Golub’s 11th fund becomes its largest yet, at $1.85bn

The vehicle will target deals in the US involving a private equity sponsor. 

Golub Capital Partners continues to pull in the money for its latest private credit fund, raising more than $630 million over the past three months as investor demand for senior secured loans remains strong.

The New York-based mid-market lender has held a third close on $1.85 billion for its Golub Capital Partners 11 fund. Golub set a target of $1 billion, a figure it surpassed with its second close in April when it had raised $1.21 billion, according to documents from the New Mexico State Investment Council, which committed $100 million to the vehicle at its February meeting.

The firm declined to comment on the fundraising.

GCP 11’s total haul so far eclipses its predecessor vehicle, GCP 10, which at that time was its largest fund, with $1.76 billion in equity commitments. GCP 10 held a final close in January and had far outstripped GCP 9, which raised $970 million.

The SIC materials show GCP 11 will focus on senior secured debt investments in private equity-sponsored deals. The fund will target companies with $10 million to $60 million in EBITDA and will likely be composed of more than 400 loans at one time, per the documents.

The fund, which has a five-and-a-half-year investment life and a three- to four-year harvest period, carries a 1.25 percent management fee on gross assets and a 20 percent carried interest. It will target a net return of 10-13 percent, according to SIC meeting minutes.

Last month, Golub led its largest unitranche deal to date, $675 million loan to PetVet Care Centers, an Ontario Teachers’ Pension Plan portfolio company, to refinance its existing debt. The firm calls that unitranche product a Golub One-Loan Debt facility, or GOLD facility. In 2014 the alternative lending firm acted as joint lead, agent and bookrunner on a $232.25 million senior credit facility to support the acquisition of PetVet by OTPP.

Limited partners continue to commit large amounts of capital to senior secured investment vehicles. The strategy has a strong selling point of providing decent yield with the safety of being higher in the repayment pecking order in the current late point in the credit cycle, market sources have told Private Debt Investor.

It was the most popular private debt strategy in the first and second quarters, making up a plurality of the capital committed at 42 percent and 38 percent, respectively, according to PDI data.

Golub Capital’s mid-market lending group provides senior and unitranche GOLD financings for private equity-backed transactions with hold positions of up to $400 million, according to its website. The firm also originates or syndicates credit facilities up to $750 million.