AIG makes dramatic return to CLOs with US manager acquisition

24 May 2018
 
Market sources say that AIG is embarking on a return to CLO management with the insurance giant acquiring Covenant Credit Partners. The transaction will see the entire Covenant team being absorbed into AIG, including managing partner and well-known CLO portfolio manager Marc Boatwright.

AIG has a long track record in the CLO market having previously managed the ‘Galaxy’ family of CLOs pre-crisis. In 2010 it sold its asset management arm, which at the time oversaw $89 billion of investments, to Pacific Century Group. That business included 11 CLOs (nine US deals and two European ones) and was renamed PineBridge Investments.

Although it disposed of its CLO management business, AIG remains a big investor in senior CLO debt tranches. In 2016, it decided to cut its exposure to hedge funds managed by third parties. Instead it has emphasised in-house fund management, illustrated by its acquisition of Covenant.

Charlotte-based Covenant was owned by Stream Companies, a Louisiana-based family office, after it purchased a stake in the firm back in December 2016 (see: Covenant finds new ally as family office capital flows into CLOs). Covenant oversees two CLOs, the most recent of which priced in August via Wells Fargo.

With Covenant onboard, sources say that AIG is expected to be a major force in CLO management. The firm has $498 billion in assets.
 
By Sayed Kadiri