LibreMax to extend its CLO offering

The firm is under agreement to acquire KCAP’s CLO credit branch by the end of this year so KCAP can refocus on mid-market lending.

LibreMax Intermediate Holdings has entered into an agreement with KCAP Financial to acquire its collateralised loan obligation manager.

New York-based LibreMax expects to close the deal – in which it will buy Trimaran Advisors, Trimaran Advisors Management and Katonah Debt Advisors – by the end of 2018 in a $37.9 million transaction.

The deal is meant to expand LibreMax’s CLO offering, while allowing KCAP, a business development company, to refocus on its mid-market lending strategy. The vehicles will retain their independence and their management teams.

LibreMax declined to comment while KCAP had not responded to a request for comment by press time.

Trimaran currently manages six different CLOs with around $3.2 billion in assets under management, as of the end of the third quarter. The majority of the loans in the portfolio are diversified secured or unsecured corporate loans, according to documents filed with the Securities and Exchange Commission.

KCAP acquired Trimaran in 2012 for $13 million in cash and 13.6 million shares of common stock. KCAP currently has $47.98 million invested in CLOs.

KCAP is a New York-based business development company that was formed in 2006. The firm’s net asset value was $4.66 as of the end of the third quarter. It invests in senior secured first-lien and second-lien loans, mezzanine debt and, occasionally, equity in mid-market companies.

LibreMax is a New York-based asset manager founded in 2010 that specialises in structured credit and has over $2.9 billion in assets under management.

This is not the first CLO credit branch acquisition this year. In June, THL Credit Advisors acquired the collateral management business of Kramer Van Kirk, which manages seven different CLOs worth $3.4 billion in assets.