Carlyle Group LP, the Washington-based private-equity firm, is in talks to buy Highland CapitalManagement LP��s unit that manages $3 billion in collateralizedloan obligations in Europe, according to two people withknowledge of the matter.
The companies haven��t come to an agreement and may notreach a deal, said the people, who declined to be identifiedbecause the sale isn��t public. Highland first put the portfolio,which includes five CLOs, up for sale earlier this year.
Carlyle is joining buyout firms such as Blackstone Group LP (BX)in leading an expansion into the European CLO market bypurchasing existing investments as the ability to raise newfunds remains challenging. There have been $11 billion of CLOsbacked by widely syndicated loans issued in the U.S. this year,while only one 858 million euros ($1.1 billion) fund was raisedin Europe, according to data compiled by Bloomberg.
Carlyle has been buying loan funds in the U.S. Last monthit said it bought Churchill Financial LLC to increase itslending business.
Earlier this year Carlyle acquired a $500 million CLO fromWells Fargo & Co.��s Foothill Group Inc. unit. It previouslybought CLOs overseen by Mizuho Alternative Investments LLC��sU.S. loan management business Mountain Capital Advisors andpurchased loans and other credits from Stanfield CapitalPartners LLC, Bloomberg data show.
CLOs are a type of collateralized debt obligation that poolhigh-yield, high-risk loans and slice them into securities ofvarying risk and return.
Blackstone��s European CLO
Natixis SA is advising Dallas-based Highland on the sale.Stefan Prelog, an outside spokesman for Highland, and RandallWhitestone, a Carlyle spokesman, declined to comment.
GSO Capital Partners LP, the debt unit of Blackstone,became the largest manager of CLOs in Europe after acquiringDublin-based Harbourmaster Capital Management Ltd. in earlyOctober, tripling its European loans under management to 11.5billion euros.
Highland would join ! Aladdin Capital Holdings LLC andResource America Inc., in selling their European CLOs as manyU.S. investors exit the European market.
Pramerica Investment Management Ltd., Prudential FixedIncome��s U.K.-based asset management business, took over a CLOmanaged by an Aladdin Capital subsidiary, according to a Jan. 10news release. Resource America said its subsidiary ResourceEurope Management Ltd., sold a CLO to an affiliate ofIntermediate Capital Group Plc, according to a Dec. 22 newsrelease. New York-based investment manager Octagon CreditInvestors LLC also sold its European CLO this year.
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