Crescent Capital is following the lead of several large buyout shops that have turned to smaller, credit-oriented vehicles as a way to reach yield-hungry investors. Apollo Global Management, The Blackstone Group and Kohlberg Kravis Roberts & Co. are among those raising “nontraded BDCs” as a way to reach smaller investors to invest in long-term credit instruments.
The firm announced at the end of June it has hired a team from HighPoint Capital Management LLC in Boston, which is going to spearhead the firm’s expansion into the lower mid-market through a unit called Crescent Direct Lending. Mark Attanasio, co-founder and managing partner of Crescent Capital, said at the Buyouts Chicago conference that the new team would raise an SBIC fund, in addition to managing separate account money for pension funds and insurance companies.
“Our firm has always been dedicated to providing capital to help grow middle market companies, in some cases, into multi-billion dollar enterprises,” Attanasio said in a prepared statement. “We also firmly believe that with our ability to price and structure transactions, this new strategy will offer another opportunity for our investors to obtain the kind of consistent returns they have come to expect from Crescent.”
Crescent Direct Lending will be led by John Bowman and Scott Carpenter, who each were named managing directors of Crescent Capital. Bowman and Carpenter had been founding managing directors of HighPoint Capital Management, a cash-flow lender to private U.S. lower mid-market companies.
Crescent Capital said the firm historically had targeted the lower mid-market, as well as larger borrowers, but over the years, its lending targets rose along with the market. The addition of this team, the firm said, extends its coverage to borrowers with EBITDA as low as $3 million.
The firm also added three professionals to its London unit, Crescent Credit Europe LLP, in a move that it said would help it to identify opportunities outside the United States. Steven Novick, a former investment banker from Credit Suisse, joined Crescent Capital as managing director, head of Europe, Middle East, Africa and Asia Pacific investor relations and business development. Benjamin Blumenschein, formerly of Bank of America Merrill Lynch, and James Scott-Williams, from at Royal Bank of Scotland, joined as senior associates.
Meantime, Crescent Capital has raised some $1.5 billion in a series of financing vehicles to make new loans, regulatory filings showed.
The firm has raised $407.7 million for a pool called Crescent Capital High Yield Fund LP, one filing showed. This fund, which has a $2 million minimum investment, is not working with a placement agent, the filing indicated. It is “indefinite” whether firm will seek to sell more to investors. In addition, the firm raised $86 million for Crescent Capital High Income Fund LP, which also has a $2 million minimum investment and “indefinite” plans for additional sales.
The distinction between the two funds was not clear from the filings, but firms sometimes customize their offerings to appeal to domestic versus international investors, or to focus on borrowers of different sizes or credit profiles.
Finally, Crescent Capital disclosed that it has cleared $1 billion for Crescent Mezzanine Partners VI LP. That fund has a minimum Investment of $5 million, and Crescent Capital is working with TCW Funds Distributors and Credit Suisse Securities (USA) LLC to market it.
A spokesman for the firm said executives could not discuss fundraising because of Securities and Exchange Commission restrictions on fund marketing.
Crescent Capital, founded in 1991 by Attanasio and a group of former Drexel Burnham Lambert investment bankers, was sold in 1995 to Trust Company of the West (later renamed TCW Group), an investment firm in Los Angeles. The French banking giant Société Générale acquired a controlling interest in TCW in 2001, and Crescent Capital spun out of TCW in 2010 to re-establish itself as an independent firm.