CLO newcomer HalseyPoint inks investment pact with A-CAP
HalseyPoint Asset Management, an asset management firm that plans to issue a debut CLO this year, has received a cornerstone investment from A-CAP, a privately held insurance company.
It's the latest example of the insurance industry's deepening involvement in collateralized loan obligations.
A-CAP, which owns annuity/life firms Sentinel Security Life and Atlantic Coast Life, as well as long-term-care insurance provider Ability Insurance Co., will provide “significant” equity and debt capital investments to collateralized loan obligations to be issued under HalseyPoint’s nascent platform, according to a press release issued Thursday.
HalseyPoint is headed by co-founders and managing partners Lynn Hopton and Yvonne Stevens, both veterans of Columbia Asset Management. While at Columbia, they issued 22 CLOs totaling more than $12 billion. In an interview, Stevens said the firm was seeking an investor-partner relationship from a firm such as A-CAP since launching in May, just two months after Hopton and Stevens left Columbia.
“Not only do they [A-CAP] have a strong presence already as an investor in the space,” said Stevens, “but they see the value in partnering up with a manager. And it’s very natural for their business to put their balance sheet to work in the space.”
The partnership with A-CAP allows HalseyPoint to step up the pace in recruiting analysts and traders, plus open a warehouse line for loan accumulation by the end of May. (HalseyPoint has an undisclosed underwriter lined up to fund the warehouse, Stevens said.)
At Columbia, Stevens and Hopton led Columbia Management Investment Advisors, and they have over 25 years' experience in the leveraged loan market. The pair struck out on their own last spring to form HalseyPoint. (“Halsey” was derived from the initials of the two executives’ names, Hopton said.)
HalseyPoint is based in El Segundo, Calif., and will be a regular issuer of perhaps two to four deals annually.
The deal represents a furthering of ties between insurance group – particularly life insurance firms – and the CLO industry.
CLOs represent a very small proportion of overall insurance industry investments – less than 1% of total cash and investment assets at year’s end 2017, according to a September 2018 report from the National Association of Insurance Commissioners.
But the insurance industry’s impact on the CLO market itself has been growing more substantial in the post-crisis era. Led by mega-firm life insurance carriers, U.S. insurers have more than doubled exposure to CLOs (both middle-market and broadly syndicated) to more than $51 billion, the NAIC report stated.
These firms have built ties by acquiring or opening advisory and asset management subsidiaries to sponsor deals funneled by parent company investments.
AIG returned to CLOs for the first time since the financial crisis last year after acquiring alternative asset manager Covenant Credit Partners. And with nearly $11 billion in deals issued in its first two years, newcomer CBAM Partners in New York has quickly evolved into one of the market’s most prolific CLO issuers with shared-services support from private equity parent Eldridge Industries – which also sponsors Security Benefit Life.