Corinthia hired more than 20 people from Barings earlier this month. — Bloomberg
NEW YORK: A legal brawl between Barings and upstart Corinthia Global Management over “one of the largest corporate raids at an asset manager in years” is laying bare just how fierce the competition is for experienced talent in the niche but lucrative US$1.7 trillion private credit market.
Corinthia, a new private-credit manager backed by Nomura Holdings Inc, hired more than 20 people from Barings earlier this month, a sizeable poaching move that shocked the industry with its audacity.
On Monday, Barings responded by suing Corinthia and two former employees, Ian Fowler and Kelsey Tucker, to stop the new firm from hiring more employees and soliciting Barings customers. It’s also seeking damages.
The talent war is heating up in private credit as the value of seasoned players grows in a booming market that continues to attract new entrants.
Many money managers are trying to gain exposure to the asset class, typically by building out a strategy in-house or through acquiring another firm.
Corinthia decided to take an approach not yet seen at this scale in this industry – poaching someone else’s team.
“This is the biggest team-lift I’ve seen in private credit, yet” said Richard Risch, who runs his own executive search business called the Risch Group.
While doing a talent grab of this scale isn’t unheard of in other parts of the finance industry, the move by Corinthia reflects the degree to which the search for talent has ramped up in private credit, Risch said.
The brain drain from Barings was significant. The total included 11 professionals in the United Kingdom or Europe and six in the United States from Barings’ global private finance team, including the heads of the business and other key leaders.
In addition, five other distribution and capital markets professionals also departed, according to a letter Barings later sent investors on Monday.
Barings has since appointed new management for its investment committees in North America and also in Europe and the Asia-Pacific region, according to a filing.
“In addition to our deep bench of experienced leaders, we remain well-supported by a platform of more than 80 private credit team members,” the company wrote in the investor letter.
Barings contends that Fowler and Tucker are violating their contracts by misappropriating and misusing Barings’ confidential information to recruit employees and start up Corinthia.
Specifically, Barings said that Fowler signed an agreement in June 2022 that contained restrictions against hiring Barings employees or soliciting its clients.
According to Barings’ letter, the UK investment professionals are on garden leave until either May 30 or June 8 of this year.
Meanwhile the US employees’ last day will be March 22.
Barings also said in its letter that it is pausing new investments across certain private credit funds while they transition to the new leadership. A representative for Barings declined to comment beyond previous statements. A representative for Corinthia declined to comment.
Fowler referred comment to Corinthia, adding he isn’t currently an employee of the firm. Tucker didn’t respond to a request for comment.
The pain started for Barings on Friday, March 8. That evening in New York time, Fowler, his co-head Adam Wheeler, and about 20 other people resigned at the same time, according to the lawsuit.
At 5:39pm that day, Corinthia’s founder Paul Weightman emailed Roger Crandall, the chief executive officer of Barings’ parent company MassMutual, asking to speak the next day, the lawsuit details.
On March 9, Weightman emailed Crandall again, writing that the departures will “create a range of issues for the Barings Private Credit business.”
Weightman included a term sheet proposing that Corinthia would assume responsibility of Barings’ entire global private finance business, hire the existing employees still at Barings, and purchase the portfolio for “pennies on the dollar” and asked for Barings to sign the proposal by Monday, March 11.
“Barings and MassMutual have unequivocally rejected Corinthia’s term sheet and advised Corinthia that it has no interest in a relationship or transaction with Corinthia,” according to the lawsuit. — Bloomberg
