Clifford Capital Asset Finance is planning to return to the US dollar CLO market in the fourth quarter as the Singapore-headquartered project finance vehicle builds its brand as a regular issuer.
The company, which is 70% owned by infrastructure finance group Clifford Capital Holdings and 30% by the Asian Infrastructure Investment Bank, raised US$527m from asset-backed securities in March under its former name Bayfront Infrastructure Management. It has issued once a year since 2021, but plans a second deal in 2025.
Clifford Capital has raised a total of US$2.7bn through the securitisation product since introducing it in 2018 under Bayfront Infrastructure Capital.
“I think we can dramatically scale up … each year,” said Clifford Capital Group CEO Murli Maiya. “We intend to be a regular issuer in the markets.”
Clifford Capital Asset Finance, which sells notes backed by cashflows from a portfolio of project and infrastructure loans and bonds, has been building its presence and refining the structure of each trade.
“It’s not just the geography but the types of investors” that it has been able to further reach with each trade, said Maiya.
The latest transaction, which was also its largest, included an unrated mezzanine tranche that proved popular with investors. Previous Class D tranches were guaranteed by GuarantCo and not available to the public.
“This programme has been very successful,” said Eugene Kim, head of securitisation and fund finance for Asia Pacific at Societe Generale, a global coordinator on the last Bayfront deal.
Investors have spanned regional accounts, including from South Korea, and buyers from the US and UK. “They have been on a very interesting journey to expand and widen their investor base, not only across the different parts of the financial world … but also from a geographical perspective. It really has become a global programme.”
Clifford Capital has so far relied on the Reg S market for its CLO trades, but it will look to use the 144A format in the future to reach US investors too.
Asset management boost
In January, Clifford Capital announced that it had expanded to include Clifford Capital Asset Management, something the company touted as a natural “evolution” to its business.
Clifford Capital was founded in 2012 as a way to increase private sector participation in project financing.
The company, which boasts Temasek as its largest shareholder, is backed by a Singapore government guarantee.
The introduction of the Bayfront business seven years ago allowed Bayfront to acquire and structure loans for sale into the CLO market, as opposed to using Clifford Capital’s balance sheet.
When Maiya joined the firm in 2023 from JP Morgan, where across the course of 25 years he led the bank's debt capital markets, equity capital markets and investment banking businesses for Asia Pacific, his strategy was to build Clifford Capital into a single infrastructure credit platform. Today the company operates across origination, structuring and distribution and fund management.
“When you grow at the rate we’re growing now … our guarantees are finite,” said Maiya.
Having the asset management business will allow the company to migrate assets to free up balance sheet to further build the business.
“There’s a velocity of capital,” said Maiya. “It’s seven, eight, 10 years of hard work ahead of us.”
Understanding CLOs
Maiya is ambitious about the potential for infrastructure CLOs, calling it “an asset class that’s poised to grow more rapidly”.
The CLO market in Asia is still nascent, with Clifford Capital and Hong Kong Mortgage Corp the only real players. For Asian investors, that has meant very limited opportunities for investment.
“Asian investors have been only looking at or investing in the US CLOs in the past few years,” said Societe Generale's Kim, explaining that the product is “foreign” to Asia with Clifford Capital and HKMC taking a slightly different approach to CLOs than the US.
The difficulty of establishing a CLO market in the region has largely come from the fragmentation of Asia’s capital markets, with different countries operating under different regulations.
“It’s difficult for any local market in the region … there’s no scale to push a corporate loan-backed Asia CLO market,” said Kim.
Part of Clifford Capital’s success in CLOs has stemmed from backing its deals with loans that meet international standards, and including Asian infrastructure finance loans that are understood by investors in the region, said Kim.
“If you have international project finance supported by many banks in the region, plus some international banks … that means, structure-wise, it speaks to many lenders,” he said.
Clifford Capital has financed more than 100 projects globally and made over US$11bn of commitments.