Exclusive: Guggenheim raising second private debt fund

 The firm is targeting $1.5 billion for its second private debt fund and also expects to start an unlisted BDC soon.  

Guggenheim Partners, the US investment management firm, has started marketing its second private debt fund to prospective new clients recently and is aiming to raise $1.5 billion in the strategy, according to sources familiar with the matter. The firm has been in talks with existing LPs from its first private debt fund for some time and expects to hold a first close with money from them later this year. The Guggenheim Private Debt Fund I, which is fully invested, raised $1.35 billion in 2012. Guggenheim declined to comment.

The firm also plans to start a business development company (BDC) soon. The vehicle will be non-traded to start, as is typical with most BDCs, and will spend several years raising money before going public. A January N-2 filing with the Securities and Exchange Commission shows that it plans to have its liquidity event sometime before 2023, although the period could also be extended by an additional year.

Guggenheim’s private debt funds are part of its overall direct lending platform, which dates back to 2002 and has made about $6.5 billion worth of loans across 130 transactions since then. The rest of the money in the platform comes from separately managed accounts with institutional investors, mainly insurance companies. Other sources of capital get drawn from the firm’s broader Corporate Credit Strategies platform, which invests in private loans, CLOs, high-yield bonds and other instruments. The business runs $60 billion overall.

The firm works on transactions of $30 million to $500 million in loan size and invests primarily in senior secured and unitranche first lien or second lien financing, according to its website. The first fund had 85 percent of its money in first lien or second lien secured loans, according to sources familiar with the fund. Guggenheim holds some loans in their entirety and also anchors transactions in club deals or on a syndicated basis.

The direct lending and broader corporate credit platforms invest in both the US and Europe. Fund I had 20 percent of its capital in Europe and Fund II expects to put up to 30 percent of its money there, sources told PDI. Zach Warren, a managing director in Guggenheim’s Los Angeles office, oversees the US private debt investments, while Adrian Duffy, a senior managing director in Dublin, looks after the European transactions.

Guggenheim Partners is headquartered in New York and Chicago, with 13 additional offices across the US and eight more internationally. The firm has $240 billion in assets under management across mutual funds, exchange traded funds, traditional institutional equity and fixed-income strategies, as well as alternative investments and structured products. The firm’s roots date back to the late 1800s, when it was founded by the rich Guggenheim family, which also spawned the Guggenheim museums around the world.