Ontario Teachers’ Pension Plan has agreed a joint venture with M&G Investments to support the scaling of its European collateralised loan obligation (CLO) platform.

The scheme has agreed to provide investment capacity of up to €200m for equity investments in future M&G Margay CLO issuances, and to participate in the long-term economics of M&G’s European CLO business and support the growth of the platform.

M&G said the investment would support its operations in European private assets for global institutional investors.

Through the combination of M&G’s credit research and investment capabilities in European broadly syndicated loans with Ontario Teachers’ institutional CLO investment experience and capital, the collaboration will look to support platform growth while providing strong returns.

The capital will be deployed on an investment-by-investment basis in accordance with the agreed investment framework.

M&G’s Margay platform is led by head of private corporate credit, Fiona Hagdrup, and manages €1.6bn of CLO assets.

“The European CLO market continues to offer compelling opportunities for long-term investors, supported by a large and diverse pool of underlying senior loans,” said Hagdrup.

“While market conditions may evolve, a disciplined, selective approach to credit remains key.

“Our focus on fundamental analysis, ESG risk mitigation, relative value and portfolio construction positions us well to navigate different phases of the cycle and deliver resilient outcomes.”

Ontario Teachers’ Pension Plan senior managing director, credit, Michael Merkoulovitch, added: “M&G is a valued partner to Ontario Teachers’ within the structured credit space. We share a common investment philosophy and disciplined approach to risk.

“We believe the European CLO equity market is an attractive asset class that complements and diversifies our existing CLO equity programme and are pleased to expand our relationship with M&G.

“With a strong alignment of interest and shared conviction in the opportunity, we look forward to working closely with M&G to grow Margay into one of Europe's leading CLO platforms."

This article was first published on our sister website, Pensions Age.

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