Pearl Diver Capital is expanding its business into SRTs, according to 9fin sources. The firm has held a close on its first SRT strategy, Pearl Diver Aquanaut Fund, which is structured as an open-ended global interval fund, the sources said.

The fund has a target size of $1.5bn and will invest in SRT first-loss and mezzanine tranches (in much the same way as Pearl Diver invests in CLO equity and mezz).

This marks a big milestone for Pearl Diver, which was launched in 2008 and has spent the last 17 years specialising in CLO investments. One of its earliest strategies was investing in majority CLO equity slabs, before it added junior and mezzanine tranches to the mix (across US and Europe). In recent years it has further developed its fund line-up, establishing a public vehicle — NYSE-listed Pearl Diver Credit Company — to invest in CLOs.