Eurazeo eschews private credit for upcoming CLO
French asset manager Eurazeo is planning to launch a collateralised loan obligation (CLO) backed by broadly syndicated loans (BSLs).
At a media breakfast hosted at the firm’s London office, Nicolas Nedelec (pictured), partner, private debt, said that Eurazeo has plans to launch a CLO “at some point”, adding that the firm has the balance sheet to support the vehicle and can underwrite the equity tranche.
Nedelec said that Eurazeo had “explored the idea” of a private credit CLO but had decided against it.
Private credit CLOs have been in focus since Barings launched the first one in Europe last November, but they have been slower to take off in the continent than they have in the US. A report from Moody’s Ratings predicted that they will remain a niche subsegment of the market in Europe, as they will face several credit challenges relative to BSL CLOs including “highly concentrated and largely unrated portfolios”.
“I don’t think the European market is deep enough in terms of assets,” said Nedelec.
“You have to persuade investors.
“Barings’ pricing was quite wide compared to the assets.”
Read more: CLO market sees strong start to 2025
Eurazeo has also expanded into asset-based finance but Nedelec said that this is challenging as the “European market is not sophisticated enough”.
However, he noted opportunities around maritime finance, where Eurazeo has raised almost €1bn (£828m), as the green transformation has created a need to modernise fleets or refurbish existing boats.
He added that the esoteric areas of asset-based finance, such as royalties, are “an American thing, we don’t see that in Europe”.
Eurazeo’s private debt strategy has €35.5bn of assets under management, of which €7bn is invested into direct lending and €1.9bn is in corporate and asset-based finance.
Eurazeo is currently fundraising for its seventh direct lending fund with a target of €3bn, which Nedelec expects to be oversubscribed by the summer.
This would be substantially larger than its sixth direct lending fund, which beat its €2bn target to raise €2.3bn.
