Benefit Street markets $1.75 bln flagship fund

  • Previous flagship closed on $1.75 bln in 2014
  • Providence credit arm netting 12.4 pct through flagship funds
  • Benefit Street also markets special-situations fund

Benefit Street Partners is back on the market with a new flagship fund targeting $1.75 billion, an investment report released by Teachers’ Retirement System of Louisiana shows.

Louisiana Teachers’ committed as much as $75 million to Benefit Street Partners Debt Fund IV at its December 1-2 meeting, Deputy Chief Investment Officer Maurice Coleman told Buyouts in an email. The commitment remains subject to final negotiations.

Benefit Street, the credit affiliate of Providence Equity Partners, closed its previous flagship fund on $1.75 billion in 2014. The fund was netting a 9.1 percent internal rate of return as of Sept. 30, according to a Hamilton Lane memo released by Louisiana Teachers’ through a records request.

Benefit Street will invest $10 million to $100 million in as many as 200 companies, with the ability to invest across their portfolio companies’ capital structures, the Hamilton Lane memo says. The fund will invest in both sponsored and unsponsored transactions for middle-market and large-cap companies.

“Benefit Street is increasingly targeting first lien and unitranche positions in the middle-market and large cap space, limiting risk while retaining much of its return potential,” Hamilton Lane wrote.

The New York firm’s loan-to-value ratios are relatively conservative for a private debt fund, typically 50 percent to 60 percent, Hamilton Lane wrote. The GP further limits risk by keeping fund-level leverage low, according to the memo.

Since its 2008 inception, Benefit Street’s flagship funds netted an aggregate IRR of 12.4 percent and a 1.4x multiple, the memo says.

The firm is also raising a new special-situations fund, targeting $500 million, which received a $150 million commitment from New Jersey Division of Investment earlier in 2016. While Benefit Street expanded into other product lines, its growth corresponded with the addition of professionals and processes, Hamilton Lane wrote.

Benefit Street Partners is led by CEO Thomas Gahan, President Richard Byrne, Chief Operating Officer David Manlowe and Senior Managing Director Michael Paasche.

Benefit Street declined to comment.

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The Rhode Island statehouse is seen from the highway in Providence on Nov. 17, 2009. Photo courtesy Reuters/Brian Snyder