Bain Capital Specialty Finance formed a joint venture with the private credit business of Pantheon, a global alternative private markets manager, to provide private direct lending solutions to middle market borrowers, primarily across Europe and Australia.
The joint venture will invest through the International Senior Loan Program (ISLP). Bain Capital Specialty Finance and Pantheon have agreed to contribute capital, subject to the terms of their agreement, to purchase equity interests in the ISLP. The equity ownership of the ISLP is expected to be approximately 70.5% for Bain Capital Specialty Finance and approximately 29.5% for Pantheon, with investment decisions requiring approval by representatives of both Bain Capital Specialty Finance and Pantheon. The ISLP’s investment portfolio is expected initially to consist of approximately $320 million in investment principal of senior secured loans contributed by Bain Capital Specialty Finance.
The partnership is expected to provide Bain Capital Specialty Finance with balance sheet flexibility to expand and greater capacity to continue to invest in new senior secured loan investments to middle market companies. Giving effect to Bain Capital Specialty Finance’s expected transfer of the initial portfolio to the ISLP, Bain Capital Specialty Finance’s pro forma ending debt-to-equity (net of cash) ratio is expected to be approximately 1.1x, down from approximately 1.3x as of Dec. 31, 2020.
“Bain Capital Credit has had a global lending presence for over 15 years. Our partnership with Pantheon is a natural extension of our middle market lending expertise and scale and will allow us to further expand BCSF’s reach and capabilities into Europe and Australia, markets where we continue to see attractive growth opportunities, while driving long-term value to our shareholders,” Michael Ewald, CEO of Bain Capital Specialty Finance, said.
“The international reach of this partnership further strengthens Pantheon’s credit coverage and highlights our expertise and leading presence in private credit secondaries,” Rakesh Jain, partner and global head of private credit at Pantheon, said. “We have known Bain Capital Credit for many years and look forward to collaborating closely with them through this new joint venture.”
Bain Capital Specialty Finance and Pantheon formed the ISLP joint venture on Feb. 9. The ISLP’s principal purpose is to invest in middle market direct lending opportunities across Europe and Australia. Bain Capital Specialty Finance and Pantheon have agreed to contribute capital up to (subject to the terms of their agreement) approximately $255 million in aggregate to purchase equity interests in the ISLP, with Bain Capital Specialty Finance and Pantheon contributing up to approximately $180 million and $75 million, respectively. Investment decisions of the ISLP require the consent of both Bain Capital Specialty Finance and Pantheon.
The transfer of the initial portfolio to the ISLP is expected to occur by the end of February, subject to certain conditions and final approval of Bain Capital Specialty Finance and Pantheon.