CIFC founder Gleysteen returns to CLO field with PE vet Lee
Peter Gleysteen, the founder and former chief executive of CIFC Asset Management, is returning to the CLO market with a new portfolio management firm he will run with private equity pioneer Thomas H. Lee.
AGL Credit Management LP will join a parade of new firms that tap veteran managers of collateralized loan obligations. This seems to reflect the fact that investors are willing to accept lower returns from issuers with established track records.
AGL “aims to build a leading CLO franchise,” the company said in a statement issued this week. It has $650 million in combined seed capital from the Abu Dhabi government sovereign wealth fund and an undisclosed U.S. state pension fund.
The private-credit investment firm reportedly will seek to build up assets under management of $4 billion to $5 billion in its first year, according to Bloomberg.
Gleysteen will take on the role of CEO and chief investment officer. The 40-year veteran in bank loans is noted for establishing CIFC, a firm he led from 2005 to 2014 into one of the largest CLO managers in the U.S. market (currently at $21 billion in assets under management).
Prior to CIFC, Gleysteen was the chief credit officer for corporate loans at JPMorgan Chase, heading syndication of the bank’s global corporate loan portfolio.
Lee, currently chairman at Lee Equity Partners, will be a non-executive chairman of the firm. Lee established one of the earliest private equity firm, Thomas H. Lee Partners LP in 1974.
Lee's family office has also made an equity investment in the new firm, alongside the $500 million backing from the Abu Dhabi Investment Authority and $150 million from the U.S. state pension.
Gleysteen's return to the market through AGL joins in a recent trend of experienced managers – some dormant for more than a decade – joining or founding new shops. In February, Elmwood Asset Management priced its first-ever deal after launching operations last year under CIO Adrian Marshall, a BlackRock bank-loan management veteran. Also last month, former Columbia Asset Management portfolio managers Lynn Hopton and Yvonne Stevens unveiled HalseyPoint Asset Management they founded with backing from insurer A-CAP.
Last December, AIG launched its first new CLO since 2008 in a deal fueled by its May 2018 acquisition of alternative asset manager Covenant Credit Partners.
AGL will enter a market in which established players in the market are gaining more favorable price spreads from investors.
Despite waning interest from investors in floating-rate products and rising concerns over corporate leverage levels, growing volumes of leveraged-loan collateral continues to be churned out by investment banks. There also remains a fall back in purchase activity by retail loan funds since the fourth quarter of 2018, as well as “ongoing negative press coverage and questions around further Fed rate hikes” that are headwinds against loan issuance, according to data research firm Refinitiv.
More than $61 billion in new bank loans were issued in February – a 50% jump from January’s volume, Refinitiv data shows.