First Eagle, THL tie-up closes $782m direct lending fund

First Eagle Alternative Credit has wrapped up its first fund since being formed from First Eagle Investment Management’s acquisition of THL Credit last month.

First Eagle Alternative Credit has announced the final closing of its US mid-market focused THL Credit Direct Lending Fund IV with $782 million of investment capacity including leverage. The fund’s target is understood to have been $750 million and it launched in July 2018.

Fund IV will focus on providing senior secured loans to sponsor-backed companies with EBITDA of between $10 million and $40 million. The previous fund, THL Credit Direct Lending Fund III, closed on $511 million in 2017 and pursued what a statement described as a “similar investment strategy”.

According to PDI data, Boston Retirement System is an investor in Fund IV, with a $30 million commitment.

First Eagle Alternative Credit was formed following New York-based First Eagle Investment Management’s purchase of Boston-headquartered THL Credit, which officially closed last month. The deal took First Eagle’s credit assets under management to $23 billion, $7 billion of which is in mid-market direct lending assets.

THL chief executive Chris Flynn became president of the new platform while THL chief investment officer Jim Fellows took on the same role with the new entity.

First Eagle Alternative Credit has offices in Boston, Chicago, Dallas, New York and Los Angeles. It makes investments in business and financial services, consumer, healthcare and information services and technology.

The THL deal marked First Eagle’s second acquisition of a private credit manager, having launched its direct lending product with the purchase of NewStar Financial in 2017. NewStar adopted its parent company’s name at the end of 2018.

A statement said the full rebranding of THL Credit entities and assets, including THL Credit Direct Lending Fund IV, “is expected to be completed over the coming weeks”.

First Eagle managed $118 billion across various asset classes at the end of last year, on a pro forma basis.