Clearlake turned stakes in its private market vehicles into tradable debt through a collateralized fund obligation. Against that asset pool, $775 million of Class A, B, and C securities were sold, along with $225 million of equity that takes first losses. People familiar with the deal said the equity slice is expected to generate about an 18% internal rate of return. Goldman Sachs handled structuring and placement.
People familiar with the matter, who requested anonymity because the information is private, said Clearlake reworked the collateral mix after talks with investors to sharpen pricing and bring down the debt to equity. The Class C layer, which gets paid after the senior notes, pays 800 basis points over SOFR. An earlier proposal from Clearlake contemplated including three credit funds plus two additional private funds in different strategies, but leverage ran too high for investors. Requests for comment were declined by Clearlake and by Goldman Sachs.
With mergers and acquisitions still sluggish, managers have been leaning on CFOs to keep liquidity flowing back to investors. Buyers are cautious in this corner of private finance - one high profile CFO was shelved in recent months - but deals continue to price. Turning fund interests into bond style instruments also opens the door to fixed income buyers such as insurance companies that often cannot invest directly in private equity.
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If you're in funds that own private assets, this is another sign managers are finding workarounds when exits slow. Tighter pricing on the senior bonds and an 18% target on the equity show there is still demand for this structure, even with investors kicking the tires harder. Watch how often deals like this pop up - it's a real time read on how private markets are handling liquidity without traditional sales.
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