Winner: Magnetar

The 2023/2024 awards year marks a period of transformative growth in the significant risk transfer (SRT) market. Amid a dynamic landscape characterised by new issuers, growth in the US SRT market and an influx of new investors, Magnetar distinguished itself with historically high investment volumes across varied deal structures and underlying asset classes and a commitment to thought leadership.

Throughout the awards period, Magnetar executed 12 transactions totaling US$724m across seven asset classes - large and mid-cap corporates, SMEs, consumers, trade finance, CRE and project finance. These investments delivered on Magnetar’s long-standing SRT investment strategy of constructing and maintaining a multi-asset class portfolio to provide diversification and attractive risk-adjusted IRRs to investors. Magnetar served as a trusted execution partner to nine financial institutions in eight countries over the year, a testament to the firm’s strong and diverse institutional relationships within the SRT ecosystem.

Central to Magnetar’s success in 2023/2024 was its continued focus on acting as sole or anchor investor in innovative transactions, across new asset classes, countries and structures. These included two synthetic consumer deals in first-time jurisdictions, with highly customised terms for a high-velocity, short-term receivables execution of a bespoke US SRT deal on a multi-family housing portfolio and helping its investment partners advance commitments to sustainable investing through a predominantly renewable energy project finance transaction.  These transactions marked departures from traditional SRT approaches in different ways, with each underscoring the firm’s flexible investment approach and ability to innovate to provide new solutions for its bank partners.

“In a year marked by pronounced increases in both the supply of SRT transactions and demand from new entrants to the market, Magnetar’s diverse investment approach successfully navigated the SRT ecosystem to deliver value to both our transaction partners and our investors,” says Alan Shaffran, senior portfolio manager and partner at Magnetar.

He continues: “Despite a market whose hype attracted scores of new entrants competing for certain transactions, we maintained our core focus on sourcing transactions with appropriate and sometimes uncommon relative value. This meant evaluating the full investment profile with a focus on creative structural solutions and strenuous underwriting, paying close attention to stress scenarios. This focus on downside protection has been proven over Magnetar’s 16-year SRT investment history to produce durable returns through the cycle.” 

Magnetar’s depth of expertise across structuring of transactions to meet bank needs, experience in multiple asset classes and a systematic approach to underwriting was crucial in navigating deal complexity throughout the year.

“Our long history of investing in multiple asset classes and jurisdictions, combined with a mature and systematic underwriting approach was key to developing the requisite conviction in our investments. And our approach of providing comprehensive, transparent and timely feedback to our bank partners has built a reputation as a trusted and long-term execution partner,” says Aidan McKeown, portfolio manager at Magnetar.

Magnetar’s SRT business is further strengthened by its integration within Magnetar’s broader alternative credit and fixed income platform, which is highly diversified across asset classes and investment types. This allows Magnetar to leverage extensive specialist asset class experience, accumulated data and robust infrastructure developed over years, all while fostering a collaborative approach across business lines. It also enables Magnetar to source and underwrite a wide array of transactions and maintain a consistently diverse portfolio of SRT transactions.

Beyond transactional successes, Magnetar has been at the forefront of thought leadership within the SRT ecosystem, including educating the LP universe on the market through the publication of detailed whitepapers and educational sessions, as well as participation in industry forums – including IMN, SBAI, the PCS Symposia and prime broker events.

Looking ahead, Magnetar remains committed to expanding its SRT presence globally and refining its investment strategies. The launch of "Magnetar Labs", an internal initiative of the firm, is a testament to Magnetar’s commitment to data-driven decision-making, harnessing AI and machine learning to enhance analytical capabilities. Leveraging its strong track record and deep expertise, the firm is poised to help continue driving the evolution of the SRT market.

"As we continue to expand our geographic reach and refine our SRT strategies, we remain focused on leading the industry into new frontiers of growth and opportunity,” says David Snyderman, managing partner at Magnetar.

Honourable Mention: ArrowMark Partners
As one of the largest and longest tenured investors in the SRT market, with US$8.5bn of investment in 109 transactions since 2010, ArrowMark Partners understands the importance of being a consistent partner to global banks while maintaining the flexibility to evolve with the market and opportunity set. The firm’s activity over the last year demonstrated its continued ability to balance these dual objectives and reinforced its positioning at the forefront of the industry.

Co-led by Kaelyn Abrell and David Corkins since inception of the strategy 14 years ago, the ArrowMark team is comprised of 10 individuals working out of the firm’s Denver and London offices. In addition to the insights and expertise from 14 years of investment, the firm benefits from almost half of the team’s prior experience working at issuing banks. Collectively, the team’s expertise spans all major collateral types, issuing geographies and regulatory frameworks.

The diversity of the team’s experience contributes to ArrowMark’s ability to offer advisory and structuring expertise to existing or new issuers. During ArrowMark’s time in the asset class, it has helped create new SRT platforms, most recently with a major Spanish bank, and developed innovative structures for the US transactions that have enabled banks to maintain access to the market in a variety of market conditions and/or improve the efficiency of the issuance process.

Milestones achieved during the 12 months ending on 30 June 2024 reflect the success of ArrowMark’s approach. During the period, the team deployed US$1.5bn across 16 new issue transactions, including a mix of syndication types – bilateral, club, syndicated – and spanning collateral types – large corporate, SME and trade finance, among others.

The firm added two new issuer relationships, one each in Europe and the US. The firm’s historical investments span 19 issuing banks across the major issuing geographies – Europe, the UK, the US and Canada – and 40 lending platforms.

Finally, as it relates to fundraising, ArrowMark launched the fifth vintage of its SRT-dedicated commingled fund series in autumn 2023. The fund will invest alongside a core group of semi-permanent fund vehicles managed by ArrowMark that are similarly dedicated to the asset class.

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