Tetragon Credit Income Partners has held a final close on its latest CLO fund.
The New York-based firm said on Wednesday that it closed on more than $430 million for Tetragon Credit Income III. This new fund will focus on the firm’s existing strategy of investing control equity positions into US-based CLOs, Mike Pang, a portfolio manager at Tetragon, told Private Debt Investor.
“That is a strategy that has worked well for us for 14 years now,” he said. “Our bread and butter is trying to create control positions in the primary market.”
Pang said that while this is the firm’s usual CLO strategy, it sometimes seeks opportunities in other areas of the capital structure that would fit its set return goals, depending on the market conditions.
“You’ll see us tend to go with managers who are primarily protecting against downside risk in their portfolio,” Pang said.
Fund III has already begun deployment since its first close on more than $254 million at the beginning of 2018. The exact percentage of deployment is undisclosed, but Pang said the firm has been active in the market since.
He predicted a slower CLO market this year than last, due to strong pullback from investors. There was a sluggish start in CLO activity at the beginning of 2018, as was the case this year. However, the market picked up considerably last year, Pang added, noting that he doesn’t see a catalyst yet that may spur that to happen again.
“We think that is a good thing, we are managing multi-manager funds, and we are patient and opportunistic,” he said.
Fund II closed in 2017 on just under $350 million and is completely deployed, according to Pang.
Tetragon Credit Income Partners is part of the broader TFG Asset Management – a global asset management firm with more than $28.1 billion.