ORIX adds private credit to asset management with purchase of NXT

ORIX USA’s current business overseeing third-party capital currently consists of a hedge fund and private equity firm.

The US arm of Japanese financial conglomerate ORIX Corporation is set to acquire NXT Capital, the firms announced late Sunday.

ORIX USA will buy the Chicago-based mid-market lender, which is currently a portfolio company of Stone Point Capital, in a transaction expected to close in August. The current management team, led by chief executive Robert Radway, would remain in place. A news report from The Japan Times cited the purchase price at ¥100 billion ($902.51 million; €776.93 million).

NXT declined to comment on terms of the deal and ORIX did not provide immediate comment.

In 2010, Stone Point backed the formation of NXT using money from two of its funds: the $2.25 billion Trident IV, which closed in September 2007, and $3.5 billion Trident V, which closed in January 2011. Radway and the management team previously had been at Merrill Lynch Capital until its sale in 2008 and at Heller Financial prior to that. NXT has closed 635 deals, representing a cumulative $19.8 billion in loans.

The direct lender closed its most recent fund, NXT Senior Loan Fund V, with $415 million in equity commitments – exceeding its $350 million target – in November. Including leverage, the fund has approximately $1.2 billion of deployable capital. Limited partners for the fund include public and private pension funds, insurance companies, foundations and asset managers, according to an announcement at the time.

With the acquisition, ORIX will add a private credit product to its asset management platform – an operation that currently consists of hedge fund manager Mariner Investment Group and private equity firm ORIX Capital Partners, which launched in March 2016. The firm has raised $160.38 million for its debut fund, ORIX Capital Fund I, according to a Securities and Exchange Commission regulatory filing.

NXT’s buyer entered the third-party capital management business in 2010 with the purchase of Mariner, which manages collateralised loan obligations and invests in myriad strategies including long/short equity and US mortgages.

ORIX also has a leveraged finance platform, though the firm invests with capital from its parent company. The group finances senior, unitranche loans and first-out and last-out loans, along with preferred or common equity co-investments.