The companies haven’t come to an agreement and may not reach a deal, said the people, who declined to be identified because the sale isn’t public. Highland first put the portfolio, which includes five CLOs, up for sale earlier this year.

Carlyle is joining buyout firms such as Blackstone Group LP (BX) in leading an expansion into the European CLO market by purchasing existing investments as the ability to raise new funds remains challenging. There have been $11 billion of CLOs backed by widely syndicated loans issued in the U.S. this year, while only one 858 million euros ($1.1 billion) fund was raised in Europe, according to data compiled by Bloomberg.

Carlyle has been buying loan funds in the U.S. Last month it said it bought Churchill Financial LLC to increase its lending business.

Earlier this year Carlyle acquired a $500 million CLO from Wells Fargo & Co.’s Foothill Group Inc. unit. It previously bought CLOs overseen by Mizuho Alternative Investments LLC’s U.S. loan management business Mountain Capital Advisors and purchased loans and other credits from Stanfield Capital Partners LLC, Bloomberg data show.

CLOs are a type of collateralized debt obligation that pool high-yield, high-risk loans and slice them into securities of varying risk and return.

Blackstone’s European CLO

Natixis SA is advising Dallas-based Highland on the sale. Stefan Prelog, an outside spokesman for Highland, and Randall Whitestone, a Carlyle spokesman, declined to comment.

GSO Capital Partners LP, the debt unit of Blackstone, became the largest manager of CLOs in Europe after acquiring Dublin-based Harbourmaster Capital Management Ltd. in early October, tripling its European loans under management to 11.5 billion euros.

Highland would join Aladdin Capital Holdings LLC and Resource America Inc., in selling their European CLOs as many U.S. investors exit the European market.

Pramerica Investment Management Ltd., Prudential Fixed Income’s U.K.-based asset management business, took over a CLO managed by an Aladdin Capital subsidiary, according to a Jan. 10 news release. Resource America said its subsidiary Resource Europe Management Ltd., sold a CLO to an affiliate of Intermediate Capital Group Plc, according to a Dec. 22 news release. New York-based investment manager Octagon Credit Investors LLC also sold its European CLO this year.

To contact the reporter on this story: Kristen Haunss in New York at khaunss@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

• U.S. Said to Seek More Than $10 Billion Penalty From BNP   (2014-05-30 09:35:40)
• Apple Agrees to Buy Beats Electronics for $3 Billion   (2014-05-29 09:42:30)
• JPMorgan’s Pinto Shuffles Deputies, Names Hernandez Unit Co-Head   (2014-04-08 08:55:29)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:48)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:29)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:17)
• China Construction Bank Profit Beats Estimate on Margins   (2014-03-31 10:50:22)
• Madoff Aides Convicted in $17.5 Billion Ponzi Trial After Decades Working for Firm   (2014-03-25 13:24:38)
• Fed Revises Worst-Case Stress-Test Results for Biggest Banks   (2014-03-22 09:45:32)
• BofA, Citigroup, Credit Suisse Sued by FDIC Over Libor   (2014-03-15 10:32:09)