Investec is setting up a team to invest in European structured finance assets and hired Andy Clapham, the former head of securitization at Bear Stearns in London, to spearhead the effort. The team will manage and invest in collateralized debt obligations, residential mortgage-backed and commercial-mortgage-backed securities and leveraged loans, according to Clapham. Clapham, who reports to David Van Der Walt, head of Investec Treasury and Specialized Finance, plans to hire about 20 professionals for the new team. He left Bear Stearns early this year (BW, 2/14).
The plans come on the back of the growth of the ABS market in Europe, and Investec follows other asset managers which have recently honed in on the market. These include Cambridge Place Investment Management, which was founded by former Goldman Sachs ABS trader Martin Finegold, and Fortress Investments, which floated its European real estate fund Eurocastle last month. Clapham expects to start raising external money for an Investec ABS fund in early 2006.
The firm has been collaborating with asset managers and financial institutions on CDOs in the U.S. for the past three years, underwriting equity pieces and distributing the deals. For instance it worked with Wachovia Bank on the $263 million Gresham Street Funding CDO of CDOs in July 2003. More recently, Investec has been putting its balance sheet to work in the ramp-up phase of CDOs, said Van Der Walt.
Furthermore, the new team will capitalize on the expertise of other divisions within Investec, such as Investec Private Client Activities, which invests in equity and mezzanine pieces of property deals, and Investec Investment Banking, which has ramped up assets in connection with its acquisition finance activities.
Clapham reflected that now is a good time to be switching to the buy-side, as he observed the balance of power is shifting between investment banks and asset managers. "With 30 banks wanting to lead-manage deals, the margins are getting very thin; it's better to be in a position where you're controlling the underlying assets," he noted.
