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Analysis CLOs
Founding five get off to a famous start
by Tom Davidson
Canadian bank CIBC has big plans. In under a year, its new team has arranged a diverse set of CLOs, including middle market, private credit and broadly syndicated deals. Now it has set its sights on broadening the CLO market in Canada and becoming a top quartile player
It is an oft used truism that however large it grows the CLO market is still a people business. The rapid growth of Canadian bank CIBC’s CLO business is a great reflection of that. This is the story of how the five founding members of the CLO team came together at CIBC, and how they have grown from nothing to 28 transactions in less than a year.
The team began when the first two members, Brad Larson, head of structured products, and Gabrielle Garcia, head of CLO syndicate, moved from Credit Suisse to CIBC in May and June 2023. But the story began long before that.
CIBC team
Brad Larson
Head of structured products
Credit Suisse 2010-23
Hexagon Securities 2009-10
ACA Capital 2002-09
Gabrielle Garcia
Head of CLO syndicate
Credit Suisse 2018-23
Citi 2012-18
Genevieve Hagedorn
Structured product syndicate
Natixis 2018-23
András Gajdos
CLO structuring
Morgan Stanley 2016-23
Budapest Stock Exchange 2013-16
Bogomil Ivanov
Head of CLO structuring
Societe General 2017-18
Seer Capital 2008-17
Deutsche Bank 2000-08
Warehousing and buying triple As
While CIBC was not involved in the arranging of CLOs over the past ten years, the bank is not new to the product. Over the past five years, it has been buying triple As (led by Milt Bonellos), financing CLOs via repo, and providing CLO warehouses for a variety of managers. By late 2022 Credit Suisse had been working with CIBC for four or five years on warehousing. It was then, during a conversation between Larson and Conrad Santos — head of global credit financing at CIBC — about a more strategic financing relationship, that the relationship took an unexpected turn.
Larson says: “The next day Conrad called to ask if I was interested in joining CIBC to lead the securitisation build out. I wasn’t thinking about leaving CS at that point, but it did get me thinking.”
A few months later Larson said yes. “For me, what was compelling about CIBC was that the culture felt good. They were already active in the CLO market, they understood the assets well, but more than that, they just had a really positive energy.”
From the start Larson wanted Garcia on the team. “I don’t want to embarrass her, but I think Gabby is one of the best syndicate people in the market, and I very much wanted her to be part of the team. And once Conrad had an opportunity to get to know her, he wanted her to be a part of the team as well.”
For Garcia, the move was an opportunity to experience building a business. “Brad and I work so well together, and he had already built a premier CLO business at CS. I knew that if I wanted to learn how to build a business, it had to be with him. It’s been awesome. Every time we price a deal I can’t believe that we’re doing this.”
Expertise in private credit CLOs
The third hire for the team was Genny Hagedorn. By then Garcia and Larson knew they wanted to be more involved in private credit CLOs this time around. Hagedorn worked in syndication at Natixis, one of the leaders in that market, so was a natural fit to provide the expertise they needed.
Finding the right structurers was also of critical importance to Larson. “Sell side structuring is a challenging role that requires organisation, effort and extreme detail orientation, so it was important we found people that not only bring a lot of experience, but also love to structure,” he says.
When CIBC starting looking for people that fit those criteria, one of its old clients at Credit Suisse pointed it to András Gajdos. Garcia says: “When we met him it was a no-brainer. He brings an elegance to his structuring. It can be pretty stressful the day before pricing, but he’s always cool and calm.”
The last of the original five to join was Bogomil Ivanov, who was brought in from SocGen to lead the structuring team, and was another obvious choice for Larson. “Bogie brings 20-plus years of structuring experience via the buy side and sell side,” he says. “The knowledge he brings to our managers — it’s amazing. We feel so fortunate to be working alongside him. He teaches us every day. He has a relentless work ethic, and is most certainly the best modeller on the street.”
Every time we price a deal, I leave the office incredibly proud
Gabrielle Garcia
Head of CLO syndicate
CIBC
Building a new business
A core part of the recruitment pitch for Ivanov, Gajdos and Hagedorn was the idea of becoming a founding member of the CIBC team. For Larson, the opportunity to start and build a business is significant. Doing it at an established bank makes it entrepreneurial, but in a safe setting.
“Even as the world heads more in the direction of AI, I believe people still matter,” he says. “I believe the people who structure your deals matter. And the people who syndicate your deals matter. Who our clients call on a daily basis matters a lot. So, we really took a lot of time, and we interviewed a lot of people. Thanks to that, we have a really good team of people who want to be transparent and accessible. We try to answer the phone on the first ring, no matter what time of day. We have people who want to do good work and people who care about reputation.”
CIBC’s expertise as a triple A and warehouse investor is also people driven. This is due to Milton Bonellos, a CIBC veteran who has been with the bank for more than 26 years. But Larson is keen to point out that in the new-issue market CIBC has also had success raising majority equity positions for two managers who didn’t have captive equity available.
We really took a lot of time, and we interviewed a lot of people
Brad Larson
Head of structured products
CIBC
Targeting new types of CLO
So what’s next for the founding five? They have already arranged a diverse set of deals, including middle market, private credit and broadly syndicated CLOs, but are looking to expand that. The bank recently won a mandate for its first infrastructure CLO, a sub-asset class that Larson expects to grow.
Beyond that, the team has ambitions to advance the CLO market in Canada, which they point to as being relatively under-served. Garcia has already made a number of trips to help educate Canadian investors, and has brought several new names into the market.
Garcia says: “We want to be a top-quartile player in the CLO market. We acknowledge how lucky we are to have managers like Onex, Trinitas and Irradiant who demonstrated tremendous faith and loyalty to us in our first few months of the business.”
CIBC
- Headquarters: Toronto, Canada
- Founded: 1867
- Total assets: $1.021tn*
- Year-to-date CLO arranger volumes
US BSL CLOs: $8.32bn**
US MM CLOs: $1.12bn**
*As of 3Q24, source CIBC **As of 30-Sep-24 source Creditflux
