Hedge Funds Seek CLO Originators in Europe

U.S. hedge funds are looking for bankers who can originate collateralized loan obligations, says one recruiter.

"The collateralized loan side of things is a big area right now," says Chris Sevenoaks, a consultant at the recruitment firm Finance Professionals. "A lot of U.S. hedge funds are building a bridgehead in Europe."

Collateralized loan obligations (CLOs) are securities backed by pools of leveraged loans. Traditionally dominated by banks, increased private equity buyout activity has attracted the attention of hedge funds.

Sevenoaks says funds are particularly keen on recruiting German-speaking originators: "Germany, Austria and Switzerland account for about 25 percent of the established European CLO market, and hedge funds are keen to capitalize on that."

In May, London-based hedge fund CQS brought a debut CLO via Morgan Stanley. Around the same time, Halcyon Asset Management, a U.S. hedge fund with a London office, hired Ross Smead to head a new business unit focused on CLOs, before going on to launch a debut European CLO in June.