York Capital Management is launching a new strategy in January that will initially target mezzanine tranches and equity components of US collateralised loan obligations.
The New York-based firm is seeking $2 billion for its York Structured Credit Opportunities Fund, according to meeting materials from the San Bernardino County Employees’ Retirement Association. The vehicle, in addition to CLOs, will also invest in European CLOs, CLO warehouses, synthetic credit default swap tranche trades and collateralised debt obligations.
A York representative could not be reached for comment.
Investments will be made on both the primary and secondaries market. SCOF can invest in York CLOs, but to prevent conflicts of interest, the fund will waive fees, for either the fund or the CLO being invested in; provide pricing transparency; and limit the amount of primary issuance into which the fund can deploy capital.
The documents show York will contribute $5 million to the fund. The fees are in flux, though SBCERA expects to pay a discounted rate. It is anticipated the pension fund would pay a management fee of 1.25 percent, though whether that figure would be on committed or invested capital was not specified. The fund’s carried interest is 20 percent, which may be subject to an unspecified hurdle.
The SCOF has an initial lock-up period of two years, and after that period, investors can withdraw their money on yearly on their investment anniversary after giving York 120 days’ notice.
The firm, in which Credit Suisse holds a minority stake, has issued $1.95 billion across four CLOs, according to an investor presentation. The firm closed a $400 million CLO in January 2015; a $500 million CLO in September 2015; a $650 million CLO in June 2016, which was reset in August of this year; and a $400 million CLO in December 2016.
Founded in 1991 by Jamie Dinan, the firm managed $17.2 billion in assets and has offices in Hong Kong and London, in addition to its New York headquarters.