Highland Capital Management has closed on its long-awaited acquisition of ING Capital Management's (ICM) European loan business from ING Wholesale Banking and is already planning to launch a collateralized loan obligation or a multi-strategy fund this year, according to Jack Yang, partner in New York. The firm also plans to expand its team in London, currently three-strong, by making new hires and re-locating staff from New York or Dallas.
Dallas-based Highland placed the winning bid last January after the field was whittled down to three from significant early interest (LMW, 1/21). The acquisition accelerates Highland's entry into the European loan market, which is attracting increasing interest from U.S. money managers and private-equity firms. "We're one of the largest providers of capital for leveraged buyouts in the U.S. and with U.S. private equity firms increasingly setting up shop in Europe, we want to be there to do business with them," Yang said. Highland has more than $14 billion in assets under management.
Yang said the take-off in European credit markets--anticipated since the introduction of the euro in 1999--has taken place. "We're witnessing credit developing in robust form in Europe--leveraged buyout activity has been bigger in Europe than in the U.S. for the past three years, and spreads on leveraged loans have been wider in Europe since 2002, making that market more attractive," he said. Moreover, the institutional investor base in Europe has matured with non-bank investors picking up more than 25% of leveraged loan transactions. Last year, Babson Capital Management bought Duke Street Capital Debt Management and The Carlyle Group set up a loan arm.
ICM has originated two CDOs under the Copernicus Euro CDO series. It was set up in 2000 and manages approximately ¤650 million. The portfolio manager is Stephen Williams. He was previously a partner with New York Life Capital Partners. ING is also selling its U.S. loan management arm ING Capital Advisors.