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CLO giant raising first ever captive equity fund

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News and Analysis

CLO giant raising first ever captive equity fund

Sam Robinson's avatar
Michelle D'Souza's avatar
  1. Sam Robinson
  2. +Charlie Dinning
  3. + 1 more
•2 min read

This article is part of our new service, 9fin Structured Credit. If you're interested in a free trial, contact subscriptions@9fin.com

Carlyle is in the process of raising its first ever captive CLO equity fund, according to 9fin sources. 

The firm joins a host of other managers, including Blackstone and CVC, that have raised captive equity in recent months. This can help managers form new CLO vehicles in an environment where third-party equity is hard to come by, largely because of a compression in CLO arbitrage.

The fund has a target of $500m, and will support Carlyle’s CLO formation globally, according to sources. The firm has yet to close on the fund, although it is understood to be nearing completion.

Carlyle is understood to have already raised $90m in capital for the fund from its own employees, sources said.

The fund has a preferred return structure in place for institutional investors, according to sources: LPs will be prioritized until the fund has achieved a certain IRR.

Carlyle is one of the world’s largest CLO managers. It has priced five new CLO vehicles in the US so far this year (most recently issuing Carlyle US CLO 2023-5 in November) and priced six US deals last year. It hasn’t issued a European CLO since September 2022.

A spokesperson for Carlyle declined to comment for this article.

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