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Pretium issues first CLO since acquiring Valcour

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Pretium Credit Management, a subsidiary of Pretium Partners, the real estate investment firm headed by former Goldman Sachs executive Donald Mullen Jr., is issuing its first CLO since acquiring independent credit manager Valcour Capital Management in August.

The $407.5 million Crown Point 4 LLC will be managed by the former principals of Valcour, which is operating as an affiliate of Pretium. The senior tranche of notes to be issued in the transaction will pay a spread of 115 basis points over Libor, according to a presale report published Thursday by Fitch Ratings.

Crown Point 4 has a now-standard reinvestment period of five years and is noncallable for two years. The average credit quality of the indicative portfolio is ‘B’, which is in line with that of recent CLOs, according to Fitch.

The transaction also features standard refinancing provisions that may be undertaken after the noncall period. Less typical, according to Fitch, is the fact that the transaction documents do not require a repricing to lead to a reduced interest rate on the applicable class of notes. So theoretically, interest rates could be increased via repricing.

Crown Point 4 is the first CLO in nearly three years for Valcour, which was last in the market with the $400 million Crown Point III in March 2015.

That deal was refinanced in October 2017, after the sale announcement but prior to the manager name change. At the time of Pretium’s takeover last summer, Valcour had approximately $1 billion in assets under management in three CLOs as well as an opportunistic hedge fund. According to Fitch, the firm also operates a mutual fund investing in leveraged loans now that it is controlled by Pretium.

The acquisition was announced in a letter to Valcour's CLO investors by managing partner George Marshmann.

According to Reuters, Marshmann wrote that Pretium “offers the prospect of long-term financial stability, access to a wide range of institutional investors, a better growth trajectory for assets under management and resources to assist in developing the firm’s investment management infrastructure and personnel.”

The acquisition was part of one of many pair-ups that year between smaller CLO managers and investment firms with deeper pockets in anticipation of risk retention requirements. Since December 2016, CLO managers have been required to hold on to 5% of the economic risk of their deals.

Pretium Partners, was established in 2012 to capitalize on investment and lending opportunities in the U.S. housing sector and the mortgage finance market. The firm has some $7.7 billion under management, according to information posted on its website. It is a
major player in the single-family rental market through its Progress Residential subsidiary.

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