American Capital is to launch American Capital CLO Fund I, LP, a new USD450 million fund focused on investing in equity tranches of collateralised loan obligations (CLOs).
Closing of the Fund is expected to occur within 90 days and is subject to standard conditions. The transaction further expands American Capital's asset management business and will increase American Capital's third-party earning assets under management by USD450 million, or 3 per cent.
The Fund, which will be comprised entirely of third party investors, will purchase USD300 million of American Capital's existing CLO equity portfolio at its fair value as of 30 June, 2015, subject to standard adjustments. The Fund will have USD150 million of investment capacity and an affiliate of American Capital's asset management company, American Capital Asset Management, LLC (ACAM), will manage the fund for customary management and incentive fees.
The proceeds are expected to be used by American Capital for general corporate purposes, including for its investment and lending activities.
Kirkland & Ellis LLP is serving as lead counsel to American Capital on the transaction. Cleary Gottlieb Steen & Hamilton LLP is serving as lead counsel for the investors.
