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BNPP AM grows Dutch mortgage exposure with Dynamic Credit acquisition

Institutional investors are seeking access to the Netherlands’ residential mortgage market, according to the French manager.

BNP Paribas Asset Management has described its acquisition of a majority stake in Dutch asset manager Dynamic Credit Group – which has a portfolio of mainly residential mortgages in the Netherlands – as an important step in the growth of its private debt platform.

Last week, the French asset manager announced that the newly acquired firm will become part of its private debt and real assets unit. In a statement announcing the closing of the deal, which was first announced in September 2021, BNPP AM said the deal is in line with its strategy of accelerating the expansion of its platform, particularly within the area of private markets.

Dynamic Credit originates Dutch mortgages through its own online platform, bijBouwe, and other channels. The company is also engaged in portfolio management through collective and single mandates, as well as reporting and valuation services for the asset class.

David Bouchoucha, head of private debt and real assets at BNPP AM, told Real Estate Capital Europe that the Dutch mortgage market represented a strong credit market opportunity for BNPP AM. “Dutch mortgages have become a recognised asset class for Tier 1 institutional clients – insurance and pension funds – across Europe,” he said.

“[Dutch mortgages] provide an appealing alternative to investments in government bonds or higher rated investment grade bonds with a good liquidity premium. It is therefore strategic for BNPP AM to accelerate its development within this asset class in line with shifting client allocations,” he continued.

The acquisition brings the private debt and real assets unit’s assets under management to more than €20 billion. In the deal announcement, Tonko Gast, founder and chief executive of Dynamic Credit, said working with BNPP AM will enable the expansion of its distribution networks across Europe and Asia.

Bouchoucha added that the Dutch mortgages strategy complements BNPP AM’s wider commercial real estate lending strategies. “Although both are real estate, the underlying exposures and risks are different. Furthermore, many features are different: residential mortgages are very granular, with longer duration and lower risk/return than commercial real estate. Typically, residential mortgages are seen as a duration play and a substitute for government bonds by insurers and pension funds, while commercial real estate debt is more a pure credit exposure and a substitute for investment grade bonds or as a diversifier to direct real estate.”

For the time being, BNPP AM is not planning to expand its platform to other residential mortgage markets across Europe, instead keeping its focus on the Netherlands. “The return characteristics of other countries’ mortgages are less appealing for investors,” Bouchoucha explained.

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