1. Risk retention – who’s done what
Sayed Kadiri
Creditflux
bit.ly/investorsummit

2. Rank Manager
2.0 AUM
($bn)
Annual growth
($bn)
Annual risk retention ($m)
1 CSAM 13.25 2.56 128.06
2 Ares 11.81 2.28 114.00
3 Carlyle 11.67 2.32 116.00
4 GSO 11.22 2.14 107.04
5 Apollo 10.65 1.89 94.72
6 CIFC 9.85 1.79 89.30
7 PGIM 9.70 2.20 109.83
8 Octagon 9.52 2.14 106.89
9 Golub 8.76 2.15 107.50
10 BlueMountain 8.14 1.59 79.52
Rank Manager
2.0 AUM
($bn)
Annual growth
($bn)
Annual risk retention ($m)
11 Voya 7.95 1.62 80.76
12 MJX 7.54 1.77 88.71
13 Och-Ziff 7.50 1.76 88.24
14 Bain 7.42 1.59 79.37
15 CVC 7.35 1.58 79.08
16 Oak Hill 6.72 1.29 64.55
17 Fortress 6.67 1.63 81.34
18 Sound Point 6.45 1.61 80.63
19 Guggenheim 6.41 1.27 63.48
20 Onex 5.95 1.40 69.89
The CLO market’s big hitters

3. Rank Manager 2.0 AUM ($bn) Annual growth ($bn) Annual risk retention ($m)
54 TPG 2.43 0.97 48.60
57 Triumph 1.90 0.76 38.00
88 Wellfleet 1.12 1.03 51.69
Risk retention-compliant CLOs

4. Rank Manager 2.0 AUM ($bn) Annual growth ($bn) Annual risk retention ($m)
54 TPG 2.43 0.97 48.60
57 Triumph 1.90 0.76 38.00
88 Wellfleet 1.12 1.03 51.69
• 46 managers have issued more than $3 billion of 2.0 CLOs
• 110 managers have printed at least one deal since 2010
• 72 US CLO managers have printed deals in 2016 and 40
managers have completed a risk-retention compliant CLO
Risk retention-compliant CLOs

5. CLO manager 3rd party investor
Majority-owned affiliate
CLO
85-90%
stake
10-15%
stake
Collateral
management
agreement
5% risk
retention
Option 1: MOA

6. CLO
manager
3rd party
investor
Majority-owned affiliate
CLO
85-90% stake10-15% stake
Collateral
management
agreement
5% risk retention
Pros
• Fairly quick and cheap to
establish
• It can be converted into a C-
MOA with relative ease
• There is limited impact on the
operations of the existing CLO
manager
Cons
• Typically, it does not comply
with EU risk retention
• Manager has to put in at
least 10-15%
Option 1: MOA

7. ZAIS Group 3rd party investor
Majority-owned affiliate
ZAIS Group
CLO
49%
stake
51%
stake
Collateral
management
agreement
5% risk
retention
Spotlight on ZAIS Group

8. 40/86: Credit manager for insurance company
Voya: Alternative credit manager with insurance business
Fidelity: Part of insurance and mutual fund family
Anchorage: Hedge fund manager
Marathon: Hedge fund manager
Och-Ziff: Hedge fund manager
Zais: Hedge fund manager
CSAM: Large credit manager, part of Credit Suisse bank
GSO: Large credit manager
TPG: Credit management arm of PE giant TPG
Angelo Gordon: Alternative credit manager
Black Diamond: Distressed, private equity and CLO manager
Octagon: CLO and structured credit manager owned by Conning
Sound Point: Alternative credit manager
Steele Creek: CLO manager owned by Moelis
Wellfleet: Credit management arm of PE firm Littlejohn
Who is using or planning an MOA?

9. Registered
investment
advisor
3rd party capital
Capitalised-majority owned affiliate
CLO
85-90%
stake
10-15%
stake
Management
services agreement
5% risk
retention
Collateral management
agreement
Option 2: C-MOA

10. Registered
investment
advisor
3rd party
capital
Capitalised-majority
owned affiliate
CLO
85-90%
stake
10-15% stakeServices
agreement
5% risk
retention
Collateral management
agreement
Pros
• From a US operations
perspective, relatively easy to
set up
• C-MOAs can be used to
comply with US and European
risk retention rules
Cons
• Dual-hatting of certain
employees is required
• Manager has to put in at least
10-15%
Option 2: C-MOA

11. Option 3: CMV
Existing CLO
manager
Master fund
CMV
CLO
100%
ownership
Management
services
agreement
5% risk
retention
Collateral
management
agreement

12. Option 3: CMV
Existing CLO
manager
Master fund
CMV
CLO
100%
ownershipManagement
services
agreement
5% risk retention
Collateral
management
agreement
Pros
• CMVs can be used to achieve
compliance with US and
European risk retention rules
• Manager is not obliged to put
any capital into the CMV
Cons
• Dual hatting of certain
employees is required
• Can be fairly time-consuming
and costly to establish
• Needs to demonstrate real
independence from original
manager – separate board,
credit committee

13. Spotlight on Napier Park
Napier Park Master fund
Regatta Loan
Management
CLO
100%
ownership
Management
services agreement
5% risk
retention
Collateral management
agreement

14. Who is using or planning a CMV
Apollo
BlueMountain
GoldenTree
Napier Park
Oaktree
Triumph Capital

15. Existing manager
3rd party
investors
New CLO manager
CLO 2
Majority stake
Minority stake
Sub-advisor 1
Sub-advisor 2
Sub-advisor 3
CLO 3CLO 1
Management
services agreement
The multi-manager solution

16. With thanks to White & Case, Dechert, Cadwalader,
Seward & Kissel, ZAIS Group and Napier Park.
For more information please contact Sayed Kadiri at
sayed.kadiri@creditflux.com