Ivy Asset Management Corp. has mandated JPMorgan Securities to structure a $300 million area fund of funds market value CDO supported by the returns of a group 20-30 of hedge SHOPS, buyside sources confirmed.
JPM has recently begun distributing data to prospective equity investors and marketing of the debt classes is several weeks away, sources familiar with the trade said. Standard & Poor's is the only agency rating the deal, as was the case with Deutsche Bank's Prime Edge private equity backed fund of funds CDO that made headlines last week.
Investors in the Ivy Alternative Investments CDO I are essentially betting on the returns of a group of 20 to 30 different hedge funds, where Ivy Asset Management acts as the fund of funds manager or advisor, explained a prospective investor.
Exposure to each hedge fund will be limited to around 5%, and there is expected to be A 10% to 20% cap on exposure to each fund strategy; e.g. long/short equity, relative value, or convertible arbitrage.
The special purpose vehicle acts as limited partner investor disbursing cash into in each fund while Ivy Asset Management is the general partner, sources said.
Long Island N.Y-based Ivy Asset Management has $3.6 billion under management and is a subsidiary of The Bank of New York Co.
Debt classes of Coast Asset Management's second CDO of CDOs were being shown to investors last week, however price talk not due until late this month. Buysiders say lead manager Lehman Brothers is pushing to price this deal in early july and likely after the us July 4 holiday break.
Coast II has been upsized to $410 million and has good luck placing the equity, sources participating in the deal explained. Price talk is expected to come in line with the Zing III CDO from ZAIS Group, which priced at +49/6ML on the triple-A's (equity in Zing III is said to have sold prior 12/31/01 allowing Zais to warehouse assets quietly.) Coast II is said to have finished off its equity around March this year.
Meanwhile, Salomon Smith Barney is said to have placed all of the equity for Highland V CDO. Highland is known as an preferred share friendly manager, said one equity investor. Also, Goldman Sachs is understood to have A Scudder HY CBO in the market while Deutsche Bank has recently won a mandate for the shop's upcoming ABS cdo.