Permira Credit plans US CLO expansion

Michelle D'Souza

6 December 2023•3 min read

This article is part of our new service, 9fin Structured Credit, which will soon require a separate subscription to view. For more info on this product and the accompanying database, contact subscriptions@9fin.com

Perrmira Credit is looking to take its CLO management platform global by launching a US business to go with its European CLO franchise, according to sources.

The firm is understood to have been taking meetings with banks at the Opal CLO conference in California this week in order to find an arranger for its first deal, one source said. 9fin understands Permira is aiming to price its first US CLO next year, likely in the second quarter.

This development comes after Ariadna Stefanescu, the firm’s head of liquid credit, was promoted to interim chief executive officer of Permira Credit in September. Stefanescu's background is in European CLOs (she leads Permira's CLO management and investment businesses), but she has for the last few years been based in California.

London-headquartered Permira launched its first CLO in November 2007, PDM CLO 1. However, the timing was far from ideal as credit markets crashed over the next year.

In the early 2010s European CLO management was put on the back burner and instead Permira pooled resources into CLO investing, raising a series of Signa funds.

But in 2018, Permira relaunched its CLO management business and it did so with an emphasis on ESG. When Providus CLO I priced in March 2018, Permira stated: “Providus CLO I is believed to be one of the first CLOs in Europe to contain ESG eligibility criteria, including restrictions on the nature of industries in which the fund will invest and a commitment to assess ESG issues ahead of the investment decision.”

This transaction popularised 'ESG' CLOs. In fact, some CLO managers replicated exactly Permira's ESG template for their own transactions.

Today, the Providus CLO management platform stands at €3.45bn. This year, Permira has priced two European CLOs, Providus CLO VIII and Providus CLO IX via Jefferies in March and October respectively, with the firm understood to have attracted minority equity in its deals.

With the last of those deals, Permira's CLO ESG guidelines have evolved. 9fin reported that Providus IX had stricter ESG language, with the firm not permitted to invest in borrowers which have any revenues derived from alcohol.

European CLO managers expanding into the US is rare, but not unheard of.

Last year, BlueBay Asset Management expanded into US CLO management with BBAM US CLO I in February. In 2021, Tikehau expanded into the US with Tikehau US CLO 1, while in the same year, CQS expanded into the US with CQS 2021-1 and Capital Four launched Capital Four US CLO I. Polus are also looking to launch in the US.

US CLO managers expanding into Europe is more common. This year, for example, US CLO manager AB CarVal debuted in European CLO management.

There are several other US CLO managers looking to expand on the continent. Fortress, for example, has opened a European CLO warehouse. The firm recently hired former ThinCats and Fair Oaks leveraged loan portfolio manager Dean Graham.

Muzinich is also understood to be expanding into European CLOs, as well as Nuveen. Schroders has historically bid on a few European CLO platforms though it is unclear if the firm is still trying to enter the space.

As 9fin reported last week, the US CLO manager base is still expanding with Macquarie the latest firm eyeing US CLOs.

A spokesperson for Permira declined to comment.