Treasury Selects Fund Managers for PPIP
Angelo Gordon, Oaktree, RLJ, TCW and Marathon among those tapped to oversee funds
July 9, 2009
The Treasury Department tapped nine asset managers, leaning toward private equity and hedge funds, to help implement its Public-Private Investment Program (PPIP), established to address legacy real estate assets.
The general partners are expected to commit a minimum of $20 million to new funds set up for program, required to be at least $500 million in size. The fund managers will have roughly three months to raise the capital, with the Treasury making matching commitments. The Treasury will also provide long-term financing alongside individual investments, allowing managers to leverage the investments with as much as 50% debt.
The underlying goal of the program is to create a market for the mortgage-backed securities that are contaminating the financial institution balance sheets.
AllianceBernstein; Angelo, Gordon & Company and GE Capital Real Estate; BlackRock; Invesco; Marathon Asset Management; Oaktree Capital Management; RLJ Western Asset Management; The TCW Group; and Wellington Management Company were all selected as fund managers in what the Treasury termed “the initial round” of the program. Over 100 institutions applied to participate.
The investment vehicles will have a fund life of eight years, according to the term sheet, and may invest in any commercial-mortgage backed securities and non-agency residential mortgage-backed securities issued before this year that originally carried a triple-A rating. At least 90% of the loans and other assets underlying the securities have to be situated in the U.S. and must be held by certain institutions already cleared by the Treasury.
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