Griffin teams up with Benefit Street for non-traded BDC

The California real estate firm and the New York credit manager are jointly launching a non-traded business development company, which could eventually be offered on an exchange.  

Los Angeles-based real estate investment firm Griffin Capital Corporation and New York-based private debt manager Benefit Street Partners have joined forces to launch the Griffin-Benefit Street Partners BDC Corp., a non-traded business development company. The firms announced on 2 February that the SEC has approved their application for an initial public offering of about $1.5 billion in common stock.

As opposed to trading on an exchange, the vehicle’s stock will initially be sold through financial advisors and broker dealers. A source close to the situation told PDI that the two firms plan to contribute some capital to the BDC, but declined to say how much. He also anticipates the BDC will eventually go public, once it’s reached a large enough asset size: a common next step among managers handling private BDCs.

GB-BDC plans to invest in secured debt including senior secured, unitranche and second lien loans, as well as both senior and junior unsecured debt and equity and equity related securities issued by private mid-market companies in the US. The vehicle will also target public US companies with equity capitalization of less than $250 million.

Benefit Street Partners (BSP) will handle most of the origination and underwriting work—something the firm is already well versed in from its private funds—while Griffin Capital, which runs several real estate investment trusts (REITs) will handle the bulk of the administrative side of the business. The structure is similar to the relationship between Franklin Square Capital Management and GSO Capital Partners’ partnership in FS Investment Corporation.

The vehicle first submitted the N-2 application to the SEC on 4 June 2014. According to filings, the manager will register a maximum of 150 million shares at $10 each.

Griffin Capital is a private Los Angeles-headquartered investment firm with a 20-year track record sponsoring real estate investment vehicles and managing institutional capital, over the course of which, it has closed transactions totalling $20 billion. Through the end of 2014, Griffin Capital handled a portfolio of US and UK commercial real estate worth about $6.7 billion.

Benefit Street oversees several credit strategies, including mid-market private debt, long/short liquid credit, long-only credit and commercial real estate debt. It invests across the debt capital structure. 

BSP is an affiliate of Providence Equity Partners, a private equity firm that has invested in 140 companies since it was established 25 years ago. Providence Equity has about $40 billion in capital under management in its equity and credit platforms. The firm is headquartered in Providence, Rhode Island.

Other firms with BDCs in the works include Credit Suisse Asset Management and Goldman Sachs Asset Management, both of which submitted applications last year.