US-based asset manager Angel Oak Capital has announced it has raised $1 billion of equity capital so far this year for non-agency residential mortgage credit.
The firm said it is seeing growing interest in non-bank and non-agency residential mortgage lending from institutional investors that are looking to diversify their private credit portfolios. As a result, it has been able to almost double its capital raising on a year-on-year basis.
LPs include a range of institutions including sovereign wealth funds, global pensions and insurance companies from across the world, investing in a mixture of comingled funds and separately managed accounts.
Manish Valecha, head of client solutions at Angel Oak, told Private Debt Investor: “Investors are continuing to build up their private debt portfolios and historically they’ve wanted corporate loan exposure. However, we believe investors are now looking for different types of exposure within that private credit bucket and US residential mortgages offers an attractive risk return profile.”
Angel Oak securitises the loans as bonds and in May this year the firm announced what it claims is the first non-agency, mortgage-backed securitisation issued in the US that qualifies as a social bond under the International Capital Markets Association’s social bond principles.
The AOMT 2021-2 securitisation was worth $231 million and was composed of 466 loans originated by affiliated mortgage lenders with an average credit score of 740 and loan-to-value ratio of 73 percent.
The firm is targeting being able to provide capital for approximately $20 billion of non-agency mortgage origination over the next three years as it aims to grow its market share in non-agency mortgages, which currently comprise around 5 percent of the US mortgage market.