Bain launches BDC

The new investment vehicle is set to lean heavily on Bain Capital's private credit group for deals.

Bain Capital Credit’s business development company (BDC) is finalised and set to close an initial stock offering of $109.3 million next week, according to regulatory filings.

The Boston-based investment firm on Thursday (6 October) submitted its BDC registration statement for Bain Capital Specialty Lending with the SEC, almost a year after Bain Capital Credit submitted the paperwork notifying the federal agency it planned to form a BDC.

The first stock offering for 5.5 million shares is expected to close Tuesday. Citing unnamed sources, the Wall Street Journal reported $500 million in equity commitments have been made to the venture, which regulatory filings show Bain Capital Credit expects to take public.

The BDC will target investments, primarily senior positions in the capital stack with a first lien or second lien on collateral, in companies posting between $10 million and $150 million in EBITDA, according to the registration statement. The venture may also invest in mezzanine and other junior debt along with snapping up debt in the secondary market.

According to the filings, the BDC will rely heavily on Bain Capital’s private credit group when identifying possible investment ideas, conducting due diligence and portfolio management.

Up to 30 percent of the company’s portfolio can be put into businesses outside the US, according to regulatory filings. Investments will generally be deployed within two years of a capital call.

According to its SEC filings, the vehicle on 1 April submitted an application for exemptive relief, which, if granted, would allow it to invest alongside other Bain Capital Credit funds. 

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.

The four full-time members comprise Jonathan Lavine, chief investment officer; Tim Barns, chief credit officer; Stuart Davies, chief investment officer for the opportunistic credit division; and Jonathan DeSimone, chief investment officer for liquid credit.

The four adjunct members of the committee are Alon Avner, European head; Michael A. Ewald, private credit group head; Christopher Linneman, New York office head; and Jeff Robinson, a portfolio manager in the opportunistic credit group.

Editor's note: The post has been updated to reflect a correction in the firm's fees.