(Bloomberg) — Citigroup Inc. markets veteran John Heppolette teamed up with former colleagues to start a private credit joint venture focused on affordable housing.
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Heppolette, former head of North America markets at Citi and chief executive officer of its Citigroup Global Markets broker-dealer, launched Old Orchard Private Credit LLC, he said in an interview. The new firm will act as a fund manager for assets in social infrastructure, with an initial focus on loans for affordable housing.
“I don’t intend to be a large private credit lender, but I see a series of niche opportunities in this space,” said Heppolette, who left Citi in April after more than 26 years there. “Banks aren’t the best place to do every kind of lending. There’s room for banks and room for private managers.”
The venture, while small, underscores the growth of private credit in even more areas of the US economy. Banks have lost out to private firms offering lending across the board as tighter capital requirements limit how cheaply they can lend to clients.
Citigroup itself recently agreed to work with Apollo Global Management Inc. on $25 billion of private credit deals in the next five years, indicating a growing acceptance from banks that they’re increasingly not the only source of financing.
The new joint venture includes Intricate Bay Capital, run by former Citi spread products executives Joseph Geraci and Dan Wisniewski, and Old Orchard Capital Management LP, a US municipal bond investor led by former UBS Group AG managing directors Ross Jackman and Larry Fox.
Heppolette, who oversaw affordable-housing lending unit Citi Community Capital, said he will use the sourcing and structuring expertise of Intricate Bay and the fund management and capital-raising expertise of Old Orchard Capital.
“Assets in social infrastructure can sometimes be overlooked from the newest, most relevant financing techniques that not everyone has,” he said. “Because it’s niche, it can be tied up in public incentives that can be difficult to work with.”
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