Winner: AXA IM Alts

AXA IM Alts has won Investor of the Year in this year’s SCI Capital Relief Trades Awards. A global leader in alternative investments, AXA IM Alts is equally a seasoned and dominant investor in the the credit risk transfer (CRT)/significant risk transfer (SRT) space, with over 20 years of experience across nine generations of funds and more than 90 transactions.

The firm’s SRT team, co-led by Milan Stupar and Edward Robinet, is composed of seven investment professionals with an average investment experience of circa 20 years in the industry and sits within the group’s Alternative Credit business line. “I feel that what sets us apart is our experience, having been present since the inception of the market, as well as our ability to look at all asset classes and long-established relationships with more than 50 originating banks,” notes Milan Stupar, co-head of the SRT team at AXA IM Alts.

AXA IM Alternative Credit, through both its dedicated teams and AXA IM’s shared resources, benefits from strong research capabilities across corporate credit (investment grade, high yield, SME, commercial real estate, mortgages etc). This specific set-up gives the team access to a large range of underlying assets and access to borrowers not available in the public market and under any form of credit exposures (notably revolvers, loans, trade finance, subscription lines, counterparty risk etc).

As 2022 saw another record year in terms of issuance, AXA IM Alts launched its nineth generation of SRT funds (AXA IM Partner Capital Solutions IX), with initial closing at the end of August 2022, targeting €1.5bn. The SRT team has already executed 13 trades with 13 different counterparties in the fund.

Such transactions included a wide array of underlying assets, which were both relatively traditional (large corporates, mid-cap, SME) but also some more esoteric segments of the market, including capital call and consumer loans, across a variety of jurisdictions. Transactions were executed under a variety of structures (SPV, direct issuance, direct financial guarantee, cash securtisation), with around 90% being bilateral trades.

Commenting on the sector’s recent and consistent growth, Stupar describes a “growing appetite for the asset class,” notably from large financial institutions. He says: “Many large financial institutions, whether in Europe, the US or Asia, have or are considering investing in this space. Five years ago this was not the case.”

Stupar further highlights a shift in the broader regulatory approach. He notes: “There will always be technical details to adjust, like the p-factor or the excess spread treatment, yet the overall regulators’ view is positive on SRTs across many jurisdictions. Most regulators now clearly support and understand the benefits of SRT transactions.”

Looking ahead, Stupar identifies the US and its pipeline as a clear opportunity for further and exponential growth. He says: “What is expected as a big event of sorts, later this year or early next year, is the return of large US banks and consequently significant SRT deals. This had been impeded by US regulatory uncertainty so far, but we expect this to change.”

Outside of the US, Stupar expects continued growth and diversification to remain the new norm. He states: “It is a market which has been growing year-on-year. The trend of the market of becoming more global (as experienced with the Canadian banks) is set to stay.”

He concludes: “We are expecting new countries, new banks and new asset classes. And volumes are expected to continue to grow.”

Honourable mention: EIB Group
The EIB Group (EIBG) has historically supported European SMEs and small mid-caps, but it is now also turning its focus on climate action and environmental sustainability lending. In this context, EIBG is a pioneer investor in adopting the use-of-proceeds approach for SRT transactions, being strongly motivated by the desire to support a smooth and fast transition to a green economy. During the awards period, the group deployed €3.4bn in funded and unfunded transactions providing capital relief across seven jurisdictions and new asset classes, collaborating with other investors and insurers to provide ad-hoc solutions and facilitate new lending of up to €6.5bn.

For the full list of winners and honourable mentions in this year’s SCI Capital Relief Trades Awards, click here.