BOSTON- Some investment firms, including those that run hedge funds or manage money for wealthy investors, are among the businesses approved for emergency US government loans to help small companies and non-profits pay employees during the coronavirus lockdown, according to data made public on Monday.
They included Semper Capital Management LP, which bets more than $2 billion on mortgage and other asset-backed securities; Domini Impact Investments LLC, a mutual fund manager with about $2 billion under management; Brevet Holdings LLC, a $1.2 billion lending firm; and Truvvo Wealth Management LP, which manages more than $2 billion for large families and institutions.
Emails to the firms seeking comment were not immediately returned. The data does not track which loans were disbursed, paid back, or if they will qualify for forgiveness.
All told, the US Small Business Administration said in a report on Monday that finance and insurance firms represented $12.2 billion across 168,462 loans, about 2.3 percent of the program’s total lending as of June 30. More than 1,400 approved loans were for businesses classified as investment advisors and nearly 600 were for portfolio management companies, according to the data.
Many investment and wealth management firms are relatively small, and staff pay varies widely, often far from the stereotype of the billionaire jet-set financier. Unlike restaurants and hotels, many financial businesses remained open during the coronavirus-related lockdowns and shifted relatively smoothly to remote work.
Investment firms typically earn a percentage of assets under management and profits as fees. The markets rebounded sharply after hitting a low in late March, which would have reversed some of those losses.
The firms disclosed on Monday add to some already revealed in public filings.
Cohen & Company Inc, for example, said in May it had received $2.2 million under the PPP, noting its small market capitalization and lack of access to the public capital markets. The company declined a request for additional comment on Monday beyond its previous statement that, in part because of the loan, it “does not anticipate any significant workforce reduction or reductions in compensation levels in the near future.”
Some financial firms initially approved for loans quickly canceled or returned them amid additional guidance from the Treasury Department and media scrutiny. One was Metacapital Management LP, according to managing member Deepak Narula.
A spokesperson for another hedge fund listed as a recipient in Monday’s data, Advent Capital Management LLC, said it explored the idea of taking a PPP loan but never completed an application and did not receive any aid.
Meanwhile, tens of millions of dollars earmarked by US lawmakers to assist small businesses in the coronavirus-induced economic downturn went to investment banks advising on corporate dealmaking, according to official data released on Monday.
As part of the Paycheck Protection Program (PPP), companies had to certify in good faith that “current economic uncertainty makes this loan necessary to support” their ongoing operations. The government-backed loan is forgivable as long as the companies restore employment to pre-pandemic levels.
Broadhaven Capital Partners LLC, which according to its website has advised on more than $50 billion worth of deals in the past decade, including the $4.5 billion sale this year of asset manager Legg Mason Inc to rival Franklin Resources Inc, applied for and was cleared for a PPP loan of between $350,000 and $1 million, according to a list released by the US government on Monday.
Broadhaven representatives did not respond to a request for comment on why the investment bank applied for the loan and whether it had received and used it.
Technology-focused investment bank Union Square Advisors LLC, consumer and healthcare-focused investment bank North Point Advisors Inc and consumer-focused investment bank Sawaya Partners LLC were also each approved for a loan of between $350,000 and $1 million.
The loans helped retain 35, 31 and 24 jobs at each firm, respectively, according
to the data released by the US Treasury Department and Small Business Administration.
— Reuters
