University of Michigan picks THL Credit for $50m investment

 The US endowment is investing in THL Credit’s third direct lending fund, which is raising $350m-$500m.  

The University of Michigan’s board of regents has approved a $50 million investment in THL Credit Direct Lending Fund III.

The fund is targeting $350 million-$500 million with a $600 million hard-cap, PDI understands.

According to documents presented to the board on Thursday, the university’s $10 billion endowment is slotting its investment into its absolute return portfolio.

The THL Credit fund will invest primarily in private secured debt of lower mid-market companies. THL Credit can invest across the debt capital structure but has a bias towards senior secured investments “to take advantage of the best risk/reward opportunities”, the documents said.

Most of the loans will be provided to sponsor-backed companies that require capital for growth, recapitalisations or refinancings.

“This investment is consistent with the university’s strategy to invest with experienced managers who have a niche strategy and ability to add value,” the documents stated.

THL Credit Greenway Fund II raised $187 million in equity commitments and $325 million via a credit facility in October 2013.

Boston headquartered THL Credit is the debt business of private equity firm Thomas H Lee Partners. The firm runs direct lending and tradable credit platforms, through private funds, business development companies, collateralised loan obligations and separately managed accounts.

THL Credit has $6.5 billion in assets under management and is lead by co-chief executives Chris Flynn and Sam Tillinghast.