Charlesbank Capital Partners is aiming to raise $1.25bn for its third opportunistic credit fund, looking to invest in new corporate loans as well as to purchase them from other private credit shops to take advantage of market dislocations.
The fundraising, which so far has closed on a commitment of $1.2bn, is looking to wrap up early next year, according to people who asked not to be identified because the information is private. The fund has already deployed $900m, according to one of the people.
A representative for Charlesbank did not respond to requests for comment.
Credit Opportunities Fund III will focus mainly on direct lending debt, often defined as senior secured loans to risky companies, that range from performing to stressed and distressed. It has been buying loans at a discount from other private credit funds as well as loans from collateralized loan obligations, which repackage them and sell them as bonds. It lends and provides liquidity to distressed companies and also lends-to-own them, an investment strategy where debt can end up as equity in a restructuring, said one of the people.
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Charlesbank targets mid-sized companies, the so-called middle market, in both its private equity and private credit arms. The new credit fund will invest in loans of companies with an enterprise value of between $150m and $3bn, one of the people said.
The firm, with offices in Boston and New York, raised a $700m fund in 2020 to take advantage of the turbulence among small- and medium-sized companies owned by private equity firms that were hit by the Covid-19 pandemic. Alongside lending directly to companies, it purchased loans from a wide array of sources, including in the direct-lending market and CLOs.
Charlesbank credit opportunity funds have so far had realized losses of 0% and a net internal rate of return of 19%, one of the people said. Fund III will continue the strategy of the previous funds, the person said.
Founded in 1998, Charlesbank was spun out of Harvard Private Capital Group, which managed an investment portfolio for the Harvard University endowment.
Source: BNN Bloomberg
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