Over the years we have evolved our investment methodology to make it more effective under all market conditions and efficient to implement in a timely manner.
As long-term investors, aligning our investment principles and processes to mitigate risks based on market cycle and positioning accordingly in a state of risk aversion or state of risk appetite have resulted in achieving our objective of sustainable return generation through all market cycles.
In keeping with our portfolio construction philosophy, we invest in CLOs to provide our investors with a core of stable earnings that can withstand all phases of an economic cycle. Depending on where we are in an economic cycle, we invest in CLO Debt or Equity tranches to benefit from supportive market conditions.
We have been applying this investment philosophy since 2000 and have invested in various CLO tranches through all market cycles, including the 2008-09 financial crisis. We have developed distinctive expertise based on investment experience and proprietary research within US CLO market.
Sustainable performance management is the result of several elements aligning to deliver the intended results.
Central to these elements we believe is the Team.
At Lakemore Partners we have more than 11 nationalities that constitute a diverse team.
Our approach to performance management drives our ability to attract the best talent from around the world and to open up possibilities for the team to excel.
London/Dubai/Scottsdale August 24, 2021 – Lakemore Partners Ltd. and its group entities (“Lakemore”), a leading private credit investment firm primarily investing in control CLO equity, today announced it has successfully closed Aquatine IV at US$400 million as a result of strong investor demand.
Aquatine IV is Lakemore’s fourth CLO fund within the Aquatine platform, which invests in control equity positions in U.S. CLOs, and is currently one of the market’s largest dedicated CLO control equity funds. The Fund’s investors are a diverse group of institutional investors representing private banks, fund of funds, insurance companies, family offices and high net worth individuals, many of whom have invested in previous Lakemore Aquatine Funds.
“The successful close of our Aquatine IV fund is an important milestone for Lakemore as we further strengthen our position as a global leader in CLO investments focused on delivering high risk-adjusted returns across market cycles,” said Mohamed Seif, Co-Founder & Managing Director of Lakemore.
“The significant interest and commitment to Aquatine IV highlights the trust and support our clients place in us,” said Hisham Ghouth, Partner and Head of Business Development. “Our investors recognize our long-standing partnerships with top-tier CLO managers, and we continue to experience strong demand from a range of global clients looking to access reliable and defensively managed credit portfolios.”
“Our team continues to deliver outstanding deal execution in 2021 through our involvement in more than 10 control equity transactions representing over US$6 billion in CLO size,” added Somnath Mukherjee, Partner and Head of Investments. “We would like to thank our collateral managers and arranging banks for their partnership in helping us to secure a robust pipeline during an incredibly active year, and for contributing to long-term, sustainable value for investors in our Aquatine Funds.”
Leading CLO equity investment firm establishes new U.S. office to further enhance global operations
London/Dubai/Scottsdale August 3, 2021 – Lakemore Partners Ltd. and its group entities (“Lakemore”), a leading private credit investment firm primarily investing in control CLO equity, today announced it has named Dan Norman Managing Director and Head of its U.S. business operations. In this role, he will focus on growing Lakemore’s investment platform globally from its recently established U.S. office in Scottsdale, Arizona.
Mr. Norman joins Lakemore following his retirement last year from Voya Investment Management (“Voya”) where he most recently served as Group Head and Senior Managing Director. While at Voya, he founded the firm’s Senior Loan Group in 1995 and co-managed the Group’s global loan platform including its global CLO business, which by the end of 2020 had managed 46 CLOs with a combined size of over US$22 billion.
“Dan is a successful, highly respected and cycle-proven executive who has established himself as one of the leading experts in broadly syndicated corporate loans and CLO management,” said Mohamed Seif, Co-Founder & Managing Director of Lakemore. “With more than 35 years of global business-building and investment management experience, Dan is the perfect fit for our firm as we continue to strengthen our relationships with leading U.S. CLO managers and look to serve the needs of current and prospective investors in the U.S. and around the world. We are thrilled to welcome him to Lakemore.”
Throughout his career, Mr. Norman has structured and managed over 80 loan funds and accounts with total combined assets of over US$50 billion. He has created extensive distribution networks and more than 300 investor relationships around the world.
As part of his role, Mr. Norman will oversee Lakemore’s on-the-ground U.S. presence from its newly established office located in Scottsdale, which will further enhance the firm’s ability to seamlessly operate on a global scale. Lakemore currently has 27 professionals worldwide overseeing US$1.1 billion in credit assets under management.
“I’m honored to join such a diverse and well-respected firm that has established a leadership role in the CLO marketplace through its sound strategic approach and commitment to client service,” added Mr. Norman. “Lakemore’s strong culture of respect and support for its team members deeply resonates with me and is core to a successful business. I look forward to working alongside the experienced professionals at Lakemore as we continue to expand our presence both in the U.S. and around the world.”
Mr. Norman currently serves as a Board Member of the Business Loans Coalition, the Loan Syndication and Trading Association’s (“LSTA”) grassroots advocacy affiliate, and as an advisory Board Member of the Maricopa Partnerships, which manages diverse business and investment interests. He previously served as Board Member of the LSTA and the International Association of Credit Portfolio Managers.
We publish monthly research reports providing an overview of current market conditions, relative value within leveraged loans and CLO debt and equity tranches. A summary of our latest report can be found below.
To receive our research reports, please email: email@example.com
For media inquiries, please email: Dukas Linden, Public Relations at Lakemore@DLPR.com
Current Lakemore Insights – September 2021 report:
In this edition of the Lakemore Insights – September 2021 report, we note the record-breaking year seen in CLO primary, which has been driven by what is, in our view, arguably the most attractive CLO equity arbitrage conditions in history. Meanwhile, we observe that leveraged loans delivered a robust performance through the month, despite volatility in other risk assets, as a fundamentally strong market and floating rate benefits continued to attract investors. Finally, we consider the impact of inflation on various sectors.
In this edition of the Lakemore Insights – August 2021 report, we discuss the drivers of current CLO equity arbitrage conditions, which continued to improve on their already extremely attractive levels through August and resulted in the highest month for CLO new issuance by volume since last year. We offer an analysis of Q2 earnings season, which shows that US corporates’ EBITDA have not only recovered but improved upon their pre-pandemic levels. Meanwhile, we explain why the leveraged loan market continues to flourish, due to plentiful upgrades, ultra-low defaults and an active primary market. In our view, current market conditions are a strong tailwind for CLO equity, and we continue to anticipate that 2020-2022 vintages are likely to be among the strongest on record for the asset class.
In this edition of the Lakemore Insights – July 2021 report, we review the way in which inflation concerns and the spread of the Delta variant of Covid-19 have begun to weigh on sentiment. With CLO equity arbitrage remaining at historical highs, warehouse activity is plentiful, and we anticipate any future volatility to further enhance CLO equity attractiveness. Meanwhile, the loan market continues to be fundamentally strong, with the last twelve-month default rate falling well below 1% and upgrades soaring ever higher above downgrades.
May / June 2021
Given relatively sanguine market conditions in recent months, we amalgamated the May and June 2021 editions of the Lakemore Insights report. In this report, we review the positive impact of volatility on CLO equity yields following the pandemic and evaluate the attractive conditions in the loan market, which has been further bolstered as investors seek to hedge inflation and benefit from the floating rate nature of this fundamentally strong asset class.
In this edition of the Lakemore Insights – April 2021 report, we analyze senior loan new issues, historically high CLO equity arbitrage levels and the benefits of CLO equity vintage diversification, showing that investing in CLO equity on a five-year rolling basis increases median IRRs and reduces standard deviation of returns. We also examine CLO liability costs and offer our outlook for the direction of liability pricing in the coming months. Meanwhile, we note that primary loan issuance has improved in quality post pandemic, with loan spreads also wider than pre-Covid-19 levels, which should benefit CLO portfolios. Moreover, loan market default rates have fallen below their long-term historical average.
In this edition of the Lakemore Insights – March 2021 report, we discuss the record-breaking primary issuance in both the leveraged loan and CLO markets, in addition to the declining default rates and softening in loan prices and liability costs through the month. We also analyze historic US unemployment data and Federal Reserve rate hikes.
In the Lakemore Insights – February 2021 report, we provide an update on market conditions and data through February, including the buoyant leveraged loan and CLO primary markets, and the rise in resets and refinancings as CLO managers and equity investors seek to take advantage of tight liability pricing.
Outlook for 2021 and Beyond
In the Lakemore Insights – Outlook for 2021 and Beyond report, we share our views and analysis on our outlook for the CLO and Leveraged Loan markets for 2021 and the years that follow, in addition to reviewing key highlights from 2020. Key discussions include our leveraged loan market default outlook, and the multiple tail winds driving return expectations on CLO equities for 2021 and 2022 vintages to above-average levels.
In the Lakemore Insights – December 2020 report, we provide an update on market conditions and data through December. For more information on what we expect from the year ahead, we will shortly publish our Lakemore Insights – Review & Outlook 2020/2021 report, which will contain in-depth analysis and views on our outlook for the CLO and Leveraged Loan markets for 2021 and review the key highlights from 2020.
In the Lakemore Insights – November 2020 report, we examine the impact of a series of Covid-19 vaccine breakthroughs on markets and why we believe that current market conditions are highly favourable for CLO equity IRRs and, in fact, 2021 CLO equity vintages could be the most attractive vintages in recent times. We also review Q3 earnings season and CLO prepayment rates.
In the Lakemore Insights – October 2020 report, we analyze the trend of upgrades in the leveraged loan market and consider how the current low rates environment may affect CLO investors. We also update on the impact of the US election and the latest vaccine phase 3 breakthrough on markets.
In the Lakemore Insights – September 2020 report, we examine why heightened distress in the loan market may present an opportunity for conservative CLOs and distressed funds as we review two high profile restructurings. We consider what the impact of the phasing out of Libor by the end of 2021 is likely to mean for CLO equity investors and highlight how defensive managers are benefiting in the current environment.
In the Lakemore Insights – August 2020 report, we review Q2 earnings season and the market response, in addition to the resurgence of M&A-related leveraged loan issuance activity. Other key highlights include: an examination of the increase in CLO warehouses and analysis of improving CLO return drivers. We also consider market conditions through the month.
In the Lakemore Insights – July 2020 report, we examine the presence of an overexuberant recovery in the leveraged loan market and the attractive opportunity evolving within new CLO equity transactions as CLO arbitrage hits a sweet spot. Other highlights include: an analysis of post-Covid-19 leveraged loan defaults, as well as a review of market conditions in the month.
In the Lakemore Insights – June 2020 report, we examine the volatile market conditions seen intra-month, Q2 2020 earnings expectations and why we believe defensive investing is key amid the current market uncertainty. Other highlights include: an analysis of how changes to the covenant-light (cov-lite) cycle could impact leveraged loan investors and the effect of distressed investors on CLO portfolios.
In the Lakemore Insights – May 2020 report, we discuss current market conditions, relative value within leveraged loans and CLO debt and equity tranches. As most asset classes continue to rally, despite deteriorating growth forecasts, we explore the increasing disconnect between underlying fundamental data and market movements. Other highlights include: the existing and future opportunities in leveraged loans for active selection and attractive risk-adjusted returns amid spiking loan amendments and the reopening of the primary market; and the trend towards normal reinvestment periods within the CLO new issue market, following a flurry of static issuances in April.
In the Lakemore Insights – April 2020 report, we discuss current market conditions, relative values within leveraged loans and CLO tranches, and track performance of Defensive CLOs vs. Aggressive CLOs. The analysis shows defensive CLOs are performing better on risk metrics as levels of stress continue to increase in the leveraged loan market. This continues to emphasize the need for an overall focus on risk stabilization as core to the generation of higher risk-adjusted performance.
In the Lakemore Insights – March 2020 report, we illustrate how volatile market conditions have helped defensive CLO portfolio constructions add portfolio spreads over time and build IRR. We examine why defensively constructed CLO portfolios are expected to outperform as they benefit from relative value and reinvestment trades within the loan books and generate strong IRRs for CLO equity investors.
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