This new newsletter covering the global private debt market will publish at 8 a.m. ET on Fridays each fortnight.
The speed of execution, certainty and flexibility of private credit is making it an attractive financing source for North American energy transition projects, with some of the world's largest asset managers taking advantage of the opportunity.
KKR & Co. Inc. agreed in May to buy $550 million of solar energy loans made to customers of residential solar and storage provider SunPower Corp. Additionally, Blackstone Inc., Ares Management Corp., and Copenhagen Infrastructure Partners have each launched debt funds targeting the sector.
"We're able to transact at scale with an efficient cost of capital which is uniquely suited to the dynamic needs of borrowers in energy transition," Rob Horn, who heads to global sustainable resources group for Blackstone's credit platform, said in an email to S&P Global Commodity Insights.
Private credit is also working with banks on project financing deals, S&P Global Commodity Insights Climate and Cleantech Executive Director Peter Gardett said in an interview.
Big hydrogen projects on the Gulf Coast, for example, generally create a special purpose vehicle that's a company in its own right. Project finance has been difficult to obtain as banks scale back lending.
"By bringing in private credit to take on some of the risk banks don't want to take, it gives private credit a role and makes the projects themselves bankable," Gardett said.
Read more about US utility infrastructure and renewable energy financing here.
FUNDRAISING AND DEALS
– Permira Credit Ltd. raised €4.2 billion for Permira Credit Solutions Fund IV LP, which targets European midmarket companies. The direct lending fund had a €4 billion target and is 37% committed.
– HPS Investment Partners LLC closed its Core Senior Lending Fund II on $7.3 billion in equity commitments. The fund and its parallel vehicles have $10 billion in available capital, including leverage, and will invest in privately-originated, floating rate senior secured loans to leading, well-established businesses primarily across North America, Western Europe, Australia and New Zealand.
– Blackstone Inc. and Goldman Sachs Asset Management Co. Ltd. will lead a £1.25 billion direct lending deal to support EQT AB (publ)'s acquisition of Dechra Pharmaceuticals PLC, Bloomberg News reported, citing people familiar with the matter. The asset managers are each committing $400 million to the deal in what is one of the largest UK take-privates of the year to-date.
INVESTORS
– San Diego City Employees' Retirement System established a private credit allocation at 5% of its $10 billion portfolio during a May meeting of its board of administration, Chief Investment Officer reported. The pension scheme, which did not previously invest in the asset class, also cut its equity allocation to 36% from 39%.
– BT Pension Scheme plans to invest in private credit funds as it seeks to sell off other assets that are "not cash flow matching," Financial Times reported, citing Wyn Francis, the plan's investment manager. The £40 billion pension scheme wants to take advantage of the changing lending climate as it continues a move away from equities, the report said.
INDUSTRY NEWS
– Alternative asset manager Bow River Capital established a private credit team and private credit investment committee. Eli Muraidekh, one of three new hires and head of the new team, said there is now a "once in a lifetime opportunity" to provide private credit to middle market companies.
– BlackRock Inc. will acquire Kreos Capital, one of Europe's largest loan providers to startups and high growth companies. Kreos' staff of 45 will join BlackRock following the deal, which is expected to complete in the third quarter.
– Third Eye Capital Management Inc and Ninepoint Partners LP is limiting redemptions from the $1.3 billion Ninepoint TEC Private Credit Fund II to 3% of the fund's net asset value during the previous quarter, The Globe and Mail reported, citing an investor memo. The terms are in keeping with a restructuring agreement penned nine months ago, the report said, quoting a Ninepoint statement.
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