The acquisition accelerates Highland's entry into the European loan market, which is attracting interest from U.S. money managers and private-equity firms. Last year, Babson Capital Management bought Duke Street Capital Debt Management, while The Carlyle Group is building a loan unit headed by Mike Ramsay. "It's an attractive market because the spreads are a little wider and as the institutional market is only 25%, they can get good allocations," said a U.S. portfolio manager. A European manager added that loan performance has been very strong over the past few years and since most of the collateral is from leveraged buyouts, the due diligence is high and this has led to lower defaults
London-based ICM has originated two CDOs under the Copernicus Euro CDO series. It was set up in 2000 and now manages approximately E650 million, but last month, ING put the U.S. loan business ING Capital Advisors (ICA) and the European arm on the block. One banker said bidders were offered the assets and the management contracts for ICM and in addition could bid on the overall business
ING is reviewing options for ICA because it is so specialized. It could not be determined whether the European business was sold for strategic reasons or the departure of key personnel, but a spokeswoman said some businesses that are not a core part of ING's strategy are being sold. In the past year Simon Hood, who ran the unit, left for European Credit Management. His replacement, David Wilson, moved last month to Eiger Capital. One London-based loan manager said commitment from ING was minimal, which played a part in the departures. "It's chicken and egg," he commented.
