Katonah Debt Advisors hired Dayl Pearson from CIBC World Markets to serve as the portfolio manager for its new middle-market collateralized loan obligation, and hired Jon Corless from Trimaran Advisors as a senior credit manager focusing on middle-market assets. Pearson started last Monday and Corless started last Thursday. Katonah, which is owned by Kohlberg & Co., is currently warehousing its first middle-market fund, Bedford CLO 1.
"Both have substantial experience in the middle market," said Chris Lacovara, a principal at Kohlberg, about the hires. "Dayl is a very experienced middle-market banker, having built high quality portfolios at several leading institutions...He is someone who has been in the middle market for much of the last 15 years, someone with deep contacts, which will allow us to source high-quality assets. Jon is someone who is more on the credit side and has worked on a variety of credits in the middle market as well as liquid loans and high yield and has a substantial background."
Lehman Brothers has been engaged to provide the warehouse line and to structure and raise the funds for the new middle-market portfolio. Pearson anticipated the group would begin warehousing today and Lacovara said the group is targeting a third quarter launch. The fund is targeted at $400 million. Lacovara said the focus will be on middle-market loans with some allocation for larger syndicated loans and second liens. E.A. Kratzman, Katonah's portfolio manager for CLOs invested in syndicated loans and bonds, will serve on the credit committee for the Bedford Fund.
Lacovara said the group chose Lehman Brothers because of its team and its middle-market experience. "We talked to four or five different banks and felt Lehman had a structure we liked," he said. "They were very enthusiastic and did some things in the middle market we liked."
On top of preparing for its first middle-market CLO, Katonah is also preparing Katonah 8 that Goldman Sachs is underwriting. Kratzman is the portfolio manager for that fund, which is targeted to be in the $400-450 million range (CIN, 1/27). Expecting to have assets of $1-2 billion under management by the end of the year, Lacovara anticipates hiring three more analysts by June; one senior hire and two more junior hires.
At CIBC, Pearson most recently worked in leverage finance and sponsor coverage. He said he and Kohlberg & Co. had had discussions on and off for a long time about their interest in doing something in the middle market. "I think that all came together in their minds in the last couple of months and they came to me and asked if I was interested," he said. "I thought this was a great opportunity, working with people who know the middle market."