Tom Majewski, managing director in charge of collateralized loan obligation origination at The Royal Bank of Scotland, has left his position at the bank’s Stamford, Conn., office to start a CLO equity investment fund.
Sources say Majewski is joining private equity firm Stone Point Capital to start the fund. It already has $250 million in capital from a seed investor. It does not have a name yet, but will begin actively buying equity primarily from new CLO deals as early as next week, according to one person familiar with the matter.
Majewski is bringing others on board with him, but the identities of those people could not be determined by press time.
It isn’t clear who will take Majewski’s spot at RBS. The bank has arranged three deals totaling $1 billion this year so far for Crescent Capital Group, CIFC and, most recently, new entrant Valcour Capital Management.
The new fund would mark an entry point into the CLO market for Stone Point. The firm has raised and managed five private equity funds with commitments totaling $9 billion under its Trident Funds brand name. Those funds generally make equity investments between $50 million and $350 million, according to the firm’s website.
Majewski and RBS officials declined to comment. Officials at Stone Point could not be reached by press time.
The CLO equity buyer base is historically thinner than that of the top-rated liabilities, market players say. Those two slices generally comprise the majority of a CLO transaction. And equity returns have compressed recently due to higher asset prices. Sources estimate equity returns at 10-12%, now, compared to the 13-15% area several months ago.
“It’s not an extremely attractive debt yield at par, because of asset prices, right now,” one CLO investor said. But equity buyers can negotiate higher return by asking for concessions such as a piece of the management fee or a discount on the equity, the investor added. “From a manager’s perspective, though, it’s always good to have additional equity buyers.”
Majewski was hired by RBS in September 2011. Among his responsibilities were originating collateralized loan obligations and “providing distribution solutions to corporate and financial institution clients of the bank,” according to a 2011 press release. He reported to Daniel McGarvey, head of asset-backed finance and financial institution banking in the Americas.