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Benefit Street surpasses initial hard-cap for $2.5bn Fund IV – exclusive

Wisconsin and Florida pension funds contributed to the latest vehicle, two retirement plans that also committed to its predecessor, Providence Debt Fund III, which was also oversubscribed.

Benefit Street Partners has blown past its $1.75 billion target for its latest direct lending fund, allowing the firm to claim at least its second substantial fundraising victory this year.

The New York-based credit arm of Providence Equity Partners has closed its Benefit Street Partners Debt Fund IV at around $2.5 billion, according to a person familiar with the matter. That number is higher than the vehicle’s initial hard-cap, which the firm raised following strong investor demand, the source said.

A representative from Benefit Street could not be reached for comment.

Limited partners that committed money to the vehicle are the Employees’ Retirement System of the State of Hawaii ($50 million), the Florida State Board of Administration ($150 million), North Carolina State Treasury ($250 million), State of Wisconsin Investment Board ($100 million) and the Teachers’ Retirement System of Louisiana ($50 million).

Debt Fund IV will invest $10 million-$100 million per commitment in companies with an enterprise value of $500 million-$2.5 billion that are primarily based in North America, according to documents from the TRSL. The vehicle will make approximately 160-200 investments, and the expected hold size for those positions will be two to five years.

The fund, while able to invest up and down the capital structure, will primarily target first lien and unitranche positions, investing in transactions both with and without a private equity sponsor. The loan-to-value ratio Benefit Street targets is 50-60 percent.

Providence Debt Fund III hit its $1.75 billion hard-cap, surpassing its target of $1 billion. That vehicle was also oversubscribed, according to the statement announcing the fund’s close. Investors included the City of Austin Police Retirement System, the Florida SBA ($150 million), the Los Angeles City Employees’ Retirement System ($30 million) and the SWIB ($75 million).

Earlier this year, the firm wrapped up its Benefit Street Partners Special Situations Fund at almost $667.2 million, more than the vehicle’s $500 million target. The fund targets net internal rates of return of 15-20 percent and multiples on invested capital of 2-2.5x, according to documents from the New Jersey Division of Investment, which committed $150 million. It has a 1 percent management fee and a 13.75 percent carried interest provision over a 6 percent hurdle rate.