TCW raising its seventh direct lending vehicle

TCW is raising its seventh direct lending fund, which will operate as a business development company.

The Los Angeles-based firm launched TCW Direct Lending Fund VII last April with a target of $2.5 billion, according to meeting documents from the Minnesota State Board of Investment. The fund is expecting net returns of 9-12 percent and has a hurdle rate of 9 percent. The vehicle has a 20 percent incentive fee.

The new vehicle will continue the firm’s direct lending strategy, which focuses on lending senior-secured, floating-rate loans, primarily to US-based mid-market companies. The average loan size falls between $20 million and $100 million.

The fund had raised more than $709 million at the end of the third quarter, according to documents filed with the Securities and Exchange Commission. In addition, the firm had invested more than $287 million across US-based companies, according to the SEC documents.

TCW could not be reached for comment by press time.

In December, the private BDC received an investment of $100 million from the Minnesota State Board of Investment. The pension fund also invested $100 million in Fund VI.

Fund VI, which also elected to be a BDC, closed in 2015 on more than $2 billion of committed capital, below its $3 billion target, according to PDI data. As of June 2018, Fund VI had a net internal rate of return of 6.91 percent and a multiple on invested capital of 1.12x.

TCW is a global asset management firm that was founded in 1971. The firm has more than $191 billion in assets under management.