Aviva Investors buys Adriana Infrastructure CLO, expanding its private debt platform

Aviva Investors has acquired the Adriana Infrastructure CLO, a vehicle established in 2008 and backed by a portfolio of UK infrastructure loans made under public-private partnership and private finance initiative schemes, converting a senior-note position it has held since 2013 into outright ownership and extending its private debt platform into securitised real assets, infrastructure-backed CLOs among them. Alternative Credit Investor reported the purchase, and the buyer — the asset management arm of FTSE 100 insurer Aviva, a group the publication puts at £273bn in assets — disclosed no price and named no seller.

The vehicle's history carries more weight than the announcement: assembled in 2008, Adriana had spent five years without Aviva Investors as a creditor before the firm began buying its senior notes in 2013, and a relationship the manager says now spans more than a decade has become outright ownership.

Munawer Shafi, who heads structured and private debt at Aviva Investors, calls the purchase a significant strategic move for the private debt platform and a strengthening of a relationship that predates it by more than a decade. Darryl Murphy, the head of infrastructure, supplies the operating logic: already an active lender across investment-grade and sub-investment-grade risk in the UK and Europe, the firm expects the new CLO vehicle to let it scale origination further, particularly in the sub-investment-grade segment and with more investment flexibility. Those two statements come from separate desks, origination and structured credit, which is the pairing any securitisation programme needs.

A CLO pools loans and issues notes of differing seniority against the pool, and the owner of the vehicle decides what sits in it and how it is managed; that is the substance of the change in position. A senior noteholder collects a coupon and sits first in the payment waterfall; an owner takes the residual, collects the margin between the assets and the cost of the notes, and lives with the consequences of credit selection. After more than a decade of holding paper against the portfolio, Aviva Investors is now the party deciding what belongs in it, which suggests a preference for the whole economics of a vehicle over the coupon alone.

Murphy's emphasis on origination is where the strategy shows: if the Adriana vehicle is meant to receive loans the firm makes, the acquisition supplies a funding channel, and the statement that Aviva Investors plans to develop further securitisation products, CLOs included, follows from the same idea. Committed term funding matters most in the segment the firm singled out, because sub-investment-grade infrastructure lending needs capital that does not reprice with every facility renewal and a structure with room to add assets, which is the work tranching does.

Infrastructure CLOs remain a specialised corner of the global securitisation market, with most activity concentrated in the US, according to Alternative Credit Investor, while Aviva Investors points the other way and says it sees scope for the segment to grow in the UK and Europe, where it is already lending in both risk bands. The Adriana collateral suggests the shape of any such market: loans assembled under PPP and PFI schemes since 2008 and held on bank and insurer balance sheets instead of pooled into notes. The coverage gives no portfolio size, no performance figures and no maturity profile, so the size of a European opportunity remains the buyer's assessment rather than a measured market.

The same migration was visible in September, when this publication described how private credit moves past property into data and tranches, with Fina and BlueOrchard importing data underwriting and securitisation into asset classes that had not carried them, and BlueOrchard's first close that month on a climate-focused private debt fund applied tranching to a different pool entirely, turning concessional capital into insurance-grade paper. The pattern recurs because managers pushing into collateral beyond conventional corporate lending need structures that can fund it at scale.

Aviva Investors has been busy elsewhere this autumn, with a completed deal in August, two executive changes in early September and a fund launch in mid-September, which places the Adriana purchase inside a broader build-out. The reporting leaves open who runs the vehicle day to day, how the existing notes are treated and whether loans are still being added to the portfolio.

The test will be the next deal. Aviva Investors has said more securitisation products are coming; a second infrastructure CLO, or a first vehicle launched under its own name, would show whether this purchase is a template for a UK infrastructure debt securitisation business or a single asset bought to be held.