Dubai, 21 September 2022
Daniel Chapman, is the CEO and CIO of the New York-based Argentem Creek Partners (ACP), which is responsible for leading the firm and management of the funds. He has more than 30 years of experience and successfully negotiated and navigated businesses through major financial crises over decades of market volatility with a track record of outperforming major benchmarks.
Prior to founding Argentem Creek in 2015, he was responsible for all emerging markets risk-taking activity within high-yield, structured, and distressed corporate credit at Cargill, Inc subsidiary, Black River Asset Management.
Daniel was recruited by Cargill to help establish the business in 2004, building a successful and highly regarded global team. Prior to joining Black River, Daniel was with JP Morgan New York for 15 years, most recently as a Managing Director responsible for the distressed debt trading business. While at JP Morgan, Daniel also established a private sector EM money markets business, and developed the business into a leading EM corporate credit trading platform.
In an exclusive interview with The Wealth Today, Daniel discusses ACP’s growth, asset management industry in the region, regulatory framework in the UAE among others.
Please tell us about Argentem Creek Partners (ACP) and its activities?
Argentem Creek Partners, LP is an emerging market, corporate credit specialist firm headquartered in New York with resources in Minneapolis, London, Buenos Aires, and Abu Dhabi.
Founded in 2015, we have 19 employees globally, we’re 100% employee owned, and we manage approximately $850 million in client assets. ACP invests in special situations, private credit, high yield, all within emerging economies and global trade finance.
Why ACP has decided to start an office in the UAE instead of Saudi Arabia as the latter has been wooing global companies to set up their headquarters in the Kingdom?
Both regions are experiencing tremendous growth at the moment and present opportunities for companies, such as ACP, to expand within the region.
ACP chose Abu Dhabi as ADGM’s strong infrastructure fosters innovation and a business-friendly environment. Moreover, our partnership with ADIO has been instrumental in accelerating our expansion plans. ADIO provides newcomers to the region, like us, the structural, legal, and personnel resources for expansion.
Can you provide us with some key insights into the growth of asset management in the GCC region as well as in the Middle East?
Interestingly, Bloomberg’s consensus economic growth projections published recently illustrates that Saudi and GCC growth rates have been revised markedly higher on an outright basis and relative to the rest of the world. Fiscal positions have been improving due to higher oil prices, and there have even been discussions of the Saudi peg being dropped (an unlikely event in my opinion). Official reserves are growing rapidly, and as a result the need for quality asset management firms is increasing in lock step.
Of additional significance to this question are the geopolitical challenges 2022 has delivered. Food security for the Middle East has always been of concern, and this year it has become a national security issue. Solutions are available in the investable universe. Asset managers with a history of sourcing and securing protein and grain producers, suppliers, and logistics are becoming invaluable resources for Middle East investors seeking secure supply chains of the future.
What are the challenges and opportunities for companies like ACP in the region?
The opportunities outweigh the challenges in my opinion. The opportunities reside in a region rich with intellectual talent, a culture of collaboration and solutions seeking institutions, deep financial resources, and a geography that places employees with a four-hour trip to MENA and Asian opportunities.
Challenges we face reside in cultural/language barriers and legal systems that differ from western systems. That said, as a firm that specializes in emerging economies, we face these challenges daily. Our partnership with ADIO provides an invaluable partner when facing uncertainty.
In the team’s frequent trips to the region, the team has been met with overwhelming graciousness and collaborative approach spanning across government agencies, potential investors and service providers.
Do you think the ongoing geopolitical tensions may impact the asset management industry?
We often see passive investing in the emerging markets regions by long only managers seeking diversification benefits of adding EM within a total portfolio approach. These passive investments are often the ones that suffer the most due to geopolitical tensions.
Assets can be seized/frozen or sanctioned when macro forces overwhelm. It’s also during these periods when “active management” funds like Argentem finds its best opportunity sets with in geopolitical haze.
Understanding how companies have managed through prior storm cycles is paramount. Finding companies that are important to infrastructure and earn hard currencies is even better. It takes time and experience to know that a company’s balance sheet produces reasonable cash flows in various scenarios that helps insulate from a sovereign crisis.
Distinguishing reputable management teams that have executed cross border businesses is mission critical. Having high quality global resources and the mandate to aggressively leverage them across legal, technical, and investigative disciplines is an often overlooked but a critical part of the toolkit.
The demand for sustainable investments has been growing and how well ACP has positioned itself in the short and long term?
ACP is a signatory of the UN Principles for Responsible Investment (PRI). We believe ESG will make us more successful in our goals of creating positive economic impact for our clients, the companies in which we invest, and the communities where they operate. 3
Is the GCC region’s regulatory framework still in a nascent stage for these businesses to join the markets?
We believe the regulatory environment in the GCC region is quite progressive. Our experience to date with ADGM, and FSRA, has been excellent.
Looking ahead, which sectors in asset management will witness development by 2030?
We believe, infrastructure, logistics, food security, and sustainable energy are paramount to societies in the decades to come. Whether via public/private partnerships or completely privately funded, both developed and emerging economies see the need to secure rapid growth in these sectors. Governments globally are seeking solutions to the challenges the sectors face, and the asset management industry will be tasked with funding the best ideas and solutions.
Disclaimer:
1 The team as of 8/31/2022 includes investment professionals and operating employees across all Argentem Creek Partners’ business lines. Assets Under Management (“AUM”) as of 7/31/2022 are calculated as total assets presented on a fair value basis
2. References made to industry affiliations association are not an endorsement by any third party to invest with ACP and are not indicative of future performance. The above information is for illustration purposes only and should not be relied upon as investment advice. ESG investments are investments made with the intention to generate positive, measurable social and environmental impact alongside financial return. ESG investments span multiple asset classes and investment structures. Financial returns can range from the below market to the market rate. ACP cannot guarantee the social or environmental outcomes and/or prevent mission drift.
