IXIS Corporate & Investment Bank has completed a Collateralized Fund Obligation (CFO) deal for AGF Alternative Asset Management (AAAM).
The deal involves the issuance by a dedicated vehicle of tranches of equity and debt underpinned by a portfolio of alternative management funds, which in this case is the Phénix Alternative Holdings Fund.
Rated by Moody's and Fitch from Baa2/BBB to Aaa/AAA according to their level of protection in the deal, the debt tranches offer investors in the interest-rate markets vehicles on which the risk is decorrelated from those of their traditional assets.
The equity tranche enables holders to benefit from leverage on the underlying portfolio and therefore from an enhanced performance.
An original feature of the package is a variable debt tranche that allows the fund manager (AAAM) to vary the degree of leverage on the equity tranche according to the general market conditions for hedge funds and therefore enhance its performance.
Phénix Alternative Holdings, which alone has invested almost EUR 2 billion in more than 100 different hedge funds, is the largest fund of its type in France and one of the largest in Europe. The regularity of its performances over the last few years makes it the first choice in this type of deal, the first such deal in France.
Phénix CFO Ltd, which represents a sum of EUR 300 million over five years, has mostly been placed with continental European investors.
IXIS Corporate & Investment Bank, is Groupe Caisse d'Epargne's financing and investment arm. It provides a range of high value-added financial services to institutional investors, corporations, financial institutions and local governments,
AGF Alternative Asset Management, an affiliate of AGF Asset Management, specializes in alternative fund of funds management and currently has AUM of more than EUR 3 billion.
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