AllianceBernstein collects $1.1bn for direct lending platform

The private credit group at the US asset management firm plans to use leverage to increase the total capital to $2 billion. The team is also gearing up for its move to Austin and considering launching a BDC.  

AllianceBernstein’s Private Credit Investors group has collected total equity commitments of $1.1 billion for its maiden direct lending platform from a range of investors, including public and private institutions, family offices and high-net-worth individuals. The firm is also using some leverage to increase its purchasing power to $2 billion or more. The AB-PCI team, which joined AllianceBernstein from Barclays last year, has grown from five people to 15 and Brent Humphries, the head of the group, is in discussions with more people to bring the number up to 20 by year-end.

The group also expects to move to Austin in the next few months and has posted preliminary filings with the Securities and Exchange Commission (SEC) towards starting a business development company (BDC), which the team is considering doing, Humphries told PDI.

At present, the platform consists of three funds, one of which is a perpetual open-end fund structure that lets investors redeem after a three-year commitment period, while also allowing the firm to raise additional capital in the future, Humphries explained. The other two vehicles are traditional closed-end private equity-style funds with long-term commitment periods. The group plans to make loans via both sponsored and non-sponsored channels. “We have built strong relationships within the sponsor community, which is an important part of our strategy, but we’ll also actively consider non-sponsored situations,” Humphries said. The group will focus mostly on North America but will selectively look at Western Europe as well.

It will invest across the industry spectrum and has its team organized around industry verticals. Humphries has already hired people with expertise in the retail and restaurant channels, communications, software and technology, healthcare, energy, as well as certain asset-oriented areas like equipment leasing and finance. The group could staff up further in these areas as needed. The AB credit team plans to focus on senior secured debt, including first and second lien loans, as well as unitranche instruments.

Most of the team will move to Austin from New York in the summer, as PDI previously reported. “I think Austin offers a competitive advantage in terms of our ability to recruit and retain talent.  It is a young, diverse and vibrant city with a low cost of living, great public schools and plenty of exciting things to do,” Humphries said. “It’s an emerging asset management and private investing center and part of the reason we’re attracted to it is that we’ll be one of the few, if not the only, direct lending businesses headquartered there,” he added. Some of the major direct lending firms in the US have outposts in Texas, but few are headquartered there. Humphries thinks the location will allow the firm to be closer to companies in the middle of the country that are in need of financing.

AB established the private credit group in April last year, by hiring a team from Barclays Private Credit Partners. In addition to Humphries, the hires included Patrick Fear, Jay Ramakrishnan, Shishir Agrawal and Wesley Raper at the time.

AllianceBernstein handles a variety of public equity and fixed-income strategies on behalf of institutional and retail investors. It has been working on expanding into a range of alternative investments over the years, which includes the private credit effort. The firm is headquartered in New York and has $485.9 billion in assets under management. French insurer AXA owns a 62.7 percent interest in the firm.