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Variable Interest Entities
3 Months Ended
Jan. 31, 2017
Variable Interest Entities Disclosure [Abstract]  
Variable Interest Entities

6.       Variable Interest Entities

 

Investments in VIEs that are consolidated

 

Consolidated sponsored funds

The Company invests in investment companies that meet the definition of a VIE. Disclosure regarding such consolidated sponsored funds is included in Note 3.

 

Consolidated CLO entities

As of January 31, 2017 and October 31, 2016, the Company was not deemed to be the primary beneficiary of any CLO entities; accordingly, no CLO entities have been consolidated at January 31, 2017 and October 31, 2016.

 

Eaton Vance CLO 2015-1

On September 21, 2016, the Company sold its 16.1 percent subordinated interest in Eaton Vance CLO 2015-1 to an unrelated third party, recognizing a gain on disposal of $0.1 million. Although the Company continues to serve as collateral manager of the entity and therefore has the power to direct the activities that most significantly impact the economic performance of the entity, the Company concluded that it was no longer the primary beneficiary of the entity upon disposition of its 16.1 percent residual interest. As a result, the Company deconsolidated Eaton Vance CLO 2015-1 effective September 21, 2016.

Prior to the deconsolidation of Eaton Vance CLO 2015-1, changes in the fair values of bank loan investments resulted in a net loss of $7.0 million for the three months ended January 31, 2016, while changes in the fair value of Eaton Vance CLO 2015-1's note obligations resulted in a gain of $7.3 million over the same period. The net gain of $0.3 million was recorded in gains and other investment income, net, of consolidated CLO entities on the Company's Consolidated Statement of Income.

 

For the three months ended January 31, 2016, the Company recorded net gains of $1.4 million related to Eaton Vance CLO 2015-1. The Company recorded net gains attributable to other beneficial interests of $1.9 million for the three months ended January 31, 2016. Net losses attributable to Eaton Vance Corp. shareholders was $0.5 million for the three months ended January 31, 2016.

Investments in VIEs that are not consolidated

 

Sponsored funds

The Company classifies its investments in certain sponsored funds that are considered VIEs as available-for-sale investments when it is not considered the primary beneficiary of these VIEs (generally when the Company owns less than 10 percent of the fund). The Company provides aggregated disclosures with respect to these non-consolidated sponsored fund VIEs in Note 4.

 

Non-consolidated CLO entities

Non-consolidated CLO entities had total assets of $1.9 billion and $2.0 billion as of January 31, 2017 and October 31, 2016, respectively. The Company's variable interests in these entities consist of the Company's direct ownership in these entities and any subordinated management fees earned but uncollected. The Company's investment in these entities totaled $3.9 million and $3.8 million as of January 31, 2017 and October 31, 2016, respectively. Collateral management fees receivable for these entities totaled $1.0 million and $1.4 million on January 31, 2017 and October 31, 2016, respectively. The Company did not provide any financial or other support to these entities that it was not previously contractually required to provide in any of the periods presented. The Company's risk of loss with respect to these managed CLO entities is limited to the carrying value of its investments in, and collateral management fees receivable from, these entities as of January 31, 2017.

 

The Company's investment in non-consolidated CLO entities is carried at amortized cost and is disclosed as a component of investments in Note 4. Income from these entities is recorded as a component of gains and other investment income, net, in the Company's Consolidated Statements of Income, based upon projected investment yields.

 

Other entities

The Company holds variable interests in, but is not deemed to be the primary beneficiary of, certain sponsored privately offered equity funds with total assets of $14.8 billion and $13.5 billion as of January 31, 2017 and October 31, 2016, respectively. The Company's variable interests in these entities consist of the Company's direct ownership therein, which in each case is insignificant relative to the total ownership of the fund, and any investment advisory fees earned but uncollected. The Company held investments in these entities totaling $2.4 million and $2.2 million on January 31, 2017 and October 31, 2016, respectively, and investment advisory fees receivable totaling $0.9 million and $0.8 million on January 31, 2017 and October 31, 2016, respectively. The Company did not provide any financial or other support to these entities that it was not contractually required to provide in any of the periods presented. The Company's risk of loss with respect to these managed entities is limited to the carrying value of its investments in, and investment advisory fees receivable from, the entities as of January 31, 2017. The Company does not consolidate these VIEs because it does not have the obligation to absorb losses or right to receive benefits that could potentially be significant to the VIE.

 

The Company's investments in privately offered equity funds are carried at fair value and included in investment securities, available-for-sale, which are disclosed as a component of investments in Note 4. The Company records any change in fair value, net of income tax, in other comprehensive income (loss).

 

The Company also holds a variable interest in, but is not deemed to be the primary beneficiary of, a private equity partnership managed by a third party that invests in companies in the financial services industry. The Company's variable interest in this entity consists of the Company's direct ownership in the private equity partnership which amounts to $2.8 million and $2.6 million at January 31, 2017 and October 31, 2016, respectively. The Company did not provide any financial or other support to this entity. The Company's risk of loss with respect to the private equity partnership is limited to the carrying value of its investment in the entity as of January 31, 2017. The Company does not consolidate this VIE because the Company does not hold the power to direct the activities that most significantly impact the VIE.

 

The Company's investment in the private equity partnership is accounted for as an equity method investment and disclosures related to this entity are included in Note 4 under the heading Investments in equity method investees.