London Firm Cheyne Capital Hires Barclays Veteran for $2 Billion Risk Transfer Strategy

Cheyne Capital, a London-based investment firm, has brought on Frank Benhamou from Barclays to lead a $2 billion synthetic risk transfer strategy, re-entering the SRT market after six years. Benhamou, who has 17 years of experience at Barclays, will join as a portfolio manager for this strategy. The move comes as there are expectations of increased SRT activity from US banks under the Basel III Endgame rules. The article also highlights challenges faced by the Cheung Kei Group in the property investment sector, reflecting liquidity issues and asset losses.

Key Takeaways

• Cheyne Capital has hired Frank Benhamou from Barclays to lead a $2 billion synthetic risk transfer strategy, marking its re-entry into the SRT market after six years.
• Benhamou, with 17 years of experience from Barclays, joins as a portfolio manager for the strategy.
• Synthetic risk transfer transactions in 2022 covered loan risks worth $300 billion globally, with expectations of increased SRT activity from US banks under the Basel III Endgame rules.
• Cheung Kei Group, specializing in acquiring and operating real estate assets globally, is facing liquidity challenges with over $200 million in overdue loans and asset losses.
• The group has lost properties worth at least $1.4 billion to creditors, including significant assets in Hong Kong and London.

Analysis

Cheyne Capital's strategic move to re-enter the SRT market with a $2 billion investment, led by Frank Benhamou, will likely impact the firm's portfolio performance and competitive positioning. The anticipated increase in SRT activity from US banks under Basel III Endgame rules may create opportunities and risks for players in the market. The challenges faced by Cheung Kei Group, including liquidity issues and asset losses, could lead to financial strain and impact their global real estate operations, potentially affecting creditors and investors. The short-term consequences could involve market adjustments, while in the long term, the outcomes may influence the overall stability of the SRT market and global real estate investments.

Did You Know?

• Synthetic Risk Transfer (SRT): This is a financial strategy used by investment firms to transfer certain risks, such as credit or market risks, to another party through the use of financial derivatives. In this case, Cheyne Capital has hired Frank Benhamou to lead a $2 billion SRT strategy, which indicates their intention to manage and mitigate specific financial risks through synthetic instruments.
• Basel III Endgame Rules: Basel III is a set of international banking regulations that aim to strengthen bank capital requirements and improve risk management. The "Endgame" refers to the final phase of implementation for these regulations. The expectation of increased SRT activity from US banks under the Basel III Endgame rules suggests that there will be changes in risk management and financial transactions in the banking sector as a result of these regulations.
• Liquidity Challenges and Asset Losses:
  • In the case of the Cheung Kei Group, the mention of facing liquidity challenges with over $200 million in overdue loans and asset losses highlights the difficulties the company is experiencing in meeting its short-term financial obligations and the devaluation of its assets. This indicates potential financial distress for the group and could impact their operations and financial stability.