Exclusive-Blackstone backs Brigade with $300 million investment in private debt, CLOs By Reuters
Written by Svea Herbst-Bayliss
NEW YORK (Reuters) – Hedge fund Brigade Capital is getting a $300 million investment from Blackstone (NYSE: ) to help build its new private equity strategy and expand its collateralized loan obligations (CLO) platform, two people familiar with the matter said. .
Brigade, an established credit investment specialist that made headlines earlier this year with a joint bid for department store Macy’s (NYSE: ), is building expertise in the private debt market where $2 billion in loans are made to non-bank entities. .
Blackstone’s Multi-Asset Investing division will allocate $150 million to Brigade’s new strategy. Brigade has raised $500 million this year with strategy and plans to focus on lower middle market opportunities, where companies make between $10 million and $50 million in earnings before interest, taxes, depreciation and amortization, one of the sources said. he said.
Representatives for Blackstone and Brigade declined to comment.
The share comes from the division’s Strategic Alliance Fund IV, which is managed by David Ben-Ur and has more than $1 billion in assets. Brigade is the third investment manager in Fund IV. Blackstone previously invested in London-based Astaris Capital Management with the fund.
Brigade is an established manager with approximately 28 billion assets and is expanding in the private debt market.
In total, Brigade has raised about $1.5 billion to build its private debt platform, including future capital commitments, one of the sources said.
The lower middle market is full of high spread and yield lending opportunities because there is little competition. Other examples of middle market borrowers include vacation rental company Awayday and mattress and bedding retailer Saatva.
The private credit brigade’s efforts began in earnest when it poached Jenny Lee of JPMorgan Chase (NYSE: ) and Jim Wolf of Whitehorse Capital two years ago to lead the strategy. Their strong networks and years of experience are expected to help secure small deals that are often hard to come by, one of the sources said.
Blackstone also allocated $150 million to support Brigade’s existing CLO business with an equal commitment to new CLOs around the world. The capital comes from the Absolute Return platform of the Multi-Asset Investing division, which is also managed by Ben-Ur. Brigade CLO’s business currently has $11 billion in assets across 25 deals in the US and Europe.
CLOs provide diversified exposure to a broadly integrated loan market and CLO equity is designed to take advantage of loan market volatility given the leverage of non-mark-to-market and long-term financing.
