In the mid-1980s to the early 1990s, Tom Capasse and Jack Ross worked together at
Merrill Lynch where they established its ABS Group. Ross worked on the first auto loan
securitization in 1985 when he was previously at
Drexel Burnham Lambert while Capasse crafted some of the first
subprime mortgage-backed securities in the late 1980s for Merrill Lynch. They later went their own ways with Ross creating his own
broker-dealer firm, Licent Capital while Capasse moved to the
Macquarie Group managing the principal finance group. In late 2004, Ross called Capasse with an idea to start their own firm, Waterfall Asset Management. They connected with boutique asset management firm, M.D. Sass to launch its first fund, the Waterfall Eden Fund which targeted residential mortgages and home equity ABS. By 2012, Waterfall had become known as a big buyer of distressed single-family home mortgages. To support its effort, it formed a venture with
Coldwell Banker Commercial named Coldwell Banker Commercial Alliance. Waterfall would buy distressed commercial real-estate assets and the venture would will sell and lease the properties. The leasing deals would be under 100,000 square feet and sales valued at $10 million or less. Waterfall moved away from a traditional hedge fund structure to become more like an
asset management company. Apart from the hedge funds it managed, it also dealt in the
separately managed account business as well as private equity. By offering a wider product offering, it was able to attract mandats from
pension funds and retirement plans. In July 2013,
Dyal Capital acquired a
minority interest in Waterfall from M.D. Sass-Macquarie Financial Strategies, a
joint venture between M.D. Sass and Macquarie Group that invests in investment funds. In November 2018, Waterfall issued $571.8 Million in
jumbo reverse mortgage bonds, the first offering of its kind since the
2008 financial crisis. In August 2020,
Navigator Global Investments (NGI) agreed to buy
Dyal Capital's stake in Waterfall. The deal was done in two parts with the second part being after 2025 where NGI will purchase the remainder of Dyal Capital's interest. In November 2020, Waterfall agreed to acquire
Alternative Credit Investments for £639m in cash. == References ==