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THL Credit Advisors to acquire CLO manager Kramer Van Kirk

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Exempting CLOs from risk retention was expected to ease the regulatory burden on smaller managers. But industry consolidation has not abated.

THL Credit Advisors announced the signing of a definitive agreement to acquire the collateral management business of Kramer Van Kirk Credit Strategies. Founded in 2012 and based in Chicago, KVK currently manages seven collateralized loan obligations totaling approximately $3.4 billion of assets, making it one of the smaller managers in the $500 billion industry.

Rules that took effect in December 2016 requiring managers to keep skin in the game of their deals appear to have kept KVK out of the market the following year. But it priced a $600 million transaction in May of this year, after a federal appeals court ruled that risk retention did not apply to CLOs.

THL Credit manages both direct lending and broadly syndicated investments through public and private vehicles, collateralized loan obligations, separately managed accounts and commingled funds. The firm currently manages 15 CLOs, which doesn't including the recently priced THL Credit Wind River 2018-1. Based on current assets under management, the acquisition would bring THL Credit’s CLO assets under management to approximately $12 billion and the firm’s total assets under management to over $15.5 billion.

“We have known and respected Tom Kramer and Tim Van Kirk for a long time, both as professionals and as neighbors across the street from our Chicago office. We believe KVK’s CLOs will complement our existing strategy,” Brian Good, senior managing director and co-head of tradable credit for THL Credit, said in a press release. “This is an opportunity to further scale our CLO asset base and broaden the THL Credit platform from which to generate risk-adjusted returns for our investors.”

“THL Credit’s deep experience with CLOs and syndicated credit investments makes the firm a great fit for our business and our team,” said KVK principal Tom Kramer. “THL Credit is well prepared to handle a larger portfolio of CLO investments, and we’re looking forward to working together through this integration.”

Financial terms of the transactions were not disclosed. It is is expected to be completed during the summer of 2018, upon receipt of certain required consents.

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