THL garners $310m to target LMM companies UPDATED

The firm will focus on senior secured loans in sponsored deals.

THL Credit has locked down $310.32 million for its latest fund, putting it within striking distance of the fundraising target just after it reorganized its direct lending team.

The Boston-based alternative lender is inching closer to its $350 million goal for THL Credit Direct Lending Fund III, according to filings made with the Securities and Exchange Commission. The University of Michigan endowment committed $50 million to the vehicle, PDI data showed.

The fund will target lower mid-market companies backed by private equity sponsors and aim to make investments in mainly senior secured loans, though it can lend up and down the capital structure, according to the University of Michigan documents.

THL extends credit 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.

DLF III’s predecessor fund raised $187 million in equity commitments, according PDI data.  Business Development Corporation of America made an unspecified commitment to the fund.

THL Credit recently shuffled its direct lending personnel deck last month with several promotions and hires. Jim Fellows, who sits on the direct lending investment committee, was promoted from co-head of tradable credit to chief investment officer.

Monty Cook and Howard Wu were named co-heads of direct lending. Cook and Wu were elevated from the positions of managing director and leader of the business and financial services vertical for its direct lending strategy, respectively. Michelle Handy and Eric Lee were also hired in the direct lending division. Before joining THL, Handy worked at GE Capital and Lee was on staff at the Credit Suisse Park View BDC. 

THL also issued its first collateralised loan obligation of the year this March, a $612 million deal, which was led by Morgan Stanley. The reinvestment period ends in April 2021 and matures in April 2029, according to a report from Moody’s. At least 90 percent of the CLO must be senior secured loans. Up to 60 percent of the assets can be covenant-lite loans.

Editor's note: This article has been updated in order to reflect the up-to-date amount raised for the fund.