Primus Guaranty has entered into a binding letter of intent to sell its third-party asset management unit CypressTree Investment Management to Commercial Industrial Finance Corp. (CIFC). The deal's terms were not disclosed.
CypressTree manages or subadvises around $2.8 billion of high yield and leveraged loan assets in eight CLOs, which include: Primus CLO I and II, and Hewett's Island CLO I-R, II, III, IV, V and VI, according to a release from Primus.
The collateral management contracts for these CLOs will form part of the sale. Additionally, a total rate of return swap as well as a collateralized swap obligation managed by CypressTree will be included in the sale as well.
CIFC is a credit asset management business that manages $3.6 billion in assets across seven CLOs. The company's team of 15 investment professionals have an average of 17 years of experience between them. It is led by Peter Gleysteen, who is considered a pioneer of the U.S. corporate loan market.
"The divestiture of CypressTree is part of our previously announced plan to focus on managing and preserving the value of our credit protection business in amortization," said Thomas W. Jasper, Primus Guaranty's chief executive officer. "While CLO management is no longer a core business for Primus, CIFC's talent, experience and track record helps to ensure that our CLOs and CLO investors remain in the hands of one of the premier credit investment firms."
"We are pleased to add the CypressTree business to our existing platform," stated Peter Gleysteen, CIFC's chief executive officer. "With this transaction, CIFC will have over $6 billion in assets under management, and we believe that the additional scale and our leading track record will be beneficial to all debt and equity investors in the CypressTree, Primus and CIFC CLOs."
Primus Guaranty's credit protection business, which includes Primus Financial Products' $14 billion portfolio of credit default swaps, is not impacted by the sale.
Primus Financial Products will still be part of Primus Guaranty and will still be managed by Primus Financial portfolio managers. Berkshire Capital Securities was the advisor to Primus on the sale of the CLO business.