John Fraser, the new chairman of Tikehau's global structured credit strategies, answers SCI's questions

Q: Tikehau Capital launched its first US CLO in August. Could you explain the motivations for doing so?
A: Establishing a presence in the US CLO market is a key part of Tikehau Capital’s growth plans for its credit platform. The firm is already active in Europe with five CLOs outstanding and, with significant plans for future growth, it’s a natural extension for a very broad-based European credit platform to move into the US via issuing CLOs. This is just one part of what will ultimately be a broad-based credit platform in the US marketplace and will help Tikehau Capital establish a credit brand here in the US that matches the brand that it has in Europe.

Q: In your view, why is now a good time to expand into the US CLO space?
A: Tikehau Capital has had a presence here in the US for several years, but about three years ago really began targeting the US market for significant growth - both in terms of capital raising from US investors, as well as investing in a number of different US markets. As part of that focus, one of the two co-founders of the firm, Mathieu Chabran, moved over here from Paris to lead the charge as the firm expands in the US market.

The US CLO marketplace is open for business. This has been a record year for US CLO issuance, both from established managers as well as several new managers.

Expectations are that the CLO market will continue to be accommodating into 2022. So, the firm made the decision, after careful consideration, to launch its first CLO in 2021 earlier this year. And that is just the first of what is expected to be a number of CLOs issued into the US market over the course of the next several years.

Q: Could you tell us more about your new role and what you're expecting to achieve?
A: My role is chairman of Tikehau Capital’s structured credit strategies. What that really means is that I will work with different people and groups within the firm to help expand its global presence in structured credit markets.

Initially, that focus will be on the US and European CLO markets, but we are already looking at other opportunities to expand into related marketplaces. That could include investing in CLO tranches or equity of other managers or investing in other securitised products.

Q: How are ESG considerations integrated in Tikehau's business?
A: ESG is becoming increasingly important to investors around the world and one of the advantages that Tikehau Capital has is a well-defined ESG process that has been in place for a number of years. Tikehau Capital has been at the forefront of implementing ESG policies and procedures: the firm was an early signer of the UNPRI and it has been very aggressive about developing environmentally-focused products in a number of different asset classes. So, its emphasis on ESG from an early stage will put the firm on a firm footing and allow it to be at the forefront of the marketplace, as investors around the world continue to focus on ESG and what it means for the various firms with which they are considering investing.

 Q: Looking ahead, what do you anticipate for the future of the market and Tikehau’s role in it?
A: The markets are very accommodating right now. But I think the challenges for any firm are balancing the desire to grow with a credit discipline.

One of the aspects that excites me about Tikehau Capital is the fact that it has a very well-defined credit investment process that puts credit quality above everything else. That’s going to be critical for any firm, as the marketplace continues to develop over the next several years and as economies start to absorb the impact of inflation and the fact that growth has not quite been what some had expected it to be coming out of the pandemic.

Tikehau Capital is very focused on those two issues and that factors heavily into its credit decision-making process. Any firm that participates in credit markets in the US, Europe or anywhere else around the globe is going to have to continue to exhibit credit discipline that incorporates some of the issues that our economies are experiencing right now.

Claudia Lewis