Värde Partners Co-CEOs Speak at Milken Global Conference

MINNEAPOLIS and SINGAPORE – Värde Partners, a leading global alternative investment firm, today shares commentary by Co-Founder and Co-CEO George Hicks and Co-CEO and CIO Ilfryn Carstairs from the recent Milken Institute Global Conference. The conference was held virtually and centered on the theme “Meeting the Moment.”

George joined the “Common Sense in Uncommon Times” session to discuss the perceived disconnect between markets and the current economy. Ilfryn spoke on the “The Credit Recovery: Uneven, Unequal, Uncertain?” panel, offering his insight on the changing credit environment and the specific sectors and regions that offer opportunities.

Lessons From Past Cycles

Commenting on the early response to the crisis, George drew comparisons with past cycles. “We recognized very quickly that we had a substantial opportunity set in front of us. Historically, the opportunity starts in the public and more liquid markets,” he said, detailing how the firm initially focused on investment grade, fallen angel and other public market opportunities. “We know it is part of a process that is going to unfold over a few years. We have gone through the first six or seven months of it, but now we’re starting to shift to more private opportunities and ultimately there will be more of a distressed cycle.”

George reflected on the firm’s ability to pivot to markets and geographies where it saw the best relative value in the early stages of the pandemic, driven by the depth of public markets and the different levels of government intervention across the world. “Even though we have the capability to invest equally in all geographies, what we’ve seen is that most of the opportunity set for us has been in the United States, 60-70% of it because those are where the large public markets are. Then it’s followed by Europe, where it’s a bank debt market not a bond market and the price adjustment is slower and the transacting is a bit slower,” George said. “Asia is a little different case, with much smaller public markets, and we are starting to see a growing pipeline on the private side.”

A ‘K-Shaped’ Recovery

“In many ways the recovery has been surprising, but on the other hand there is a material disconnect between economic fundamentals and how the market is responding,” George said noting that significant levels of monetary and fiscal stimulus appear to be masking substantial dispersion in credit markets.

“The reality is we have a K-shaped recovery, where while you can try to make a bullish case for next year, there are clearly Covid-impacted industries that are going to continue to suffer,” George said about the economic outlook. “An interesting case in point is commercial real estate. Sectors like industrials or multifamily are doing very well. But others, including hospitality, office and retail, which face more of a secular problem, are in trouble. Even when you have a recovery of some sort, as we get into next year and beyond, you have the secular challenge – how much office space you are going to need, what’s going to happen to business travel, and the like.”

Point in the Cycle

Reflecting on the current phase of the credit cycle, Ilfryn noted: “We’ve come through the chaos period at the beginning of this cycle but we are really still in the early to mid-part of the cycle, and that makes us ask not only what opportunity is out there, but what type of risks do we want to take. There’s a happy confluence at this point in credit markets, where there’s a lot of demand for credit, be that for bolstering liquidity, problem solving, rescue capital or even deleveraging capital.”

“It’s a point in time where you don’t need to take on so much uncertainty,” Ilfryn said emphasizing the ability to be selective given the large demand for credit. “We’re still very focused on things that have great downside protection that aren’t precisely dependent on the path of the economy. The end of the health crisis and the end of the credit crisis will be very different, depending on the industry concerned, because so much damage has already been done. We expect the credit opportunity to extend well beyond the point we have a health solution.”

Significant Value in Dislocated Markets

Discussing the prevailing opportunity set, Ilfryn commented: “There is still a lot of value in traded credit markets, both in corporate credit and certain areas of structured products, where we continue to see significant dislocation. There are opportunities to buy the securities of very large companies, with strong business models and access to liquidity, at good duration with significantly wider spreads. In certain circumstances you can find those dislocations even where equity market cap and enterprise values have almost fully recovered.”

Across private credit markets, Ilfryn outlined certain potential compelling opportunities across asset based lending, pointing to the firm’s scale in commercial real estate debt, corporate lending, consumer finance, and more bespoke special situations origination, particularly in Asia.

Expanding on the drivers for lending opportunities in Asia, he said: “There is a systematic supply-demand imbalance for credit in Asia. It’s very poorly supplied, particularly when you compare it to the size of the traditional financing markets in the U.S. and Europe, and you haven’t seen the same depth of development of the alternative credit market. It is also a region with an enormous demand for credit, either through growth or the fact that there are very credit dependent industries such as real estate and heavy industry. So any time there is disruption in the market we tend to see a real elevation in the pricing for credit in our Asian origination business.”

About Värde Partners

Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested more than $75 billion since inception and manages over $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.

Värde Partners Bolsters Global Leadership With Appointments of President and Deputy CEO

MINNEAPOLIS and NEW YORK – Värde Partners, a leading global alternative investment firm, today announced the promotion of Jon Fox to the role of President and Andy Lenk to the role of Deputy CEO, effective immediately. These appointments are the latest in a series of transition steps which previously included the appointment of Ilfryn Carstairs as Co-CEO and CIO and the promotions of Brad Bauer and Giuseppe Naglieri as Deputy CIOs.

“I’ve often said that transition is a process involving the entire firm and a number of leaders,” said George Hicks, Co-Founder and Co-CEO. “The appointments reflect the many contributions of Jon and Andy to the success and growth of the firm as well as the leadership experience and capabilities that they will bring to the years ahead.” Previously announced in July 2019, George intends to move to an Executive Chair role at the end of 2021.

Ilfryn Carstairs added, “These promotions are an important step in ensuring that we have the right senior leadership team for the next chapter at Värde. I’ve worked very closely with Jon and Andy for many years and I’m excited to see this elevation in their roles.”

In addition to the President and Deputy CEO roles, Värde announced promotions and role changes within the areas of Financial Services, Insurance, and Capital Markets:

Elena Lieskovska, Partner, will head a new, dedicated Insurance business after leading this effort within the Financial Services team and previously leading specialty finance investing in Europe.
Aneek Mamik, Senior Managing Director, will be promoted to Global Co-Head of Financial Services from his current role leading those investments in North America and Asia. He will oversee the global team with Partner Rick Noel.
Craig Rydqvist, Senior Managing Director and Global Head of Capital Markets based in London, will join the Financial Services team to lead investments outside of North America.
Missy Dolski, Managing Director, will be promoted to Global Head of Capital Markets from her current role as Head of Capital Markets for North America.

Commenting on these appointments, Deputy CIO Brad Bauer said, “We’re excited to announce these promotions which align proven leadership talent with significant areas of opportunity for our investors. These individuals represent the breadth and depth of talent we have in our investing teams and these promotions are well deserved in light of their contributions.”

Jon Fox is a Partner and the head of the New York office who joined the firm in 2013 in London. He has led the firm’s global Business Development and Investor Relations team, fund and product development, and also oversees Communications and Public Affairs. He is a member of the firm’s Investment Committee and Senior Leadership Committee and plays an important role in general management decisions. In 2018, Jon relocated from London to become the head of the firm’s New York office. He will maintain all existing leadership responsibilities as President and further develop Värde’s global industry relationships.

Jon holds a B.A. from the University of Colorado, an M.B.A. from Columbia Business School and serves on the boards of trustees of the Fire Department of New York (FDNY) Foundation and Oliver Scholars and on the Business Council of the Asia Society.

Andy Lenk joined the firm in 2001 and is a Partner in Minneapolis. As Global Head of Strategy and Portfolio Operations, he works closely with the Co-CEOs on all aspects of firm strategy, finance, talent and operations. He is a member of the firm’s Investment Committee, Senior Leadership Committee and the Enterprise Risk Management Committee. Andy has held many leadership roles for the firm including oversight and development of global Portfolio Operations, Capital Markets, Asset Management and the firm’s Finance and Operations functions. Earlier in his career at Värde, Andy worked in investing teams in both the U.S. and Europe.

Andy received a B.B.A. in Accounting from the University of Wisconsin-Madison and an M.B.A. from the University of Michigan. He is a CPA (inactive).

About Värde Partners
Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested more than $75 billion since inception and manages over $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. For more information, please visit www.varde.com.

American Equity, Värde Partners and Agam Capital Management Announce Strategic Partnership

WEST DES MOINES, MINNEAPOLIS & NEW YORK – American Equity Investment Life Holding Company (“American Equity”) (NYSE: AEL), a leading issuer of fixed index annuities, Värde Partners, Inc. (“Värde”), a leading global alternative investment firm, and Agam Capital Management, LLC (“Agam”), an insurance solutions provider, announced they have reached agreement in principle to form a strategic partnership intended to drive value for investors, retirement planners and retirees by combining the capabilities, resources and expertise of each organization.

Under the terms of the agreement in principle, Värde will establish a Bermuda reinsurance company that would reinsure $5 billion of American Equity fixed index annuity liabilities. American Equity and Värde will also jointly establish an asset management entity to provide insurance asset management services to the reinsurance company. American Equity is intended to have a significant minority interest in the new reinsurer and a 35% interest in the newly formed asset manager.

Each of the three companies brings distinct capabilities to the partnership. American Equity brings distribution, policyholder service and administration, product development and insurance specific asset management expertise. Värde brings alternative asset management capabilities and Agam brings differentiated risk management solutions. By combining these complementary capabilities in a new reinsurance company and a new asset management entity, all three partners will benefit from the growth of the reinsurance business and assets under management.

“We are very pleased to announce our strategic partnership with Värde and Agam, which we believe could define the next phase in the evolution of the intersection of the insurance and asset management sectors,” said Anant Bhalla, CEO of American Equity. “This is the first of many steps in us executing our new AEL 2.0 strategy. This would expand our presence into new markets with world class partners through strong structural and economic alignment. As this venture scales, it would expand American Equity into the global life and annuity reinsurance and third party insurance asset management businesses. Additionally, by starting this venture with plans to transfer a $5 billion block of annuities to the reinsurer, American Equity shareholders would benefit by the freeing up of approximately $350 million of capital. Finally, this is intended to provide American Equity with access to differentiated asset origination which creates investment flexibility across market cycles. This would ultimately enable the company to offer more attractive, and a wider variety of, products to America’s retirees and pre-retirees.”

Elena Lieskovska, Partner at Värde, said: “Värde is pleased to partner with American Equity as we grow our global insurance asset management business with Agam. This is a strategic extension of our long established capabilities as a leading investor in credit and alternatives. Our goal is to build a world-class insurance solutions platform combining Värde’s core strengths and Agam’s differentiated pALM technology and insurance expertise. Through this partnership we anticipate being able to execute on a number of follow-on transactions in the life and annuity space.”

Agam’s co-Founders, Chak Raghunathan and Avi Katz, said: “This transformative strategic partnership will set the standard for multi-dimensional solutions towards value creation in the retirement income market. We believe that Agam’s differentiated pALM platform will provide the foundation for the robust ALM and ERM infrastructure underpinning this initiative and, combined with Värde’s world class investment management capabilities, will unlock significant value for American Equity. We look forward to working with Anant and his leadership team as we embark on this exciting long-term partnership.”

The partnership is intended to be finalized in the first half of 2021, pending regulatory approvals and customary closing conditions.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future operations, strategies, financial results or other developments, and are subject to assumptions, risks and uncertainties. Statements such as “guidance”, “expect”, “anticipate”, “believe”, “goal”, “objective”, “target”, “may”, “should”, “estimate”, “projects” or similar words as well as specific projections of future results qualify as forward-looking statements. Factors that may cause our actual results to differ materially from those contemplated by these forward looking statements can be found in the company’s Form 10-K filed with the SEC. Forward-looking statements speak only as of the date the statement was made, and the Company undertakes no obligation to update such forward-looking statements. There can be no assurance that other factors not currently anticipated by the Company will not materially and adversely affect our results of operations. Investors are cautioned not to place undue reliance on any forward-looking statements made by us or on our behalf.

ABOUT AMERICAN EQUITY

American Equity Investment Life Holding Company, through its wholly-owned operating subsidiaries, is a leading issuer of fixed index annuities through independent agents, banks and broker-dealers. American Equity Investment Life Holding Company, a New York Stock Exchange listed company (NYSE: AEL), is headquartered in West Des Moines, Iowa.

ABOUT VARDE PARTNERS

Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested more than $70 billion since inception and manages over $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals across 12 offices worldwide. For more information, please visit www.varde.com.

ABOUT AGAM CAPITAL MANAGEMENT

Agam is a New Jersey-based insurance solutions provider, founded by Abraham Katz and Chak Raghunathan, senior executives from Apollo Global Management and Aflac Inc. While traditional insurance solutions have been aimed at enhancing asset yield to support a liability structure, Agam has focused its efforts on building technology for risk management with integrated analytics. Agam’s expertise is to develop solutions for complex cash flow streams through greater hedging optimization and meaningfully lower operating costs.

Värde Partners completes sale of luxury hotel group The Dedica Anthology

MILAN – Värde Partners, a leading global alternative investment firm, today announced the successful completion of its previously announced sale of a portfolio of eight luxury hotels operating under The Dedica Anthology brand (“Dedica”) to Covivio, a European real estate operator, through its subsidiary Covivio Hotels.

The portfolio comprises eight luxury full service independent hotels with an aggregate of 1,115 rooms located in the major tourist destinations of Rome, Nice, Budapest, Prague, Florence and Venice.

Värde began buying the debt of the company in 2016, ultimately acquiring 100% of the equity in 2017. Värde transformed the hotel group by appointing a best-in-class management team, refinancing the business, and executing an ambitious investment programme. In 2018 the hotels were re-branded The Dedica Anthology.

The property portfolio will be operated under the brands NH Collection, NH Hotels and Anantara. The eight hotels included in the transaction are:

Rome – Palazzo Naiadi
Nice – Plaza Nice
Budapest – New York Palace
Budapest – New York Residence
Prague – Carlo IV
Florence – Palazzo Gaddi
Venice – Grand Hotel Dei Dogi
Venice – Hotel Bellini

Eastdil Secured, Ludovici Piccone & Partners and Gianni, Origoni, Grippo, Cappelli & Partners acted as advisors on the transaction.

About Värde Partners

About The Dedica Anthology

The Dedica Anthology is a portfolio of eight distinctive hotels in select cities in Italy and across Europe. Pioneering a new vision of curated, contemporary hôtellerie, the brand fuses classic locations with a modern mindset and skilled hotelcraft, to create places where people want to be, and return to. ‘Dedica’ refers to a dedication to the art of curated hotel-keeping, while ‘Anthology’ describes the collection of unique stories represented by the hotels and their guests.

Värde Partners Co-Founder and Co-CEO Speaks on Milken Summer Series Panel

MINNEAPOLIS – Värde Partners, a leading global alternative investment firm, today shares commentary by Co-Founder and Co-CEO George G. Hicks from a recent Milken Institute panel titled “Credit Trends: Back From the Brink?”

Panelists discussed the severe levels of stress in credit before the Federal Reserve (the “Fed”) stepped in, the limitations of fiscal and monetary intervention, and the long-term implications for credit markets.

How the opportunity will play out over time

George detailed the types of investment opportunities that are likely to develop: “Public markets are still an important piece of the opportunity set, but it is going to shift quickly into more private opportunities, in the workout and value added, complicated opportunity sets. There will likely be some traditional bankruptcies and restructurings and some NPL plays, but it’s increasingly going to be a story – not just globally where it’s been true for a while, but in the US – where there may be more structured capital solutions, providing rescue capital, capital for extensions and the like.”

He went on to outline how varying levels of intervention will affect the global opportunity set: “Europe is an interesting one. The big thing we are all watching is whether the 750 billion euro stimulus package gets passed. If it doesn’t, I think that will be a big setback for the markets. Then, as you look around the rest of the world, a lot of emerging market countries do not have the capacity to bring the monetary or fiscal stimulus that we have had in the US. We know how much corporate debt has grown in the emerging markets.”

He concluded: “There will be a reckoning. There’s a reckoning ahead in the US and there’s a reckoning ahead globally.”

Early impact of government intervention

Reflecting on the early impact of the Fed’s actions, George noted: “The major response from the Fed has meant that significant parts of the credit markets are in great shape. The government averted Armageddon, massive bankruptcies and unemployment, which is great… however, you still cannot fix all the problems and those will play out in the time ahead. We are in a deep recession which will have consequences for credit markets, and parts of that are being masked by the Fed’s actions. I think what we are going to find is that it is easier to shut down an economy than it is to reopen it.”

The ‘Fed put’ and long term consequences for financial markets

George also raised concerns about unintended consequences of market intervention and called for the Fed to takes steps to address the risk of moral hazard: “I’d like to see increased Fed transparency. Going forward, the market could benefit from a better understanding of when and where the Fed will step in. It can have a positive impact in itself, but it can also let the market operate and have better price discovery. It’s hard to do…but if the market thinks it’s always going to get bailed out, some negative consequences will develop over time.”

Värde recently published “Värde Views: Unprecedented Government Intervention Will Not Prevent Historic Wave of Defaults” with additional commentary on the impact of fiscal and monetary stimulus to date and why these actions, while necessary, have limitations in their collective ability to prevent a wave of defaults as the credit cycle plays out.

About Värde Partners

Värde Views: Phases of a Credit Cycle – A Map of What’s to Come

Värde Partners today shares an update from Co-CEOs George G. Hicks and Ilfryn C. Carstairs on the current market environment and state of the business, setting out the phases of a credit cycle and what to expect as it evolves.

Download Värde Views here featuring excerpts from a recent webcast for approximately 400 investors from around the globe.

About Värde Partners

Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the firm has invested more than $68 billion since inception and manages over $14 billion on behalf of a global investor base. The firm’s investments span corporate and traded credit, real estate and mortgages, private equity and direct lending. Värde employs more than 300 professionals across 13 offices worldwide. For more information, please visit www.varde.com.