Private equity firm The Carlyle Group has agreed to purchase the management contracts on USD5.1bn in collateralised loan obligations and other credit assets from Stanfield Capital Partners, a fixed income asset manager based in New York.
The transaction, part of a broader strategy to expand the scope and depth of Carlyle’s global credit alternatives business, would increase credit AUM to USD18.1bn from its current USD13bn.
Financial terms were not disclosed. The transaction is subject to investor consent and is expected to close in the third quarter of 2010.
Mitch Petrick, Carlyle managing director and head of the global credit alternatives and capital markets group, says: “Scale is critical to the CLO business. With this purchase, Carlyle would become one of the world’s largest structured credit managers and an industry consolidator.”
The USD5.1bn transaction consists of USD4.2bn in CLOs and USD950m of managed account assets, all of which are invested primarily in non-investment grade corporate loans. The USD4.2bn in CLOs would grow Carlyle’s CLO AUM from USD10.2bn to USD14.4bn, a 40 per cent increase.
Dan Baldwin, chief executive officer of Stanfield Capital Partners, says: “The decision to sell your business is a very difficult one to make. However, we believe the marketplace for credit managers is consolidating, as investors in credit place their money with firms that possess the broad array of resources found at large global asset managers. We chose to sell to Carlyle because they not only have a strong investment platform, but possess a comprehensive infrastructure focused on risk management and client service. We believe our clients will continue to benefit from a consistency and quality of management and service that they have been accustomed to.”
Carlyle’s credit alternatives business comprises leveraged finance, mezzanine and distressed products – currently 24 funds with USD13bn in assets managed by 57 investment professionals.
Berkshire Capital Securities served as adviser to Stanfield Capital Partners.
