Private Credit Storm Lashes Father-Son Duo at Helm of Cliffwater

As investors in private credit funds rush for the exits, Cliffwater has become one of the biggest question marks in the $1.8 trillion industry. The worry isn’t so much that private loans will go bad all at once and crush the funds where Cliffwater has invested. It’s that antsy investors will keep asking for money back, prompting Cliffwater to dash for cash itself — instigating a vicious circle of redemptions and markdowns. Concerns center around the $33 billion Cliffwater Corporate Lending Fund, the largest of its kind in private credit. Bloomberg News Leveraged Finance reporters Ellen DiMauro and Olivia Fishlow join Bloomberg Businessweek Daily to discuss. They speak with Carol Massar and Tim Stenovec. Dawson Partners, an alternative asset manager that specializes in extracting cash from illiquid assets, bundled $1 billion of private-fund stakes into a so-called collateralized fund obligation.

The latest CFO is Dawson’s sixth such product since 2022, with the Toronto-based firm completing a total of $5.2 billion of those deals, according to a statement Wednesday. The firm, which manages $25 billion, also made two senior hires for the group that structures those deals.

Dawson, formerly known as Whitehorse Liquidity Partners, was an early mover in obtaining cash for investors in private vehicles such as buyout funds. CFOs such as Dawson’s package stakes in private credit or private equity funds into bonds of varying size and risk, which can then receive credit ratings. Dawson’s latest issuance was backed by insurers, asset managers and other financial institutions.

The secondary market for private assets, including CFOs, has boomed in recent years as a prolonged deal rut has slowed traditional exits. Private equity backers are increasingly turning to CFOs as they look for “alternative structuring solutions,” according to a report earlier this year from Jefferies Financial Group Inc.

Dawson’s new hires for its structured products team include Sean Malone, who joins as senior principal and recently co-led global structured credit at KBRA Holdings. Ariella Rosenzweig joins Dawson as principal after leading financing for private credit at GoldenTree Asset Management.

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