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3i launches push into US debt markets

3i Group has continued the build-out of its debt management arm having signed a joint venture with US-based WCAS Fraser Sullivan Investment Management which gives it access to the North American market.

UK-listed 3i Group, fresh from the acquisition of seven CLO contracts worth €2 billion from Invesco in May, has made its first foray into the US debt markets.

3i has agreed a joint venture with WCAS Fraser Sullivan Investment Management, a specialist debt manager based in the US. The joint venture “provides access to the large and liquid US credit markets,” it said in a statement.

3i Debt Management’s total assets under management has now reached £6.5 billion ($10.2 billion ; €8.3 billion) following the deal. The group now oversees 19 CLO funds.

The deal will see all new US debt managmenet business for both 3i and Fraser Sullivan implemented through the newly-formed 3iDM US, which will be able to draw on Fraser Sullivan’s senior management and investment team. There will be no change to the management of Fraser Sullivan’s six existing CLO funds, the parties said.

3i will initially hold 80 percent of 3iDM US’ equity, with the remainder held by Fraser Sullivan founders John Fraser and Tighe Sulliva, together with three other partners. That 20 percent will be subject to put and call arrangements which, when exercised, will see 3i take control of the group’s entire share capital after a period of three years.

Fraser and Sullivan will be appointed as co-heads of 3iDM US, reporting to 3i’s head of debt management Jeremy Ghose. Ghose commented:  “It is our ambition to build a global, multi-product debt platform and I am pleased to have the team at Fraser Sullivan take us one step closer to our goal.”

3i chief executive Simon Borrows added: “This strategic transaction demonstrates our stated commitment to grow 3i’s debt management business and third-party income over time. The US is a highly attractive credit market given its size and liquidity.”