Livermore Investments a specialist in Collateralized Loan Obligations, has taken a majority equity stake in Ares 61 - Ares Managements’ latest $500 million CLO which closed on 30 September 2021.
The transaction, arranged by Nomura Securities, priced with a competitive weighted average cost of debt of Libor + 1.61 percent. The CLO has a five-year reinvestment period and will be managed by Ares Management, one of the largest and most experienced CLO managers, with over $28 billion of CLO AUM. Livermore’s controlling equity also comes with the options to refinance the debt or reset the CLO to enhance value, as it has done across other CLO positions on several occasions this year.
This latest move from Livermore’s recent CLO deal with Blackstone, one of the world’s major players in this space
Livermore’s management team is led by industry veterans Ron Baron and Gaurav Suri, under which Livermore Investments Group has achieved gross IRRs in excess of 20 percent over the last ten years. The firm also recently reported an increase of over 18 percent on the CLO-related portfolio in its first half 2021 results.
Gaurav Suri, investment manager at Livermore Investments, said: “CLOs are finally being recognised as a mainstream asset class following their resilient performance through several credit cycles, including the turbulent Global Financial Crisis and the ongoing COVID-19 pandemic. The projected low-default environment combined with investors’ strong desire for yield is an attractive backdrop for new-issue CLO equity. Its high cash-on-cash return profile shortens the investment duration and its long reinvestment period allows CLO managers to add value from bursts of volatility.”