BSP to launch fourth debt fund in the fall – exclusive

The Providence Equity Partners-owned credit firm has been soft marketing its next debt fund to existing LPs and plans to formally start fundraising for $1.75bn in autumn.  

Benefit Street Partners (BSP) is gearing up to launch its fourth debt fund soon, PDI understands. The firm plans to formally start marketing it in the fall with a $1.75 billion target, sources close to the firm told PDI.

Benefit Street, which declined to comment, has been talking to existing limited partners about the fund.

The firm’s last Providence Debt Fund III vehicle closed on its $1.75 billion hard-cap in April 2014, passing its $1 billion target. The firm has since rebranded its products under BSP’s name and the next fund will carry the Benefit Street title, PDI understands.

Investors in the third fund included the Florida State Board of Administration, the State of Wisconsin Investment Board and the North Carolina State Treasury, among others, according to PDI data.

New York-based BSP is the private credit subsidiary of Providence Equity Partners. Benefit Street got its start in 2008 when several high-ranking Deutsche Bank executives were hired by Providence to launch a debt business. They started out with TMT (technology, media and telecommunications) funds then, as it was their specialty from Deutsche Bank. Though the group has since branched out to invest in a broad array of US mid-market businesses. BSP primarily works on non-sponsored deals.

Tom Gahan and Rich Byrne lead the firm as chief executive and president, respectively. Since the firm’s launch they’ve hired many of their former colleagues from Deutsche Bank, as well as senior investment professionals from other well-known credit firms.

Ray Costa, a former Deutsche Bank distressed debt specialist, joined in 2014 and BSP has been raising capital to invest in more distressed deals. Tim Murray, formerly a managing director in GSO Capital Partners’ energy practice, also joined last year to help BSP expand into energy deals.

BSP has about $12 billion under management, while Providence overall handles $45 billion. Dyal Capital took a 10 percent stake in Providence in 2014 and invests in several of Providence’s and BSP’s funds as part of the deal. Neuberger Berman-owned Dyal manages funds that take minority interests in private equity and hedge fund managers.