(Bloomberg) -- Alternative asset manager Sculptor Capital Management has launched a platform to invest in the riskiest tranches of collateralized loan obligations, which will count its new owner Rithm Capital Corp. as a key investor.
The venture, dubbed Sculptor Loan Financing Partners, will manage investments in the equity tranches of Sculptor's own CLOs in the US and Europe, which package leveraged loans into securities of varying risk and size. It will be part of the firm's institutional credit strategies business, which oversees about $15 billion in assets under management, according to a statement seen by Bloomberg.
Sculptor is following other firms that have pursued similar strategies over the past 18 months, setting up funds to allow them to retain the equity portions of the CLOs they manage as it got harder to sell the bonds to third parties. Alternative investment platform Sagard is fundraising a CLO equity fund, for which it already had secured anchors, while CLO manager Irradiant Partners LP raised more than $400 million last year to invest in the securities.
"The new platform allows us to be nimble in accessing the CLO market when opportunities arise while continuing to scale Sculptor's global CLO business across the US and Europe," said Michael Nierenberg, Rithm's chief executive officer.
Sculptor's fund has already seeded one such deal: a $406 million transaction that priced in March and closed this week. A group of leading global institutions invested in the minority equity and rated notes, according to the statement. Sculptor's latest new issue CLO comes as issuance in the $1.3 trillion market soars, with sales of new CLO bonds running about 54% higher than this time last year, according to data compiled by Bloomberg News.
"The significant demand we received from third-party investors for CLO 32 reinforces the benefits of our decision to launch a captive CLO equity platform," Brett Klein, global head of corporate credit at Sculptor said in the statement.
Rithm's commitment comes a few months after the mortgage servicing company bought Sculptor following a long fight between the asset manager's founder Dan Och and the company's chief investment officer Jimmy Levin. The real estate investment firm finally completed the purchase in November, buying Sculptor for $720 million.
In 2024, Sculptor has refinanced three CLO transactions to achieve lower capital costs. Overall, the company has issued 42 CLOs and collateralized bond obligations since 2012, according to the statement.
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