Guggenheim direct lending tops $1.3bn last quarter

The Chicago-based asset manager provided $1.3bn in $30m to $500m debt financings globally in 3Q 2016.

Guggenheim Partners direct lending totaled $1.3 billion in deals across North America and Europe over the third quarter, according to a statement from the firm.

Most of the deals were first lien transactions, along with several second lien and unitranche transactions.

The Chicago-based firm offers debt financing solutions from $30 million to $500 million to provide borrowers capital for leveraged buyouts, dividend recaps, acquisitions, and growth financings.

Joe McCurdy, head of originations at Guggenheim’s direct lending team, told Private Debt Investor he wasn’t surprised his team reached such a high threshold, as the number is consistent with their dealflow over the last several quarters. The firm has provided a total of $3.7 billion in direct lending year-to-date and a total of $3.8 billion in 2015 alone.

“We’ve been direct lending for 15 years, so our accounts are bigger and the size of the deals are bigger, but the business mantra is still the same,” said McCurdy. “The fact that our 50 analysts do first lien, second lien and unitranche transactions across every industry creates a wider funnel for us.”

Currently, the returns from first lien deals roughly range between 5 percent to 6 percent, with 9 percent and above for second lien and 7 percent to 9 percent for unitranche, he added.

Guggenheim’s largest direct lending transaction from last quarter was a $250 million unitranche financing to a commercial mortgage services company this September to support an acquisition, while the second largest deal was a $139 million first lien deal to a fitness and hospitality resorts operator this August to support the borrower’s refinancing of existing debt.

Last month, the firm passed its fundraising goal for its second private debt fund, Guggenheim Private Debt 2.0, which has swept up $1.55 billion since its May 2015 launch with an original target of $1.5 billion. That same month, Guggenheim launched a distressed debt fund with a target between $750 million and $1 billion, PDI exclusively reported.

McCurdy confirmed that the Private Debt Fund 2.0 was a participant in some of the team’s third quarter transactions, although the firm’s new distressed debt fund was not.

David Richman, director at Guggenheim’s direct lending team, said the firm’s success is more than just the result of new regulations that are restricting lending by traditional banks, and consequently opening up opportunities for non-bank lenders this year.

“Borrowers appreciate and are attracted to our type of lending not just because bank regulations are pushing capital to direct lenders, but because of our unified product and investment style,” said Richman.