Dan Norman, md at Lakemore Partners, discusses his plans to strengthen the firm's US presence and grow its CLO control equity strategy

Q: Tell us about your new role at Lakemore Partners (SCI 4 August)?
A: I joined the team in March this year and I am very happy to be part of Lakemore’s global expansion. We are in the process of building a US business and the primary steps are to build a US and global product distribution system for the Lakemore family of funds.

Q: How do you plan to grow Lakemore's investment platform globally?
A: Lakemore has built an outstanding credit and product management platform that has a great track record across all its funds. We believe that the CLO and loan markets will remain very attractive to global investors over the short to medium term, and we intend to offer our platform of CLO control equity investment funds to investors across the globe. We will grow the product platform based on the existing strategy and style of Lakemore.

Q: What does CLO control equity investing involve?
A: In the CLO world, control typically means more than 50% ownership of the equity tranche. In the Lakemore style, we like to own more than 90% of the equity tranche.

We work closely with a core group of top-tier US CLO managers that have through-cycle experience with outstanding track records. Our objective is to partner with top-tier US CLO collateral managers to secure between 20% and 30% of their annual issuance volumes.

Q: How does this help managers build their CLO business?
A: The top managers in the business appreciate working with Lakemore. If we bring 90% to 100% of the equity tranche, which is typically the most difficult tranche to distribute, then these managers can focus their efforts on building high-quality pools of CLO collateral.

Nearly all of the managers that we work with are repeat managers – they appreciate the diligence of our team. Our team consists of knowledgeable and experienced market professionals, who apply a proven methodical discipline that has delivered attractive returns through several market cycles since 2000.

Q: What do CLO managers typically require from Lakemore?
A: Top CLO managers look for equity partners that are knowledgeable and experienced control equity investors that understand the in-depth details of a CLO management process and the long-term optionality to maximise equity returns afforded by CLO equity rights. These managers seek a true and trusted investment partner that has strong alignment regarding investment strategy and portfolio management. 

They also expect a robust and proven institutional infrastructure, and an efficient and experienced team that can seamlessly execute the deal decision-making, structuring and legal processes involved in the creation and management of a long-term, illiquid structured finance transaction. Finally, managers seek equity investment partners who manage long-term, patient investment capital in order to maximise deal performance.

Q: What is in the pipeline for the rest of 2021?
A: 2021 has been an extremely busy year for CLO new issue, reset and refinance activity. As control equity investors, year-to-date we have completed six new issues, reset and refinance transactions with several more transactions in process. Our goal for the year is to complete CLO transactions that amount to more than US$6bn in aggregate US CLO size.

Angela Sharda