NEW YORK: First Eagle Investment Management agreed to buy Napier Park Global Capital, an established manager of collateralised loan obligations (CLO), in the latest consolidation in the US$1 trillion (RM4.20 trillion) industry.
With the purchase, First Eagle will add European CLO management to its portfolio as well as US$18.7bil (RM78.61bil) in assets under management (AUM), according to a company statement.
The investment management firm also holds other structured products, including bonds backed by United States mortgages, consumer and municipal debt and equipment leasing.
The acquisition follows a wave of others where money managers have moved to beef up their alternative credit businesses.
As inflation soars to the highest in 40 years and the market weighs the Federal Reserve’s rate hikes trajectory, some products in the alternative credit business, such as CLOs, are garnering greater appeal with their floating interest rates.
“We are seeing larger credit platforms looking for potential opportunities, primarily to bring in additional AUM and management fees,” Christopher Duerden, a CLO-focused partner at law firm Dechert LLP said.
“For folks looking to scale up, this is a good time to do it.”
The Carlyle Group Inc is one of the firms that’s scaling up, having agreed to buy Todd Boehly’s investment shop, CBAM Partners LLC, for US$787mil (RM3.31bil) earlier this month. The deal, expected to close in the first half of this year, will make Carlyle the largest global CLO manager with some US$48bil (RM201bil) of such assets.
First Eagle, which already manages US$17bil (RM71.47bil) in CLOs, is following Carlyle’s path with the Napier Park purchase. — Bloomberg
