By Svea Herbst-Bayliss
NEW YORK (Reuters) – Hedge fund Brigade Capital will receive a $300 million investment from Blackstone (NYSE:) to help build its new private credit strategy and expand its collateralized loan obligation (CLO) platform, they said. two people familiar with the matter.
Brigade, a well-established credit investment specialist that made headlines earlier this year with a joint bid for department store Macy's (NYSE:), is gaining experience in the hot private credit market, where nonbanks lend around $2 trillion in loans to corporations. .
Blackstone's Multi-Asset Investing unit will allocate $150 million to the new Brigade strategy. Brigade raised about $500 million this year for the strategy and plans to focus on opportunities in the lower middle market, where companies generate between $10 million and $50 million in earnings before interest, taxes, depreciation and amortization, one of the companies said. sources.
Representatives for Blackstone and Brigade declined to comment.
The allocation comes from the unit's Strategic Alliance Fund IV, led by David Ben-Ur and which has more than $1 billion in assets. Brigade is the third manager seeded into Fund IV. Blackstone previously seeded London-based Astaris Capital Management through the fund.
Brigade is an established manager with about $28 billion in assets and is expanding into the private credit market.
In total, Brigade has raised about $1.5 billion to build its private credit platform, including commitments for future funds, one of the sources said.
The lower-middle market is full of credit opportunities with higher spreads and yields because there is less competition. Examples of lower-middle-market borrowers include vacation rental company Awayday and mattress and bedding retailer Saatva.
Brigade's efforts in private credit began in earnest when two years ago it poached Jenny Lee from JPMorgan Chase (NYSE:) and Jim Wolf from Whitehorse Capital to head the strategy. Their strong networks and years of experience are expected to help land smaller deals that are often harder to find, one of the sources said.
Blackstone is also allocating $150 million to support Brigade's existing CLO business with dedicated capital commitments for new CLOs globally. The capital comes from the Absolute Return platform of the Multi-Asset Investing unit, which is also managed by Ben-Ur. The Brigade CLO business currently has about $11 billion in assets across 25 deals in the United States and Europe.
CLOs offer diversified exposure to the broadly syndicated loan market and CLO capital is structured to take advantage of volatility in the loan market given mark-to-market leverage and term financing.
!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;n.queue=();t=b.createElement(e);t.async=!0;t.src=v;s=b.getElementsByTagName(e)(0);s.parentNode.insertBefore(t,s)}(window, document,’script’,’https://connect.facebook.net/en_US/fbevents.js’);
