Primus Guaranty Sells CypressTree Subsidiary
Hamilton-based Primus Guaranty, Ltd. today [December 2] announced it has completed the sale of CypressTree Investment Management, LLC , its third-party asset management subsidiary, to Commercial Industrial Finance Corp. (CIFC). Terms of the transaction were not disclosed. Headquartered in Bermuda at Clarendon House, Church Street with primary operations in New York, Boston and London, Primus was founded in 1998 and commenced operations in 2002.
The completion of this transaction enables us to further sharpen our focus on our key goal: preserving the value of our credit protection business in amortisation,” said Richard Claiden, Primus Guaranty’s chief executive officer. “At the same time, it ensures our CLO investors will continue to be well served by the top-notch professionals at CIFC.”
Peter Gleysteen, CIFC’s chief executive officer, stated, “Effective immediately, CypressTree’s activities will be operationally integrated within CIFC’s existing investment model, which we believe will benefit all investors in these funds. CIFC has implemented a plan to ensure a smooth, seamless transition of the management of the CLOs and other funds and their underlying investments into CIFC’s platform.”
CypressTree manages or subadvises approximately $2.6 billion of high yield and leveraged loan assets in seven collateralized loan obligations (CLOs) and two other funds. The collateral management contracts for the CLOs, as well as the two other funds, were included in the sale.
Primus Guaranty’s credit protection business, which consists of Primus Financial Products’ $11.8 billion portfolio of credit default swaps, is not affected by the sale. Primus Financial Products will remain part of Primus Guaranty and will continue to be managed by Primus Financial portfolio managers. Primus Guaranty sells credit swaps as protection against the risk of default on investment grade obligations. In exchange of a fixed quarterly premium, Primus will guarantee its customers a payment of an agreed amount in case debt issuer counterparty defaults. The primary purchasers of credit swaps are commercial and investment banks, as well as portfolio managers, insurance companies and other financial institutions seeking to reduce the credit risk exposure in their fixed-income security portfolios
Berkshire Capital Securities LLC acted as advisor to Primus on the sale of the CLO business.
