Business Development Companies (BDCs), investment vehicles originally aimed at retail buyers, are increasingly being used by institutional investors to access the $1.5tn private credit market, according to a report by Bloomberg.
A number of managers including Oak Hill Advisors, Fidelity Investments, Jefferies Financial Group, and Churchill Asset Management, have all launched their first non-traded BDCs this year in an effort to cater to growing institutional investor demand.
Originally intended as way to allow small companies to raise capital from retail investors, BDCs are now finding favour with pensions schemes, insurers and family offices, as well as some international institutions, according to Bloomberg.
Unlike the more traditional private credit investment option of draw-down funds, which typically require an upfront commitment and mean capital is locked up for a set number of years, BDCs are structured as perpetual vehicles and issue shares that can be bought or redeemed with more flexibility.
