Allied Capital is buying loan management business Callidus Capital Management in a move that will provide the firm with a senior debt capability to originate mezzanine deal flow and will provide Callidus with $100 million of financing. "Allied has purchased a controlling interest, but we [management] will have a significant position," stated Gary Neems , a co-founder and managing director of Callidus. As first reported on LMW's Web site last week, the cash will fund working capital, support warehouse facilities and invest in the equity of future CLOs. Neems said Callidus is in talks about a third collateralized debt obligation, which will be a loan fund, but it has not yet started warehousing.
Neems explained that Callidus was looking to grow the business and this will provide the firm with a strong strategic partner and will also provide the firm with capital. "Allied is primarily a credit business," he said, explaining the firm offers mezzanine and private equity. "They were looking to expand into the corporate loan space," he added. Allied will have an opportunity to receive referrals for new mezzanine financings as well as refer opportunities for senior loan financings, according to a statement from Allied. Officials at Allied did not return calls.
Callidus has $700 million in assets under management. Its first vehicle, Callidus Debt Partners CDO Fund I, a $400 million Cash Flow CDO closed in December 2001 and is invested in high yield bonds (approximately 80%) and leveraged loans (approximately 20%). The second CDO, however, was a loan deal led by Wachovia Securities called Callidus Debt Partners CLO Fund II (LMW, 2/9).
Richard Ivers , CEO of Callidus, and another co-founder, Mavis Taintor , were managing directors in the leveraged finance group at Credit Suisse First Boston . Taintor worked at Salomon Smith Barney,where she was a founder of and ran the bank loan group with Ivers from 1996 to 1998. Co-founder Wayne Mueller was a managing director at Banc of America Securities,where he was involved in structuring and underwriting leveraged debt deals. Neems started out with Citibank , but has worked at Equitable Capital Management Corp. and as a co-managing partner of private-equity firm Advanta Partners .