Loan Note: Blackstone, Daiwa target fund at Japan; Silver Point progresses distressed vehicle

The Blackstone/Daiwa JV targeting Japan's retail investor base; JB Capital and Silver Point announce fundraising milestones; plus, high yield climbs as leveraged loans fall. Here's today's brief for our valued subscribers only. 

They said it

“Central banks know that besides having to try and tame stubbornly high inflation, they also need to ensure financial stability”

Nigel Green, chief executive officer and founder of UK-based financial consultancy deVere Group, in a statement

First look

Blackstone to tap Japanese investors for private credit
Blackstone is to offer access to a private credit fund in Japan as part of a joint venture with Daiwa Securities Group.

The deal will enable Japanese investors to invest in the Blackstone Private Credit Fund through a public investment trust managed by Daiwa, with a minimum investment of $50,000 and some limits on redemptions.

The fund is geared towards retail investors and offers exposure to loans made to companies that are below investment grade with interest rates updated on a quarterly basis.

It could prove attractive to Japanese investors who have been hit by low yields due to persistent low interest rates. Base rates in Japan remain at -0.1 percent while they have increased elsewhere in the world.

Other investment houses are also exploring offering access to private markets funds, including credit, in Japan, with both Goldman Sachs and Apollo Global Management reportedly planning to offer private debt to Japanese investors.

JB Capital launches new income fund
Asset manager JB Capital launched a new income fund, Merchant Banking Income Fund II on 1 March. The fund has a target size of $200 million.

Jeremy Hill, founder of the Bellevue, Washington manager, said the new fund will focus on the lower mid-market, which it believes is under-served both by traditional banks and by larger asset managers who have, a statement add, “too much money to give this area of the market the attention it deserves”.

The precursor, fund I, the company’s flagship fund, was oversubscribed and has closed. (JB Capital would not disclose AUM.) Hill said the “incredible response” the flagship received illustrates that “continued growth in private credit and the need from investors for alternative fixed income solutions dictates the need for an additional offering”.

The new fund will look to a wide range of industries: technology, healthcare, professional services and speciality consumer businesses especially.

Hill founded JB Capital in 2003. The company has since focused on corporate debt in the US and Canadian lower mid-markets, looking for high-yield debt and short-to-middle term capital appreciation with low correlation to traditional markets.

Hill’s LinkedIn page says JB Capital has raised and advised on approximately $1 billion in capital for growth companies since then.

And another thing…
We would urge you to continue making nominations for our Women of Influence in Private Markets 2023. The deadline is Wednesday, 22 March, and you can take part here.


Silver Point holds first close on $1.17bn
Silver Point Capital has launched and held a first close on a new distressed fund, Silver Point Distressed Opportunity Institutional Partners II, according to filings with the Securities and Exchange Commission on 6 March.

Silver Point, founded in 2002 by former Goldman Sachs partners Edward Mulé and Robert O’Shea, focuses on global credit investing. It has no comment on the new filings, which show that the new distressed fund closed on $1.17 billion.

This is a second vintage. The precursor fund, Silver Point Distressed Opportunity Institutional Partners, closed in February 2019 on $1.58 billion, according to PDI data. It likewise has a distressed strategy and a North American focus. Its fundraise exceeded its target of $750 million, according to documents from the New Mexico State Investment Council.

PDI data from the University of Texas/Texas A&M Investment Management Company says that in the course of its investment activity through 2020, 2021, and the first half of 2022, the precursor fund had an internal rate of return of 22.16 percent. Its total value to paid-in ratio was 1.43x.

As of February, Silver Point had over 270 employees, including nearly 90 investment professionals. It manages about $23 billion in assets. Silver Point has close ties with the Texas County & District Retirement System, which committed capital to each of the three funds in its speciality credit series and contributed as well to the first vintage of the distressed fund.

Double hire for Precede
Real estate-focused fund manager Precede Capital has expanded its team through the appointments of Leon Johnson as associate director, credit, and Sonali Mullick as senior associate, legal.

Johnson joins Precede Capital from the research and advisory firm, Green Street, where he began as a senior associate and was promoted to vice-president. Sonali joins from law firm Reed Smith, where she served as a legal consultant for structured finance.

Since March 2021, Precede Capital (formerly known as Précis Capital) has originated and arranged loans totalling over £1.5 billion ($1.8 billion; €1.7 billion). The firm recently announced a partnership with QuadReal Property Group, which saw the latter acquire a shareholding in the firm and commit up to £1 billion to deploy into its development loans.

High yield up, leveraged loans down in Europe
European high yield and leveraged loans ended last year in a very different place according to the latest research from the Association of Financial Markets in Europe for the fourth quarter of 2022.

It found that European leveraged finance issuance as a whole delivered €37.4 billion in proceeds in the fourth quarter, a 31.4 percent quarterly decrease and a 57.8 percent year-on-year decrease.

This was driven by the continuing freeze in the leveraged loan market, where issuance – including first lien, second lien and mezzanine financing – stood at €26.6 billion in Q4, down 46.1 percent on the prior quarter and down 45.5 percent compared with the fourth quarter of 2021.

By contrast, high-yield bond issuance totalled €10.7 billion in Q4, representing a 114 percent increase from the €5 billion total in the third quarter.

LP watch

Institution: New York State Common Retirement Fund
Headquarters: Albany, US
AUM: $242.3 billion

New York State Common Retirement Fund (NYSCRF) has committed $15 million to Raith Real Estate Fund III, managed by Raith Capital Partners.

Founded in 2012, Raith Capital Partners is a New York-based asset management firm focused on distressed loans and commercial mortgage-backed securities across the US.

Raith Capital Partners‘ third flagship distressed fund seeks to acquire mainly North American businesses. NYSCRF‘s recent private debt commitments are focused on North American vehicles with various strategies.

Today’s letter was prepared by Andy Thomson with John Bakie, Christopher Faille and Robin Blumenthal