Dinan’s York Plans to Sell CLO Unit Months After Hedge Fund Exit

Jamie Dinan’s investment firm York Capital Management is in talks to sell its collateralized-loan obligations division -- just months after it exited the hedge fund business.

York has held discussions with potential buyers for its CLO platform, which oversees about $4 billion in assets, according to people with knowledge of the matter. The firm will seek to retain a minority stake in the business, the people said, asking not to be identified because the information isn’t public.

Dinan’s York Plans to Sell CLO Unit Months After Hedge Fund Exit

A sale would further pare back the once-expanding financial empire of the 61 year-old billionaire owner of the Milwaukee Bucks. He climbed from the trading floors at investment bank Donaldson, Lufkin & Jenrette Inc. to overseeing a firm that at its peak managed $26 billion in assets. But his realm has been in decline, headlined by the decision to largely exit hedge funds in November.

A spokesman for the firm declined to comment. York may elect not to go ahead with a deal.

York’s hedge fund exit caused Credit Suisse to take a $450 million hit tied to its stake in York’s business. At the time, Dinan told investors he wanted the firm to focus on longer-duration assets like private equity, private debt and CLOs -- the remaining pillars of his firm that now oversees about half of what it managed at its height.

Selling majority control to another investment firm could allow Dinan, a trader at heart, to hand over the task of building out a platform for the securities that package and sell riskier corporate loans, while still taking in gains from a minority ownership stake.

The business is led by Rizwan Akhter, a former Wall Street trader who was a portfolio manager at DA Capital before leading the CLO group at York, according to the company website.

Dinan founded York in 1991 and rode the heady wave of the hedge-fund industry’s expansion, with his assets peaking in 2015. A year prior, he had bought his stake in the Bucks, making him co-owner alongside fellow investors Marc Lasry and Wesley Edens.

Now, he’s among the hedge fund industry’s old guard, who’ve soured on the business. Mediocre returns have forced industry titans to take a back seat to index investors and turn elsewhere to attract investors.

©2021 Bloomberg L.P.

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