3i Said to Join Ares Management in European CLO Deal SurgePatricia Kuo
3i Group Plc and Ares Management LLC are planning to join the surge in issuance of European collateralized loan obligations, according to people with knowledge of the matter.
3i Debt Management, the credit unit of the London-based private-equity company, is raising a CLO of about 300 million euros ($395 million), said three people with knowledge of the matter, who asked not to be identified because the deals are private. Ares is also seeking a CLO of about 300 million euros, three people familiar with that transaction said.
About 1 billion euros of European CLOs have been raised this year by Cairn Capital Ltd., Pramerica Investment Management Ltd. and Apollo Global Management LLC, according to data compiled by Bloomberg. Other money managers marketing deals include Alcentra Ltd., Carlyle Group LP and GSO Capital Partners LP.
“The reopening of the European CLO issuance is positive for the leveraged-finance market,” said Peter Hurd, managing director for acquisition and leveraged finance at Nomura Holdings Inc. in London. “It is helping replace some of the liquidity that is being lost as old CLOs reach the end of their reinvestment periods.”
Nomura forcasts that new European CLO issuance will reach
4.5 billion euros to 5 billion euros from about 15 deals this year.
Los Angeles-based Ares hired Credit Suisse Group AG to arrange its transaction while Resource America Inc. has underwritten the lowest-ranking portion of the 3i financing, the people said.
Bill Mendel, a New York-based spokesman for Ares, declined to comment on the deal. Laurie Yeh, a 3i spokeswoman in London, also declined to comment.
Alcentra may offer investors a spread of about 125 basis points, or 1.25 percentage points, more than benchmark rates on the AAA rated portions of its CLO, people with knowledge of the matter said yesterday. Cairn Capital paid 140 basis points for its top-rated notes in February, according to data compiled by Bloomberg.
3i Debt Management oversees more than $10 billion including 11 CLOs in Europe, according to its website. It has raised two CLO deals in the U.S. after it acquired Fraser Sullivan Investment Management LLC last year.