Benefit Street Partners, the credit investment arm of Providence Equity Partners, has held a final close on the $1.75 billion hard cap for Providence Debt Fund III, beating its $1 billion target. Fund III is a middle market lending fund that attracted demand surpassing its $1.75 billion hard cap. Fund III launched in the first half of 2013.
Benefit Street Partners and its affiliates (“BSP”), the credit investment arm of Providence Equity Partners, one of the world’s leading private equity firms, today announced the final closing of Providence Debt Fund III L.P. and its parallel funds (the “Fund”), a middle market direct lending fund. The Fund had demand surpassing its $1.75 billion hard cap.
The Fund was substantially oversubscribed and exceeded its target of $1.0 billion. BSP began raising the Fund in the first half of 2013. BSP previously raised Fund II in 2010, which also focused on middle market private debt and direct lending, and Fund I in 2008. Since the inception of this strategy in 2010 through Q4 2013, it has generated a gross internal rate of return of approximately 18% (14% net)1, significantly outperforming the S&P LCD and ML High Yield Master II credit indices over the same period, and ranking in the top quartile of similar vintage funds based on data compiled by Venture Economics / Thomson Financial.
The Fund received commitments from many existing and new investors, including state and corporate pensions, sovereign wealth funds, family offices and other high net worth individuals.
“We appreciate the commitment of our investors and their confidence in our team,” said Thomas J. Gahan, founder and CEO of BSP. “The significant demand for the Fund underscores the strength of our credit platform’s track record, particularly since multiple investors in this fund are also committed to one or more of our other credit products. Our entire team is focused on the significant opportunities ahead in credit and driving alpha for our investors.”
“Tom and the BSP team share the same principals we all practice at Providence – integrity, discipline and creativity – and their insights into the global credit markets help inform our world view,” said Jonathan Nelson, Chief Executive Officer of Providence. “They are an important complement to our private equity business, and with the support of our investors, we expect to continue to grow the platform in the years ahead.”
Established in 2008, today BSP manages over $8.5 billion in assets across a broad range of credit strategies including private debt, long-short credit, long-only credit, commercial real estate debt and custom tailored separate accounts. Led by Mr. Gahan, former Chief Executive Officer of Deutsche Bank Securities, the team has capabilities across the full credit spectrum while investing through multiple business cycles. Mr. Gahan and the firm’s Senior Managing Directors all previously worked together at Deutsche Bank for over a decade and each have over 20 years of credit experience.
BSP President Richard Byrne said, “We believe that a combination of regulatory and structural changes is resulting in a sustained significant funding gap for middle market companies. With the Fund, corporations benefit from our flexible financing solutions and the deep operational and strategic expertise we can provide management. We have already begun deploying capital from the Fund and are excited to help a wide range of companies grow their businesses and achieve their full potential.”