CLO equity investor Pearl Diver Capital is in full-on expansion mode with the launch of new funds and the opening of its US office in New York.
The London-headquartered firm invests mainly in US CLOs, carving out a reputation in the last decade as one of the biggest majority CLO equity investors in the business. While retaining its focus on CLO investing, the firm has expanded its product range with a new open-ended fund focusing on CLO mezz. This fund launch marks Pearl Diver’s first evergreen fund with the firm best known for putting together private equity-style funds.
Pearl Diver founder Neil Basu has told Creditflux that the company’s footing as a key CLO equity investor will support its new CLO debt strategy. “We believe our significant presence in the control equity markets and active involvement in resets and refis allows us to scale efficiently into mezz investments, with ability to model calls/durations more accurately,” he says.
Pearl Diver has a track record of investing in CLO mezz through various funds. In fact its first fund, PDC Opprtunities 1, focused on mezz, but this was a closed-ended offering.
Officials at the asset manager also confirm that PDC Opportunities VII closed last week at roughly $250 million. It’s also understood that Pearl Diver is preparing PDC Opportunities VIII for the fourth quarter of this year. These private equity-style funds will primary focus on CLO equity tranches, like previous Pearl Diver opportunity funds.
Since its founding in 2008, Pearl Diver has been investing in the US CLO market from London. But it recently opened a New York subsidiary, welcoming new partner Tim Carroll who is tasked with building out this North American business. Carroll joined from emerging market credit specialist Moneda Asset Management, having worked at Bear Stearns earlier in his career.