Clearlake Capital Raised $1 Billion in CFO Transaction
Private equity firms are increasingly turning to collateralized fund obligations to manage asset liquidity and leverage.
Updated on Sept. 30, 2026 in Corporate Finance
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Clearlake Capital Group has raised $1 billion through a collateralized fund obligation (CFO) after restructuring the deal to address investor concerns regarding leverage. The transaction allows the firm to securitize a mix of private credit and equity stakes.
Why it matters
The deal signals how private equity managers are responding to market demands for lower leverage by adjusting asset mixes to secure better pricing. Firms must balance the need for capital liquidity against the risk appetite of debt investors in increasingly complex securitizations.
The vehicle includes $600 million in private credit exposure and $400 million in combined private equity fund interests. Clearlake secured $775 million in debt securities across three classes, while the $225 million equity tranche targets an 18% internal rate of return.
The players
Clearlake Capital Group
A private equity firm that manages significant capital across private credit and equity sectors.
Goldman Sachs
A global investment bank that provides underwriting and structuring services for capital market transactions.
The details
Clearlake revised the structure of the CFO following investor feedback to lower overall leverage and achieve a 15-basis-point reduction in pricing. The vehicle pools diverse assets, including $200 million in secondaries and $200 million in direct fund stakes, to back the debt issuance. By successfully placing these securities, the firm gains efficient access to capital markets using its existing portfolio holdings as underlying collateral.
Timeline
September 30, 2026: The collateralized fund obligation transaction was reported.
Market Landscape
The move reflects an industry-wide trend where managers use collateralized fund obligations to recycle capital from stable fund stakes. It marks a shift toward more cautious structuring as investors increasingly scrutinize leverage ratios in private credit vehicles.
Operators should note that rising investor sensitivity to leverage can lead to more favorable pricing for well-structured deals. Firms planning similar securitizations should prioritize transparency regarding asset quality to avoid the pricing friction that required Clearlake to restructure.
The takeaway
This transaction demonstrates that proactive restructuring can successfully overcome investor hesitation regarding leverage levels. Managers should track SOFR spreads as a benchmark for their own cost of capital when exploring debt-backed vehicle creation.
Further reading
For more on how firms manage capital structures, visit the Corporate Finance section.
Source note: This article includes information reported by Private Equity Wire.
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