WestLB has combined its New York-based portfolio management unit with WestAM, the German bank's global asset management business.
The 21-person investment team is now operating as a registered investment advisor under the trade name Brightwater Capital Management. The group continues under the leadership of Managing Director Jim Galowski, who took over the portfolio in March 2002. Galowski has held senior trading and management positions with WestLB since he joined the firm in 1990.
The team's most recent hire was Executive Director Patrick Goulard, who joined WestLB from Deutsche Bank late in 2004. Currently, Brightwater has $21 billion in assets under management. The assets include roughly $10 billion in high-grade CDOs via the Whitehawk and Blue Heron vehicles, as well as the Greyhawk Funding securities arbitrage conduit and the Harrier Finance structured investment vehicle.
The group's most recent venture in the CDO universe was a $985 million offering from the Whitehawk vehicle led by Wachovia Securities. The transaction priced in August 2004, and is the only issuance off of that vehicle to date, Galowski said, adding that there are further deals in the pipeline for 2005. Blue Heron has sold nine CDOs from October 2001 through last February.
"We find it extremely difficult to understand how there are so many high-grade CDOs in the market. The current market for high-grade CDOs is not exactly favorable; as everybody knows, spreads have become very tight," Galowski said. "However, we are optimistically cautious about the future of high grade ABS CDOs."
Brightwater will keep its options open when choosing an underwriter for its CDOs. "We will continue to do our one-offs and see who offers us the best value. It all depends on where spreads go," Galowski said.
WestAM's global platform will enable Brightwater Capital Management to further expand its reach beyond the domestic market, Galowski said.
"As we developed into an asset liability manager, becoming a registered investment advisor was the most logical course," Galwoski added. "This will be a more efficient structure to service our clients."
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