Cantor Seeks New Deal on UBS Hedge Fund Unit Over First Brands Exposure
(Bloomberg) — Cantor Fitzgerald LP is seeking to change the terms of its purchase of the O’Connor hedge-fund unit from UBS Group AG as the business faces big losses from the bankruptcy of First Brands Group, according to people familiar with the matter.
The New York-based investment bank, which agreed in May to buy the unit, is discussing excluding one of O’Connor’s strategies at the heart of the First Brands exposure, the Working Capital Finance group, and reducing the price overall, one of the people said. The people asked not to be named discussing private details.
When the auto-parts supplier filed for Chapter 11 protection on Sept. 28, after failed attempts to refinance $6 billion of loans, court documents showed O’Connor had a claim for $116.1 million on First Brands in supply chain finance.
The renegotiation is the latest stage in the fallout from First Brands’ bankruptcy, which already threatens financial losses for Cantor’s larger New York rival, Jefferies Financial Group Inc. A fund controlled by a unit of that firm put nearly a quarter of its $3 billion trade finance portfolio into receivables tied to auto parts supplier First Brands.
Representatives for UBS and Cantor Fitzgerald declined to comment. UBS shares rose after the story was published before erasing gains, trading at 32.82 Swiss francs ($40.95) at the market close in Zurich.
It is unlikely that the transaction, which is currently expected to close in the fourth quarter of 2025, will be canceled altogether, one of the people said. UBS and Cantor had planned to establish a long-term revenue sharing agreement following the transaction. The firms did not disclose the amount of the original transaction at the time.
Funds under the UBS umbrella face more than $500 million of exposure to First Brands Group through various investment strategies. UBS Hedge Fund Solutions is the largest unsecured creditor with a $233.7 million claim for providing supply chain financing.
A roadblock for the deal poses a headache for UBS as it seeks ways to trim risk on its balance sheet following the Swiss government’s demand for as much as $26 billion in extra capital. UBS’s predecessor organization, Swiss Bank Corp., began acquiring former Chicago-based derivatives house O’Connor & Associates in 1992.
O’Connor was started as a private partnership focused on market-making and derivatives trading before its acquisition by the Swiss bank. UBS O’Connor’s traders developed the bank’s equities proprietary-trading desk before opening hedge funds to clients in 2000. Its strategies span from multi-strategy and event-driven investing to private credit.
It’s the latest blow-up in the murky world of trade finance, a sector that has been hit by numerous frauds in recent years, often leaving banks and insurers facing losses. The biggest bust in the industry came in 2021, when Greensill Capital filed for insolvency after channeling bank deposits and insurance funds into short-term loans to risky companies.
The collapse of the firm contributed to the demise of Credit Suisse Group AG, which had been selling Greensill-linked funds through its asset management arm. UBS ultimately bought Credit Suisse in an emergency operation in early 2023 and later offered a redemption of 90% to investors in the Greensill funds, costing it about $900 million.
(Adds shares in fifth paragraph)
©2025 Bloomberg L.P.
