Adams Street looks to add BDC to credit product suite

The private equity firm launched its private debt arm in 2016 and has so far raised over $500 million for its closed-end fund.

Adams Street Partners has plans to launch a business development company, according to a regulatory filing with the Securities and Exchange Commission.

The New York-based credit shop of the decades-old private equity firm formed the entity, Adams Street Private Credit BDC, late last month. The firm has filed paperwork with the US regulator to receive exemptive relief, which would allow Adams Street to co-invest with its other private credit vehicles.

The firm, which did not provide immediate comment, is raising Adams Street Private Credit Fund, which has locked down at least $531.75 million, according to SEC documents. It has arranged a $200 million leverage facility it is using alongside the fund’s equity commitments, a source familiar with the matter previously told Private Debt Investor.

The strategy targets private equity-backed mid-market companies, which the firm categorises as businesses with a $150 million-$750 million enterprise value or $15 million-$75 million of EBITDA, according to investor documents from the Texas Municipal Retirement System. It invests across the debt structure.

TMRS has committed $200 million to the vehicle. In addition, Amica Life Insurance Company committed $9 million, documents from that company revealed. For its fees, the fund carries a 15 percent carried interest over a 7 percent hurdle rate and a 1.5 percent management fee on invested capital, according to SEC filings.

Recent transactions include the acquisition of API Healthcare by Clearlake Capital Group- and SkyKnight Capital-backed healthcare compliance firm symplr, which closed earlier this month. In December, the firm backed the acquisition of Jayhawk Fine Chemicals by Permira.

Senior debt fundraising slowed in 2018, dropping from $64.58 billion to $47.28 billion, which came amid a steep drop in overall private debt fundraising.

Direct lending funds made up several of the largest fund closes in the first quarter, with BlueBay Asset Management’s €6 billion BlueBay Direct Lending Fund III and Tikehau Capital’s €2.1 billion Tikehau Direct Lending Fund IV making up the second and fifth largest closes, respectively, for the three months ending 31 March.

Adams Street launched its private credit arm in 2016 by bringing on Bill Sacher and Shahab Rashid, formerly Oaktree Capital Management’s mezzanine fund managers, to spearhead the effort. As of the end of last year, the firm had provided $390 million in financing since it launched. In addition, the firm operates a fund-of-funds product and invests in growth equity, co-investments and the secondaries market.