Principal® Names Deanna Strable as the New President and CEO, Succeeding Dan Houston

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Principal Deanna Strable new president CEO

Principal Financial Group has announced that its Board of Directors has appointed President and Chief Operating Officer Deanna Strable as the next President and CEO of the company, effective January 7, 2025. She will also join the Board of Directors of Principal in January 2025. Prior to being appointed President and Chief Operating Officer in August 2024, she served as the company’s CFO from 2017 to 2024, and before that, as President of its Workplace Benefits and Insurance business.

“I am incredibly proud of the company we have built, the culture and experience developed, and our unwavering commitment to our clients. It has been an honor to serve as president and CEO and work with so many talented employees around the world. Deanna has been a trusted partner and co-architect of the company’s growth strategy. I have the utmost confidence in her leadership and business acumen, and I look forward to working with her to ensure a smooth transition,” said Dan Houston.

“Deanna brings strategic vision, strong leadership experience, and a deep understanding of the company’s interconnected business units,” said Scott M. Mills, principal independent director of Principal’s Board of Directors. He added, “Deanna has developed extensive and deep experience over her 35 years with Principal and has held key leadership positions in shaping its strategy and business portfolio. We look forward to her continued leadership to drive Principal into the next phase of growth.”

According to the company, Strable has been instrumental in the strategy and business operations as Principal has experienced significant growth, and she has continuously strengthened the company’s market position, as detailed by the entity. She helped build the company’s Benefits and Protection business, as the first leader of its Special Benefits division, and led the integration with its life insurance business before assuming the role of President of the business unit in 2015.

“I am honored to be named the next President and CEO of the company and to build on the solid foundation we have established under Dan’s leadership. Throughout my career, I have seen Principal strengthen its position as a global financial services leader dedicated to helping clients build a solid financial future. Along with our dedicated and passionate colleagues around the world, I look forward to continuing our culture of innovation, inclusion, and service, with a focus on meeting client needs to drive growth and create value for shareholders,” said Deanna Strable.

Strable will succeed Dan Houston in the role. Houston has served as President and CEO of Principal since 2015 and has held several leadership positions during his 40 years with the company. During this time, he navigated highly complex business issues, from the financial crisis to industry reform and throughout the global pandemic. Under Houston’s leadership, Principal’s market capitalization grew from $13 billion to over $20 billion, as he focused the company’s strategy on high-value opportunities and growth drivers to serve clients and shareholders worldwide.

“Dan has been the driving force behind Principal’s evolution over the last 10 years,” said Mills. “He set the company’s growth agenda and led it through a significant transformation. Principal is in a strong position today and well-positioned for continued growth thanks to his leadership.”

Four Reasons That Will Fall Short of Growth Forecasts for Alternatives: Sovereign Funds, Individual Investors, Insurers, and Asia

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alternatives growth forecasts sovereign funds Asia

The growth of the alternative assets industry will be exceptional: it is estimated that the volume of private assets will increase to over $24 trillion, from a volume of $15 trillion in 2022, according to Preqin’s calculations. For now, the current alternative assets market still represents less than 11% of global GDP and only 2.4% of global financial assets, according to KKR. A study by the firm on the past, present, and future of the alternative market suggests that there are reasons to believe these figures may be conservative, as there are growth opportunities both by product, client base, and geographic areas.

1. Increased Growth of Sovereign Fund Allocations

Over the last decade, the maturity of alternatives as an asset class is evident, as Sovereign Wealth Funds (SWFs) – which the firm estimates to total at least $12 trillion in assets under management – have increased their exposure to private markets from around 16% in 2016 to 26% in 2024. However, conversations with sovereign funds from Latin America, the Middle East, and other parts of the world suggest a healthy desire to do more with alternatives, in addition to using private markets to broaden exposure to both emerging and developed markets.

In particular, “the reach and scale of sovereign funds is rapidly expanding beyond traditional infrastructure and real estate investments to include most private market asset classes across all geographies,” the report states.

At KKR, they believe the reason for this shift is twofold: in many cases, private markets can help boost returns and reduce volatility, especially as the correlation between stocks and bonds has increased. For example, sovereign funds can leverage private opportunities to invest excess revenues or diversify their total dependence on natural resources or their local economies. Alternative investments can also enable sovereign funds to acquire strategic stakes in local companies in economically important sectors.

2. Individual Investors Increasingly Turning to Alternative Products

The study notes that the individual investor market presents a significant growth opportunity. “Consider that the consulting firm Cerulli states that only 2.3% of assets from U.S. financial advisor clients invested in alternatives in 2023. However, this estimate pales in comparison to the 60% increase since 2007 in the number of individual investors with between $1 million and $5 million in the U.S., many of whom are seeking to compound their long-term returns more efficiently,” the firm explains.

In line with this view and with some of the customer work and surveys conducted by KKR’s Chief Investment Strategist, Paula Roberts, “allocation to alternative products may increase as private products become more accessible due to lower minimums, greater transparency, and greater liquidity.”

In fact, the report claims that all segments, from Ultra High Net Worth to retail investors, have significant growth potential, as the value of the illiquidity premium also becomes significant in a world where aggregate returns are falling. “We are not the only ones who think this way, as Cerulli also estimates that an additional $1 trillion could be invested in retail alternatives, with the total allocation from retail investors rising from the current $1.4 trillion to more than $2.4 trillion over the next five years,” KKR asserts.

3. Growing Appetite from Insurers

For insurers, the study suggests that uncorrelated private asset classes, especially higher-yielding ones, have gained importance. In a higher interest rate environment, they have created highly liquid asset funds that can offer global returns in support of reserves for claims when underwriting new business – something most want to do more of.

Moreover, the most recent investment environment has created a shift in mindset, allowing CIOs to focus on leveraging both liquid and illiquid allocations to build more resilient and all-terrain portfolios.

“We believe that the value of an uncorrelated asset in one’s portfolio increases materially if we are right in our base-case scenario, which points to the neutral rate for Fed funds now being higher; traditional government bonds can no longer diversify as much as they did in the past and global yields have compressed now that we’ve moved out of a low-rate, flexible monetary policy and restrictive fiscal policy environment,” the report reads.

The firm considers it “important” to highlight that diversification among issuers, sectors, and asset classes contributes to mitigating idiosyncratic risk, while diversification across asset classes helps mitigate systematic risk.

4. Increased Demand for Private Markets in Asia

Investments allocated to alternatives in Asia have grown at an average annual rate of 22% since 2000, nearly double the rate of private alternatives in North America and comparable in size to current private markets in Europe. “These numbers seem especially interesting given that we have seen a retreat in investment in private markets in China – from around 10%-12% to about 5% – while demand for alternatives from Asian clients is on the rise,” KKR explains.

The study also suggests that investment managers in Asia are seeking to diversify beyond equities, fixed income, and listed real estate, toward private equity, infrastructure, and private credit.

In line with the growth of Asian private markets, KKR has been increasing exposure to the region. Over the past five years, the firm’s allocation to Asia has grown from 10% to 16%, with a target allocation of 20% to 30%.

The firm justifies its optimism about Asia by stating that, of all the macro trends it observes, the rise in urbanization in Asia is one of the most powerful tailwinds it is monitoring: between 40% and 50% of the growth in urban population per decade, both in 2030 and 2040, will come from Asia. Additionally, urbanization generates demand for technology and energy efficiency. It also believes that key markets such as China, Japan, and India will spend significantly on a wide range of retirement and healthcare offerings in the future.

FINRA Plans to Increase Member Fees to Address Costs

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FINRA increase member fees address costs

FINRA has requested approval from the SEC to increase member fees to address the costs of supervising the industry.

In the proposal, FINRA outlines a phased approach to fee increases between 2025 and 2029, ultimately aiming to boost its annual fee revenues by $450 million, with total fees growing at a compound annual rate of 5.3% over this period.

The rise in expenses is largely attributed to increased salaries and accelerated hiring to meet expanding enforcement mandates, as well as higher spending on technology, including cybersecurity and data storage, according to FINRA’s submission.

FINRA highlighted the anticipated fee increases in its annual report from July, noting a net operating loss of $119 million in 2023, double the $60 million loss from the previous year, as reported by industry media. The regulator also expects to record further annual losses at the close of this fiscal year.

The implementation of new SEC mandates, including Reg BI, has required “substantial investments,” stated FINRA.

The increases will apply to a range of fees, including membership, qualification exams, arbitration, and other services. Some fees, such as the routine branch fee, will increase for the first time since 2013.

Registration fees will rise in 2028. For example, firms will need to pay $175 to submit a file for transferring a hired broker’s license, compared to the current $125. The cost of filing a U5 termination notice will increase from $50 to $70, as estimated by AdvisorHub.

Firms with more than 500 brokers will face over $400,000 in additional fees by 2029, according to the proposal. Firms with 10 to 150 brokers will see their contributions rise by more than $4,000 over the next five years.

The last time FINRA proposed fee increases was in 2022, with a plan to fund its operations up to this year, resulting in a total increase of $225 million.

Trump’s Victory Boosts Bitcoin and Sets a New Record

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Trump victory Bitcoin record $88,000

A week after the U.S. elections, there has been a historic increase in the price of Bitcoin. As Bloomberg highlights, the cryptocurrency has continued its unstoppable rise, surpassing $88,000 for the first time, driven by the acceptance of digital assets by the Republican candidate, Donald Trump.

According to Eric Demuth, co-founder and CEO of Bitpanda, the fact that Bitcoin has reached a new all-time high is a clear sign of the change occurring in the financial ecosystem. “This year, we have already surpassed the price record twice, and everything points to the fact that in the coming years, we may continue to see more. Among the factors driving this surge are the constant progress in the adoption, integration, and regulation of digital assets, along with the growing influx of institutional capital from traditional financial markets,” explained Eric Demuth.

The CEO of Bitpanda explains that during these bullish periods, the market expects prices to continue rising, which creates sustained buying and a positive feedback effect that drives prices even higher. Additionally, these periods are usually marked by increased media coverage, growing public interest, and favorable momentum for the market. “Bitcoin is reaching new highs every day, suggesting that we are at the start of a new bull run. It is very likely that this rally will continue for some time. We are already quite close to the $90,000 mark, and there is a real possibility that we will see $100,000 this year or even this month. Therefore, those looking to benefit in the short term should act quickly. However, what really matters is maintaining a long-term perspective and the overall market sentiment toward cryptocurrencies, which continues to be very optimistic,” he states.

From Kraken, they also highlight that with a Trump presidency, the market anticipates greater clarity for cryptocurrencies, both at the administrative and legislative levels. The market would view a complete Republican victory favorably, as it increases the chances of a cryptocurrency innovation agenda with fewer delays, as noted by the entity. “This is the first time that a U.S. president has openly supported a progressive cryptocurrency agenda. The Trump administration’s openness toward the sector offers new positive catalysts, such as the possibility of a strategic Bitcoin reserve and reviews of more conservative tokenomics policies,” emphasizes Kraken.

“With Trump’s clear election as the 47th president of the United States, a new direction has been set for the sector. The main source of uncertainty for the cryptocurrency market—the unclear and harmful actions by the SEC—could soon be replaced by transparent and progressive crypto regulation, which will meet the market’s expectations. It is expected that the current SEC chairman, Gary Gensler, will be removed by February at the latest. This decision will likely accelerate ongoing lawsuits and allow existing applications to be processed more quickly, facilitating the entry of new applications,” Demuth adds.

From the Swiss bank Julius Baer, their experts have observed that, beyond the persistence of post-electoral enthusiasm, Bitcoin’s prices seem to be well supported by strong ETF inflows, as well as relatively low market depth. “Looking ahead, volatility should continue, and despite the strong rebound, we see few obstacles in the near future for Bitcoin,” highlight Julius Baer.

The good state of the Bitcoin market is reflected in the success of some investment funds. For example, eToro reports that BlackRock’s spot Bitcoin ETF has surpassed the valuation of its Gold ETF in terms of net assets for the first time last week. “The IBIT spot Bitcoin ETF currently has net assets of $39.1 billion, compared to BlackRock’s iShares Gold Trust (IAU), which has net assets of $32.4 billion. What makes this achievement even more remarkable is that the IBIT ETF has only existed since January of this year, while the IAU Gold ETF was launched in 2005, 19 years ago,” eToro detailed.

Kathia Sánchez Mardegain Joins White Bridge Capital for the Real Estate Solutions Area

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Kathia Sánchez Mardegain White Bridge Capital Real Estate Solutions

White Bridge Capital announced the appointment of Kathia Sánchez Mardegain to lead its Real Estate Solutions area.

Based in Mexico City, Sánchez will work alongside Regina García Handal, Co-founder of White Bridge Capital, in response to the partnership with Vertix Group.

With seven years of experience in both corporate finance and investments, Sánchez has worked at firms such as Skandia, Citi, and Blackstone.

During this period, she supported portfolio growth by conducting operational reviews and financial modeling. Additionally, she has performed short- and long-term financial planning and the corresponding reporting process, according to her LinkedIn profile.

She holds an MBA from EGADE Business School and a bachelor’s degree in Financial Management from Tecnológico de Monterrey.

Patria Moneda Celebrates Its First “Uruguay Day,” Promising a Long-Term Commitment

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Patria Moneda first Uruguay Day long-term commitment

Patria Moneda, the new giant of Latin American asset management, celebrated its first “Uruguay Day” in Montevideo with a promise to establish a long-term relationship with the local industry. In the luxurious setting of the Sofitel Hotel in Carrasco, the group showcased its unique strength in the region: Moneda is the largest player in Latin American bonds, and Patria is the leader in alternatives.

The firm has been in Uruguay since late 2023, and during this time, its representatives have understood the essentials: that the local private banking sector needs committed companies to invest in alternatives, and that commitment must be made in a common language to facilitate basic processes such as quick subscriptions, understanding terms, and fees. And, in the process, to stop being told that they are not “financially educated.”

An investment house rather than a commercial firm

Alfonso Duval, Partner and Head of Commercial Andean Region, began by defining his company as a platform and an investment house with 40 partners and $45 billion under management.

Patria Moneda has 13 offices worldwide. They bring global capital to Latin America and provide access to international assets for local capital. The firm has relationships with 8 of the 10 largest sovereign wealth funds in the world, with 39% of its investors from Latin America, and a strong presence of pension funds.

Latin American asset management and the new mandate of Donald Trump

The Patria Moneda event took place on November 6, with the surprise of hearing about the quick and decisive victory of Republican candidate Donald Trump in the U.S. elections. Esteban Jadresic, Partner and Chief Economist and Global Investment Strategist, offered his first analysis.

If Trump fulfills his election promises, including tax cuts, projections suggest that U.S. debt could reach 134% of GDP. Jadresic notes that the first consequence would be an appreciation of the dollar, initial growth, and, if his protectionist measures are applied, a decline in the economy in the medium term with an increase in interest rates.

Latin American countries expect this possible scenario with “stable and sound” economies, said the expert, with independent central banks and historically high interest rates.

While China announces massive stimulus measures for its economy, will Trump impose a 60% tariff on the Asian country and a 10% tariff on the rest of the world, as promised? “It would be going back to tariff levels from 100 years ago, and that won’t happen,” says Jadresic.

Latin America pays more and “defaults” less

The phrase of the day came with the presentation of Fernando Tisné, Global Head of Credit Managing Partner: this year has been good for Latin American bonds, with High Yield yielding good returns and surpassing benchmarks: “Latin America pays more and defaults less.”

The firm’s message is that there are great opportunities in Latin American public debt and in the two strategies of the firm, currently backed by 24 years in the market and a team of 50 people.

A new era for Latin American private credit

Javier Montero, Partner and Portfolio Manager Credit Latam, quickly defined a key issue for Latin America: in the region, “financing essentially comes from banks, and private credit is almost nonexistent.” Currently, around the world, a company needs credit and can impose its conditions due to fierce competition and supply. In Latin America, the main demand comes from family offices, and there is still much work to be done.

Montero believes that the business opportunity is enormous, and that after 15 years of investing in private credit (“our business is lending money”), the combination of Moneda and Patria is a winning option for investors.

Trump, Milei, Taxes: Martín Litwak’s Opinion a Few Days Before His Tax Annual Summit

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The election of Donald Trump has clarified the trajectory of fiscal policies in 2025, though uncertainty remains in Latin America regarding Argentina’s future direction. Tax expert Martin Litwak offers his view on potential changes and provides a summary of 2024’s fiscal trends, which will be further discussed at the Tax Annual Summit on November 21 in Montevideo.

 Here is the updated agenda and registration information.

Trump, New Tax Cuts, Continuity of FATCA, and Public Spending Uncertainty

With caution regarding a government yet to take office, Litwak predicts the following:

(a) Trump’s second term will likely be more “Trumpist” than his first, given that he won with a greater margin (including a higher number of electors) and now holds a majority in both chambers. Additionally, he secured the popular vote—a feat he did not achieve in 2016 or 2020. The Republican Party is also more unified behind him than during his first administration.

(b) With the Republican majority in both chambers, it is probable that Trump’s first-term tax cuts will be extended for another ten years, possibly with an additional corporate tax rate reduction. However, concerns linger about the potential resurgence of a “border-adjustable tax.” Regardless, any fiscal policy pursued by Trump is expected to be significantly better than what Kamala Harris had proposed (e.g., wealth taxes, increased corporate taxes for certain sectors, unrealized capital gains tax, among others).

(c) In terms of foreign trade and global relations, another period of “deglobalization” is expected. While this has negative implications for the region (e.g., increased tariffs on specific products), it also holds a potentially positive aspect, such as the possible defunding of the OECD.

(d) Regarding FATCA implementation and international information exchange, Trump did not eliminate this legislation during his first term nor replace the U.S. tax system based on nationality with a residency-based one. Therefore, it is unlikely that he will do so now, although he did nearly halt the signing of new IGAs (intergovernmental agreements), a trend Litwak hopes will continue.

(e) The big question mark pertains to Trump’s stance on public spending—a non-issue during his first term but potentially more relevant now. It will be interesting to see what role Elon Musk might play in the administration.

Expectations for 2025

“Looking ahead to 2025, I believe the key factor will be what President Milei can achieve in Argentina,” says Litwak.

So far, despite Milei having been in power for nearly a year, there has been no substantial tax reduction. Only the Personal Assets Tax and the “Impuesto PAIS” have been lowered, but the news is less positive upon closer examination. The Personal Assets Tax, which should have been abolished, was only reduced gradually without significantly raising the non-taxable minimum. An aggressive offer was made to those willing to prepay five years of this tax.

The Impuesto PAIS was reduced, but Milei had significantly raised it upon taking office. The subsequent reduction did not fully offset the initial increase. The major question concerning this tax is what will happen in 2025, as it is set to expire on December 31, 2024.

How Did Argentina’s Capital Amnesty Work?

“We predicted the amounts to be regularized quite accurately and stated from the start that two figures would stand out at the end of this new amnesty—one positive and one less so,” notes Litwak. The positive figure relates to the total regularized funds, while the less favorable one pertains to the revenue the government collected through the regularization tax.

Additional Conclusions:

(a) The amnesty primarily attracted taxpayers with undeclared cash holdings. (b) It was not attractive to high-net-worth individuals or those holding other types of assets. (c) The key issue for Argentine taxpayers is not whether to enter the amnesty but how to structure their assets regardless of their decision.

Changes in 2024 and What Happened in Latin America

There have been relatively few tax changes this year, in contrast to the prior three to four years in the region, Litwak observes. Colombia and Brazil stand out as countries with significant changes, along with major tax increases in Argentina and Bolivia, the latter having introduced a wealth tax.

Colombia’s Fiscal Reform of 2022 (Law 2277) brought multiple changes that affected 2023 and are now becoming evident in 2024, including an additional 5% surcharge on corporate income tax for oil and coal companies, financial institutions, and insurance and reinsurance firms, a permanent wealth tax, and increased taxes on foreign corporations with significant economic presence.

Brazil has made changes affecting deferral of gains from offshore investments, prompting high-net-worth families to consider fiscal relocations or restructuring trust arrangements.

In Bolivia, the introduction of a “Wealth Tax” in 2021 imposed rates ranging from 1.4% to 2.4% based on net worth.

In Argentina, President Alberto Fernández‘s government established or increased 18 taxes, contributing to the country’s record-high tax burden. This includes the IVA, Income Tax, and the Wealth Tax.

Finally, countries like Ecuador and Uruguay, despite being market-oriented, have failed to deliver significant tax cuts, which is disappointing.

Information about the Tax Annual Summit 2024 can be found by clicking here 

Organized by The 1841 Foundation

The 1841 Foundation of the U.S. Internal Revenue Code, meaning donations are tax-deductible

BlackRock Expands Its Range of iShares iBonds UCITS ETFs with the Launch of Eight New Funds

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BlackRock has expanded its range of iShares iBonds UCITS ETFs with the launch of eight new vehicles based on exposures to investment-grade corporate bonds, increasing the iShares range of fixed-maturity UCITS ETFs to 25 funds with maturities between 2025 and 2034. According to the asset manager, these new ETFs aim to provide affordable access to the corporate bond market, enhanced by cost efficiency, transparency, liquidity, and diversification through ETFs.

“The iBonds ETFs hold a variety of bonds with similar maturity dates. Each ETF provides regular interest payments and distributes a final payment in its set maturity year. Designed to mature like a bond, trade like a stock, and diversify like a fund, the iBonds ETFs simplify bond laddering with just a few ETFs instead of searching for and buying numerous individual bonds,” BlackRock has emphasized.

These new iBonds ETFs add additional maturities in IG corporate debt to the iBonds range, across multiple countries and sectors in each ETF. The ETFs offer four defined maturity dates in December of 2031, 2032, 2033, and 2034, in both U.S. dollars and euros in IG, giving investors flexibility between currencies, maturities, and countries.

“As the range of iBonds UCITS ETFs expands, investors will be able to benefit from greater versatility to meet specific needs of their portfolios and expand use cases, such as bond laddering. These new iBonds ETFs provide an additional option for clients seeking to lock in yields at a specific point on the curve, along with the operational efficiency and convenience of the ETF vehicle,” said Brett Pybus, Co-Global Director of Fixed Income iShares ETFs at BlackRock.

The iBonds ETFs can be used by investors to complement existing investment vehicles, in an easy-to-understand structure that aims to achieve performance through a combination of capital appreciation and income derived from coupon payments on the underlying bonds. The set of ETFs can also be used to add scale to bond portfolios offered by investment advisors and improve operational simplicity. The iBonds are available through wealth management platforms, including digital ones, and brokers across Europe.

“Investors can also use these iBonds UCITS to build scalable and diversified bond ladders. By buying bonds with different maturity dates, investors can stagger the final payments and reinvest in funds with subsequent consecutive maturities, creating bond ladders. The unique structure of the iBonds ETFs makes it easier for investors to structure their investments to meet shorter-term objectives and achieve defined returns over specified investment periods,” concludes the entity.

SIX Buys Aquis, the Seventh-Largest Trading Platform in Europe, for 234 Million Euros

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European stock exchanges strengthen their potential. SIX Group AG (SIX) has announced an agreement to acquire Aquis Exchange Plc (Aquis), the seventh-largest trading platform in Europe, for 234 million euros. According to their statement, the offer values the entire issued and to-be-issued share capital of Aquis at approximately 250 million euros (207 million British pounds) using a treasury shares methodology. SIX views this acquisition as a key opportunity to complement its strategy of expanding its trading business beyond its national markets. The combined resources and capabilities of SIX and Aquis create a pan-European exchange that encompasses traditional primary market exchange businesses and MTF (Multilateral Trading Facilities).

Both companies emphasize their shared philosophy regarding innovation in capital markets, liquidity, and providing options to users, further enhancing SIX’s ability to serve clients in Switzerland, Spain, and across Europe. “The unique value proposition of combining Aquis’ cutting-edge technology solutions business with SIX’s capabilities opens the door to recurring revenue streams. Additionally, it offers the opportunity to create a competitive pan-European listing hub for growth companies by combining Aquis’ and SIX’s growth company listing segments,” they explain.

The companies highlight that Aquis offers SIX the chance to expand its current trading offering by adding Aquis’ MTF business to SIX’s existing primary market listing and data activities, thus extending SIX’s pan-European presence beyond its national markets. Clients and shareholders of SIX benefit from the enhanced capabilities of the combined group and pan-European access to trading services, along with new growth opportunities and the strengthening of the Swiss and Spanish financial centers.

SIX shares with Aquis a strong commitment to innovation in capital markets and sees Aquis as having a similar philosophy regarding liquidity, offering opportunities to users and challenging traditional pan-European operators across the entire value chain of trading. “Aquis’ cutting-edge technology solutions, combined with SIX’s expertise in trading, data, and multi-asset post-trade services, enable a unique value proposition that opens the door to recurring revenue streams,” they state.

Moreover, the combination with Aquis, whose infrastructure facilitates access to capital markets for SMEs and growth companies, is expected to create an opportunity for a competitive pan-European listing hub that complements SIX’s existing segments for growth company listings. SIX expects Aquis to create an increasingly attractive offer for retail brokers by expanding SIX’s universe of tradable securities and improving the quality of retail liquidity execution across Europe.

Bjørn Sibbern, Global Head of Exchanges at SIX, remarked: “We believe that combining Aquis with SIX’s platform is an attractive opportunity to unite two companies that share a commitment to innovation in capital markets. The combination will add Aquis’ strong offering to our traditional primary listing and data businesses, complementing SIX’s growth company listing segments. As part of SIX, Aquis will continue to operate with its existing brand and business model with maximum agility, while benefiting from our resources, scale, and new investments, thereby enhancing its ability to further develop its operations. We look forward to welcoming the Aquis team to SIX and continuing to build an innovative pan-European exchange operator.”

Alasdair Heynes, CEO of Aquis, added: “I am immensely proud of the business we have built over the past twelve years. From its inception as a subscription-based exchange for startups in 2012, Aquis has evolved into a multi-product, diversified European exchange group that creates and facilitates more efficient markets for a modern economy. This has only been possible thanks to continuous technological innovation and the tireless efforts of our staff. Aquis has a clear path for growth ahead; however, the Board acknowledges that there are always some operational, commercial, and market risks associated with creating future value. The cash offer reduces the risk of future value creation and provides Aquis shareholders with significant premium value. As part of SIX, we have an exciting opportunity to accelerate the development of our business and compete more effectively at a European level, while retaining our entrepreneurial spirit. SIX shares our deep commitment to innovation in capital markets, and together we will be better positioned to help SMEs and growth companies access capital markets.”

How Does the Fed’s Rate-Cutting Cycle Affect Private Credit?

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After 15 months of aggressive tightening, the U.S. Federal Reserve (Fed) shifted its stance and cut its benchmark rate by 50 basis points in its first move. The second step came a week ago, when it announced another cut, this time by 25 basis points. Although the market had anticipated both moves, the Fed has not given any indication of its future pace or whether there will be a pause in December. This lack of guidance opens up debate and raises questions, among other things, about what the appropriate neutral rate will be and how Donald Trump might impact monetary policy.

“The impact of the end of the ‘higher for longer’ interest rate policy on direct lending and private credit in general is not straightforward, as multiple factors come into play. First, direct lending has experienced significant growth in recent years due to banks’ limited capacity to expand their balance sheets, combined with the ability of non-bank lenders to offer faster and more precise execution. The variable-rate nature of direct lending has been extremely attractive to investors, as they could benefit from high yields and strong distributions during a period of rate tightening. However, it is also important to consider that rate cuts could reduce total returns for direct loan investors, assuming spreads remain unchanged,” emphasize Nicolas Roth, Head of Private Markets Advisory at UBP, and Gaetan Aversano, Deputy Head of the Private Markets Group at UBP.

According to their latest report, the economy is entering a soft-landing phase in this initial period of monetary policy easing, and the immediate effect will be an increase in liquidity in the system, creating refinancing opportunities at potentially lower capital costs. “Borrowers with variable-rate loans will benefit from an immediate reduction in interest costs. Investors should closely monitor the pace of the cuts and the strength of the economy, as a hard landing would imply a significant slowdown in business activity, which in turn would increase covenant breaches and, ultimately, defaults, leading to loan losses,” they warn.

In this context, they also consider it important to assess the interconnected relationship between direct lending and private equity, as direct lenders often provide loans to sponsor-backed companies. “As mentioned earlier, lower interest rates will drive up valuations, along with mergers and acquisitions (M&A) activity and leveraged buyouts (LBOs), creating demand for private credit financing. This is not only positive for market liquidity but will also help accelerate capital deployment, reducing pressure on uninvested capital (dry powder),” they state.

These rate cuts also coincide with increased competition from banks with direct lenders and the potential for borrowers to refinance some loans at a lower cost. According to their report, while direct lenders used to finance at 550 basis points over the risk-free rate, banks can now offer cheaper financing (below 400 basis points on some transactions). “A new paradigm is being created in credit markets, as banks are beginning to collaborate with large non-bank lenders rather than compete. The underlying logic is that banks used to serve their corporate clients in both equity and debt capital markets (ECM and DCM). Due to regulatory pressure and higher capital requirements, banks are now referring debt business to direct lenders in exchange for a fee, while maintaining the ECM relationship with their corporate clients, creating a win-win situation,” they conclude.