TPG Special Sits and CIT launch commercial finance JV

The new venture will have a target size of $500 million and provide financing to US companies across a variety of industries.  

TPG Special Situations Partners, the credit platform of alternative investment firm TPG, and CIT bank have entered into a commercial finance joint venture.

Strategic Credit Partners will have a target size of $500 million and provide senior secured financing to US companies across a range of industries, including communications, healthcare, information services and technology, industrials and restaurants. CIT Asset Management will serve as administrative agent to the joint venture.

Jim Hudak, president of CIT Corporate Finance, said: “Our efforts to support the financing needs of our customers will be greatly enhanced through this new relationship. This joint venture will further advance our efforts to grow our commercial lending franchise, while providing us the opportunity to increase our agency roles and grow our relationships within the sponsor community.”

Alan Waxman, partner and chief investment officer of TSSP, added: “We believe this new venture will allow us to extend our reach in providing critical financing to businesses in the US economy, while delivering high-quality assets to our investors. This partnership with CIT reflects our shared views on building a unique platform centred on credit discipline and risk management.”

Deutsche Bank served as financial adviser to CIT. Dechert served as CIT’s legal counsel. Cleary Gottlieb Steen & Hamilton served as legal counsel to TSSP.

Several large alternative investment firms have recently set up asset-backed lending businesses. Ares launched its commercial finance platform and fund last year after hiring a team from Keltic Financial. Apollo Global Management is also working on an ABL venture through MidCap Financial, a healthcare lender that was acquired by Athene, an insurance holding company owned by Apollo, in 2013.

Partnerships in the lending business have also proliferated recently. Cerberus Capital Management is raising a fund to do direct lending with PNC Bank, while other JVs have been formed by BDCs looking to access more leverage than their 1:1 regulatory limit.

TSSP had about $12 billion of assets under management as of 30 June. It is the dedicated special situations and credit platform of Fort Worth, Texas-headquartered TPG, a private investment firm with approximately $75 billion in assets and 17 offices around the world. TSSP executes through primary originations, secondary market purchases and restructurings. The division runs several private funds, a publicly-traded BDC (TPG Specialty Lending) and has recently started a European direct lending platform.

Founded in 1908, CIT is a financial holding company with $65 billion in assets. Its principal bank subsidiary, CIT Bank, has more than $40 billion in assets. It provides financing, leasing and advisory services principally to mid-market companies across a variety of industries in North America. The bank also offers equipment financing and leasing services to the transportation sector.