Columbia Exits CLO Biz As Flagship Crew Jumps To DeAM
The team of Flagship Capital Management is leaving the asset management firm to join Deutsche Asset Management (DeAM), a move that signals the exit of Columbia Management, the primary asset management arm of Bank of America, from the collateralized loan obligation business.
The team of Flagship Capital Management is leaving the asset management firm to join Deutsche Asset Management (DeAM), a move that signals the exit of Columbia Management, the primary asset management arm of Bank of America, from the collateralized loan obligation business. The six CLOs that Flagship manages, representing $2 billion of advisory assets at the end of 2005, will move to DeAM, but will continue to carry the Flagship name.
As first reported on CIN's Web site last Monday, B of A's decision to exit the loan asset management business was prompted by the team's decision to leave. A source explained that the team decided to move to DeAM, the global asset management business of Deutsche Bank, because the CLO business is more strategic to that firm. "Deutsche is active in the CDO business, but they don't have loan capability," he said. "They are looking to add that. " He added that although loans are a big part of B of A's business on the underwriting side, they are less strategically important to its asset management business.
Ty Anderson, who heads Flagship, will become managing director and global head of syndicated loans at DeAM. The team will be based in New York. Anderson will report to Bart Grenier, global head of special fixed income at DeAM. The transition of the team is expected to happen in the next couple of weeks, at which time they will become employees of Deutsche Bank. Grenier said Deutsche plans to leverage on the group's expertise. "We would consider using the firm's credit expertise to offer products in mutual fund form," he said. Anderson declined comment.
DeAM will serve as sub-investment advisor for the six CLOs and will perform all the management duties of the funds. Columbia will remain advisor of the business and hold primary responsibility for the investments with the client, said a Columbia spokesman. The financial terms of the deal were not disclosed. The spokesman would not comment on how long DeAM will serve as sub-investment advisor to Columbia. The Flagship business will remain an affiliate of Columbia, but the spokesman would not comment on the future structure of Flagship within the Columbia organization.
A Columbia spokesman said the transition of the CLOs to DeAM reflects the group's plan to focus on fixed income, which he said represents its core capabilities. "Over the course of the last couple of years, we have looked at various businesses. We wanted to focus on our core business where we have areas of expertise. Fixed income is more core because of the skills of our people and the size of the business." He added that the loan business has a relatively small asset base.