AllianzGI, StepStone and Citizens Bank form mid-market lending platform

Allianz Global Investors, the StepStone Group and Citizens Bank have established a mid-market lender to offer senior secured loans to mid-market companies.

The three firms announced the creation of AC Loan Sourcing last week, with Citizens Bank to source most of the deals and AllianzGI managing the loans.

StepStone and AllianzGI provided the initial capital from clients that invest in their private debt platforms, AllianzGI portfolio manager John Corbett said. Corbett joined AllianzGI through the firm’s acquisition of Sound Harbor Partners, announced in December 2016, a move aimed at expanding its private credit platform.

AC Loan Sourcing will target investing in companies that have less than $100 million of EBITDA. Among the advantages to investing in the mid-market are higher coupons and historically better recoveries than other parts of the market, Corbett said. AllianzGI will increase the number of deals it sees, he added.

Phillip Robbins, managing director at Citizens Bank, said the firm will be able to increase fee revenue and improve balance sheet flexibility.

StepStone managing director Jan Kuhlmann said the partnership will offer the firm’s investors a “distinctive opportunity to gain instant exposure” to an investment strategy that can “generate attractive risk-adjusted returns”.

Citizens declined additional comment, while StepStone could not be reached.

Munich-based AllianzGI manages $598 billion across an array of strategies, with 7 percent in alternative investment strategies, including private credit. StepStone manages $135 billion and also provides advisory services. Citizens Bank is part of Citizens Financial Group, which offers retail banking services alongside its commercial and investment banking.