CLO equity is the most junior investment in a CLO. Like shareholders of a company, CLO equity investors take the most risk and also get the biggest return if things go well. CLO equity can take the form of preference shares, income notes or subordinated bonds, but is never, in legal terms, equity.
Equity investors have the right to call time on the deal. Once a non-call period has expired, they can vote to call the deal, redeem its notes and pay themselves any money left over.
Post-crisis CLOs typically have an investor which owns more than 50% of the equity tranche. This investor is known as the control equity investor.