CLO Titan Stephen Riddell Launches DS2 Capital with Major Backing

CHARLOTTE, N.C. & GREENWICH, Conn. – February 05, 2026

In a significant move for the structured credit market, veteran investor Stephen Riddell has partnered with private investment firm Gallatin Point Capital to launch DS2 Capital, a new investment firm specializing in Collateralized Loan Obligations (CLOs). Riddell, a prominent figure with over three decades of experience in credit markets, will lead the new venture as its Chief Executive Officer and Chief Investment Officer.

The launch marks a high-profile return to a founder role for Riddell, who previously co-founded CLO manager Gulf Stream Asset Management. DS2 Capital enters the competitive landscape with substantial institutional support, including committed capital for CLO equity investments and working capital from funds managed by Gallatin Point and other institutional partners. The firm is set to make its market debut with its inaugural CLO planned for later this year.

A Veteran's New Playbook

At the heart of DS2 Capital is the deep expertise of its leadership. Stephen Riddell is a well-known quantity in the CLO space, having most recently served as Chief Investment Officer at Redding Ridge Asset Management, an affiliate of Apollo, until late 2024. His career is marked by leadership roles at some of the industry's most notable platforms. He was a founding partner of Gulf Stream Asset Management, a successful CLO manager that was ultimately acquired by Apollo in 2011, showcasing his ability to build and scale a durable franchise.

DS2’s mission is built upon the investment philosophy Riddell has honed over his extensive career. “DS2 was founded to build a focused, credit-first investment platform designed to perform across market cycles,” said Riddell in a statement. “We believe disciplined underwriting, thoughtful portfolio construction, and an unwavering emphasis on loss avoidance are essential to CLO investing.”

This ethos signals a return to fundamental credit analysis in a market that can often be swayed by momentum. The firm's name itself, DS2, while not officially explained, could be seen as an allusion to a second act for Riddell and his core team, building on past successes. Reinforcing this theme of experience, Riddell is joined by Will Farr, another senior CLO executive with over thirty years of experience, who previously worked alongside him at Gulf Stream. The broader team is said to include professionals who have partnered with the duo across multiple market cycles, ensuring a continuity of strategy and culture from day one.

Navigating a Complex CLO Market

The timing of DS2 Capital’s launch is noteworthy. The CLO market, which bundles leveraged loans into securities of varying risk and return, has proven resilient despite recent economic headwinds. As of early 2026, institutional demand for floating-rate assets remains robust, driven by a desire for yield and a hedge against past inflation. However, the market is not without its challenges.

After a period of aggressive rate hikes, the market is now grappling with a more uncertain interest rate outlook and higher funding costs. More critically, the credit quality of the underlying corporate loans that collateralize CLOs is under intense scrutiny. While widespread defaults have been kept at bay, persistent economic pressures could test corporate balance sheets, making active and discerning portfolio management more crucial than ever.

It is precisely this environment where a firm like DS2 Capital aims to differentiate itself. Its emphasis on active management and loss avoidance is a direct response to market conditions that reward rigorous credit selection over passive exposure. By launching now, DS2 is positioned to offer investors a strategy focused on navigating potential volatility, rather than simply riding a market wave. The firm’s stated goal of performing “across market cycles” suggests a strategy designed to protect capital in downturns while capturing upside in more favorable conditions, a proposition that is likely to resonate with cautious institutional investors.

The Strategic Capital Behind the Launch

A new firm's success is often predicated on the strength of its backers, and DS2 Capital launches with a formidable partner in Gallatin Point Capital. The private investment firm specializes in opportunistic investments in the financial services sector, often partnering with experienced leadership to build high-growth platforms.

Gallatin Point’s investment thesis frequently involves identifying seasoned management teams and providing them with the strategic capital needed to execute their vision. Their portfolio includes investments across banking, insurance, and asset management, demonstrating a deep understanding of the financial industry's intricate landscape. The partnership with Riddell fits squarely within this strategy.

“Stephen and his team bring deep experience and a disciplined investment approach that we believe meaningfully differentiates DS2 in the CLO market,” commented Matthew Botein, Co-Founder and Managing Partner of Gallatin Point. “DS2 exemplifies the type of high-conviction, founder-led platform Gallatin Point seeks to support.”

This backing is more than just a financial endorsement; it provides DS2 with immediate credibility and the operational stability to build its infrastructure and execute its strategy without the typical fundraising pressures faced by a new manager. The committed capital for CLO equity investments is particularly significant, as it allows DS2 to anchor its own deals, aligning the firm’s interests directly with those of its future investors.

Building a Franchise for the Future

While its immediate focus is on actively managed U.S. CLOs, DS2 Capital has signaled a long-term vision that extends beyond this initial scope. The press release mentions an objective of “expanding into adjacent strategies over time,” a common and logical growth path for successful credit managers.

Given the team’s core competency in corporate credit analysis, these adjacent strategies could include a move into the burgeoning private credit and direct lending markets, where managers can leverage underwriting skills to originate loans directly to companies. Other potential avenues include opportunistic credit funds, which invest in distressed or dislocated assets during periods of market stress, or an expansion into other forms of structured credit, such as asset-backed securities or European CLOs.

This forward-looking plan suggests an ambition to build a diversified credit platform. For now, however, the firm’s energy is squarely focused on establishing its beachhead in the CLO market. With its first vehicle expected to launch in 2026, all eyes in the credit world will be on DS2 Capital to see if this combination of veteran expertise and powerful backing can deliver on its promise to build a truly durable and high-performing credit franchise.