Z Capital Credit Partners LLC is something of a rarity these days: a first-time CLO manager.
The credit fund management arm of Z Capital Group closed on a $400.1 million collateralized loan obligation this week. The deal is intended to be compliant with both U.S. and European risk retention requirements.
It’s also the first deal this year by a first-time manager.
Impending requirements that U.S. managers retain “skin in the game,” in the form of a 5% stake in CLOs have tended to discourage new entrants. Smaller asset managers typically don’t have the balance sheet to do this.
Z Capital, which has $1.9 billion under management, was founded in 2006 by a CLO veteran, James Zenni. He is the former president, co-owner, and co-founder of Black Diamond Capital Management, an alternative asset management firm established in 1995. Under Zenni’s leadership, Black Diamond issued a $1 billion CLO in 2005.
Z Capital Credit Partners CLO 2015-1 issued securities rated from 'AAA' through 'B' by Standard & Poor's.
Z Capital CLO Management will retain a majority of the deal's subordinated notes.
Jefferies was the lead arranger.
The CLO is backed primarily by a revolving pool of broadly syndicated senior secured loans and has a four and one-half year reinvestment period.
"We are pleased that our inaugural CLO received strong support, representing a successful debut offering for Z Capital Credit Partners," Zenni said in a press release published Tuesday. "The level of investor interest speaks to our principals' track record in CLO and broadly syndicated bank loan management, our robust credit platform and the expertise of the team at Z Capital Credit Partners."