Market quiets; CLO manager consolidation continues; Man Group to acquire Silvermine

By Cristal Cody

Tupelo, Miss., Dec. 17 – Activity continues to thin ahead of the Christmas Day holiday in the CLO market, with some deals still in the pipeline likely to come after the new year, according to sources on Wednesday.

The CLO primary market is ending the year with more than $152 billion of transactions priced in the U.S. and European spaces, according to data compiled by Prospect News.

CLO management consolidates

Reports of consolidation among CLO management firms was the focus in Wednesday’s session following Man Group plc’s announcement that it will acquire Silvermine Capital Management LLC.

Man Group said in a statement that the rationale for the deal includes “significant enhancement of Man Group’s existing U.S. credit business and global CLO footprint, providing the necessary scale to become a significant player in the U.S. CLO market.”

Silvermine, a Stamford, Conn.-based employee-owned asset management firm formed in 2006, has $3.8 billion of funds under management across nine active CLO structures as of Nov. 30.

Silvermine Capital priced three U.S. CLO transactions year to date, including most recently the $879.1 million ECP CLO 2014-6 Ltd./ECP CLO 2014-6 LLC offering on Aug. 27. The asset management firm brought one CLO deal in 2013.

“The acquisition of Silvermine will transform our existing credit business and position us to benefit from strong demand for U.S. CLOs and other credit strategies,” Mark Jones, co-chief executive officer of Man GLG, said in the statement.

Man Group said it will pay $23.5 million in cash up front and two cash payments payable on the first anniversary at closing of up to $16.5 million and on the fifth anniversary of closing of up to $30 million.

Silvermine will be integrated into Man GLG and will operate under the Man GLG Silvermine name.

The acquisition is expected to be completed in the first quarter of 2015.

The transaction follows Man Group’s acquisitions in the U.S. market of Pine Grove Asset Management LLC, Numeric Holdings LLC and the Merrill Lynch Alternative Investments LLC fund of hedge fund portfolio.

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