GreensLedge Asset Management has made a breakthrough with its first commingled CLO fund in a $500 million vehicle that invests in senior CLO tranches, officials at the company confirm.

The CLO fund is in the form of a unit trust, GreensLedge AM officials say, and will invest in triple A, double A and single A paper, skewed towards the highest rating band. The fund can invest in primary and secondary markets.

Matt Natcharian, co-founder with Derek Yaworsky and head portfolio manager of GreensLedge AM, says the fund reaffirms the company’s commitment to investing across the CLO capital structure in the US and Europe. GreensLedge AM has separately managed accounts which focus on junior CLO debt and equity and advises on over $5 billion of CLO assets, but this is its first commingled offering targeting CLO investment grade notes.

Creditflux understands much of the initial support for GreensLedge AM’s CLO fund is coming from Japan, where parent company GreensLedge Holdings has strong relationships (Sumitomo Mitsui Trust Bank owns a minority stake in the parent company).

“There is lots of appetite for senior CLO paper in Japan away from the large investment banks,” says Jim Kane co-founder of boutique investment bank GreensLedge, which is GreensLedge Asset Management’s sister company. Despite the affiliation, GreensLedge AM operates as an independent entity.

Most CLO funds target lower-rated tranches and equity, but there are a growing number of strategies giving investors access to CLO first-pay notes, particularly through exchange-traded funds.

In fact, Natcharian managed one of the first triple A CLO commingled funds while at Barings, according to a Creditflux report from 2014. At the time, he said the advantage of a pooled fund over managed accounts is the minimum investment requirement hurdle is lower for commingled funds, which means a broader range of investors can participate.

Creditflux reported on Natcharian and Yaworsky launching GreensLedge AM in 2019. That was just over a decade after GreensLedge was formed, with the dealer emerging as a consistent CLO arranger since then. It has carved out a niche arranging CBOs having pioneered the concept, and regularly advises on CLO M&A.

Kane says expanding into CLO tranche investment has long been on the agenda.

“We know the ingredients needed to make a successful asset management business, having provided that advice to others,” he says. “Naturally, we started thinking in recent years about applying the decades of experience we have in this area towards creating an asset management platform of our own.”

See the story as published by Creditflux here on October 11, 2022.

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