AI profile: Solent Capital steers a course through the crunch
The withdrawal of liquidity that started in July has posed a challenge for the financial markets, not least credit investors. Solent Capital, a $7.4 billion credit asset manager, has experienced first hand what happens when markets dry up. Helen Avery reports.
Solent Capital: holding firm in a time of crisis
Solent Capital was set up in 2003 by Geoff Smailes, Jonathan Laredo and Tim Gledhill, who had worked together at Bankers Trust in the 1990s before moving on to senior positions in structured credit and fixed income at, respectively, Credit Suisse, JPMorgan and Merrill Lynch. Solent has two lines of activity – CDO management and structured credit fund management, with two credit hedge funds. Solent’s Credit Opportunities fund has $330 million in assets under management. It has produced annual net returns since inception of about 14%, with volatility of about 8.8%. In 2006, the fund delivered a 24% return. It is a relative value fund that specializes in credit derivatives at the liquid end of the market and uses credit indices, tranches and options of the credit indices to generate value. "We might look, for example, at the value of different tranches on credit indices in US, Europe and Asia over various timeframes, see how they are trading relative to each other and understand why they are priced differently," says Raymond O’Leary, a partner at Solent.