Jefferies Financial Group Inc. is expanding deeper into private credit by raising its first private business development company focused on providing first-lien senior secured loans to private equity-backed US companies.
(Bloomberg) — Jefferies Financial Group Inc. is expanding deeper into private credit by raising its first private business development company focused on providing first-lien senior secured loans to private equity-backed US companies.
Jefferies Credit Partners, the asset management arm of Jefferies Finance LLC, is launching the BDC, according to a statement Wednesday. A unit of the Abu Dhabi Investment Authority will anchor the vehicle with a $625 million of equity investment. The BDC will start with $1.7 billion of investable capital.
“Investors are interested in getting exposure to private credit and what they find is differentiated about the Jefferies platform is the power of the sourcing engine provided through over 1,400 investment bankers,” Jason Kennedy, chief executive officer and president of the BDC, said in an interview. “We are at the front end of levered buyout and financing opportunities coming into the market.”
The BDC will seek to lend to mid-sized borrowers with more than $75 million of earnings before interest, taxes, depreciation and amortization that “benefit from established track records, seasoned management and operational scale,” the statement said. The fund has already deployed 12% of available capital.
Private credit has grown into a $1.5 trillion industry as companies seek to avoid choppy broadly-syndicated financial markets and investors look for opportunities to lend at higher yields. Jefferies’ launch of a non-traded BDC follows a string of similarly-structured vehicles by firms including Golub Capital, HPS Investment Partners, Blue Owl Capital, Apollo Global Management and Fidelity.
Jefferies Finance is also contributing capital alongside ADIA to get the fund off the ground, kicking off global marketing of the fund, Kennedy said.
“This agreement with ADIA to seed our first BDC comes as the tailwinds in the private credit market have never been stronger,” Thomas Brady, president of Jefferies Finance, said in the statement.
(Adds executive quote in final paragraph. An earlier story corrected the size of the private credit industry in the fifth paragraph.)
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