HPS Investment Partners

Last updated

HPS Investment Partners, LLC
FormerlyHighbridge Principal Strategies
Company type Private
Industry Investment management
Founded2007;17 years ago (2007)
Founders
  • Scott Kapnick
  • Scot French
  • Michael Patterson
Headquarters New York City, U.S.
Key people
Scott Kapnick (CEO)
Products Private credit
Private equity
Mezzanine capital
Real assets
Public credit
AUM US$117 billion (June 2024)
Number of employees
700 (2024)
Website hpspartners.com
Footnotes /references
[1]

HPS Investment Partners, LLC (HPS) is an American investment firm headquartered in New York City. The firm focuses on investments in private credit and public credit as well as private equity and real assets. Outside the United States, the firm also has offices in Europe, the Middle East and Asia-Pacific.

Contents

In 2022, the firm was ranked by Private Debt Investor (under Private Equity International ) as the third largest private debt investment firm based on total fundraising over the most recent five-year period. [2]

Background

In 2007 Scott Kapnick, Scot French and Michael Patterson founded Highbridge Principal Strategies after leaving Goldman Sachs. It was formed as the private equity and credit investment division of Highbridge Capital Management (Highbridge) within J.P. Morgan Asset Management. Its strategies included mezzanine capital, bonds, direct lending and growth capital. [3] [4] [5] [6] [7] [8] [9]

In 2009, as a result of 2007–2008 financial crisis, many hedge funds suffered from redemption. However, Highbridge Principal Strategies grew significantly during this period. [4] [10]

In February 2011, Highbridge Principal Strategies was expanded after Highbridge acquired Gávea Investimentos and had let go of its event-driven trading team. [7] [10]

In December 2014, Institutional Investor reported that Kapnick and the management team of Highbridge were in discussions with JPMorgan Chase to lead a management buyout of the firm. The talks were focused mostly on Highbridge Principal Strategies. One of the main reasons for the buyout was the Volcker Rule which put strict limits on how much banks can invest in alternative investments which would be detrimental to Highbridge. Another reason was how Highbridge staff were compensated with bank stock which put the firm at a disadvantage when hiring and retaining staff compared to privately held hedge funds since the bank was a highly regulated entity. Finally, Jes Staley who headed J.P. Morgan Asset Management and was instrumental in Highbridge's acquisition back in 2004 had left the firm in 2013 and was replaced by Mary Callahan Erdoes. In fact by this period, Highbridge co-founders Glenn Dubin and Henry Swieca and former Highbridge President Todd Builione had all left Highbridge. [4] [5]

By 2015, Highbridge Principal Strategies became the larger more dominant part of Highbridge due to its performance and popularity among investors. It managed $22 billion in assets under management while the hedge fund side managed $6 billion. It was one of Highbridge's most successful ventures. [6] [10]

In October 2015, it was reported that only Highbridge Principal Strategies would be separating from JPMorgan Chase. JPMorgan Chase would keep the Highbridge and its hedge funds operations as well as a minority stake of Highbridge Principal Strategies. [5] [6] In March 2016, the buyout was completed from Highbridge and JPMorgan Chase. This led to an independent firm being spun out as HPS Investment Partners. [3] [8] [9] [11]

In July 2018, Dyal Capital acquired a minority investment in HPS. [3] [8] [9]

In April 2023, Financial Times reported that HPS had almost $100 billion in assets under management after it had raised $12 billion for a new junior credit fund. [12]

In December 2023, HPS confidentially filed for an initial public offering. [13]

On November 21, 2018 LBI Media filed for Chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. Afterwards the company created a bankruptcy-exit plan where HPS would take over the company. Bondholders of the company such as York Capital Management and Caspian Capital launched a lawsuit to oppose the deal and stated the plan was product of insider trading and fraud. Both LBI Media and HPS denied the allegation and said the plan followed standard market practices and big boy letter was signed. In April 2019, HPS and the bondholders came to an agreement on the plan after agreeing to boost recoveries for bondholders. HPS then took over LBI Media. [14] [15] [16]

On August 17, 2020, Citigroup filed a lawsuit against HPS, Brigade Capital and Symphony Asset Management, seeking the return their share of $504 million from a near $900 million payment that Citi said it paid by mistake to Revlon's lenders. The payments were related to loans made to Revlon by various private lenders which included the three firms. The lenders took the position that they were not obligated to return the money. [17] On February 16, 2021, a Federal court ruled that the lenders are under no obligation to return any of the monies mistakenly received. [18] However Citigroup asked the United States Court of Appeals for the Second Circuit for an appeal and on September 8, 2022, the court ruled in favour of Citigroup reversing the 2021 ruling. [19] The lenders then requested an appeal but were denied by the court on October 12, 2022. [20]

In June 2023, Jacob Chetrit sued HPS over 850 Third Avenue claiming the firm filed a fraudulent deed. Chetrit claimed when he handed over the property to HPS, he signed a deed showing the balance on the loans to be $320 million. HPS allegedly created a separate deed showing a balance of only $266 million. The reduced loan amount allowed HPS to charge Chetrit more for other expenses like an exit fee and interest costs. [21]

Related Research Articles

The Carlyle Group Inc. is an American multinational company with operations in private equity, alternative asset management and financial services. As of 2023, the company had $426 billion of assets under management.

<span class="mw-page-title-main">Investment banking</span> Type of financial services company

Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of debt or equity securities. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, FICC services or research. Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses. As an industry, it is broken up into the Bulge Bracket, Middle Market, and boutique market.

Private equity (PE) is stock in a private company that does not offer stock to the general public. In the field of finance, private equity is offered instead to specialized investment funds and limited partnerships that take an active role in the management and structuring of the companies. In casual usage, "private equity" can refer to these investment firms, rather than the companies in which that they invest.

<span class="mw-page-title-main">Citigroup</span> American multinational investment bank and financial services corporation

Citigroup Inc. or Citi is an American multinational investment bank and financial services company in New York City. The company was formed by the merger of Citicorp, the bank holding company for Citibank, and Travelers in 1998; Travelers was spun off from the company in 2002.

<span class="mw-page-title-main">Bear Stearns</span> American investment bank

The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 during the 2007–2008 financial crisis and the Great Recession. After its closure it was subsequently sold to JPMorgan Chase. The company's main business areas before its failure were capital markets, investment banking, wealth management, and global clearing services, and it was heavily involved in the subprime mortgage crisis.

<span class="mw-page-title-main">PIMCO</span> US global investment management firm

Pacific Investment Management Company LLC is an American investment management firm focusing on active fixed income management worldwide. PIMCO manages investments in many asset classes such as fixed income, equities and other financial assets across public and private markets. PIMCO is one of the largest investment managers, actively managing more than $2 trillion in assets for central banks, sovereign wealth funds, pension funds, corporations, foundations and endowments, and individual investors around the world. According to the Sovereign Wealth Fund Institute, PIMCO is the 6th-largest asset manager in the world by managed AUM.

Terra Firma Capital Partners Ltd. (TFCP) is a UK-based private equity firm. Financier Guy Hands founded the firm in 2002 through the spin-off of Nomura Principal Finance Group. The firm, which traces its roots to the formation of its predecessor in 1994, has invested over €14 billion since inception.

<span class="mw-page-title-main">Oaktree Capital Management</span> American global asset management firm

Oaktree Capital Management, Inc. is an American global asset management firm specializing in alternative investment strategies. As of September 30, 2024, the company managed $205 billion for its clientele.

<span class="mw-page-title-main">First Republic Bank</span> Former American financial services company

First Republic Bank was a commercial bank and provider of wealth management services headquartered in San Francisco, California, United States. It catered to high-net-worth individuals and operated 93 offices in 11 states, primarily in New York, California, Massachusetts, and Florida. On May 1, 2023, as part of the 2023 United States banking crisis, the FDIC announced that First Republic had been closed and sold to JPMorgan Chase.

<span class="mw-page-title-main">TPG Angelo Gordon</span> American investment management company

TPG Angelo Gordon is a global alternative investment manager founded in 1988 by John Angelo and Michael Gordon who together ran the arbitrage department of L.F. Rothschild in the 1980s. The firm focuses on four main investment disciplines: credit, real estate, private equity, and multi-strategy.

<span class="mw-page-title-main">Ares Management</span> American asset management company

Ares Management Corporation is a global alternative investment manager operating in the credit, private equity and real estate markets. The company was founded in 1997 with additional offices across North America, Europe, and Asia.

Blackstone Credit, formerly known as GSO Capital Partners (GSO) is an American hedge fund and the credit investment arm of The Blackstone Group. Blackstone Credit is one of the largest credit-oriented alternative asset managers in the world and a major participant in the leveraged finance marketplace. The firm invests across a variety of credit oriented strategies and products including collateralized loan obligation vehicles investing in secured loans, hedge funds focused on special situations investments, mezzanine debt funds and private equity funds focused on rescue financing.

<span class="mw-page-title-main">Glenn Dubin</span> American hedge fund manager (born 1957)

Glenn Russell Dubin is an American billionaire hedge fund manager and the Principal of Dubin & Co. LP, a private investment company. He is the co-founder of Highbridge Capital Management, an alternative asset management company based in New York City, and a founding board member of the Robin Hood Foundation.

<span class="mw-page-title-main">Highbridge Capital Management</span> Alternative investment management firm

Highbridge Capital Management, LLC is a multi-strategy alternative investment management firm founded by Glenn Dubin and Henry Swieca in 1992. In 2004, it was purchased by JPMorgan Chase; as of 2019, it had about $3.9 billion in assets under management, out of $150 billion in JPMorgan's global alternatives division.

Henry Alexander Swieca is the co-founder and former Chief Investment Officer of Highbridge Capital Management and the founder of Talpion Fund Management.

DFO Management, LLC is an American family office that manages the capital of Michael Dell and his family. The firm, which is based in New York City and has offices in Santa Monica and West Palm Beach, was formed in 1998.

Assured Investment Management is an institutional asset management firm, with a heritage in credit strategies. The firm manages approximately $15 billion as of 2022.

Brigade Capital Management, LP, more commonly referred to as Brigade Capital, is a global alternative investment manager specializing in credit investment strategies. The firm employs a multi-strategy, multi-asset class investment approach focused on leveraged balance sheets and manages core strategies across long/short credit, distressed debt, capital structure arbitrage, long/short equities and structured credit. The hedge fund invests primarily in the retail, media, telecommunications, healthcare, finance, utilities and energy sectors with particular expertise in distressed securities, bankruptcy and reorganization.

Private credit is an asset defined by non-bank lending where the debt is not issued or traded on the public markets. "Private credit" can also be referred to as "direct lending" or "private lending". It is a subset of "alternative credit". Estimations of the global private credit industry's size vary; as of April 2024, the International Monetary Fund claims it is just over $2 trillion, while JPMorgan claims it to be $3.14 trillion.

Värde Partners (Värde) is an American alternative investment management firm headquartered in Minneapolis, Minnesota. The firm focuses on investments in credit-related assets and distressed securities although it has also expanded into other areas of alternative investments including real estate.

References

  1. ↑ "Form ADV" (PDF). SEC.
  2. ↑ "PDI 100". Private Debt Investor. December 1, 2022. Retrieved July 20, 2023.
  3. 1 2 3 "Banking Escapees Make Billions From Private Credit Boom". Bloomberg.com. November 30, 2023. Retrieved December 1, 2023.
  4. 1 2 3 Rose-smith, Imogen (December 5, 2014). "Highbridge Capital Is Seeking an Exit from JPMorgan Chase". Institutional Investor. Retrieved July 20, 2023.
  5. 1 2 3 Chung, Juliet; Glazer, Emily (October 20, 2015). "J.P. Morgan Near Deal to Sell Majority of Highbridge Private Equity Business". Wall Street Journal. ISSN   0099-9660 . Retrieved July 20, 2023.
  6. 1 2 3 Donde, Anastasia (October 20, 2015). "Highbridge credit business soon to go it alone". Private Debt Investor. Retrieved July 20, 2023.
  7. 1 2 Taub, Stephen (February 9, 2011). "Highbridge Expands Credit Business". Institutional Investor. Retrieved July 20, 2023.
  8. 1 2 3 "Neuberger's Dyal Is Near Deal to Buy HPS Stake". Bloomberg.com. June 12, 2018. Retrieved July 20, 2023.
  9. 1 2 3 Fortado, Lindsay (July 3, 2018). "Credit investment firm HPS sells minority stake". www.ft.com. Retrieved July 20, 2023.
  10. 1 2 3 Jones, Sam (February 7, 2011). "Highbridge to launch standalone credit fund". www.ft.com. Retrieved July 20, 2023.
  11. ↑ "CLOs - Creditflux.com". www.creditflux.com. Retrieved July 20, 2023.
  12. ↑ Platt, Eric (April 11, 2023). "HPS assets near $100bn as credit funds move deeper into banks' territory". www.ft.com. Retrieved July 20, 2023.
  13. ↑ "HPS Investment Partners Confidentially Filed for IPO". Bloomberg.com. November 30, 2023. Retrieved December 1, 2023.
  14. ↑ Brickley, Peg. "Bondholders Go on the Offensive as LBI Media Seeks to Restructure". WSJ. Retrieved July 20, 2023.
  15. ↑ Brickley, Peg. "Bondholders Accuse LBI, HPS of Insider Trading in Debt". WSJ. Retrieved July 20, 2023.
  16. ↑ Brickley, Peg. "LBI Media Bondholders, HPS Reach Deal on Bankruptcy Exit". WSJ. Retrieved July 20, 2023.
  17. ↑ "Citigroup Gets Almost Half of $900 Million Revlon Funds Frozen". Bloomberg.com. August 19, 2020. Retrieved July 20, 2023.
  18. ↑ "Citi Loses Bid to Recoup Massive Mistake in Surprise Ruling". Bloomberg.com. February 16, 2021. Retrieved July 20, 2023.
  19. ↑ "Citigroup Wins Appeal in $500 Million Revlon Transfer Case". Bloomberg.com. September 8, 2022. Retrieved July 20, 2023.
  20. ↑ "Citigroup's (C) $500 Million Win Holds, With Revlon Lenders Denied Review - Bloomberg". October 12, 2022. Retrieved July 20, 2023.
  21. ↑ Hourie, Ilya (June 7, 2023). "Jacob Chetrit Sues Lender Over 850 Third Ave Deed-in-Lieu". The Real Deal. Retrieved July 20, 2023.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.