雅虎香港財經 Stifel, Lord Abbett Form Latest Private Credit Partnership
(Bloomberg) -- Stifel Financial Corp. and Lord Abbett & Co. are teaming up on a joint venture for private credit, the latest partnership between investment banks and traditional asset managers as both try to grab a bigger slice of the growing $1.7 trillion asset class.
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They will focus on leveraged lending, specifically loans to small and mid-sized companies backed by private equity firms, according to a Wednesday news release. The new effort will be called SBLA Private Credit.
The goal is to bring together Stifel’s existing platform for direct lending with Lord Abbett’s capital base. The joint-venture will be equally managed by senior representatives from both firms, and the two have already co-invested across multiple loans, according to the news release.
Stifel is following the footsteps of others including Barclays Plc, which partnered with AGL Credit Management, and PNC Financial Services Group Inc., which teamed up with TCW Group Inc. last month. Banks that missed the beginning of the private credit wave have been trying to find ways to break into it. However, lending large amounts of money to indebted companies can be risky, so while they are happy to originate deals, they are also looking for outside partners to provide cash.
The new joint venture will allow Stifel to write bigger checks to any one company, said Chris Reichert, the CEO of Stifel Bank, the firm’s commercial bank, in an interview. Currently, the amount the commercial bank side of Stifel can lend per company is around $35 million.
“Having a joint-venture arrangement with someone like Lord Abbett would allow us to just meet the increasing demands of clients that pursue larger deals,” said Juli Van Hook, who runs the commercial bank’s sponsor-finance lending group.
Stifel already participates in private credit through lending via the commercial bank’s balance sheet — having deployed about $3 billion since 2016, Reichert said.
In addition, Stifel’s investment bank side has committed or arranged more than $3 billion to private credit deals since 2018 through a combination of its separate balance sheet and a different joint venture with Korea Investment & Securities called SF Credit Partners, which was established in 2022, he added.
Lord Abbett is a large leveraged finance investor and has about $199 billion in assets under management across all strategies, according to its website. The firm has been building out a private credit team, including hiring Stephan Kuppenheimer, who previously worked at Blackstone Inc., and Vincent Lu, an alum of JPMorgan Chase & Co., Bloomberg previously reported.
“What we saw as a firm was the growing presence of private credit as part of the leveraged finance markets,” said Kuppenheimer, now Lord Abbett’s head of private credit, in an interview. “We really wanted to deliver that capability and that risk and return to our historic investors and capital base.”
The firm participated in a $3.3 billion direct loan to Ardonagh Group Ltd. earlier this year.
The new joint venture will be able to invest directly in new loans, and both Stifel and Lord Abbett will have the ability to co-invest in these deals, as well as originate transactions, Reichert said.
Direct lending, the part of private credit that provides money to corporations, competes with the high-yield bond and leveraged loan markets. As more borrowers turn to direct lending, banks lose out on the fees they would have earned for arranging transactions, and asset managers lose out on deal flow if they can’t invest in private loans.
Competition between the asset classes has become a normal part of the market. Most borrowers now review direct lending as well as syndicated high-yield bond and leveraged loan markets for the best terms and rates. While 2023 represented a big growth year for private credit as the syndicated markets dried up, leveraged loans saw a strong resurgence this year.
(Updates starting in fifth paragraph with quotes from Stifel and Lord Abbett.)
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