The railcar leaser ITE has brought on Tod Trabocco, formerly of LP gatekeeper Cambridge Associates, to work on business development initiatives.
The New York-based industrial and real assets investment firm is seeking to expand its business, which will be a core focus of Trabocco’s. Specifically, he will also aid in investment communication and reporting and developing strategic initiatives in the areas of product development, marketing, external partnerships and relations.
The firm launched in 2007 and initially focused on railcars. It has raised $1.14 billion for its railcar funds, which operate in a hedge fund structure. Several years ago, the firm developed an aircraft leasing strategy and it works closely with Air Lease Corporation; ITE provides balance sheet financing for midlife aircraft through the partnership. ITE is also exploring other strategies that focus on productive real assets.
“Direct lenders have introduced the world to private credit,” Trabocco said. “The challenge is trying to talk to LPs about railcars in a way they understand and view the opportunity through the corporate lens. LPs now are not just buyers of LP interests; they want to partner more closely with GPs like ITE to create opportunities and vehicles that better reflect the investment opportunities.”
Trabocco moved into the world of specialty finance after spending much of his career in corporate credit, including roles at Kayne Anderson Capital Advisors and LBC Credit. At his previous post at Cambridge Associates, Trabocco worked with specialty finance fund managers as well as corporate credit shops. The former area, he explained, is on the rise and he sees it as the future of private credit.
According to PDI Perspectives 2020, our annual LP survey, more investors plan on increasing their exposure to specialty finance than reducing it: 13 percent to 9 percent, respectively. Most LPs invest in those strategies on an opportunistic basis, while 22 percent plan on keeping the same amount invested. In addition, 34 percent plan on committing to aircraft leasing in the next 12 months.
Trabocco also noted that there is a client shift in his new role. The largest client in his old role at Cambridge Associates was a large southeastern US pension plan, but many of ITE’s clients are not just large plans but also family offices and high-net-worth individuals.
“The real assets we focus on – and we call them productive real assets – have unique financial and operational characteristics different from typical PE or credit. If you understand these assets, they can hold tremendous long-term value for LPs.” In making the case for railcar leasing as a strategy, Trabocco emphasized the stable cashflow and portfolio diversification.