THL Credit forms partnership with wealth management firm

Boston-based lender THL Credit, has formed a joint venture with Perspecta Trident, an affiliate of trust company Perspecta Trust to create THL Credit Logan JV. The joint venture will invest primarily in senior secured first lien loans to mid-market companies.

Most of THL Credit’s existing strategy consists of unitranche, mezzanine and second lien loans, explains Chris Flynn, THL’s co-chief executive and co-chief investment officer (CIO). With the Perspecta partnership, THL will be able to move further up the capital structure, which Flynn and Sam Tillinghast, the firm’s other chief executive and CIO explain, is a better, safer investment strategy in the current market environment.

The duo also expect they’ll be able to access more leverage in the JV, at 2:1, as opposed to 1:1, which BDC’s are currently limited to (although there is a bill under consideration by the US Congress that would allow BDCs to use more leverage).

THL Credit and Perspecta are providing $120 million and $30 million, respectively, of initial equity capital for the Logan JV. The venture has also agreed terms on a credit line from an unnamed lender.

Logan JV expects to begin investing this month. THL will work on origination, while Perspecta and THL will both oversee investment strategy and Perspecta will deliver on distribution.

“We are pleased to partner in this joint venture with Perspecta, a leader in the wealth management industry with expertise in credit investing. Logan JV will allow us to access our existing national origination platform to seek appropriate risk-adjusted returns in more senior secured investments,” Flynn said in a statement.

THL Credit is a business development company focused on investing in private debt and equity securities of mid-market companies with revenues of $25 million to $500 million. The firm is headquartered in Boston, with additional investment teams in Chicago, Houston, Los Angeles and New York. 

The firm is a direct lender that invests in first lien and second lien secured loans, including through unitranche, as well as subordinated debt, which can include associated equity components such as warrants, preferred stock or other similar securities.

Perspecta Trust is a non-depository trust company that offers a full range of trust, investment management and wealth planning services to wealthy individuals and families. The firm is based in Hampton, New Hampshire and has $5.5 billion in assets under its supervision.