Exclusive: Benefit Street targeting senior loan fund

The firm is seeking $500 million for the new vehicle which is expected to launch next month.  

Benefit Street Partners is gearing up to offer a new fund focused on senior loan investments, sources close to the situation told PDI. The New York based firm, which is the credit arm of Providence Equity Partners, aims to raise $500 million for the strategy and will formally begin fundraising sometime in May.

Benefit Street declined to comment on the fundraising, though Michael Paasche (pictured), BSP’s head of illiquid investments, told PDI in an interview for the April issue of the magazine that he’s more interested in senior debt investments right now, as markets are getting a little too frothy.

The firm is also in the process of raising the same amount for a new distressed debt strategy, to be managed by Ray Costa, Deutsche Bank’s former distressed debt trader who joined the firm in November. The firm launched a private BDC in February, with a $1.5 billion IPO and a partnership with Los Angeles-based Griffin Capital.

BSP is in the process of investing its third private debt fund, the BSP Debt Fund III, which raised $1.75 billion on year ago. Its previous two closed-end funds concentrated on the technology, media and telecommunications (TMT) sector. The first Providence TMT Special Situations Fund LP delivered 15 percent net IRR and the second Providence TMT Special Situations Fund II earned 13.6 percent net IRR, according to LP documents. Benefit Street has $9.2 billion under management across its various strategies and is based in New York.