Churchill raising first fund under TIAA – exclusive

Churchill Asset Management is out on the trail raising $1.5 billion for a fund that will originate and invest in mid-market senior loans, a source familiar with the matter told Private Debt Investor.

The New York-based firm is seeking capital for what will be its first investment vehicle since April 2015 when Churchill became a TIAA majority-owned firm, the source said. The firm held a first close in May, on about one quarter of the target, or $375 million, according to the source.

The fund will likely hold a final close in the first half of 2017. The source also told PDI the investment shop is in the process of lining up several separately-managed accounts ranging from $100 million to $500 million.

Churchill declined to comment on the fundraising.

In April 2015, TIAA launched Churchill as its mid-market senior lending platform that participates exclusively in sponsored deals. Churchill was previously owned by The Carlyle Group, which acquired the firm from Olympus Partners in November 2011. Churchill recently cleared the $1 billion mark in deals closed or committed.

The firm announced on Thursday it had closed its first mid-market collateralised loan obligation, a $382.2 million deal with Wells Fargo as its banker. Of the total CLO, the AAA-rated loans were the largest tranche at $212 million, according to data from CreditFlux.

The source said the company will aim to complete at least one mid-market CLO a year. This person said the company is already working on their next deal. Churchill has a $250 million term facility with Wells Fargo, which it will use as a warehouse for the next CLO.

CLO issuance for the past five months has changed little, according to data from Standard & Poor’s Leveraged Commentary and Data. In August, issuance stood at $5.9 billion, unchanged from July. As of end of August, $37.9 billion-worth of CLOs had been issued this year, a stark drop from last year’s $73.3 billion.

While CLO dealflow may be down this year, fundraising for mid-market lenders has been particularly fruitful. A group of debt managers told PDIin July they have seen strong demand for fundraising.

Last month, LBC Credit Partners held a $314 million interim close for its Credit Partners IV fund, putting it more than halfway toward its $600 million goal. The Angelo, Gordon & Company mid-market platform, Twin Brook Capital Partners, is also on the trail, seeking $1 billion for its second direct lending fund. Adams Street Partners, which established its credit business earlier this year, is also raising its debut fund, with a target of $500 million to $700 million.