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3i boosts debt portfolio with €2bn CLO deal

3i Group has agreed its first deal under new chief executive Simon Borrows, with its debt arm adding €2bn to its portfolio through the acquisition of seven CLO contracts from Invesco.

3i Debt Management, the debt arm of London-listed private equity manager 3i Group, has acquired seven collateralised loan obligation contracts worth €2 billion from Invesco.

The deal is the first to be agreed following the promotion of Simon Borrows from chief investment officer to chief executive in mid-May.

The CLOs acquired from Invesco are primarily invested in sub-investment grade debt issued by companies in Europe, 3i said in a statement.

3i joins other large asset managers who have been actively bolstering their debt portfolios. In February, the Carlyle Group acquired four management contracts for €2.1 billion-worth of European CLOs from Highland Capital Management, bringing its CLO assets under management to $16 billion. It was Carlyle's first foray into the European CLO market.

The deal with Invesco brings 3i Debt Management’s overall assets under management to €6 billion. Its team has grown to 30 personnel, all based in London. Following this deal, it manages 17 funds including CLOs, mezzanine and managed accounts, together with its recently-launched Palace Street I credit opportunities fund.

“This transaction reinforces our commitment to growing our debt management business and ensures we are well-placed to capitalise on future opportunities,” Jeremy Ghose, managing partner and 3iDM chief executive, said. “We continue our search for a US platform in line with our strategy of playing a leading part in the consolidation of the debt market and creating a global credit platform of size.”

3i’s push into debt investing came during previous chief executive Michael Queen’s tenure. In 2010, 3i acquired Mizuho’s debt management business for £18 million.