JPMorgan Asset Management is launching a collateralized debt obligation business in Europe. As first reported on DW's Web site, it has hired Dominic Powell, former head of the CDO solutions group at Henderson Global Investors in London, to lead the charge. The group joins a select handful of traditional asset managers already operating in the CDO space, including AXA Investment Managers, Fortis Investment Managers, and Henderson Global Investors.
One credit official predicted more traditional, long-only managers will follow JPMAM into the CDO space because structuring operations are easier to launch than hedge funds. "CDOs are just variations on long-only management," he said, adding these groups should already have the necessary credit processes in place. He declined to speculate who will join the fray, but said there is sufficient room in the market for more players.
Dick Oswald, head of the international fixed-income group at JPMAM in London, said he views structured finance as a growth area and the focus of the new desk is to arrange and manage cash and synthetic CDOs. Both Oswald and Powell said it was too early to pinpoint the direction of the business, how many hires will be made or if they will tap buy- or sell-side staffers.
Until now, JPMAM in Europe has limited its activity in synthetic credit structures to small buy-side investments. The group's U.S. team launched a managed high yield and emerging market structure two years ago and recently announced the set up of a cash asset-backed securities desk which will focus on cash CDOs. One credit player said JPMAM has been notably slow to enter the structured credit arena.
Powell left Henderson Global Investors in November (DW, 11/11) after four years growing its CDO business. Last year, he oversaw the launch of a combined equity and credit structuring team (DW, 6/20/04) and most recently he focused on client marketing. At JPMAM he reports to Tim Meumann, managing director and head of structured product portfolios in New York.