First Eagle Investment Management, which has about $99 billion in assets, is buying THL Credit Advisors, which includes publicly traded fixed income and a middle-market direct lending business.
THL Credit was founded in 2007 as the credit affiliate of private equity firm Thomas H. Lee Partners.
“We believe the combined platform represents a compelling value proposition for a broad spectrum of investors and other credit market participants,” said First Eagle president and CEO Mehdi Mahmud in a statement.
There is no shortage of M&A activity in alternative credit, one of the most popular investment categories in recent years. Among other deals, BlackRock acquired private credit manager Tennenbaum Capital Partners earlier this year.
Once the transaction with $17 billion THL is finalized, First Eagle will have about $23 billion in total credit assets. THL’s CEO Chris Flynn will oversee the combined credit group and will report to Mahmud. Blackstone and Corsair Capital took a majority stake in First Eagle in a deal that closed in 2016.
First Eagle made its first foray into credit when it acquired NewStar Financial, a direct lender and provider of broadly syndicated loans. The 2017 deal allowed First Eagle to offer credit strategies to institutional and retail investors. The deal was part of a larger transaction that Blackstone was able to help craft with its credit arm GSO. While First Eagle got NewStar's direct lending business, GSO bought the portfolio, which included approximately $2.4 billion of middle-market loans and other credit investments, for a new fund that it offered to institutional investors.