Neuberger Berman has completed a $1.2bn collateralised fund obligation (CFO), one of the largest transactions of its kind, in a strategic move to boost liquidity across its suite of private capital funds.

The securitisation is backed by interests in a diversified portfolio of Neuberger-managed funds, spanning private equity, private credit, and secondaries. The structure includes bonds rated A and BBB-, alongside a first-loss tranche, and was arranged with advisory support from Evercore.

According to sources cited by Bloomberg, the transaction attracted a broad base of institutional investors, including insurance companies and family offices. Peter von Lehe, Head of Investment Solutions and Strategy at Neuberger Berman, confirmed robust interest in the deal.

CFOs have gained momentum in recent years, offering general partners an alternative route to monetise fund interests without selling underlying assets. These instruments pool fund cash flows and issue tranches of rated debt with varying risk profiles.

For insurers, CFOs represent an attractive solution, as they carry lower capital charges under NAIC regulations compared to direct fund investments. This dynamic has helped fuel rapid growth in the asset class, with nearly $8bn in CFOs rated in 2024 alone, according to Kroll Bond Rating Agency.

Neuberger Berman’s issuance surpasses Churchill Asset Management’s $750m CFO launched last month, reflecting increasing scale and investor confidence in the securitisation of private capital strategies.

Source: Private Equity Wire