Sankaty Advisors, a Boston-based credit firm, has submitted filings with the Securities and Exchange Commission (SEC) that detail its plans to launch a private business development company (BDC).
Bain Capital-owned Sankaty has so far filed a registration statement under the Securities Exchange Act of 1934, which once approved, will allow it to file an election to be registered as a BDC under the Investment Company Act of 1940.
The BDC will be called the Sankaty Capital Corporation and its investment activities will be managed by SCC Advisors, a subsidiary of Sankaty that is a registered investment adviser with the SEC. The advisor will be responsible for originating prospective investments, conducting research and due diligence on potential loans, analyzing investment opportunities, negotiating and structuring deals and monitoring portfolio companies on an ongoing basis, the filing said.
The vehicle will have a five-member board of directors, two of whom will be “interested directors,” as they are also executives at the investment advisor. The other three will be independent directors.
Jeffrey Hawkins, who is the chief operating officer at Sankaty, will be the chairman of the board. Michael Ewald plans to serve as president and chief executive officer of the BDC and also as an interested board director. Ewald is head of the mid-market group at Sankaty. He serves as the portfolio manager for Sankaty’s mid-market opportunities and senior direct lending funds. Sankaty has not yet picked its independent directors.
The firm has also named executive officers who are not directors. Sally Fassler will be the chief financial officer at the BDC. She currently serves as CFO and risk & oversight committee member at Sankaty. James Goldman will be the chief compliance officer at the new company. He is a vice president in compliance at Sankaty. James Athanasoulas has been named the vice president and treasurer at the company. He is a managing director in the mid-market group of Sankaty. Ranesh Ramanathan will be the secretary of the BDC. He is general counsel and a risk & oversight committee member at Sankaty.
The BDC’s focus will be primarily on senior mid-market lending opportunities. The vehicle will target companies with $10 million to $150 million in EBITDA. The company intends to focus on senior investments with a first or second lien loan on collateral.
Sankaty was founded in 1998 and has about $26.8 billion in assets under management. The firm has invested across the credit spectrum, including performing and distressed bank loans, high-yield bonds, debtor-in-possession loans, senior direct lending, mezzanine debt and other junior securities, structured products and credit-based equities. In addition to its Boston headquarters, the firm has offices in New York, Chicago, London, Dublin, Hong Kong and Melbourne.
Most large and mid-size private debt firms in the US either manage or sub-advise BDCs, while others have plans to set them up. The TCW Direct Lending Group, the Crescent Capital Group and AllianceBernstein’s Private Credit Investors (AB-PCI) business have filed preliminary documents with the SEC as well. Benefit Street Partners (BSP) partnered with Griffin Capital in February to launch a private BDC and is also trying to acquire the investment management contract for TICC Capital Corp., a Connecticut-based BDC. Credit Suisse Asset Management also launched a non-traded BDC this year, while Goldman Sachs Asset Management took its vehicle public.