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Barings is suing a Nomura-backed venture after most of its top private credit team defected to the new firm, in what the fund manager described as one of the “largest corporate raids at an asset manager in years”.
Barings, a subsidiary of US life insurer MassMutual, filed on Monday for a temporary restraining order and preliminary injunction against Corinthia Global Management in a North Carolina court. The move follows the departures of more than 20 of its employees to Corinthia. Barings also filed complaints against former employees Ian Fowler and Kelsey Tucker for leading the defections.
In a letter sent to its fund investors on Monday, Barings also said that following the departures it was pausing new investments in some of its private credit funds.
The lawsuit underscores intensifying competition for talent among traditional lenders racing to expand in the fast-growing $1.7tn private credit market.
The defections — leading to one of the largest team carve-outs from an alternative asset manager in recent years — also put the future of Barings’ direct lending business in question. Typically the resignation of one or more senior fund managers triggers a so-called key man clause in the legal fund documents, stating that funds these executives manage have to pause investing.
“Given that Corinthia has no business relationships or operations of its own, the success of Corinthia’s raid is dependent on its ability to lure . . . clients to follow the departing senior executives,” Barings said in its suit.
Barings said that in early March more than a dozen employees resigned for Corinthia, alongside global private finance co-heads Fowler and Adam Wheeler.
Barings added that Corinthia, which was founded by former real estate executive Paul Weightman in 2022, continued to contact other employees within its private credit business in the days that followed.
Banks such as Nomura, which owns a minority stake in Corinthia, have sought to build their own private credit fund businesses as they have watched fund managers including Ares, HPS Investment Partners, Sixth Street and Blue Owl grab a big slice of private markets.
Those firms have attracted funds as more stringent regulation following the financial crisis meant banks pulled back from lending to small and medium-sized businesses in the US and Europe.
Several banks, including Barclays and Wells Fargo, have partnered with asset managers to establish a toehold in private credit. Others, such as Goldman Sachs and Morgan Stanley, have relied on their wealth and asset management arms.
Barings has raised billions of dollars for its private credit strategy from investors including Staffordshire County Council’s pension fund and a fund that invests the money of Ohio schoolteachers.
In July 2022, the firm secured a €7bn pool to lend to European midmarket companies, the largest fund it has ever raised.
By September 2023, Weightman began assembling a private credit team, said Corinthia.
One adviser to Barings said its lending team had considered spinning the business out, having seen peers make similar moves. Corinthia said that Weightman’s only link to the group was a previous relationship with Wheeler.
Barings said that it rejected an offer from Corinthia to buy its global private finance business for a “tiny fraction of its value”, writing that Weightman “believed that the imminent departure of ‘the senior managers will create a range of issues for the Barings’.”
Corinthia told the Financial Times that it had offered Barings to manage some of its funds after these top executives had resigned.
Before the lawsuit was filed, Corinthia said that “any claims . . . would be without basis and vigorously defended”, adding: “We understand and expect that all exiting Barings employees will meet their enforceable post- termination obligations.”
This article has been updated to clarify that Barings is pausing new investments in some, rather than all, of its private credit funds.
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