can of Ham” skyscraper — could be the bellwether for City offices.

More and more deals across the varied, multitrillion-dollar CRE market will add up to a picture of what prices different real estate subsectors can command in a higher interest rate market.

While necessary, it’s a nail-biting exercise for investors. All they can do is hope the reopening market will not bring a nasty surprise about what their buildings are really worth.

Boeing’s cash troubles

Most news about plane maker Boeing over the past year has been bleak.

On Wednesday, it added to a long list of disappointments. It reported a $6bn third-quarter loss and burnt through $2bn in cash. Boeing also said it would bleed cash into next year.

The earnings report comes on the heels of Boeing’s new scheme last week to shore up its balance sheet. It unveiled plans to raise up to $35bn through a combination of a $10bn credit facility and raising up to $25bn through equity and debt.

Kelly Ortberg, the company’s chief executive, used the earnings report as a chance to call for a company overhaul.

He told employees and investors that the plane maker was “at a crossroads” and that “serious performance lapses” had led to an erosion of trust, mounting debt and customer disappointment.

His plan: to stabilise the business, improve its aircraft production processes, and for executives to be “closely integrated with our business and the people who are doing the design and production of our products”.

In August, Ortberg came out of retirement to take on the top job, perhaps the single most challenging position in corporate America today. (He’s being well remunerated, though: this year he’ll receive $1.25mn in cash and other pay valued at $16mn.)

Yet perilous finances are just one of the crises plaguing the American company.

Boeing’s workers — who saw their pay increase just 4 per cent over the past eight years — voted on Wednesday to reject an offer that would bump up their pay by 35 per cent over four years.

The offer didn’t reinstate the defined benefit pension that they lost following a bitter fight a decade ago — a decisive sticking point. As always with Boeing, more turbulence ahead.

Job moves

• UBS Group’s Tom McLoughlin, who spent the past 14 years at the bank’s global wealth management division, is retiring, Bloomberg reports. He was most recently head of fixed-income and municipal securities for the Americas.

Smart reads

Quant pioneer John “Mac” McQuown, who was a father of passive investing, has died. His combination of bullheadedness and brilliance proved the crucial driver of the first entirely passive, index-tracking investment fund’s birth in 1971, FT’s Alphaville writes.

Deglobalisation pitfalls Regulating banks around the world in a fragmented way could be potentially destructive, writes UBS chief executive Sergio Ermotti for the FT.

University distress Small private colleges across the US are having a tough time covering costs, Bloomberg reports. One quick fix: pawning off their rare art and mansions.

News round-up

HSBC east-west overhaul reignites break-up debate (FT)

CityFleet to buy Addison Lee in £269mn deal (FT)

Goldman Sachs and Apple to pay $89mn in US fines over credit card programme (FT)

Deloitte axes 250 UK employees in performance-related cull (FT)

McDonald’s shares drop as Quarter Pounders tied to fatal US E. coli outbreak (FT)

Frontier, Spirit Airlines revive merger talks (WSJ)

Siemens in talks to buy software group Altair (Bloomberg)