Bain Capital Credit’s business development company may have just officially opened its doors, but it has already raised substantial amounts of money.
Regulatory documents filed Monday with the SEC, a US regulatory agency, showed Bain Capital Specialty Finance has garnered commitments amounting to $546.4 million, a total reported less than two weeks after it filed its BDC registration statement.
A source familiar with the situation said Bain launched the BDC to access two classes of investors: offshore investors looking to access mid-market direct lending while avoiding commingled funds for regulatory reasons; and onshore tax-exempt investors limited by the use of leverage at the fund level.
This person also noted Bain Specialty Finance won’t be a substantially different strategy from Bain Capital Credit; rather, the BDC is a “new wrapper for more exposure to the asset class”.
Bain Capital Credit would take Bain Specialty Finance public after most of its funds are fully invested, the source said. The firm has drawn down $109.3 million of its $546.4 million, according to regulatory documents. The source added that the BDC has not yet concluded fundraising.
Bain Specialty Finance notified regulators in October 2015 it intended to create a BDC, and on 6 October it submitted its formal paperwork launching the mid-market lending vehicle. Bain Specialty Finance will rely heavily on Bain Capital Credit when it comes to the investment process. On 23 August, the BDC received exemptive relief, or the ability to invest alongside other Bain Capital funds, after submitting the initial application on 27 July.
The BDC will charge a 15 percent incentive fee on net investment income with a hurdle return of 6 percent, meaning Bain Capital Credit will not receive any incentive income fee should the fund earn less than the stated hurdle return. The company will also charge a 15 percent capital gains fee. If the BDC goes public, both the incentive fee and capital gains fee increase to 17.5 percent.
The new company’s credit committee comprises four full-time members and four adjunct members, all senior management at Bain Capital Credit.
Editor's note: This post has been updated to reflect the development of Bain Specialty Finance and possible plans to take the vehicle public. It has also been updated clarification to the company's fees.