Healthcare of Ontario Pension Plan and CIFC have teamed up to make $375 million of equity investments to support the firm’s new CLO issuances.
Through the alliance, dubbed CIFC Strategic Partners II, the Canadian retirement plan agreed to take majority positions in the CLOs, to be issued by the New York-based structured credit manager. HOOPP made a $300 million commitment, according to a US Securities and Exchange Commission regulatory filing, while CIFC put forward $75 million, which will support $7.5 billion of new issuances in the coming years.
CIFC co-chief executive officer Oliver Wriedt said in the statement that the partnership will “help [HOOPP] gain access to the new issue CLO opportunities that lie ahead”, adding the arrangement will be “mutually beneficial… for years to come.”
The firm declined further comment.
The new fund is a capitalised majority-owned affiliate that was formed specifically to address the new capital requirements of US and EU risk retention rules, the statement said.
CIFC has used the majority-owned affiliate hybrid structure in the past. But the structure is fairly atypical in the CLO market, where capitalised manager vehicles and other structures are more common, Wriedt told Private Debt Investor in June.
The first investment from the fund will be for CIFC’s next CLO, CIFC Funding 2017-V, a source familiar with the situation said. Year-to-date, CIFC has issued $2.9 billion across four CLOs, stepping up its issuance dramatically from 2016, when it only issued a single new deal in December following the sale of the firm.
CIFC raised a total of $117.3 million for its first CIFC Strategic Partners to support the first four CLOs issued this year, according to an SEC filing. The capital was raised from CIFC’s balance sheet and one third-party investor.