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First Union to Form New Company Mahoney To Head First Union Institutional Debt Management, Inc. CHARLOTTE, N.C. - First Union is forming an institutional investment management company to capitalize on continued growth in the asset-backed securities marketplace. First Union Institutional Debt Management, Inc. (IDM) will specialize in the management of collaterized loan obligations (CLOs) and collaterized bond obligations (CBOs). These highly structured, rated pools of securitized funds will allow investors to make investments in those classes of securities that best match their risk/return investment criteria. Mark Mahoney will serve as president of First Union Institutional Debt Management, Inc., reporting to Don McMullen, executive vice president and head of First Union's Capital Management Group, which manages $143 billion in assets for individuals and institutions ranging from retail mutual funds to institutional pension plans. "We see a tremendous opportunity to leverage our proven performance in the areas of capital markets and capital management," McMullen said. "Creating this capital management capability will extend the scope of our capabilities and allow us to strengthen our service to our growing client base." "First Union Institutional Debt Management will be our gateway to these expansive growth markets," said Mahoney. "For the past five years we have had solid success with all aspects of this business, so it is an obvious extension of our growing array of products and services targeted to serve the needs of our institutional clients." Sophisticated investors are seeking increased returns through participation in new asset classes resulting from the convergence of the loan and securities markets. Mahoney compared the growth in issuance of CBOs and CLOs in the 1990s to the history of asset backed investments, ranging from residential mortgages in the 1970s, to auto loans and credit cards in the 1980s. Offerings in this asset class are expected to range from of $500 million to $1 billion, with this year's overall national market expected to generate more than the $50 billion generated in 1997, up from less than $5 billion in 1994. First Union's Capital Markets Division will assist in structuring, underwriting and distributing the securities. First Union's loan syndications, loan trading and high yield groups are expected to be a significant source of assets to back these securities offerings. "Our merger with Wheat First gave us the opportunity to demonstrate our expertise in blending our strengths in capital management and capital markets," said Ken Thompson, executive vice president and co-head of First Union's Capital Markets Group. "We intend to build upon this success with First Union Institutional Debt Management, which will enable us to create a significant institutional bridge between these groups." Mahoney joined First Union Capital Markets in 1992 as head of Specialized Industries which includes communications, healthcare, insurance, mortgage banking, oil & gas, transportation and the expanding lease and equipment securitization efforts. Since 1995 he has served as head of the Investment Banking Group, which he formed, responsible for corporate finance, loan syndications, distribution and trading, investment grade and high-yield debt originations and private placements of debt and equity securities. First Union's Capital Management Group includes the corporation's investment and asset management services. These include First Union Brokerage Services Inc., the nation's eighth largest broker-dealer based on the number of licensed representatives; First Investment Advisors; First Capital Group; the Evergreen Funds, one of the nation's fastest-growing mutual fund families; CAP, the nation's first bank-based asset management account; First Union Insurance Group; Personal Trust; Corporate and Institutional Trust; Pension Services; IRAs; Financial Planning; Private Client Group and Women's Financial Advisory Services. First Union Corporation (NYSE:FTU) is a leading provider of financial services to more than 16 million retail and corporate customers throughout the East Coast and the nation. First Union is the nation's sixth largest bank holding company, based on assets of $229 billion as of June 30, 1998, and ranks among the top 15 financial services companies in the world, based on market capitalization. The company operates full service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and Washington, D.C. --END-- |
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