This article explores some of the key arguments for investing in captive CLO equity, how it differs from third-party CLO equity investments, and why it can be particularly appealing from a CLO manager’s perspective.
Overall, based on 97 deals that have already been redeemed or are anticipated to be redeemed, EU CLOs have delivered good performance, with an average equity IRR of 12.5%. This success can be attributed to a combination of factors, including disciplined issuance spurred by risk retention requirements, resets of more seasoned deals such as those from 2014 and 2015, the resilience of the underlying loan performance, the expertise of the managers, favourable CLO liability costs, and attractively priced assets, among others.
As reported by PitchBook LCD, Tikehau plans to liquidate Tikehau CLO, its debut 2015 vehicle, which was reset in 2021.
As reported by PitchBook LCD, BlackRock is considering liquidating BlackRock European CLO VI, a 2018 vintage that exited its reinvestment period in April 2023.
The estimated final equity IRRs for GoldenTree Loan Management EUR CLO 3 and Harvest CLO XIX are approximately...
Based on a sample of 75 EU CLO deals that have either already been redeemed or are expected to be fully redeemed soon, CLO equity tranches from the 2020, 2022, and 2023 vintages stood out, delivering impressive final IRRs supported by strong equity NAV metrics. As shown in the table above, their average equity NAVs exceeded 100%, highlighting robust performance.
