This content is from: Corner Office
Blackstone-Owned Asset Manager to Buy Credit Shop
First Eagle is acquiring Thomas H. Lee's credit arm.
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.
[II Deep Dive: M&A Might Not Fix the Industry’s Problems, but Asset Manager Mergers Are Barreling Ahead]
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.