Benefit Street Partners hits $1.75 bln for Fund III

Firm: Benefit Street Partners, a unit of Providence Equity Partners

Fund: Providence Debt Fund III LP

Target: $1 billion

Amount raised: $1.75 billion

Benefit Street Partners said the fund was “substantially oversubscribed” in an effort that began in the first half of 2013. LPs have been keen to invest in credit funds as a way to seek yield in a low interest rate environment. 

Providence said it raised Fund II in 2010 and Fund I in 2008. Between 2010 and the fourth quarter of 2013, the credit strategy produced a gross internal rate of return of about 18 percent, or 14 percent net IRR, outperforming its benchmarks and landing in the top quartile for funds of similar vintage. LPs in Fund III included state and corporate pensions, sovereign wealth funds, family offices and high net worth individuals.

“We believe that a combination of regulatory and structural changes is resulting in a sustained significant funding gap for middle market companies,” Benefit Street Partners President Richard Byrne said in a prepared statement. “We have already begun deploying capital from the fund and are excited to help a wide range of companies grow their businesses and achieve their full potential.”

Related persons listed on a Dec. 20 Form D amendment for the fund include Byrne, along with David Manlowe, Thomas Gahan, Michael Paasche and Paul Salem. Providence Equity Partners disclosed $991.8 million in sales from 39 investors in the filing.

Gahan, the founder and CEO of Benefit Street Partners, worked as CEO of Deutsche Bank Securities and head of corporate and investment banking in the Americas. He now  leads a staff of 47 employees and 24 investment pros at Benefit Street Partners as of March 1.

Other senior managing directors of the firm worked together at Deutsche Bank before joining Providence Equity Partners in its New York City office. Providence also runs offices in Providence, Rhode Island, Hong Kong, Beijing, London and New Delhi.

Benefit Street Partners  manages more than $8.5 billion in assets employing strategies including private debt, long/short credit, long-only credit, commercial real estate debt and custom tailored separate accounts.