THL Credit closes direct lending fund on $511m

The fund, which originates first and second lien secured loans to lower mid-market portfolio companies of private equity sponsors, surpassed its $350m target.

THL Credit Advisors has raised a total of $511 million in capital for its third direct lending fund, the company said on Monday.

The THL Credit Direct Lending Fund III originates first and second lien secured loans to lower mid-market portfolio companies of private equity sponsors, according to a statement.

The loans will support growth capital, leveraged buyouts and dividend recapitalisations, Chris Flynn, co-chief executive officer at THL Credit, told Private Debt Investor. The fund targets healthcare, business and financial services, media and technology firms in North America.

The firm declined to comment on target return rates for the fund.

This close surpassed a fundraising target of $350 million, filings with the US Securities and Exchange Commission showed. The fund launched in 2015.

The commitments were pulled from endowments, foundations, insurance companies, pensions, and family offices globally, the statement read. University of Michigan endowment committed $50 million to the vehicle, according to PDI data.

THL Credit’s previous direct lending fund, THL Credit Greenway Fund II, raised $187 million in 2013, and invested in 25 companies. In first quarter and 2016, the firm earned $300,000 and $400,000, respectively, in fees related to Greenway II, an SEC filing showed.

The Boston-headquartered firm provides loans to companies with annual EBITDA in the $5 million to $50 million range, though it concentrates on the $5 million to $25 million range, the firm said on its website. Its hold size ranges from $10 million to $35 million.

The firm has $10 billion of assets under management, according to the statement. THL Credit recently shuffled its direct lending personnel deck earlier this year with several promotions and hires.