Investment manager Aladdin Capital Management, which has issued four CLOs, a high-grade CDO and one synthetic transaction to date, will soon begin purchasing structured finance product in order to start a relative value opportunity fund as well as begin issuing CDOs backed by ABS and CMBS.
Aladdin already manages roughly $3 billion of high-yield bank loans and investment-grade debt. "We hope to make ABS the third leg of our investment strategy," said Joe Schlim, a partner at Aladdin. "Investing in ABS and CMBS offers additional investment opportunities for our clients," Schlim added.
In addition to hiring portfolio manager Anatoly Burman to head its ABS and CMBS purchasing activity, Aladdin also recently hired Martin Nance and Joseph Breslin, and will look to make additional hires to round out the group. Nance will focus on new business opportunities within the structured finance market and head the firm's business development in the credit markets. Breslin is the firm's chief operating officer, overseeing compliance, legal infrastructure and information technology.
Aladdin plans to waste little time entering the ABS market and expects to issue "more than one" CDO backed by structured finance product in the next 12 to 18 months, according to Schlim. Aladdin has not lined up an underwriter for its potential future offerings, but has worked with Banc of America Securities, Bear Stearns, Credit Suisse First Boston and JPMorgan Securities on previous CDO and CLO transactions.
Schlim said Aladdin's entrance into the structured finance markets would follow the blueprint it used when it entered the bank loan market in 2001 with the hiring of Gilles Marchand from Merrill Lynch Investment Management.
Following Marchand's hiring, Aladdin began issuing CLOs off its Landmark issuance vehicle, and currently has two more in the pipeline. Additionally, its Aladdin high grade CDO was completed in 2002 and Aladdin's synthetic CDO, which sold protection on the 0% to 3% tranche on a $500 million bespoke portfolio, priced in 2003, but was unwound last September, "at a significant gain," reported Schlim.
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