American Capital Access (ACA) officially launched its broker/dealer business as of Nov. 20, a milestone in the firm's unfolding business plan, according to seniors in ACA's asset management group.
ACA established broker/dealer capabilities to enhance its asset management business, in both structuring and distributing the equity and mezzanine pieces of the structured finance deals that the firm participates in.
"The broker/dealer is really to facilitate our relationship with the Street so that we're an easier counterparty for the Street to work with, and we can also play a part in placing our risk," said Chris Skardon of the portfolio management team at ACA. "We want to make sure the Street views us as a junior partner with them, in terms of allocating risk responsibilities."
As previously reported in ASR (see issue 6/14/01 and 4/23/01), ACA reinvented itself last winter as a hybrid financial insurance/asset management shop, largely targeting the CDO and credit derivatives market. Under the management of CEO Michael Satz, ACA initially brought on ex-Prudential Securities CDO group head Maryam Muessel, as well as Bill Tomljanovic. The firm expects to close its first deal, a credit default swap, before the end of the month, and expects to close its first asset-backed CDO early next year.
ACA pursued a dealer license so that, at some point, it will be able to better mitigate risk by placing parts of its own deals. For example, the firm can sell off equity it initially retained when launching a deal, said David Zimmer, head of the broker/dealer effort. ACA expects to take on the majority of equity in its CDOs, but will have the ability to place the remaining through its own broker/dealer.
"This is a positive thing for our relationship with the Street because equity is a very difficult asset class to sell," Zimmer said. "So in some ways it gives us a leg up on some competing asset managers. If the Street gets a mandate, it doesn't necessarily, at this point, have to get involved in marketing our equity class and ACA's large investment is a plus for marketing the investment-rated classes."