Six firms in the process of launching CLO management businesses in Europe are lining up their debut transactions for 2024, which would bring the number of managers on the continent to 79, according to market sources.
Credit Industriel et Commercial (CIC), DWS, Fortress Investment Group, Muzinich, Pimco and Serone Capital are all looking to begin issuing CLOs this year. After seven CLO managers priced their inaugural CLOs in 2023, 16% of the European manager base would have debuted either this year or last, and some investors are questioning whether the industry is getting overcrowded with too many managers chasing too few loans.
Last year first-time CLO issuers in Europe priced their debt at spreads significantly wide to the rest of the market, but three debut firms issuing in the fourth quarter showed that the market is accessible to new entrants.
“CLO investors seem to be OK with new managers and platforms, so if you can solve for risk retention then it's all good,” says one London-based CLO investor.
Serone Capital’s upcoming CLO team is run by former Angelo Gordon portfolio manager Steven Paget, who is Serone’s head of performing credit. In December the firm hired another former AG team member, Michiel Von Saher, as head of credit research.
DWS has also been hiring for its CLO platform - in November the firm appointed Dan Robinson, former global head of loans and CLOs at Man Group and former chief investment officer for CIFC Asset Management in Europe, as EMEA head of alternative credit to develop its €114 billion alternatives franchise. DWS has one of the largest project finance CLO platforms and priced two CLOs last year backed by infrastructure assets, known as RIN V and RIN VI.
CIC’s CLO platform is led by Steve Dunn, head of private debt solutions, who is based in London. Muzinich’s platform has four portfolio managers the firm hired from ECM Asset Management in 2016 led by Torben Ronberg, who is head of syndicated loans at the firm. ECM was one of the first European CLO managers in the early 2000s.
Fortress and Pimco have been speculated to begin selling CLOs in Europe for a number of years and sources say both firms have warehouses open.
European CLOs have a €220 billion market cap, making the euro-denominated version of the asset class considerably smaller than the US equivalent, which surpassed $1 trillion in 2021.
Last year
AB CarVal,
Arini, Canyon, M&G, Pemberton, Signal and
Sona all issued their first European CLOs.