Churchill triples committed capital via Nuveen junior debt, PE combo

The New York-based firm, part of Nuveen, will now invest throughout the capital structure after previously being a senior debt-only shop.

Churchill just got bigger.

The mid-market senior debt provider expanded its product suite through integrating Nuveen’s junior debt and private equity team, which invests in commingled funds and makes co-investments, the firm announced.

With the addition of the two new platforms, the firm will oversee $21 billion in committed capital. Its senior debt product, which had been its sole offering, has $7.5 billion in committed capital.

“We’ve been an affiliate of Nuveen for the better part of five years,” Churchill chief executive Ken Kencel told Private Debt Investor. “It’s become very clear that Nuveen’s strong relationships as an LP in private equity funds and our history as a very active middle-market lender to the sponsor community is a very powerful combination. We feel that the combination of these dynamics in a single scaled platform will benefit both our investors and our private equity sponsor clients.”

The firm previously provided solely senior loans in mid-market private equity-backed transactions.

The junior debt team, now operating under the Churchill name, targets companies with $10 million to $100 million of EBITDA, the same size that its senior debt product targets. Its average investment size ranges from $15 million to $75 million.

The private equity team also targets companies with EBITDA of $10 million to $100 million and makes an average fund commitment of $20 million to $75 million. It makes an average equity co-investment of $10 million to $50 million.

“We think that the largest scaled private credit managers are increasingly taking share at the expense of smaller players. This combination gives us the scale and relationships to drive robust deal activity and will enable us to raise more capital and grow our business,” Kencel said, adding that the firm can “comfortably underwrite” up to $250 million today.

“I’d say in particular with the senior and the unitranche [facilities] it has become an arms race in the amount of capital,” Kencel said. “It’s a function of your ability to grow your capital under management to meet the needs of your clients.”

Churchill is currently in market seeking $2.25 billion, comprising $1.5 billion for its Churchill Middle Market Senior Loan Fund II and $750 million for the Nuveen Churchill BDC. So far, the firm has collected $746.5 million for Fund II and $100 million for the business development company, according to Securities and Exchange Commission regulatory filings. Fund I raised $1.1 billion. The firm also closed a $350 million mid-market collateralised loan obligation last month.

There will be no changes in the day-to-day operations of either business, Kencel said, noting that Jason Strife, Nuveen’s head of private equity and junior capital, will now lead Churchill’s junior capital efforts and also serve on the senior management team.

Editor’s Note: Churchill Asset Management publishes The Lead Left, a private debt industry newsletter, to which Private Debt Investor contributes.