New CLOs help 3iDM maintain AUM

The resurgent CLO market meant 3iDM was able to increase its AUM slightly to £6.5bn through raising four new vehicles to replace those reaching the end of their reinvestment periods.

UK-listed 3i Group’s debt arm, 3i Debt Management, has warehousing facilities in place in preparation for the launch of two more CLOs after a busy 2013, the group announced in its annual results on Wednesday.

3iDM broadly maintained its assets under management last year, following the launch of its first new European CLO since the group’s inception in 2011. Harvest VII added €310 million to the group’s AUM and was followed by a second new European CLO, the €425 million Harvest VIII.

The firm also launched two new CLOs in the US totalling $900 million.

All four CLOs helped 3iDM’s AUM to £6.49 billion as of 31 March 2014, a small rise on the £6.44 billion on the same date last year. The new CLO launches were offset by a number of its existing vehicles reaching the end of their re-investment periods and moving into distribution mode.

3i Group itself invested £61 million in in three of the four new CLOs, compared to its total investment of £23 million a year earlier in 3iDM’s funds.  

Jeremy Ghose, chief executive of 3iDM, said in the results statement: “Successful CLO fund launches, as well as continued strong track records in both Europe and the US, position the business for further growth.”

Fee income from third parties increased to £32 million from £31 million a year ealier, 3iDM said. With Europe accounting for 78 percent of that total.

Its gross investment return was £16 million, or 20 percent of the operating portfolio, compared to £14 million and 33 percent a year previously.

The firm said its priorities for the year ahead were to continue to manage existing funds to maintain its strong track record, raise new CLOs in Europe and the US to replace those maturing in its existing portfolio, and focus on costs to ensure fees exceed operating expenses. It will also consider “further inorganic growth opportunities, or diversification, where fee income from acquired management contracts or platforms would be incrementally profitable”.

3iDM manages 13 CLOs in Europe, nine in the US and eight others including two warehousing vehicles. 3i has committed £80 million to those warehousing vehicles, one in the US and one in Europe, in order to support the creation of portfolios ahead of future fund launches.