DFG closes CLO, reaches first close on strategic fund

New York-based Dundee Wealth spin-off issued a CLO and made preparations for future risk retention compliance.  

DFG Investment Advisors announced last Monday (20 June) that it had closed its fourth collateralised loan obligation (CLO) transaction at $406 million. Goldman Sachs arranged the transaction on Vibrant CLO IV, which closed on 10 June, according to a statement.

The vehicle has a non-call period of two and a half years, a reinvestment period of four and a half years and is not risk-retention compliant.

Seven classes of notes rated AAA/Aaa through Ba3 were placed in Vibrant CLO IV, which has a maturity date of 20 July, 2028. The largest portion of the issuance ($236 million) is in class A-1 senior triple-A/Aaa rated notes priced at Libor plus 165 bps with a discount margin of 170 bps. The rest of the capital structure is comprised of:

$24 million in Class A-2 junior triple-A/Aaa rated notes with an undisclosed interest rate and discount margin;

$42 million in Class B Aa2 rated notes priced at Libor plus 240 bps and a discount margin of 255 bps;

$21.6 million in Class C A2 rated notes priced at Libor plus 330 bps and a discount margin of 360 bps;

$22.4 million in Class D Baa3 rated notes priced at Libor plus 450 bps and a discount margin of 575 bps;

$20 million in Class E Baa3 rated notes with an undisclosed interest rate and discount margin;

$40 million in subordinated notes.

In the same announcement, DFG said that it had reached a $100 million first close on a strategic fund, the firm's first such fund. The fund will be used to provide capital for warehouse financing and risk retention compliant CLOs, among other initiatives.

“The CLO management landscape is undergoing a sea change,” said DFG founder Volkan Kurtas in the statement. “Risk retention rules taking effect at the end of 2016 will accelerate this process,” he said.

A DFG representative declined to provide more detail about investors in the fund.  

DFG is an asset-management firm with $2.5 billion in corporate and structured credit assets under management through commingled funds, separate accounts and CLOs. The New York-based firm was established in 2006 as part of Canadian mutual fund company Dundee Wealth and spun out in 2008.

DFG's chairman is Phillip Darivoff, who spent 27 years at Goldman Sachs before being named chairman of DFG and its parent company Vibrant Capital Partners in 2013. During his career at Goldman Sachs, Darivoff held various positions including head of capital markets, co-head of the corporate bond department and chairman of credit capital markets.

In late 2014, DFG announced it had hired Goldman Sachs veterans Roberta Gross and Timothy Milton as senior members of the firm's leveraged loan platform.