Apollo sees value of diverse thinking in CLO investments

Sayed Kadiri

Editor

Officials at Apollo Global Management have praised the “diversity of thought” at Advent Capital after providing seed capital for Advent’s new CLO platform.

Apollo says Advent has a strong track record and provides a fresh perspective because it is a minority-led company and has a background in convertible bonds, which is not a traditional entry point into CLOs.

Advent’s chief investment officer, Tracy Maitland, believes the firm’s focus on downside protection and capital preservation can be applied across the capital structure of levered companies and has led to a deeper understanding of the value of companies.

“This disciplined approach also led to the launch of a successful high yield bond strategy in 2011, and Advent believes it can replicate this success with the launch of its CLO strategy,” says Maitland.

On the make-up of Advent’s team, Maitland says: “We strongly believe that different perspectives are critical to better outcomes.”

“Different perspectives are critical to better outcomes”

Tracy Maitland, Chief investment officer | Advent

Bret Leas, head of global corporate structured credit and ABS in New York, says Advent approached Apollo about supporting its ambitions in CLOs. “They have a different take on how they think about the world and we want to lever those ideas,” he says. “We all need to be open to other ways of approaching credit and working with people from different backgrounds.”

Leas says Apollo provides equity seed capital for a series of funds as well as infrastructure and recruitment, and brings strong relationships with CLO counterparties, including arrangers, which can drastically reduce set-up costs for newcomers. But it does not get involved with credit selection.

“All our third-party CLO managers independently manage their portfolios — we have no veto rights,” says Leas. “The arrangement only works if Advent is Advent. We just want to make sure we give people the opportunity to expand their business in a responsible way.”

Leas says Apollo has a mandate to prioritise “dependable, front-end origination”. It also runs a programme designed to promote diversity across the workplace, community and marketplace, without compromising on commercial value.

The firm has backed BlueBay, Diameter and Gulf Stream’s CLO businesses.

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Global credit funds & CLO's

July 2022 | Issue 247

Published in London & New York.