Oaktree-Backed 17Capital Raises Almost $3bn For First Credit Fund

Apr 21, 2022 | News

17Capital, a financier of buyout groups, has raised $2.9bn for its first credit fund, which will lend money to private equity funds looking to boost returns by using more leverage to close deals.

The London-based investment firm, backed by Oaktree Capital, is already pioneering lending to private equity funds by letting them borrow against the value of their portfolio companies. Such schemes allow funds to acquire assets without having to tap into their investors for capital.

“We lend to private equity funds and help them to make additional investments in existing companies, or to buy out co-investors so that they can create more value for their investors,” said Pierre-Antoine de Selancy, managing partner at 17Capital , in an interview.

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The company’s debut credit fund, one of the largest in private debt, targets a return of as much as 9 percent and comes as money pouring into the buyout industry through increasingly complex structures.

Founded in 2009, 17Capital has pushed the boundaries to find more exotic ways to fund the private equity industry. It is a provider of so-called intrinsic value shares, where a private equity fund will finance up to 20 percent of its NAV with debt.

This borrowed money is then used by a portfolio company to help pay for an acquisition, potentially increasing the total value of the fund in the coming years, albeit by taking on greater risk.

17Capital typically lends to private equity funds with between $1 billion and $5 billion in assets under management, but is increasingly targeting larger players.

In March, Oaktree Capital Management, the distressed debt investor founded and co-chaired by Howard Marks, acquired a majority stake in 17Capital for an undisclosed price. The deal was intended to expand the business in North America and help it fund bigger deals as buyout companies raise larger and larger funds.

Before raising its credit fund, 17Capital had offered financing by making preferred equity investments in private equity funds, deploying more than $7 billion in 78 such deals since its inception.

Including preferred stock financing and the newly formed credit fund, 17Capital is willing to provide financing at about 50 percent of a fund’s NAV, de Selancy said.

Source: Whatsnew2day

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