Madison Capital Funding LLC has raised its seventh collateralized loan obligation (CLO) fund, MCF CLO VII LLC, with $302 million in capital. The lender closed its last CLO fund in July.
"Investors place great value in Madison Capital’s strong loan originations capabilities, sophisticated credit management platform, and uninterrupted capital support from New York Life,” says Ashish Shah, head of Investment Management for Madison Capital. The fund will have a 4-year reinvestment period and Madison Capital will serve as collateral manager.
Founded in April 2001 as the middle-market lending arm of New York Life, Madison Capital has invested more than $26 billion in net funded commitments in more than 997 financing transactions. The firm currently manages more than $8 billion in assets for New York Life and other clients.
Proving their ability to deliver favorable returns and minimal defaults even through the recession, CLO funds have resurfaced as lucrative investment vehicles for the private debt world. The resurgence of CLOs across the middle market backs the notion that this managed, multi-tranche investment vehicle is indeed working for both fund managers and investors. Antares Capital raised its first CLO fund; The Carlyle Group LP (Nasdaq: CG) has closed two CLO funds; and and Trinitas Capital Management LLC closed the firm’s sixth CLO.
A CLO fund is a security backed by a pool of debt, often times low-rated corporate loans, where payments from middle-market business loans are collected and repaid to limited partners. The CLO structure had proven to be beneficial for fund managers until the financial crisis, when it got something of a bad reputation, due to guilt by association with mortgage-backed securities.