LFI Private Credit Weekly 05-09-25.xlsx
The increase in the number of retail investors in private credit has provided managers a new source of cash, though keeping up this pace of fundraising without affecting the returns of BDCs may be tricky.
Retail investors have much more exposure to the asset class because of the growth of perpetual-life non-traded BDCs. The goal of these funds was relatively straightforward: to make direct lending accessible to retail investors by allowing them to invest small amounts of capital in a semi-liquid fund.
The funds have seen rapid growth since January 2021, with assets increasing by 71% in 2024 to $195.2 billion, according to numbers from Fitch Ratings published early last month. They now constitute over 46% of total BDC assets.
The question is whether the deal flow will be available to sustain this growth.
“There’s been a growth in the non-traded BDCs in the wealth channel, but at the same time, the addressable market for those deals have expanded in pace. You know, the growth in that channel is what’s allowing us to finance deals that are $3 billion, $4 billion or $5 billion a clip,” Blue Owl Capital Craig Packer said on the fund’s Thursday earnings call.
Perpetual-life, non-traded BDCs can raise money continuously, but to make them a success, managers must have the deal flow to absorb the constant flow of cash. If the volume of deals done does not keep pace with fundraising, it creates a cash drag on the BDCs and lower yields.
One way to keep up deal volume is by increasing deal size, and the private market has flexed its muscle with large-scale deals recently and shown the ability to make large financings even larger. As an example, Circana, a well-regarded existing private credit borrower, garnered a $100mn incremental term loan this week, bringing its total debt stack to $4.45bn.
Another large deal that came to light this week was a refinancing of Cambrex, on which Ares Management and Blackstone Credit provided a $900mn term loan to the company. That deal, which closed in March, took out the issuer’s syndicated loan.
“Stealing” borrowers from the institutional market may be key to helping non-traded BDCs absorb much of the cash that is coming in at a time when M&A is lower.
The other avenue of deal flow continues to be managers finding investment opportunities within their existing portfolio. Golub Capital BDC COO Matthew Benton said on the fund’s earning call this week that Golub had found more than 50% of its deal flow from its existing issuers.
One question is whether private credit managers can continue to find the deal flow needed to absorb the influx of retail cash at a time with slow M&A volume and an outlook that’s not particularly optimistic. Another is what it may mean for private credit if they fail and BDC performance slumps.
Circana has garnered a $100mn incremental term loan and lowered its interest rate by 50bps to S+450, bringing its total debt stack to $4.45bn. Proceeds of the add-on, which cleared at 99, will be used to fund potential M&A as well as for general corporate purposes.
Cambrex Corp. received an approximately $900mn-plus loan from Ares and Blackstone that refinanced existing BSL debt. The new financing, obtained in March, pays interest at S+475 and comes due in 2032.
Ares shed some light on deals for which the lender served as administrative agent, arranger or bookrunner, or a combination of the three, during the quarter in Q1.
Among the LBO loans Ares worked on were for TJC’s acquisition of Acron Aviation and Nordic Capital’s purchase of Anaqua. Ares agented and led both deals, while also serving as bookrunner on the latter. Ares also agented and jointly led Roark Capital’s buyout of Ground Penetrating Radar Systems.
Ares also provided several add-on acquisition financings. It supported Vitu’s purchase of Dealertrac and SageSure’s acquisition of GeoVera. Insurance broker Foundation Risk Partners received a senior secured credit facility to support Partners’ Group’s continued growth plans for the company. Ares was sole lead arranger and sole bookrunner.
Meanwhile, Fusion Connect obtained a $85mn term loan from Hark Capital to pay down existing debt and to use for future acquisitions and operating capital.
Hoist Global Tech Solutions obtained senior secured credit facilities to support a growth investment in the company from WestView Capital from Abacus Finance Group, which served as administrative agent and lead arranger on the transaction. Abacus also made an equity co-investment in Hoist.
Plug Power has drawn and funded an initial tranche of $210mn under a $525mn senior secured term loan facility. Yorkville Advisors provided the financing, which includes $315mn in additional tranches.
Autobooks obtained a $40mn senior secured term loan from Runway Growth Capital to support its add-on acquisition of Allied Payment Network. The acquisition added bill payment and disbursement capabilities to Autobooks’ services.
AcquireROI received debt financing from Decathlon Capital Partners to bring on more employees and enhance its products.
Compensation advisory provider Equity Methods obtained a unitranche facility to support its buyout by HGGC. Golub Capital acted as administrative agent, sole lead arranger and sole bookrunner.
EverVet Operations, dba EverVet Partners, obtained a senior secured credit facility for growth capital from MidCap Financial, which served as administrative agent and sole lender.
Graycliff Partners provided debt financing and equity to TriStar Plastics to support its acquisition by Sky Peak Capital.
Elevation Point, an investment and advisory firm for the RIA industry, landed a “significant” senior credit facility and minority stake investment from Emigrant Partners.
Unifeye Vision Partners (UVP) received debt financing from Morgan Stanley Private Credit and PGIM Private Capital to support an add-on acquisition of Brooks Eye Associates.
Peer Advisors, the parent company of Compu-Link, received a senior credit facility agented by Comvest Credit Partners, which also was sole lender, to support a refinancing.
Evolus Inc. obtained a new $250mn credit facility that will refinance existing debt. Pharmakon Advisors is providing the senior debt, which replaces a $125mn loan that the company received previously from the lender.
Fortress Investment Group will purchase up to $1.2bn of consumer loans originated on Upstart’s fintech platform through March 2026 as part of a forward-flow agreement.
“This forward-flow agreement with Upstart reflects our continued pursuit of high-quality, risk-adjusted consumer credit assets,” said Fortress Managing Director Matt Biczak.
Citi will provide debt financing to Fortress for the transaction.
Alliance Energy Services’ infrastructure expansion was funded with a term loan facility led by Breakwall Capital.
Oilfield-services company Nine Energy Service received a $125mn asset-backed revolving credit facility from White Oak Commercial Finance. Stifel served as sole placement agent to Nine Energy Service. White Oak served as administrative agent.
Proceeds will refinance existing credit facilities, add incremental liquidity and pay related fees and expenses.
Elanco Animal Health said it will repay $295mn of outstanding term debt on a pro rata basis with proceeds from the sale of royalty and milestone rights for XDEMVY (lotilaner ophthalmic solution) to Blackstone-managed credit and life-sciences funds
Movella Holdings Inc. completed a restructuring with existing senior credit investor Francisco Partners and is now wholly owned by the investment firm.
Funds and People
UBS and General Atlantic Credit (GA Credit) are teaming up on a new private credit partnership, joining the ranks of banks tying up with direct lending firms.
The partnership will integrate teams from both GA Credit and UBS Asset Management’s Credit Investments Group to create a dedicated private credit team.
The platform will provide senior secured facilities to companies in North America and Western Europe.
Monroe Capital launched a $1.7bn middle-market joint-venture fund with Sumitomo Mitsui Banking Corporation and MA Asset Management. The new vehicle will provide senior secured loans to core middle-market companies in the US. It will use Monroe’s direct lending capabilities, SMBC’s private credit and sponsor finance platform and MA’s specialty credit and co-lending prowess.
Clearlake Capital Group launched Clearlake Credit, following the completion of its acquisition of pan-European private credit specialist MV Credit from Natixis Investment Managers.
MV Credit and WhiteStar Asset management, which Clearlake acquired in 2020, will be integrated into one unified business under the Clearlake Credit brand, which now represents over $57bn in liquid and illiquid credit investments deployed globally to date.
Among new hires, Alexandra (Ally) de Padua and Frank Oliver joined international law firm Proskauer as partners in its global finance practice in New York. Previously, de Padua and Oliver were partners at A&O Shearman, which was created via the merger of Allen & Overy and Shearman & Sterling on May 1, 2024.
Andrew Hedlund
andrew.hedlund@levfininsights.com
Mobile: +1 480 313 1334
