BlueMountain closes $1.3bn multi-asset fund

Summit Opportunities Fund II will target a 15 percent allocation to CLO equity as the firm develops its securitisation platform and ramps up its first European CLO.

BlueMountain has closed its second multi-asset opportunity fund on $1.3 billion of capital commitments. The remit of BlueMountain Summit Opportunities Fund II includes public corporate credit and equity, securitised assets, real estate, private debt and equity.

The vehicle will invest up to 15 percent of its capital in BlueMountain CLO equity, but does not have weighting targets for specific instruments, PDI understands. The first Summit Opportunities Fund was 35 percent invested in private debt and approximately 50 percent of the vehicle focused on distressed investments (debt and equity). 

The strategy aims to take advantage of low liquidity and high complexity to produce target net returns of 12-15 percent. The fund is unlevered. 

Investments are sourced by a number of different teams within BlueMountain. One private debt deal executed by Summit Fund II saw a $100 million secured loan to Seventy Seven Energy, which was sourced by the firm’s distressed investment team. 

“The fund’s broad investment mandate and its long-term draw down structure enable us to invest opportunistically over a five- to nine-year time horizon. We will patiently deploy capital and believe our distinctive integrated investment process will capitalise on opportunities found in the ‘white spaces’ between traditional asset class silos,” said Stephen Siderow, co-president and co-founder of BlueMountain.

The new fund will actively invest in BlueMountain’s own CLO platform, focusing on the equity tranches to capture the premium offered by the unrated slice of the securities. 

CLO RISK

BlueMountain is also currently ramping up its first European CLO. JPMorgan is helping arrange the deal, which is expected to price by the end of the year or early 2016. To comply with European risk retention rules for CLOs and similar guidelines coming into force in the US, BlueMountain’s investors will hold pieces of CLO equity via both funds like Summit Opportunities Fund II and the BlueMountain CLO manager. 

“Our investors will hold the CLO equity through our funds and there will also be a new CLO manager that they will own. So our investors will hold the equity of the manager that [in turn] holds the equity in the CLOs,” Siderow explained to PDI.

BlueMountain Capital Management has $22 billion in assets under management. It manages 12 strategies with around 100 investment professionals based in London and New York.