Cloud 9fin Fundamentals of CLO fundraising
Oct 9, 2024
Jamil Nathoo from MidOcean Partners, an expert in CLO business development, shares intriguing insights into the world of Collateralized Loan Obligation fundraising. He discusses the emergence of CLO captive equity funds and their impact on issuance control. Dive into the growing CLO appetite in the Middle East and South America, along with the unique challenges these regions present. Nathoo also elaborates on the importance of local partnerships, investor trust, and the evolving dynamics of fundraising in Asia, particularly among family offices.
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CLO Equity Fund Structures
- CLO equity funds have two main types: captive (single-manager) and third-party (multi-manager).
- Captive funds offer greater control, while third-party funds provide manager diversification.
Variations in Captive Fund Structures
- Captive CLO equity funds offer structural variations like fee rebates and tranching.
- These variations aim to differentiate managers and cater to diverse LP preferences.
Captive vs. Third-Party Funds
- Investors consider manager reputation, fees, and returns when choosing between captive and third-party funds.
- Captive funds often have lower fees and vintage diversification, while third-party funds offer manager diversification but potential double fees.