Alternative asset manager MidOcean Partners has obtained $304 million of capital commitments for its first fund that will invest in the riskiest tranches of bonds backed by leveraged loans.
The firm, which has $11 billion of assets under management and nearly half that in collateralized loan obligations, began raising funds for MidOcean CLO Equity Fund I in 2023. MidOcean raised $136 million by that September, en route to a targeted $300 million, Bloomberg News reported at the time.
Both new and existing MidOcean clients put money into the fund, which will invest in the company's own CLOs, according to a statement seen by Bloomberg. MidOcean has put about 55% of the fund's capital into seven of those CLOs that represent $2.8 billion of assets under management.
"This capital will enable us to be nimble and opportunistic during an exciting and dynamic time for the CLO market," said Jamil Nathoo, according to the statement. MidOcean has been active in CLOs for more than a decade, and Nathoo leads MidOcean's CLO team along with Joseph Rotondo.
The new fund is part of a larger push by CLO managers to set up their own equity vehicles, which can allow managers to deploy capital and speed up issuance timing. Getting investors for the riskiest portion of the debt can be difficult.
Investors have seen double-digit returns this year, with performance helped by record amounts of a type of CLO refinancings called resets.
Issuance in the $1.3 trillion CLO market has soared this year, hitting their highest ever in the US at nearly $200 billion, according to data compiled by Bloomberg News. Even private credit has been part of the CLO sales surge. This as leveraged loans, of which CLOs are the biggest buyers, has had record deal launches this month in capping the market's first $1 trillion year.
MidOcean's most-recent US CLO transactions were a new issue in October and a reset in November, according to data compiled by Bloomberg.
