Goldman Sachs CEO David Solomon gave up his DJ gig in 2023, citing the media ‘distraction,’ but we know he’s still rocking somewhere. He also managed to put out an office remix Monday.

The Wall Street firm said parts of its investment banking and markets divisions will be combined to form a team focused on mega-deals and loans to corporate clients. Its ultimate goal: nabbing a bigger share of the booming private credit market, which would be music to shareholders’ ears.

Private Dancer

The global private credit market, now in excess of $2.1 trillion, has outpaced the growth of other asset classes, including the white hot stock market, according to the IMF. Traditionally, the term refers to loans made by non-bank lenders like asset managers, often for deals with riskier propositions like buyouts financed with debt.

Banks, however, have found ways to get a foot in the door, some by striking partnerships with private credit lenders: Citigroup and BNP Paribas both teamed with Apollo Global last year. Goldman, for its part, has an existing private credit operation under its asset management division.

The firm’s new unit, dubbed the Capital Solutions Group, couples pieces of its fixed income, currency, and commodities and equities businesses with parts of its financing group and investment banking unit. CSG will focus on private credit, mega deals, corporate loans, asset-backed lending and other alternative financing.

The announcement comes two days before the bank is set to help kick off a banner earnings week, which analysts expect to highlight a burst of dealmaking that fueled traditional investment banking revenue:

• Goldman will report its latest earnings on Wednesday, along with Citigroup, JPMorgan Chase and Wells Fargo; Bank of America and Morgan Stanley will follow on Thursday. Dealogic figures show analysts expect revenue from investment banking fees climbed 26% in the fourth quarter.
• With stock markets posting lucrative gains in 2024, banks are expected to produce $225 billion in trading revenue for the year, according to capital markets analytics firm Coalition Greenwich. The big six are expected to report $31 billion in profits in the last three months of 2021, up 16% from the same period last year, according to Bloomberg data.

I’ll Second That: Allianz Global Investors, the investment management subsidiary of (you guessed it) Germany-based financial services giant Allianz, said Monday that it raised $1.5 billion, roughly half a billion more than its initial target, to buy private credit stakes on the secondary market. The fund competes with Apollo, which also buys on the secondary market, where buyers can get discounted positions from institutional investors.

If Bill Ackman were a boxer, he’d probably compare himself to Oleksandr Usyk, the undisputed heavyweight champion of the world. But he’s a money guy, so he’s equating himself to Warren Buffett instead.

On Monday, Ackman’s hedge fund Pershing Square announced a formal bid for Howard Hughes, the real estate developer where he served as chairman for over a decade before departing last year. With the deal, Ackman is pitching an explicit vision to build a “modern day” version of Buffet’s Berkshire Hathaway, and it’s just the latest blockbuster proposed by the unbashful billionaire and prolific Xeeter.

The Prodigal Son Returns

It’s hard to be surprised by Ackman’s interest in Howard Hughes (the company, not the reclusive billionaire). Back in 2008, Ackman took a large stake in the teetering-on-bankruptcy real estate group General Growth, banking on a post-recession property market rebound. By 2010, General Growth spun-off its portfolio of master-planned community properties as Howard Hughes, where Ackman served as the chairman of the board until April of last year. And when he left, hardly anyone thought he’d be saying goodbye for good. By August — after backing off a much-ballyhooed plan to take public a closed-end fund backed in part by retail investors who follow him on X-née-Twitter — Ackman had disclosed in paperwork filed with the SEC that he was interested in taking Howard Hughes public. Call it a retreat to comfortable territory.

Now, Ackman wants to make his dream a reality — and says the deal makes sense for both sides:

• Pershing Square already owns around 37% of Howard Hughes shares, and in a letter to the Howard Hughes board, the hedge fund offered to snap up remaining shares at $85 a pop. Shares of Howard Hughes traded at $71 on Friday and closed at $78 per share on Monday.
• Pershing Square would then use the cash flow, balance sheet, and property holdings of Howard Hughes to power large takeover deals of other companies — meaning Pershing Square intends to expand beyond its typical capacity as a minority activist.

“With apologies to Mr Buffett, [Howard Hughes] would become a modern-day Berkshire Hathaway that would acquire controlling interests in operating companies,” Ackman wrote in an investor letter on Monday. That’s some tall talk; Howard Hughes has a market cap of around $4 billion. Berkshire Hathaway? Somewhere around $956 billion.

Zombieland: Acquiring Howard Hughes isn’t the only thing on Ackman’s mind these days. The billionaire has been publicly pushing President-elect Donald Trump’s incoming administration to end the government conservatorship of Freddie Mac and Fannie Mae, where he remains among the long-suffering shareholders. First Howard Hughes, now this? Ackman must be nostalgic for 2008.

It’s less a tariff and more like regional real estate redlining. 

Spain’s Prime Minister Pedro Sánchez says the country is proposing an extraordinary new tax of 100% for real estate buyers from outside the European Union. It’s part of a collection of measures to address the country’s housing crisis, he says, and it’s bad news for Britons who thought they might be able to surmount post-Brexit bureaucracy to settle on the costa del sol.

Taking the Bull by the Horns

Spain’s housing crisis is acute: The country has seen a 24% increase in homelessness since 2012, and the proportion of people living in rented accommodations who are at risk of poverty sits at 45%, the highest in Europe, per a Reuters report. While its housing market has become increasingly less affordable, tourism has boomed and the supply of short-term rentals has jumped while the availability of long-term leases declined. This summer saw widespread protests against tourism in holiday hot-spots like Barcelona.

With the planned property tax on non-EU nationals, the Spanish prime minister is broadening the conversation beyond run-of-the-mill tourists with selfie sticks, focusing on wealthy foreign investors:

• Spain already scrapped its golden visa program, which will officially shutter in April this year, meaning wealthy foreigners can no longer invest their way to a Spanish passport.
• Sánchez said when the program was scrapped that the majority of foreigners who’d applied for citizenship via investment had done so through buying real estate.

On Monday, Sánchez said that non-EU nationals had bought 27,000 properties in Spain in 2023, “not to live in them, but mainly to speculate.”

Gold Visa Rush: It’s not just Brits who’ll miss out on a sunny home in Spain; Bloomberg reported last week that there’s been an uptick in American buyers rushing to take advantage of the final days of Spain’s golden visa program. “It’s been non-stop requests,” Matt Anderson, an American real estate agent working on the Spanish island of Mallorca, told the outlet.