David L. Babson & Company is said to be coming to market with a new collateralized loan obligation, the first one since completing the acquisition of Wachovia's institutional leveraged loan asset management business, First Union Institutional Debt Management (IDM). Drew Dickey, managing director at Babson, could not confirm or deny Babson is doing a deal as "any CLO would be a private placement." But, he added, "Certainly, it is fair to say the acquisition of IDM enhanced Babson's ability to complete deals when it is prudent."
One analyst noted he would be interested to see how the new deal would be done, considering the particular investment styles of the former IDM and Babson teams. "IDM had a very clear investment philosophy. Very credit based and best value," said the analyst. "[John] Wheeler, a managing director, has a very good record [with Babson], but he has a particular investment style that is based on niche industries," he added. The investment style can make a difference with investors, he said.
Dickey disagreed with the suggestion that the styles are that fundamentally different, noting that "There are different perspectives on the style of a manager, but the IDM acquisition was attractive for Babson as we thought their style was similar." He pointed out that as a large organization, IDM maintained traders who continually talked to the market. "As a result they may have had more visibility in the secondary market, whereas Babson may have been perceived as more of a primary market player," he suggested. He referred more specific questions on the old IDM's style to Tom Finke, president of IDM. Finke did not return calls by press time.
The acquisition of IDM's business expands Babson's leveraged loan asset management activities, adding $3.7 billion in assets under management.