First Eagle to acquire alternative credit manager THL Credit

First Eagle Investment Management (First Eagle) is to acquire THL Credit Advisors, an alternative credit manager with approximately USD17 billion in assets under management as of 30 September, 2019.

The acquisition complements First Eagle’s established alternative credit platform, solidifying its place among the leaders in both tradable credit and middle-market direct lending.

First Eagle is an independent, privately owned investment firm with approximately USD99 billion in assets under management as of 30 September, 2019. The acquisition of THL Credit will expand the range of differentiated investment solutions First Eagle offers to institutional and retail investors worldwide while strengthening its partnerships with financial professionals as well as with borrowers, private equity sponsors and investment banks. Upon completion of the acquisition, First Eagle’s alternative credit platform will represent approximately USD23 billion in assets under management and advisement.

“We see a persistent need in the market for meaningful and sustainable sources of income. Alternative credit strategies that invest in tradable credit and directly originated middle-market loans help address this need, offering investors the potential for material income streams and compelling risk-adjusted total returns across business cycles and interest rate environments,” says Mehdi Mahmud, President and Chief Executive Officer of First Eagle. “With best-in-class credit expertise and a creative, fiduciary-minded approach to developing investment solutions, THL Credit has built an excellent reputation in this structurally attractive space. We believe the combined platform represents a compelling value proposition for a broad spectrum of investors and other credit market participants. We are excited to welcome the THL Credit team to First Eagle.”

Established in 2007 as the credit affiliate of Thomas H Lee Partners, one of the world’s oldest private equity firms, THL Credit is headquartered in Boston and has its primary credit underwriting office in Chicago. THL Credit specialises in the management of tradable credit and direct lending to middle-market companies, made available to sophisticated investors through public and private vehicles, separately managed accounts and commingled funds, including the Wind River and Lake Shore collateralised loan obligation (CLO) programs.

“Uniting the capabilities of THL Credit and First Eagle on a single platform will create a credit business with the scale and experience to further accelerate our leading position in today’s market,” says THL Credit CEO Chris Flynn. “The team at THL Credit is excited by the growth opportunities we can seize by joining First Eagle. We look forward to working together to continue to provide clients with a best-in-class product suite in alternative credit.”

Flynn will become President of the combined alternative credit platform, reporting to Mahmud, with THL Credit’s Chief Investment Officer Jim Fellows becoming CIO of the combined credit platform.

“We are extremely proud of what the THL Credit platform has achieved under the leadership of Chris and Jim. This is a very talented group of people who have built a strong franchise in a competitive market. Becoming part of First Eagle makes tremendous sense for all stakeholders, and we wish the THL Credit team nothing but continued success,” adds Thomas M Hagerty, Managing Director at Thomas H. Lee Partners.

“THL Credit’s significant organic growth over the years is testament to the investment capabilities of their team and the quality of the relationships they have been able to build in the marketplace,” says Tim Conway, founder of the business that ultimately became First Eagle Private Credit, who will remain with the combined platform as Vice Chairman. “The transaction is a transformative step forward for both organisations, positioning the business to provide more capital and financing options to private equity sponsors, while also offering broader investment options to institutional and retail investors. I am confident that the resulting First Eagle alternative credit platform will thrive under Chris’s leadership, and I look forward to working with him to ensure a smooth transition for all of our stakeholders.”