Investcorp.'s $500 million collateralized fund obligation (CFO), backed by hedge-fund returns, is expected to wind up its global roadshow this week and underwriter Credit Suisse First Boston will potentially release price talk in mid-April.
Since most of the equity in the Diversified Strategies deal is being placed with Investcorp. and its contacts in the Middle East, CSFB's biggest challenge has been placing the debt. The bank has reportedly presented the transaction to virtually every fixed-income/hedge fund investor in the firm's rolodex and the bankers are pretty worn out. Investors report that CSFB has told them the triple-A levels will be greater than recent CDOs, which could be 55-70 basis points over Libor. Diversified Strategies is not expected to have a monoline wrap.
The CFO issued by Investcorp., the fund-of-fund manager (Baa2/BBB Moody's/Fitch), will track performance of the firm's Diversified Fund: five-year returns of 9.7%, volatility of 4.24% and Sharpe Ratio of 1.11.
The latest name to enter the CFO marketing bonanza is a $500 million JPMorgan-led hedge fund-backed CFO, Man Glenwood Alternative Strategies I (MAST), that will be managed by Man Investments Products (MIP). Chicago-based Man-Glenwood is the investment advisor for the transaction. Both MIP and Man-Glenwood are subsidiaries of Man Group plc, a member of the FTSE 100 Index with a total in $9.6 billion funds under management. MAST is expected to close on April 25, 2002. Legal final maturity is in 2009.