Sector developments and company hires

CLO investment firm formed
York Capital Management and Kennedy Lewis Investment Management have formed a strategic partnership and established a new entity called Generate Advisors. Under the agreement, York’s approximately US$4bn CLO business and team - led by Rizwan Akhter - will transition to Generate Advisors and continue to manage York’s current CLO portfolio, as well as any future CLOs issued by Generate Advisors. Kennedy Lewis, supported by its strategic investor Azimut Alternative Capital Partners, has committed at least US$200m of capital to be invested in the equity of Generate Advisors’ future CLOs.

Akhter will manage Generate Advisors. He and York cio Bill Vrattos will be joined by representatives from Kennedy Lewis to form the CLO investment committee. The pair will serve on Generate Advisors’ board, alongside Kennedy Lewis co-founders David Chene and Darren Richman, as well as Kennedy Lewis president Doug Logigian.

Credit opportunities build-out underway
Oak Hill Advisors (OHA) alumni Lei Lei and Christophe Rust are leading the build-out of Ninety One’s European credit opportunities business. Formerly known as Investec Asset Management, Ninety One manages approximately £120bn of assets globally and is significantly expanding its alternative credit platform. The European credit opportunities strategy represents an important initiative within this context and will focus on asset-backed capital solutions for European sponsorless borrowers.

Lei and Rust co-head European credit opportunities at the firm. The former joined from OHA – where he was md and portfolio manager - in December, having previously worked at Merrill Lynch.

The latter joined Ninety One in October from Sterndale Capital Partners, which he founded in October 2017, having previously been an md at OHA. Before that, Rust worked at Värde Partners, BC Partners, JH Whitney Capital Partners and Bankers Trust.

EMEA
NoviCap has appointed Lois Duhourcau cfo, reporting to founder and ceo Federico Travella. Duhourcau will focus on building out the company’s capital markets activities and strengthening the broader finance function. He has 12 years of experience in investing roles in London, with a focus on originating, underwriting and managing debt and equity investments.  Prior to joining NoviCap, he was a director in The Carlyle Group’s global credit division, where he helped build out the credit opportunities team.

NoviCap plans to continue hiring in the finance team across capital markets, control, risk and other functions.

Following his appointment at NoviCap, Duhourcau will remain an advisor to The Carlyle Group in connection with its credit platform.

Forward-looking SOFR eyed
The ARRC has published three key principles that will guide it as it considers the conditions necessary to recommend a forward-looking SOFR term rate. Such a rate should: meet the ARRC’s criteria for alternative reference rates, similar to SOFR itself; be rooted in a robust and sustainable base of derivatives transactions over time, to ensure that its use as a reference rate is consistent with best practices and the ARRC’s own standards; and have a limited scope of use. The latter point aims to avoid use that is not in proportion to the depth and transactions in the underlying derivatives market, as well as use that materially detracts from volumes in the underlying SOFR-linked derivatives transactions that are relied upon to construct a term rate, making the term rate itself unstable over time.

The ARRC says it has long recognised that the use of a forward-looking SOFR term rate may be a useful supporting tool, but for a limited set of use cases - such as fallbacks for certain legacy cash products referencing Libor - and only once sufficient liquidity exists in SOFR derivatives. This is because forward-looking SOFR term rates would be based on derivatives transactions, not the financing transactions that back overnight SOFR rates.

Ocwen case closed
The US District Court for the Southern District of Florida has entered final judgment in Ocwen’s favour and ordered the case to be closed, following the CFPB’s decision to drop any remaining claims under its Counts 1-9 and the entirety of its Count 10 in connection with its lawsuit (SCI 12 January). The court granted summary judgment in Ocwen’s favour last month. The CFPB is reportedly appealing the decision.