Crestline Investors closes second portfolio financing fund at $1bn

Credit-focused alternative investment firm Crestline Investors has closed its second fund financing vehicle with commitments of $1 billion and additional overflow interest, according to a news release.

The Crestline Portfolio Finance Fund II is focused on fund finance, which includes NAV loans and preferred equity offerings. Among the investors in Crestline’s fund are public pensions, endowments, insurance companies and sovereign wealth funds.

“We view fund finance as a sub-strategy within private credit as it is more nascent than direct lending,” said David Philipp, partner at Crestline and co-head of the fund liquidity solutions team, in an interview with Private Debt Investor. “There are still inefficiencies we want to capitalize on.”

Evolution of fund finance grew “a bit faster than anticipated” during the pandemic, Philipp said, which helped it evolve into a mainstream portfolio tool.

Crestline’s fund liquidity solutions group, which is a market leader in the NAV lending space, provides custom financing and capital solutions to private equity funds as well as other private vehicles seeking capital.

Since its formation in 2013, Crestline’s group has closed 38 transactions with more than $1.5 billion in commitments through commingled vehicles, separately managed accounts and co-investment structures.

Crestline’s latest fund, which initially launched in May of 2020, has a $12 million limited partner commitment from the two public pension funds: City of San Jose Police & Fire Department Retirement Plan and the San Jose Federated City Employees’ Retirement System, according to PDI research.

The firm’s $597 million predecessor fund, Crestline Portfolio Finance Fund, closed more than three years ago in November of 2018, according to PDI research.

“The performance of the first fund showed us that the expansion and opportunity of portfolio finance continued to grow,” Philipp said. “We’re now well positioned to be the bridge of capital between LPs on one side and borrowers on other side.”

Crestline won Private Debt Investor’s fund financier of the year award last year, as it was an active leader that used a variety of structures to expand its portfolio of bridge loans.

Fort Worth, Texas-based Crestline Investors is an institutional alternative investment firm with $13.8 billion in assets under management. The firm, which was founded in 1997, specializes in credit and opportunistic investments, which include financing and restructuring solutions for mature private equity funds.